10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1994 Commission File Number 001-11015 ------------------------------------------- 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 ------------------------------------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Stock, $1.50 par value New York Stock Exchange Pacific 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 10, 1995, 92,850,923 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 $2.39 billion. DOCUMENTS INCORPORATED BY REFERENCE Documents Where Incorporated --------- ------------------ A portion of Proxy Statement for Annual Meeting of Shareholders to be held May 9, 1995 Part III PART I ITEM 1. BUSINESS. The Dial Corp ("Dial" or "Corporation"), conducts a consumer products and services business focused on North American markets producing annual revenues in excess of $3.5 billion. Dial's CONSUMER PRODUCTS segment operates in four major categories, as follows: SKIN 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 TREND dry and liquid detergents, PUREX TOSS 'N SOFT sheet fabric softeners, PUREX RINSE 'N SOFT and PUREX STA PUF liquid fabric softeners, and other laundry products; HOUSEHOLD, which manufactures and markets RENUZIT air fresheners, DIAL dish detergents, BRILLO scouring pads, SNO BOL toilet bowl cleaners, PARSONS and BO-PEEP ammonia, BRUCE floor care products, CAMEO powdered cleanser and other household items; and FOOD, which processes and markets ARMOUR STAR chili, beef stew, corned beef hash and Vienna sausage, TREET luncheon meat, LUNCH BUCKET microwaveable meals, and other shelf-stable canned and packaged foods. Dial's SERVICES business operates in three principal business segments through subsidiary corporations of Dial, as follows: AIRLINE CATERING AND SERVICES, which engages in airline catering operations, providing in-flight meals to domestic and international airlines, and provides airplane fueling and ground handling services; 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 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; offers money orders through a national network of retail agents and provides official checks and negotiable instrument clearing services to mid-size bank customers and credit unions in the United States and Puerto Rico; and operates restaurants, fast food outlets and contract foodservice facilities and concessions ranging from cafeterias in manufacturing plants to corporate executive dining rooms to the food and beverage facilities of the Phoenix, Arizona, America West Arena. Dial subsidiaries operate service or production facilities and maintain sales and service offices in the United States, Canada and Mexico. The Corporation also conducts business in certain other foreign countries. Dial had approximately 200 employees at its corporate center at December 31, 1994, 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 Corporation. Dial is managed by a Board of Directors comprised of 9 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 skin care, laundry, household and shelf-stable food products. This segment originated as the grocery products division 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 and other consumer products. 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 meat products, and packaged food products. SKIN CARE Skin Care products are marketed under a number of brand names, including DIAL, MOISTURIZING DIAL PLUS, MOUNTAIN FRESH DIAL, TONE, PURE & NATURAL, SPIRIT and FELS NAPTHA soaps, LIQUID DIAL antibacterial soap, BORAXO powdered hand soap and DIAL antiperspirant. Skin Care also markets the BRECK line of hair care products, including hairsprays, 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 that cleans, moisturizes and provides deodorant protection, is distributed nationally, as is TONE, a complexion and moisturizing bar with cocoa butter, and many of the Corporation's other skin care products. In 1994, Skin Care began national shipments of DIAL For Kids bar and liquid soaps and continued the national expansion of MOISTURIZING DIAL PLUS soap. Skin 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 sold under the BORAXO, 20 MULE TEAM, LURON and LUROSEP trademarks, hand and body cleansers 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, TREND liquid detergent, DUTCH and INSTANT FELS dry detergents, PUREX TOSS 'N SOFT sheet fabric softeners, RINSE 'N SOFT and STA PUF liquid fabric softeners, MAGIC sizing and starch, PUREX bleaches, BORATEEM dry bleach, STA-FLO starch, 20 MULE TEAM BORAX laundry additive and other brands. In 1994, Laundry launched a new product, GEM detergent, and expanded and restaged several products, including PUREX Heavy Duty Liquid with bleach alternative, PUREX Free and Clear liquid laundry detergent, ULTRA TREND with bleach alternative and ULTRA TREND detergent. HOUSEHOLD Household products include brands such as RENUZIT air fresheners, BRILLO soap pads, SNO BOL 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, offers products for the continuous-action and aerosol segments of the air freshener market, including RENUZIT Adjustable, RENUZIT Aerosol, RENUZIT ROOMMATE liquid air fresheners and RENUZIT LONGLAST ELECTRIC air freshener in the electric subsegment of the air freshener category. RENUZIT LongLast Carpet & Room Deodorizer, RENUZIT LongLast Mist Home Fragrance Spray and RENUZIT LongLast InVent car air freshener were introduced in 1994. During the fourth quarter of 1994, Household introduced a line of DIAL dish detergents, consisting of DIAL dish powder and gel detergents for use in automatic dishwashers and a liquid DIAL dish soap which also kills germs on hands. 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 strong number two market position in the canned meats category. ARMOUR STAR Vienna sausage, potted meat and sliced dried beef lead their respective segments on a national basis, and ARMOUR STAR canned meats now account for nearly one-fifth of all canned meat sales in the United States. During 1994, CONSUMER PRODUCTS introduced two line extensions, Low-Fat TREET and Turkey Loaf luncheon loaves, to the ARMOUR STAR canned meat line of products; and a new product, ARMOUR STAR BIG ONES meat sticks, is being introduced to compete in the meat sticks category. CUSTOMERS CONSUMER PRODUCTS sells to thousands of 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 Services), airplane fueling and ground handling (Aircraft Service International), convention services (GES Exposition Services, Exhibitgroup), payment services (Travelers Express), contract foodservices (Restaura), Canadian intercity bus passenger and package express service (Greyhound Lines of Canada), family cruises (Premier Cruise Lines), airport and cruise ship duty-free businesses (Greyhound Leisure Services), and travel services (Brewster Transport, Jetsave, Crystal Holidays). AIRLINE CATERING AND SERVICES Airline catering, and aircraft fueling and other ground-handling operations are conducted through the Dobbs International Services and Aircraft Service International groups of companies. Dobbs International, which has been conducting airline catering operations since 1941, became the nation's largest domestic in-flight caterer as a result of its 1994 acquisitions from United Airlines of 15 in-flight catering kitchens at 12 domestic airports. Dobbs International is now United's exclusive in-flight caterer at 12 locations where the kitchens are located. The company also expanded its presence in the United Kingdom by the acquisition in February 1994 of 3 catering kitchens in England and one in Scotland. At the end of 1994, Dobbs International's in-flight catering operations provided in-flight meals to more than 60 domestic and international airlines at 48 airports in the United States and 5 airports in foreign countries. 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. The Aircraft Service International group ("ASIG") of companies provides aircraft ground-handling services such as aircraft fueling, aircraft cleaning and baggage handling for major domestic and foreign airlines at 30 airports throughout the United States and in Freeport, Bahamas and London, England. In 1994 ASIG won a 5-year contract to provide into-plane fueling services to Delta Air Lines at Atlanta's Hartsfield Airport. Dobbs International and ASIG are focused on meeting the outsourcing needs of the airline industry, providing a lower-cost alternative to those airlines which are committed to reduce costs and operate profitably. CONVENTION SERVICES Convention services are provided by the Corporation'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. In early 1994, GES Exposition expanded its electrical service activities with the purchase of Expo-Tech Electrical & Plumbing Services, Inc., with operations in Detroit, Philadelphia, Texas, Florida and the West Coast. GES Exposition, in December 1994 entered into a long-term agreement to become the official contractor for the Interface Group, the world's largest independent producer of tradeshows and conferences, including COMDEX, the largest tradeshow in North America. In January 1995, GES Exposition acquired 2 Canadian companies, Panex Show Services Limited and Stampede Display and Convention Services Limited, that provide tradeshow and exposition services in Canada. During 1993 GES Exposition acquired United Exposition Services Co., Inc., Andrews, Bartlett & Associates, Inc., and Gelco Convention Services, Inc., which broadened its operations in the eastern and southeastern United States, including Chicago, Cleveland, Orlando, New Orleans, Washington, D.C. and Atlanta. Exhibitgroup is a leading designer and builder of convention exhibits and displays, with manufacturing facilities in 7 U.S. cities. TRAVEL AND LEISURE AND PAYMENT SERVICES Travel and leisure services are provided by the Premier Cruise Lines, Greyhound Leisure Services, Jetsave, Crystal Holidays, Greyhound Lines of Canada and Brewster Transport business units. Premier Cruise Lines provides three-day and four-day BIG RED BOAT cruises from Port Canaveral, Florida, to the Bahamas and specializes in seven-day vacations which combine a cruise with a three-day or four-day Orlando theme park vacation at Walt Disney World or Universal Studios and Sea World. Premier operates two cruise ships, the 38,772-ton Star/Ship Oceanic and the 35,143-ton Star/Ship Atlantic. Cruise destinations offer various underwater diving and snorkeling attractions, historical tours, sandy beaches and shopping opportunities. Since April 1994 famous LOONEY TUNES characters (Bugs Bunny and others) have provided entertainment on board Premier Cruise Lines' ships, under a licensing agreement with Warner Bros. In February 1995, Premier Cruise Lines exercised its option to purchase the 17,042-ton Star/Ship Majestic, which had been used to offer cruises from ports other than Port Canaveral, and leased it to a European cruise company under a 4-year bareboat charter agreement. Greyhound Leisure Services operates duty-free shopping concessions on 49 cruise ships and also operates duty-free shops at the Chicago, Miami and Fort Lauderdale/Hollywood Florida international airports. 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 package 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 446 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 facility in Banff, Alberta, Canada. Brewster owns and operates 79 intercity coaches, 16 buses, and 13 snocoaches which transport sightseers on tours of the glaciers of the Columbia Icefield. In July 1994, Brewster purchased the Cascade Inn, which it had been leasing and operating; the Cascade Inn is located adjacent to Brewster's Mount Royal Hotel in Banff. The Travelers Express group of companies engages in the sale of money orders to the public through approximately 41,000 agent locations in the United States and Puerto Rico. Travelers Express is the nation's leading issuer of money orders, issuing over 251 million money orders in 1994. Travelers Express also provides processing services for approximately 5,000 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 cashier's 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. In January 1995, Travelers Express acquired an automated bill payment product and related assets from BUYPASS Corporation, a leading point-of-sale processing company, and entered into an operating relationship with that company to provide an electronic processing service for in-person utility bill payment. The Restaura group of companies' contract foodservice division serves meals to workers 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 Phoenix, Arizona, America West Arena and operates 7 historic lodges in and around Glacier National Park in Montana and Canada. 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 payment service companies and the U.S. Postal Service (money orders), many of which have greater resources than the Corporation. Dobbs International also competes on the basis of reliability, condition of kitchen facilities and truck fleet, and on-time record. Caterair International Corporation, Sky Chefs, Inc./LSG, and Gate Gourmet (a SwissAir unit) are the principal competitors of Dobbs International. Freeman Decorating Company is the principal competitor of GES Exposition on a national basis. 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 patents are currently granted for a term of 17 years from the date of issue. The Dial companies own a number of patents which give them competitive advantages in the marketplace, including a number of patents owned by Travelers Express for automated money order dispensing systems which provide significant marketplace advantage. These patents cover security, automated reporting and control, and other features which are important in the issuance of money orders. CONSUMER PRODUCTS also has the right, pursuant to license agreements, to operate under certain third- party patents covering specific technologies. 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. The Dial companies maintain a portfolio of trademarks representing substantial goodwill in the businesses using the marks. Many trademarks used by CONSUMER PRODUCTS, including DIAL, PURE & NATURAL, ARMOUR STAR, TONE, TREET, PARSONS, BRUCE, CAMEO, PUREX, DUTCH, RENUZIT, BRILLO, SNO BOL, BRECK, TREND, PUREX TOSS N' SOFT, STA PUF, FLEECY WHITE, 20 MULE TEAM, BORAXO, LUNCH BUCKET, and MAGIC, 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, in connection with their businesses, certain subsidiaries within SERVICES use the Greyhound and the Image of the Running Dog marks, which are owned by the Corporation. 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 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. Although Dial is a party to certain environmental disputes, Dial believes that any liabilities resulting therefrom, after taking into consideration amounts already provided for, but exclusive of any potential insurance recovery, should not have a material adverse effect on Dial's financial position or results of operations. EMPLOYEES EMPLOYMENT AT DECEMBER 31, 1994 EMPLOYEES COVERED BY APPROXIMATE NUMBER OF COLLECTIVE BARGAINING SEGMENT EMPLOYEES AGREEMENT ------- --------------------- --------------------- Consumer Products 4,000 1,900 Airline Catering and Services 14,600 8,600 Convention Services 2,700 1,200 Travel and Leisure and Payment Services 7,600 3,400 Dial believes that relations with its employees are satisfactory and that collective bargaining agreements expiring in 1995 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, 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. As a result of these factors, 1994 quarterly earnings per share of Dial as a percentage of the full year's earnings were approximately 12% (first quarter), 31% (second quarter), 32% (third quarter), and 24% (fourth quarter). RESTRUCTURING MATTERS On August 5, 1993, Dial completed the initial public offering of of all of the stock of Motor Coach Industries International, Inc., formerly its transportation manufacturing and service parts segment. The sale followed the March 1992 spin-off of all of the stock of GFC Financial Corporation (now the FINOVA Group, Inc.), a corporation which had 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 1993 sale of the Corporation's transportation manufacturing and service parts segment and the 1992 spin-off of GFC Financial Corporation. SHELF REGISTRATION In July 1994, the Corporation filed a shelf registration with the Securities and Exchange Commission covering $500 million of debt and equity securities. To date, no securities have been offered under the registration. BUSINESS SEGMENTS Principal business segment information is set forth in Annex A attached hereto and made a part hereof. ITEM 2. PROPERTIES. Dial's modern headquarters building, a 24-story, approximately 484,000 square foot building in Phoenix, Arizona, is owned by a joint venture between two subsidiaries of Dial. 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, technical, administrative and other activities. CONSUMER PRODUCTS operates 13 plants in the United States, 1 plant in Mexico, and 4 offices in 4 foreign countries. All of the plants are owned; 3 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, Shampoos and Conditioners, Antiperspirants, Hotel Amenities (shampoos, conditioners and hand lotions) AIRLINE CATERING AND SERVICES operates 37 offices (27 of which are also airplane-fueling locations) and 67 catering kitchens. All of the properties are in the United States, except for 2 office/airplane-fueling locations and 5 catering kitchens which are located in foreign countries. Twelve of the catering kitchens are owned; all other properties are leased. CONVENTION SERVICES operates 31 offices and 32 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 29 offices, 29 foodservice facilities, 5 retail stores, 161 duty-free shops, 2 cruise ships, 8 warehouses and 9 hotels/lodges with ancillary foodservice and recreational facilities, and an icefield tour facility. All of the properties are in the United States, except for 8 offices, 1 foodservice facility, the icefield tour facility and 2 hotels, which are located in foreign countries; approximately 140 duty-free shops are operated in international waters on board cruise ships. Travel and Leisure and Payment Services owns 3 hotels and has a partial interest in one hotel for which it is also the lessee and operator; five of the hotels are operated pursuant to a concessionaire agreement. One of the cruise ships, 1 warehouse and 3 of the foodservice facilities are owned; all other properties are leased. Additionally, Travel and Leisure and Payment Services owns a cruise ship which is leased to a European cruise company under a 4-year bareboat charter agreement that expires in February 1999. GLOC operates 10 terminals and 8 garages in Canada. Five terminals and 7 garages are owned; the other properties are leased. In addition, bus stop facilities at approximately 580 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 $3,494,000 outstanding at December 31, 1994. 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. In 1994, the matter of Transportation Manufacturing Corporation ("TMC") vs. the Chicago Transit Authority ("CTA"), which had been filed in the United States District Court for the District of New Mexico, was settled by Dial and TMC on favorable financial and other terms. The lawsuit arose from a contract between TMC, a former subsidiary of Dial, and CTA for the manufacture and delivery of 491 wheelchair-lift transit buses. TMC was divested by Dial in connection with its sale of MCII in August 1993, but Dial retained rights to certain damage claims, indemnified MCII against certain potential costs and damages arising from counterclaims and continued to direct the litigation pursuant to a Litigation Cooperation Agreement. The Corporation 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, 1994, 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 1994. OPTIONAL ITEM. EXECUTIVE OFFICERS OF REGISTRANT. The names, ages and positions of the executive officers of the Corporation as of March 15, 1995, are listed below: EXECUTIVE POSITION NAME AGE OFFICE HELD SINCE ---- --- ------ ---------- John W. Teets 61 Chairman, President and 1982 Chief Exeutive Officer and Director and Chairman of Executive Committee of Registrant Frederick G. 61 Vice President and 1977 Emerson Secretary of Registrant Joan F. Ingalls 46 Vice President-Human 1991 Resources of Registrant L. Gene Lemon 54 Vice President and 1979 General Counsel of Registrant Ronald G. Nelson 53 Vice President-Finance 1994 and Treasurer of Registrant Richard C. Stephan 55 Vice President- 1980 Controller of Registrant William L. Anthony 52 Executive Vice 1987 President-Administration and Controller, Consumer Products Group of Registrant Robert H. Bohannon 50 President and Chief 1993 Executive Officer of Travelers Express Company, Inc., a subsidiary of Registrant John E. Greenwell 47 Senior Vice President- 1994 General Manager, Food Division, Consumer Products Group of Registrant Frederick J. 60 President of Dobbs 1985 Martin International Services, Inc., a subsidiary of Registrant Andrew S. Patti 54 President and Chief 1986 Operating Officer of the Consumer Products Group of Registrant Norton D. 60 Chairman and Chief 1983 Rittmaster Executive Officer of GES Exposition Services, Inc., a subsidiary of Registrant Mark R. Shook 40 Executive Vice 1994 President-General Manager, Soap and Detergent 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. Prior to July 1994, Mr. Nelson was Vice President-Treasurer of the Registrant. Mr. Bohannon was elected as President and Chief Executive Officer of Travelers Express Company, Inc. in 1993. Prior thereto, he was a senior officer at Marine Midland Bank of Buffalo, New York. Prior to May 1994, Mr. Greenwell was Vice President Marketing of the Food Division in Registrant's Consumer Products Group, and prior to 1992 was Director of Marketing of the Household and Laundry Division of Registrant's Consumer Products Group. Since 1991, Mr. Shook has been an Executive Vice President-General Manager of one or more divisions in Registrant's Consumer Products Group, 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 1997 Annual Meeting of Stockholders. 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, 1994: Sales Price Range of Common Stock --------------------------------- Calendar 1994(1) 1993(1) Quarters High Low High Low -------- ---- --- ---- --- First $22.6875 $19.75 $22.25 $19.50 Second 24.00 20.25 21.9375 18.4375 Third 23.75 19.75 20.5625 17.9375 Fourth 23.25 19.25 21.125 18.375 Dividends Declared on Common Stock ---------------------------------- 1994(1) 1993(1) ------- ------- February $ .14 $ .14 May .15 .14 August .15 .14 November .15 .14 ----- ----- TOTAL $0.59 $0.56 (1) On May 10, 1994, the Corporation's Board of Directors declared a 2-for-1 stock split which was paid on July 1, 1994, to stockholders of record as of June 1, 1994. All Dial common stock sales price and dividend information has been restated to reflect the stock split. Regular quarterly dividends have been paid on the first business day of January, April, July and October. As of March 10, 1995, there were 54,947 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 9, 1995 ("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) The following documents are filed as a part of the report: 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). 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 Corporation and its subsidiaries on a consolidated basis. The Corporation 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, filed as Exhibit 4.B to Dial's 1993 Form 10-K, is hereby incorporated by reference. 4.B1 Copy of First Amendment to Amended and Restated Credit Agreement dated as of September 23, 1994.* 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 Dial's 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 Dial's 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 Dial's 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, filed as Exhibit 10.E to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 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.H1 Copy of Dial's 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.H2 Copy of amendment, effective August 1, 1994, to Dial's 1983 Stock Option and Incentive Plan.*+ 10.I1 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.I2 Copy of amendment, effective August 1, 1994, to The Dial Corp 1992 Stock Incentive Plan.*+ 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 Dial's 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, filed as Exhibit 10.L to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 10.M Copy of The Dial Corp Supplemental TRIM Plan.*+ 10.N Copy of Employment Agreement between GES 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 GES Exposition Services' 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, filed as Exhibit 10.P to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 10.Q Copy of The Dial Corp Deferred Compensation Plan, filed as Exhibit 10.Q to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 10.R Copy of form of The Dial Corp 1983 Stock Option and Incentive Plan Amended and Restated Restricted Stock Agreements dated August 12, 1994, between Dial and six executive officers.*+ 10.S Copy of form of The Dial Corp 1992 Stock Incentive Plan Restricted Stock Agreements dated August 12, 1994, between Dial and six executive officers.*+ 11 Statement Re Computation of Per Share Earnings.* 21 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.* 27 Financial Data Schedule.* *Filed herewith. +Management contract or compensation plan or arrangement. Note: The 1994 Annual Report to Securityholders will be furnished to the Commission when, or before, it is sent to securityholders. (b) REPORTS ON FORM 8-K. The Corporation filed no reports on Form 8-K during the period for which this report is filed. 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 27th day of March, 1995. 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 27, 1995 By: /s/ John W. Teets John W. Teets Director; Chairman, President and Chief Executive Officer Principal Financial Officer Date: March 27, 1995 By: /s/ Ronald G. Nelson Ronald G. Nelson Vice President-Finance and Treasurer Principal Accounting Officer Date: March 27, 1995 By: /s/ Richard C. Stephan Richard C. Stephan Vice President-Controller Directors 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 27, 1995 By: /s/ Richard C. Stephan Richard C. Stephan Attorney-in-Fact ANNEX "A" THE DIAL CORP 1994 FINANCIAL INFORMATION
SELECTED FINANCIAL AND OTHER DATA Year ended December 31, 1994 1993 1992 1991 1990 ----------- ----------- ----------- ----------- ----------- OPERATIONS (000 omitted) Revenues $ 3,546,847 $ 3,000,342 $ 2,874,088 $ 2,827,849 $ 2,851,535 =========== =========== =========== =========== =========== Income from continuing operations (1) $ 140,311 $ 110,273 $ 74,351 $ 25,755 $ 75,418 Income (loss) from discontinued operations (2) 32,120 (45,125) (83,363) (59,045) ----------- ----------- ----------- ----------- ----------- Income (loss) before extraordinary charge and cumulative effect of change in accounting principle 140,311 142,393 29,226 (57,608) 16,373 Extraordinary charge for early retirement of debt (21,908) Cumulative effect of change in accounting principle -- SFAS No. 106 (110,741) ----------- ----------- ----------- ----------- ----------- Net income (loss) $ 140,311 $ 120,485 $ (81,515) $ (57,608) $ 16,373 =========== =========== =========== =========== =========== INCOME (LOSS) PER COMMON SHARE (3) (dollars) Continuing operations (1) $ 1.61 $ 1.28 $ 0.87 $ 0.31 $ 0.94 Discontinued operations (2) 0.38 (0.53) (1.05) (0.75) ----------- ----------- ----------- ----------- ----------- Income (loss) before extraordinary charge and cumulative effect of change in accounting principle 1.61 1.66 0.34 (0.74) 0.19 Extraordinary charge (0.26) Cumulative effect of change in accounting principle (1.32) ----------- ----------- ----------- ----------- ----------- Net income (loss) per common share $ 1.61 $ 1.40 $ (0.98) $ (0.74) $ 0.19 =========== =========== =========== =========== =========== Dividends declared per common share (3) (4) $ 0.59 $ 0.56 $ 0.60 $ 0.70 $ 0.68 =========== =========== =========== =========== =========== Average outstanding common and equivalent shares(3)(000 omitted) 86,646 85,406 84,026 79,822 79,250 =========== =========== =========== =========== =========== FINANCIAL POSITION AT YEAR-END (000 omitted) Total assets $ 3,780,896 $ 3,281,088 $ 3,156,998 $ 3,493,656 $ 3,417,956 Total debt 745,479 635,892 707,111 550,017 543,540 $4.75 Redeemable preferred stock 6,590 6,586 6,586 6,610 6,606 Common stock and other equity (4) 555,093 469,688 390,395 940,721 1,027,382 =========== =========== =========== =========== =========== PEOPLE Stockholders of record 55,241 51,300 50,688 56,358 59,623 Employees of continuing businesses (average) 32,519 25,025 26,765 29,042 32,009 =========== =========== =========== =========== =========== (1) After deducting restructuring and other charges of $19,800,000 (after-tax) or $0.24 per share in 1992 and $54,871,000 (after-tax) or $0.69 per share in 1991. Also after deducting $9,128,000 (after-tax), or $0.11 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) Restated to reflect the two-for-one stock split effected July 1,1994 to shareholders of record as of June 1, 1994. (4) Dial's quarterly dividend increased from $0.14 to $0.15 with the July 1, 1994 payment. 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. GFC Financial's initial dividend rate after the spin-off early in 1992 maintained the 1991 annual dividend rate for stockholders who retained their GFC Financial shares following the spin-off. /TABLE MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF THE DIAL CORP Results of Operations: Dial is focused on maintaining a balance between consumer products and services and in remaining in businesses that are growing and have high margins and a high return on investment. 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. 1994 VS. 1993: Revenues for 1994 were $3.5 billion compared with $3 billion in 1993. Net income and income from continuing operations for 1994 were $140.3 million or $1.61 per share, compared with income from continuing operations in 1993 of $110.2 million or $1.28 per share. Consumer Products. The Consumer Products segment's revenues of $1.5 billion were up $91.2 million or 6 percent from those of 1993. Operating income of $160 million was up $20.8 million or 15 percent over 1993 amounts. Operating margins improved to 10.6 percent from 1993's 9.8 percent. Skin Care division's revenues and operating income were down $29.2 million and $2.5 million, respectively, as sales of bar and liquid soaps to distributors were down from 1993 levels. However, Dial's market share for bar soap was up from that of last year, reflecting continuing high consumer acceptance of Dial products. Lower raw material costs and marketing expenses partially offset the effect of the volume declines. Laundry division's revenues and operating income were up $57 million and $4.2 million compared to 1993 levels, led by strong volume increases of liquid detergents which more than offset volume decreases in dry detergents due to changing consumer preferences. Lower raw material and other production costs contributed to the operating income improvement. Household division's revenues and operating income were up $54.5 million and $11.3 million, respectively, from 1993 levels. The Renuzit product line, acquired in May of 1993, accounted for most of the improvement. Other household product lines contributed to the increased operating income with lower costs and expenses, while ammonia products followed industry trends with lower sales and operating income. Food division's revenues and operating income were up $4.2 million and $2.4 million, respectively, from 1993 levels. Higher revenue and operating income due to increased sales volume of 2most food categories more than offset reductions in the microwaveable category. Lower raw material and other production costs contributed to the increase in operating income. International's revenues were up $4.7 million from 1993's, driven by higher volume in Mexico, Canada and Germany. A $5.4 million increase in operating results was due mostly to eliminating unprofitable operations, plus contributions from the higher revenue. Services. For 1994, Dial's principal business segments have been reclassified to include airplane fueling and ground handling activities along with airline catering as the Airline Catering and Services segment, in recognition of recent industry developments and the fact that all of Dial's airline related activities are now being jointly managed. The airplane fueling and ground handling operations were previously part of the Travel and Leisure and Payment Services segment, which now includes other foodservice operations, previously classified with airline catering as the Airline Catering and Other Food Service segment. Combined Services revenues were $2 billion, up $455.3 million or 29 percent, while operating income of $170.2 million increased $34.1 million or 25 percent, over 1993 amounts. Revenue and operating income comparisons continue to be aided by the 1993 acquisitions of convention services businesses and the 1994 phase in of flight kitchens acquired from United Airlines. Airline Catering and Services. Revenues of the Airline Catering and Services segment increased $260.9 million or 52 percent from 1993 to 1994, while operating income increased $20.1 million or 49 percent over the same period. Operating margins of the group declined slightly to 8.1 percent from 1993's 8.2 percent, as the newly acquired flight kitchens went through their start-up phase in 1994. Airline catering revenues and operating income increased $251.1 million and $18.3 million, respectively, primarily because of the acquisition and integration of fifteen airline catering kitchens from United Airlines in the U. S. and four airline catering kitchens in England and Scotland acquired from a British airline caterer. These acquisitions added to the airline catering list of international and major U. S. airports with a large number of longer domestic and international flights which require more meal service than average. Revenues and operating income of the airplane services companies increased $9.8 million and $1.8 million, respectively, due primarily to new contracts. Convention Services. Convention Services segment revenues for 1994 increased $166.4 million or 47 percent over those of 1993, while operating income increased $22.8 million or 82 percent. These increases were due to the inclusion of businesses acquired during 1993 for the full year of 1994 and the achievement of planned operating efficiencies for the merged operations, as indicated by the improvement in operating margins to 9.7 percent in 1994 from 7.8 percent in 1993. Travel and Leisure and Payment Services. Revenues of the Travel and Leisure and Payment Services segment were up $28 million or 4 percent from those of 1993, while operating income was down $8.8 million or 13 percent from that of 1993. Dial's payment services subsidiary is investing increasing amounts in tax exempt securities. On a fully taxable equivalent basis, revenues increased $31.9 million while the operating income decline was $3.9 million less at $4.9 million. Operating margins, on a fully taxable equivalent basis, declined to 8.7 percent in 1994 from 9.8 percent in 1993. Transportation services companies' 1994 revenues and operating income declined $3.5 million and $580,000, respectively, from those of 1993, due mostly to the 5.2 percent decline in the average Canadian-currency exchange rate over the same period. In Canadian dollars, revenues increased $7.6 million as revenues from newly purchased routes and higher Courier Express and sightseeing, charter, and snowfield operations more than offset decreases in passenger ridership. Passenger ridership continues to be adversely affected by general economic uncertainties and low airfares on medium and long haul destinations. Operating income in Canadian dollars was up slightly from that of 1993. Duty Free airport and shipboard concession operations achieved increases of $13.8 million in revenue and $1.5 million in operating income over 1993 levels, due mostly to new business and higher passenger volumes, offset partially by the loss of a contract at Dulles International Airport in the spring of 1994 and the reduction of international flights at two other airports. Cruise revenues declined $7.6 million in 1994 compared with 1993 levels due to lower Florida tourism and increased competition, while higher ship leasing costs due to higher interest rates offset ongoing cost reductions and contributed to the $7.9 million decline in operating results. In February 1995, Dial exercised its option to purchase the previously leased Star/Ship Majestic and commenced a four-year charter arrangement to lease the ship to a European operator, returning Premier Cruise Lines to a two ship operation sailing from Port Canaveral to the Bahamas. The contract food service group's 1994 revenues increased $13.4 million due to increased production at auto manufacturing plants and new business, offset somewhat by loss of revenue from the closing of marginal locations. Excluding a $5 million one-time gain from the curtailment of a postretirement benefit plan in 1993, operating income was up $700,000 from 1993 levels. On a fully taxable equivalent basis, payment services' 1994 revenues were up $5.1 million from those of 1993, due to higher interest income from higher funds on deposit and higher dispenser fee and service charge revenue, offset somewhat by cancellation of certain money order agents who presented undue credit risks. Lower operating expenses also contributed to the increase in operating income of $4.1 million on a fully taxable equivalent basis. Unallocated Corporate Expense and Other Items, Net. During the fourth quarter of 1994, Dial reclassified expenses related to certain interest rate swap agreements to interest expense from unallocated corporate expense and other items, net. As a result, interest expense was increased and unallocated corporate expense was reduced by $5,983,000 and $7,327,000 for 1994 and 1993, respectively. Unallocated corporate expense and other items, net, increased $1.2 million or 3 percent from that of 1993. Interest Expense. Interest expense in 1994, after giving effect to the reclassification described above, was $3.9 million higher than in 1993. Higher average debt levels related to expenditures for acquisitions in the consumer products, airline catering and convention services businesses and the effects of higher floating interest rates, adjusted by the impact of interest rate swap agreements as discussed in Note I of Notes to Consolidated Financial Statements, combined to more than offset the reduction resulting from the prepayment of high-coupon, fixed-rate debt during the third quarter of 1993. Income Taxes. The 1994 effective tax rate declined by 1.6 percentage points to 36.7 percent from last year's 38.3 percent (excluding from 1993 the $4.4 million, or $0.05 per share, favorable impact on deferred tax assets at January 1, 1993, from accounting for the effects of a one percent increase in the U. S. corporate income tax rate under the Omnibus Budget Reconciliation Act of 1993, which was signed into law on August 10, 1993). This reduction in the effective tax rate results primarily from the increased use of tax-exempt investments by Dial's payment services subsidiary. 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 $1.28 per share. Before restructuring and other charges, income from continuing operations in 1992 was $94.2 million, or $1.11 per share. After restructuring and other charges of $19.8 million, or $0.24 per share, Dial had income from continuing operations of $74.4 million, or $0.87 per share, in 1992. Consumer Products. The Consumer Products segment'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. Operating margins improved to 9.8 percent from 9.3 percent in 1992. Skin Care division's 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. Skin Care division's 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. Laundry division's revenues increased $63.3 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 contributed to the favorable comparison between periods. Operating income increased $5.0 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. The Household division's revenues and operating income increased $66.7 million and $5.8 million, respectively, from those of 1992. The acquisition of Renuzit during the 1993 second quarter contributed a substantial portion of the increase. Food division's 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. International revenues and operating results improved $3.8 million and $1.1 million, respectively, from those of 1992. Services. Excluding certain airport concession operations which were sold in September 1992, and excluding the effects of $30 million of restructuring charges in 1992, combined 1993 Services revenues and operating income increased $109.6 million, or 8 percent, and $11.3 million, or 9 percent, respectively. Airline Catering and Services. Revenues of the Airline Catering and Services segment declined $25.1 million from those of 1992, while operating income increased $600,000. Operating margins were 8.2 percent, up from 7.7 percent in 1992. 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 stringent cost controls. Revenues for airplane fueling and other ground handling services declined $3.7 million due primarily to lower foreign exchange rates. Convention Services. Convention Services segment revenues and operating income increased $117.6 million and $7.6 million, respectively, from those in 1992. Growth in existing business and 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. Operating margins were 7.8 percent in 1993, down from 8.5 percent in 1992 as the merged operations had not reached full efficiency. Travel and Leisure and Payment Services. Revenues for the Travel and Leisure and Payment Services segment declined $111 million, and, excluding the effects of $30 million of restructuring charges in 1992, operating income declined $6.2 million from 1992 results. On a fully taxable equivalent basis, revenues declined $108 million and the operating income decline was $3 million less at $3.2 million, also excluding the effects of 1992's restructuring charges. Operating margins calculated on a fully taxable equivalent basis were 9.8 percent in 1993, up from 8.9 percent in 1992. The sale, in late September 1992, of most of Dial's food and merchandise airport terminal concession operations resulted in declines in revenues and operating income of $113.9 million and $6.8 million, respectively, from those in 1992, more than accounting for the segment declines on a fully taxable equivalent basis. 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. 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. 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 Star/Ship Oceanic in the 1993 first quarter and the introduction of a new itinerary for the Star/Ship Majestic 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 percent from the volume in 1992 due to publicity surrounding violence against foreign visitors. 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 1992's results, due primarily to a $5 million one-time gain from the curtailment of a postretirement benefit plan in 1993. Payment services' revenues decreased $3.9 million on a fully taxable equivalent basis, due primarily to reduced money order revenues from terminating unprofitable agents and to lower investment income due to lower market interest rates. On a fully taxable equivalent basis, operating income was $5.7 million ahead of 1992's results due primarily to the termination of unprofitable business even though investment income was lower as stated above. Unallocated Corporate Expense and Other Items, Net. During the fourth quarter of 1994, Dial reclassified expenses related to certain interest rate swap agreements to interest expense from unallocated corporate expense and other items, net. As a result, interest expense was increased and unallocated corporate expense was reduced by $7,327,000 and $7,321,000 for 1993 and 1992, respectively. 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 floating interest rates on short-term borrowings and the prepayment of certain high-coupon, fixed-rate debt at the end of the third quarter of 1993. Income Taxes. The provision for income taxes for 1993 includes the $4.4 million, or $0.05 per share, favorable impact on deferred tax assets at January 1, 1993, from accounting for the effects of a one percent increase in the U. S. corporate income tax rate previously discussed, offset partly by the added 1993 expense of approximately $1.3 million, or $0.02 per share, from the U.S. rate increase. LIQUIDITY AND CAPITAL RESOURCES: Dial's total debt at December 31, 1994 increased to $745 million from $636 million at December 31, 1993 due to borrowing for acquisitions as mentioned herein. The debt to capital ratio was 0.56 to 1 and 0.55 to 1 at December 31, 1994 and December 31, 1993, respectively. Capital is defined as total debt plus minority interests, preferred stock and common stock and other equity. In July 1994, a Shelf Registration filed with the Securities and Exchange Commission became effective. Under the Shelf Registration, Dial can issue up to an aggregate $500 million of debt and equity securities. No debt has been issued under the program and there is no intention to issue any equity securities at the present time. The filing increases Dial's future financing options. During 1993, Dial filed a $300 million Senior Debt Securities Shelf Registration with the Securities and Exchange Commission under which Dial was able to 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. In early 1994, Dial issued the remaining $70 million of debt under the senior note program with maturities of six to fifteen years. During the third quarter of 1993, Dial utilized the proceeds from the sale of its Transportation Manufacturing and Service Parts segment to repurchase approximately 2,000,000 shares of common stock on the open market and to reduce outstanding debt, including prepaying $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). As discussed further in Note B of Notes to Consolidated Financial Statements, during 1994 Dial completed the acquisition of the United Airlines catering kitchens and acquired several small companies. The combined purchase price for all 1994 acquisitions was $152 million. Property and equipment and intangibles increased as a result of these acquisitions which were financed through cash flow from operations and additional long-term debt. Dial's payment service operations generate funds from the sale of money orders and other payment instruments (classified as "Payment service obligations"). The proceeds of such sales are invested by Dial's payment services subsidiary, in accordance with applicable state laws, in highly liquid debt instruments (classified, along with cash on hand and cash in transit from agents, as "Funds and agents' receivables restricted for payment service obligations"), which before consolidating eliminations, included investment grade commercial paper issued by Dial and supported along with the rest of Dial's outstanding commercial paper by a credit commitment under a long-term revolving bank credit agreement, as described in Note I of Notes to Consolidated Financial Statements; and in a portfolio of high-quality investments (more than 98 percent have ratings of A- or higher or are collateralized by federal agency securities), including federal, state and municipal obligations, asset-backed securities and corporate debt securities (classified as "Investments restricted for payment service obligations"). These investments are restricted by state regulatory agencies for use by Dial's payment services subsidiary to satisfy the liability to pay, upon presentment, the face amount of such payment service obligations, and accordingly such assets are not available to satisfy working capital or other financing requirements of Dial. 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. 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. As discussed in Note I of Notes to Consolidated Financial Statements, short-term borrowings are supported by a $500 million long-term revolving bank credit agreement. In addition, Dial's subsidiaries have agreements to sell $115 million (increased to $140 million in February 1995) 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 were fully utilized at December 31, 1994, mature in February of each year, but are expected to be extended annually by mutual agreement. The agreements are currently extended to February 1996. As discussed in Note J of Notes to Consolidated Financial Statements, in September 1992 Dial sold 10,491,800 shares of treasury stock to The Dial Corp Employee Equity Trust (the "Trust") at $19.06 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 $200 million promissory note at the date of sale. The $200 million, 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, 1994, a total of 6,898,358 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. Except as noted herein, cash flows from operations and the proceeds from the sale of businesses during the past three years along with 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 the sale of Trust shares and other treasury stock generally being sufficient to finance its business. Should financing requirements exceed such sources of funds, Dial believes it has adequate external financing sources available, including Dial's $500 million Shelf Registration, to cover any such shortfall. As indicated in Note M 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 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, 1994, Dial has recorded U.S. deferred income tax benefits totaling $169 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 income, exclusive of nondeductible goodwill amortization but after deducting restructuring and other charges, over the past three years has been approximately $175 million. Furthermore, approximately $109 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, after taking into consideration amounts already provided for, but exclusive of any potential insurance recovery, should not have a material adverse effect on Dial's financial position or results of operations. BUSINESS OUTLOOK AND RECENT DEVELOPMENTS: As discussed in Note B of Notes to Consolidated Financial Statements, in February 1995 Dial purchased the previously leased Star/Ship Majestic cruise ship and entered into a charter to lease the ship to a European operator. In addition, Dial has agreed to execute its option to purchase Dial's other leased cruise ship in October 1995, when the current lease expires. Management anticipates financing the acquisitions with 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. MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING The management of The Dial Corp 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 M 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 LLP, independent auditors elected by the stockholders. Management has made available to Deloitte & Touche LLP 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 potential 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 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, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. As discussed in Note M of Notes to Consolidated Financial Statements, the Company changed its method of accounting for postretirement benefits other than pensions in 1992. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Phoenix, Arizona February 24, 1995
THE DIAL CORP CONSOLIDATED BALANCE SHEET December 31, (000 omitted, except share data) 1994 1993 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 33,222 $ 10,659 Receivables, less allowance of $20,453 and $22,597 231,388 199,996 Inventories 229,273 216,837 Deferred income taxes 42,517 46,373 Other current assets 46,565 43,082 ----------- ----------- 582,965 516,947 Funds and agents' receivables restricted for payment service obligations, after eliminating $80,000 and $65,000 invested in Dial commercial paper 661,252 535,657 ----------- ----------- Total current assets 1,244,217 1,052,604 Investments restricted for payment service obligations 710,625 574,094 Property and equipment 813,384 740,724 Other investments and assets 65,448 59,757 Deferred income taxes 126,787 124,096 Intangibles 820,435 729,813 ----------- ----------- $ 3,780,896 $ 3,281,088 =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term bank loans $ 931 $ 8,935 Accounts payable 243,982 248,975 Accrued compensation 91,992 69,060 Other current liabilities 258,065 272,430 Current portion of long-term debt 22,830 2,295 ----------- ----------- 617,800 601,695 Payment service obligations 1,438,960 1,147,063 ----------- ----------- Total current liabilities 2,056,760 1,748,758 Long-term debt 721,718 624,662 Pension and other benefits 319,519 295,656 Other deferred items and insurance reserves 96,525 99,834 Commitments and contingent liabilities (Notes B, J, N, O and P) Minority interests 24,691 35,904 $4.75 Redeemable preferred stock 6,590 6,586 Common stock and other equity: Common stock, $1.50 par value, 200,000,000 shares authorized, 97,108,724 and 48,554,362 (pre-split) shares issued 145,663 72,832 Additional capital 308,350 378,814 Retained income 393,233 304,481 Cumulative translation adjustments (20,910) (9,889) Unearned employee benefits (176,201) (189,940) Unrealized loss on securities available for sale, net of tax (21,742) Common stock in treasury, at cost, 4,319,624 and 2,536,354 (pre-split) shares (73,300) (86,610) ----------- ----------- Total common stock and other equity 555,093 469,688 ----------- ----------- $ 3,780,896 $ 3,281,088 =========== =========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF CONSOLIDATED INCOME Year ended December 31, (000 omitted, except per share data) 1994 1993 1992 ----------- ----------- ----------- REVENUES $ 3,546,847 $ 3,000,342 $ 2,874,088 ----------- ----------- ----------- Costs and expenses: Costs of sales and services 3,216,627 2,725,049 2,621,372 Restructuring and other charges 30,000 Unallocated corporate expense and other items, net 43,938 42,734 36,198 Interest expense 61,195 57,292 63,370 Minority interests 3,392 3,618 2,814 ----------- ----------- ----------- 3,325,152 2,828,693 2,753,754 ----------- ----------- ----------- Income before income taxes 221,695 171,649 120,334 Income taxes 81,384 61,376 45,983 ----------- ----------- ----------- INCOME FROM CONTINUING OPERATIONS 140,311 110,273 74,351 Income (loss) from discontinued operations 32,120 (45,125) ----------- ----------- ----------- Income before extraordinary charge and cumulative effect of change in accounting principle 140,311 142,393 29,226 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) $ 140,311 $ 120,485 $ (81,515) =========== =========== =========== INCOME (LOSS) PER COMMON SHARE: Continuing operations $ 1.61 $ 1.28 $ 0.87 Discontinued operations 0.38 (0.53) ----------- ----------- ----------- Income before extraordinary charge and cumulative effect of change in accounting principle 1.61 1.66 0.34 Extraordinary charge (0.26) Cumulative effect to January 1, 1992, of initial application of SFAS No. 106 (1.32) ----------- ----------- ----------- NET INCOME (LOSS) PER COMMON SHARE $ 1.61 $ 1.40 $ (0.98) =========== =========== =========== Dividends declared per common share $ 0.59 $ 0.56 $ 0.60 =========== =========== =========== Average outstanding common and equivalent shares 86,646 85,406 84,026 =========== =========== =========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF CONSOLIDATED CASH FLOWS Year ended December 31, (000 omitted) 1994 1993 1992 ----------- ----------- ----------- CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES: Net income (loss) $ 140,311 $ 120,485 $ (81,515) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 109,861 100,160 100,935 Deferred income taxes 19,391 35,943 18,915 Extraordinary charge for early retirement of debt 21,908 Cumulative effect of change in accounting principle 110,741 Restructuring and other charges 30,000 (Income) loss from discontinued operations (32,120) 45,125 Other noncash items, net 8,402 24,071 15,369 Change in operating assets and liabilities: Receivables and inventories (44,884) (79,349) 14,905 Payment service assets and obligations, net 218,994 98,791 67,537 Accounts payable and accrued compensation 14,496 31,825 (22,692) Other assets and liabilities, net (39,075) (11,882) (101,591) ----------- ----------- ----------- Net cash provided by operating activities 427,496 309,832 197,729 ----------- ----------- ----------- CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES: Capital expenditures (108,592) (114,624) (109,131) Acquisitions of businesses and other assets, net of cash acquired (152,271) (216,787) (7,192) Proceeds from sales of securities available for sale 225,523 Proceeds from maturities of securities available for sale 12,449 Purchases of securities available for sale (341,716) Purchases of securities held to maturity (108,123) Proceeds from sales and maturities of investments restricted for payment service obligations 626,527 320,425 Purchases of investments restricted for payment service obligations (767,035) (441,387) Proceeds from sale of shares of MCII 245,700 Proceeds from sale of businesses and property 8,403 19,442 54,891 Investment in and advances from discontinued operations, net 35,084 (138,563) Other, net (190) (288) (347) ----------- ----------- ----------- Net cash used by investing activities (464,517) (171,981) (321,304) ----------- ----------- ----------- CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES: Proceeds from long-term borrowings 70,000 229,358 Payments on long-term borrowings (2,238) (196,611) (21,557) Extraordinary charge for early retirement of debt (21,908) Net change in short-term borrowings 42,233 (105,338) 178,255 Dividends on common and preferred stock (51,401) (48,345) (50,180) Minority portion of subsidiary's special dividend (9,761) Proceeds from sale of treasury stock 28,546 43,286 57,949 Common stock purchased for treasury (38,642) (417) Net change in receivables sold 26,800 Cash payments on interest rate swaps (17,795) (32,909) (37,027) ----------- ----------- ----------- Net cash provided (used) by financing activities 59,584 (171,109) 153,823 ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents 22,563 (33,258) 30,248 Cash and cash equivalents, beginning of year 10,659 43,917 13,669 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 33,222 $ 10,659 $ 43,917 =========== =========== =========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF CONSOLIDATED COMMON STOCK AND OTHER EQUITY Year ended December 31, (000 omitted) 1994 1993 1992 ----------- ----------- ----------- COMMON STOCK: Balance, beginning of year $ 72,832 $ 72,832 $ 72,832 Two-for-one stock split 72,831 ----------- ----------- ----------- Balance, end of year $ 145,663 $ 72,832 $ 72,832 =========== =========== =========== ADDITIONAL CAPITAL: Balance, beginning of year $ 378,814 $ 390,790 $ 326,724 Two-for-one stock split (72,831) Treasury shares issued in connection with employee benefit plans (1,588) (5,300) 2,294 Net change in unamortized amount of performance-based and restricted stock awards (4,456) 2,063 1,195 Treasury shares sold to Employee Equity Trust and ESOP 39,708 Employee Equity Trust adjustment to market value 8,635 (8,723) 19,020 Other, net (224) (16) 1,849 ----------- ----------- ----------- Balance, end of year $ 308,350 $ 378,814 $ 390,790 =========== =========== =========== RETAINED INCOME: Balance, beginning of year $ 304,481 $ 234,655 $ 832,539 Net income (loss) 140,311 120,485 (81,515) Dividends on common and preferred stock (51,401) (48,345) (50,180) Distribution of GFC Financial to Dial stockholders (467,291) Other, net (158) (2,314) 1,102 ----------- ----------- ----------- Balance, end of year $ 393,233 $ 304,481 $ 234,655 =========== =========== =========== CUMULATIVE TRANSLATION ADJUSTMENTS: Balance, beginning of year $ (9,889) $ (11,341) $ 2,083 Unrealized translation loss (11,021) (279) (20,226) Distribution of GFC Financial to Dial stockholders 6,802 Disposition of Transportation Manufacturing and Service Parts Group 1,731 ----------- ----------- ----------- Balance, end of year $ (20,910) $ (9,889) $ (11,341) =========== =========== =========== UNEARNED EMPLOYEE BENEFITS: Balance, beginning of year $ (189,940) $ (245,155) $ (35,414) Treasury shares sold to Employee Equity Trust (200,000) Employee benefits earned 22,374 46,492 9,279 Adjustment of Employee Equity Trust to market value (8,635) 8,723 (19,020) ----------- ----------- ----------- Balance, end of year $ (176,201) $ (189,940) $ (245,155) =========== =========== =========== UNREALIZED LOSS ON SECURITIES AVAILABLE FOR SALE: Unrealized loss on securities available for sale at January 1, 1994, due to adoption of SFAS No. 115 $ (1,369) $ -- $ -- Net increase in unrealized loss (20,373) ----------- ----------- ----------- Balance, end of year $ (21,742) $ -- $ -- =========== =========== =========== COMMON STOCK IN TREASURY: Balance, beginning of year $ (86,610) $ (51,386) $ (258,043) Purchase of shares (38,642) (417) Shares issued in connection with employee benefit plans 9,660 4,167 38,078 Shares sold to Employee Equity Trust and ESOP 170,423 Other, net 3,650 (749) (1,427) ----------- ----------- ----------- Balance, end of year $ (73,300) $ (86,610) $ (51,386) =========== =========== =========== COMMON STOCK AND OTHER EQUITY $ 555,093 $ 469,688 $ 390,395 =========== =========== =========== See Notes to Consolidated Financial Statements.
THE DIAL CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 1994, 1993 and 1992 A. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation. The consolidated financial statements of The Dial Corp ("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 1994 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 Funds and Agents' Receivables and Investments Restricted for Payment Service Obligations. Dial's payment service operations generate funds from the sale of money orders and other payment instruments (classified as "Payment service obligations"). The proceeds of such sales are invested by Dial's payment services subsidiary, in accordance with applicable state laws, in highly liquid debt instruments, (classified, along with cash on hand and cash in transit from agents, as "Funds and agents' receivables restricted for payment service obligations"), which before consolidating eliminations, included investment grade commercial paper issued by Dial and supported along with the rest of Dial's outstanding commercial paper by a credit commitment under a long-term revolving bank credit agreement, as described in Note I of Notes to Consolidated Financial Statements; and in a portfolio of high-quality investments (98 percent have ratings of A- or higher or are collateralized by federal agency securities), including federal, state and municipal obligations, asset-backed securities and corporate debt securities (classified as "Investments restricted for payment service obligations"). These investments are restricted by state regulatory agencies for use by Dial's payment services subsidiary to satisfy the liability to pay, upon presentment, the face amount of such payment service obligations and, accordingly such assets are not available to satisfy working capital or other financing requirements of Dial. Effective January 1, 1994, Dial adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires the classification of securities at acquisition into one of three categories: available for sale, held to maturity or trading, with different reporting requirements for each classification. See Note F of Notes to Consolidated Financial Statements for a discussion of the classification and reporting of these securities at December 31, 1994. Intangibles. Intangibles are carried at cost less accumulated amortization. Intangibles which arose prior to November 1, 1970, are not being amortized. Intangibles arising on or after November 1, 1970 are amortized on the straight-line method over the estimated lives or 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. 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 M of Notes to Consolidated Financial Statements for further information. Effective January 1, 1994, Dial adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits." The adoption of SFAS No. 112 had no material effect on the consolidated financial statements. Foreign Currency Translation. In accordance with SFAS No. 52, the assets and liabilities of Dial's foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with resulting unrealized translation gains and losses accumulated in a separate component of stockholders' equity. Income and expense items are converted into U.S. dollars at average rates of exchange prevailing during the year. Derivatives. Amounts receivable or payable under interest rate derivatives are recognized as interest income or expense. Gains and losses from foreign exchange forward contracts which hedge identifiable foreign currency commitments are deferred and are recognized in income in the same period as the hedged transaction. Stock Split. On May 10, 1994, Dial's Board of Directors declared a two-for-one stock split which was paid on July 1, 1994, to stockholders of record as of June 1, 1994. Unless otherwise noted, all references in the financial statements with regard to number of shares of common stock and related dividends declared and income per share amounts have been restated to reflect the stock split. 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 shares held by the Employee Equity Trust (the "Trust"). Shares held by the Trust are not considered outstanding for net income (loss) per share calculations until the shares are released from the Trust. B. ACQUISITIONS OF BUSINESSES AND OTHER ASSETS During 1994, Dial completed its acquisition of the final eleven of fifteen airline catering kitchens from United Airlines ("UAL") and also acquired several small services companies. The first four UAL flight catering kitchens were purchased by Dial on December 30, 1993. Also in December 1993, Dial acquired the remaining 49% interest in a joint venture which owns the office building in Phoenix, Arizona, that serves as Dial's corporate headquarters complex. During 1993, Dial also purchased a consumer products line and three convention services companies. Acquisitions in 1992 were not material. Net cash paid, assets acquired and debt and other liabilities assumed in all acquisitions for the years ended December 31 were as follows:
1994 1993 1992 ----------------------------- --------------------------------------- -------- Head- quarters Conven- Building tion UAL Joint Services Catering Venture Companies (000 omitted) Kitchens Other Total Interest (1) Other Total Total -------- -------- -------- -------- -------- -------- -------- -------- Assets acquired: Property and equipment $ 62,560 $ 10,934 $ 73,494 $ 63,086 $ 17,128 $ 13,722 $ 93,936 $ 9,488 Intangibles, primarily goodwill 59,147 16,029 75,176 95,646 77,450 173,096 Other assets 7,019 2,453 9,472 37,773 14,687 52,460 Debt and other liabilities assumed (5,871) (5,871) (85,155) (17,550) (102,705) (2,296) -------- -------- -------- -------- -------- -------- -------- -------- Net cash paid $128,726 $ 23,545 $ 152,271 $ 63,086 $ 65,392 $ 88,309 $ 216,787 $ 7,192 ======== ======== ======== ======== ======== ======== ======== ======== (1) During 1994, Convention Services amounts were revised to reflect final purchase accounting adjustments for 1993 acquisitions. The impact of such adjustments was to increase goodwill, other assets and liabilities by $30,372,000, $5,928,000 and $36,300,000, respectively. Amounts previously reported for 1993 have been modified to reflect such adjustments.
All acquisitions were accounted for as purchases. The purchase prices, including acquisition costs, were allocated to the net tangible and intangible assets acquired based on estimated fair values at the dates of the acquisitions. The difference between the purchase prices and the related fair values of net assets acquired represents goodwill which is being amortized on a straight-line basis over 40 years. The fair value of patents and other intangible assets included in the acquisitions is amortized over their estimated useful lives. The results of the acquired operations have been included in the Statement of Consolidated Income from the dates of acquisition. The results of operations of the acquired companies from the beginning of the year to the dates of acquisition are not material. In February 1995, Dial exercised its option to purchase a cruise ship, previously under a lease agreement, for $39,500,000. Dial has entered into a four-year charter arrangement to lease the ship to a European operator. In April 1994, Dial notified the lessor of its intention to purchase Dial's other leased cruise ship for $71,000,000 when the current lease agreement expires in October 1995. C. RESTRUCTURING AND OTHER CHARGES--CONTINUING OPERATIONS Dial recorded restructuring and other charges of $30,000,000 ($19,800,000 after-tax, or $0.24 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. D. DISCONTINUED OPERATIONS AND DISPOSITIONS On August 12, 1993, Dial sold, through an initial public offering, 20 million shares of common stock of Motor Coach Industries International, Inc. ("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, the sale of certain bus installment sale receivables in early 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 (pre-split) of Dial common stock. In connection with the dispositions, special charges to earnings were made in 1992 to cover restructuring of certain operations and other costs while, in 1993, these provisions related primarily to previously discontinued businesses. The caption "Income (loss) from discontinued operations" in the Statement of Consolidated Income for the years ended December 31 includes the following:
(000 omitted) 1993 1992 ----------- ----------- Income (loss) from operations: Transportation Manufacturing and Service Parts Group, net of tax provision (benefit) of $7,685 and ($17,666)(1) $ 10,193 $ (46,364) GFC Financial, net of tax provision of $1,798 5,498 Gain on sale of Transportation Manufacturing and Service Parts Group, net of tax provision of $42,040 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 (18,224) ----------- ----------- $ 32,120 $ (45,125) =========== =========== (1) After deducting restructuring and other charges of $59,400,000 (after-tax) in 1992.
In addition to those classified as discontinued operations and described above, businesses with aggregate net assets of $48,584,000 were sold in 1992. E. INVENTORIES Inventories at December 31 consisted of the following:
(000 omitted) 1994 1993 ----------- ----------- Raw materials $ 38,250 $ 42,056 Work in process 23,705 13,930 Finished goods and supplies 167,318 160,851 ----------- ----------- Inventories $ 229,273 $ 216,837 =========== ===========
F. INVESTMENTS IN DEBT AND EQUITY SECURITIES Effective January 1, 1994, Dial adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires the classification of securities at acquisition into one of three categories: available for sale, held to maturity or trading. Dial has no securities classified in the trading category. Securities are included in the Consolidated Balance Sheet under the caption, "Investments restricted for payment service obligations" except for those securities expected to be sold or mature within one year which are included under the caption, "Funds and agents' receivables restricted for payment service obligations." Although Dial's investment portfolio exposes Dial to certain credit risks, Dial believes the high quality of its investments (more than 98% of the investments at December 31, 1994 have ratings of A- or higher or are collateralized by federal agency securities) reduces this risk substantially. Dial regularly monitors the credit and market risk (the possibility that market changes may make financial instruments less valuable) and takes steps to mitigate the likelihood of these exposures resulting in actual loss. Securities Available for Sale. Securities that are being held for indefinite periods of time, including those securities which may be sold in response to needs for liquidity or changes in interest rates, are classified as securities available for sale and are carried at fair value, with the net, after-tax, unrealized holding gain or loss reported as a separate component of common stock and other equity, with no effect on current results of operations. At December 31, 1994, the unrealized loss of $21,742,000 (net of tax benefit of $13,415,000) was included in the Consolidated Balance Sheet as a separate component of stockholders' equity under the caption, "Unrealized loss on securities available for sale." The increase in the unrealized loss during 1994 was principally due to increases in interest rates. A summary of securities available for sale at December 31, 1994 is as follows:
Gross Gross Amortized Unrealized Unrealized Fair (000 omitted) Cost Gains Losses Value ---------- ----------- ---------- ---------- U. S. Government Agencies $ 5,174 $ -- $ 129 $ 5,045 Obligations of states and political subdivisions 283,112 278 20,597 262,793 Corporate debt securities 63,263 6,325 56,938 Mortgage-backed and other asset-backed securities 100,630 7,469 93,161 Debt securities issued by foreign governments 16,007 915 15,092 Other securities 121 121 ---------- ----------- ---------- ---------- Securities available for sale $ 468,307 $ 278 $ 35,435 $ 433,150 ========== =========== ========== ==========
Maturities of securities available for sale at December 31, 1994 are as follows:
Amortized Fair (000 omitted) Cost Value ---------- ----------- Due in: 1996-1999 $ 163,184 $ 149,425 2000-2004 132,567 121,216 2005 and later 172,556 162,509 ---------- ----------- $ 468,307 $ 433,150 ========== ===========
Actual maturities may differ from contractual maturities because the borrowers have the right to call or prepay certain obligations, sometimes without penalties. Mortgage-backed and other asset-backed securities not due at a single maturity date are included in the table above based on average maturity dates. Gross realized gains and losses on sales were $2,500,000 and $500,000, respectively, based on the specific identification method of determining cost. Securities Held to Maturity. Securities classified as held to maturity consist of securities that management has the ability and intent to hold to maturity, are carried at amortized cost, and are summarized as follows at December 31, 1994:
Gross Gross Amortized Unrealized Unrealized Fair (000 omitted) Cost Gains Losses Value ---------- ----------- ---------- ---------- U. S. Government Agencies $ 59,637 $ -- $ 3,750 $ 55,887 Obligations of states and political subdivisions 54,545 4,545 50,000 Corporate debt securities 128,145 12,310 115,835 Other securities 22,534 1,100 21,434 ---------- ----------- ---------- ---------- Securities held to maturity $ 264,861 $ -- $ 21,705 $ 243,156 ========== =========== ========== ==========
Maturities of securities held to maturity at December 31, 1994 are as follows:
Amortized Fair (000 omitted) Cost Value ---------- ----------- Due in: 1995 $ 5,193 $ 5,044 1996-1999 129,224 120,558 2000-2004 89,050 79,342 2005 and later 41,394 38,212 ---------- ----------- $ 264,861 $ 243,156 ========== ===========
Actual maturities may differ from contractual maturities because the borrowers have the right to call or prepay certain obligations, sometimes without penalties. There were no sales or transfers of securities held to maturity to another category of securities during the year ended December 31, 1994. G. PROPERTY AND EQUIPMENT Property and equipment at December 31 consisted of the following:
(000 omitted) 1994 1993 ----------- ----------- Land $ 83,751 $ 76,577 Buildings and leasehold improvements 401,743 333,761 Machinery and other equipment 948,892 897,391 ----------- ----------- 1,434,386 1,307,729 Less accumulated depreciation 621,002 567,005 ----------- ----------- Property and equipment $ 813,384 $ 740,724 =========== ===========
H. INTANGIBLES Intangibles at December 31 consisted of the following:
(000 omitted) 1994 1993 ----------- ----------- Goodwill (1) $ 736,320 $ 633,831 Other intangibles 230,863 223,416 ----------- ----------- 967,183 857,247 Less accumulated amortization 146,748 127,434 ----------- ----------- Intangibles $ 820,435 $ 729,813 =========== =========== (1) Includes $166,688,000 of goodwill which arose prior to November 1, 1970, and is not being amortized.
I. DEBT Long-term debt at December 31 was as follows:
(000 omitted) 1994 1993 ----------- ----------- Senior debt:(1) Short-term borrowings: Commercial paper (net of $80,000 and $65,000 issued to Dial's payment services subsidiary), 6.3% and 3.6% weighted average interest rate at December 31 $ 94,903 $ 58,666 Promissory notes, 6.4% and 3.8% weighted average interest rate at December 31 180,000 166,000 Senior notes, 6.1% and 5.8% weighted average interest rate at December 31, due to 2009 349,454 279,390 Guarantee of ESOP debt, floating rate indexed to LIBOR, 5.3% and 2.9% at December 31, due to 2009 30,000 32,000 Real estate mortgages and other obligations, 4.3% and 4.8% weighted average interest rate at December 31, due to 2014 13,274 13,984 ----------- ----------- 667,631 550,040 Subordinated debt, 10.5% debentures, due 2006 76,917 76,917 ----------- ----------- 744,548 626,957 Less current portion 22,830 2,295 ----------- ----------- Long-term debt $ 721,718 $ 624,662 =========== =========== (1) Rates shown are exclusive of the effects of commitment fees and other costs of long-term revolving bank credit used to support short-term borrowings and the guarantee of ESOP debt, and exclusive of the effects of interest rate swap agreements on certain short-term and long-term borrowings.
Interest paid in 1994, 1993 and 1992 was approximately $47,695,000, $55,807,000 and $59,962,000, respectively. In July 1994, a Shelf Registration filed with the Securities and Exchange Commission became effective. Under the Shelf Registration, Dial can issue up to an aggregate $500,000,000 of debt and equity securities. No debt has been issued under the program and there is no intention to issue any equity securities at the present time. The filing increases Dial's future financing options. During 1993, Dial filed a $300,000,000 Senior Debt Securities Shelf Registration with the Securities and Exchange Commission under which Dial was able to 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%. In early 1994, 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%. During the third quarter of 1993, Dial utilized the proceeds from the sale of MCII to repurchase approximately 2,000,000 shares of Dial's common stock on the open market and to reduce outstanding debt, including prepaying $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. As discussed further in Note O of Notes to Consolidated Financial Statements, Dial has entered into a) interest rate swap agreements ("pay-fixed swaps") which convert floating interest rates on existing and anticipated short-term borrowings into fixed interest rates and b) interest rate swap agreements ("receive-fixed swaps") which convert fixed interest rates on a portion of the Senior notes and other debt into floating interest rates. During the fourth quarter of 1994, Dial reclassified expenses related to certain interest rate swap agreements to interest expense from unallocated corporate expense and other items, net. As a result, interest expense was increased and unallocated corporate expense was reduced by $5,983,000, $7,327,000 and $7,321,000 for 1994, 1993 and 1992, respectively. Including this reclassification the net effect of interest rate swap agreements was to increase interest expense by $2,863,000, $6,112,000 and $7,321,000 for 1994, 1993 and 1992, respectively. The weighted average interest rate on total debt, inclusive of the effect of interest rate swap agreements, was 6.55%, 7.53% and 8.24% for 1994, 1993 and 1992, respectively. Dial satisfies its short-term borrowing requirements with bank lines of credit and by the issuance of commercial paper and promissory notes. Outstanding commercial paper, promissory notes and the guarantee of ESOP debt are supported by a $500,000,000 credit commitment available under a long-term revolving bank credit agreement. Borrowings under the agreement were available at December 31, 1994 on a revolving basis until June 30, 1999. Annually, at Dial's request and with the participating banks' consent, the terms of the agreement may be extended for a further 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 credit agreement. The agreement also provides for commitment fees. Such spreads and fees will 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 $274,903,000 and $224,666,000 at December 31, 1994 and 1993, respectively, have been classified as long-term debt. Annual maturities of long-term debt due in the next five years will approximate $22,830,000 (1995), $32,729,000 (1996), $2,639,000 (1997), $32,589,000 (1998) and $277,189,000 (1999). Included in the 1999 amount is $274,903,000 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 $35,645,000 (stated in U. S. dollar equivalent). 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. J. PREFERRED STOCK AND COMMON STOCK AND OTHER EQUITY At December 31, 1994, there were 97,108,724 shares of common stock issued and 92,789,100 shares outstanding. At December 31, 1994, a total of 6,898,358 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 382,352 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 147,288 shares which will be applied to this sinking fund requirement; therefore, the 235,064 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 stockholders 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 stockholders. 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 2,277,582 shares of treasury stock to the ESOP for $17.56 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 (pre-split) 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 546,258 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 2,277,582 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 ($30,000,000 at December 31, 1994) 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:
(000 omitted) 1994 1993 1992 ----------- ----------- ----------- Amounts paid by ESOP for: Debt repayment $ 2,000 $ 2,000 $ 2,000 Interest 1,161 946 1,199 Amounts received from Dial as: Dividends 1,218 1,244 1,295 Capital contributions 1,785 1,696 2,026
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 $1,684,000, $1,782,000 and $2,210,000 in 1994, 1993 and 1992, respectively. ESOP shares at December 31 were as follows:
1994 1993 ----------- ----------- Allocated shares 851,589 699,068 Shares not committed for allocation 1,972,251 2,124,772 ----------- ----------- 2,823,840 2,823,840 =========== ===========
In September 1992, Dial sold 10,491,800 shares of treasury stock to The Dial Corp Employee Equity Trust (the "Trust") for a $200,000,000 ($19.06 per share) promissory note. The Trust is being used to fund certain existing employee compensation and benefit plans over the scheduled 15-year term. Through December 31, 1994, the Trust had sold 3,593,442 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, 1994, retained income of $86,259,000 was unrestricted as to payment of dividends by Dial. K. STOCK OPTIONS The Board of Directors approved and on March 3, 1992, the stockholders adopted the 1992 Stock Incentive Plan ("1992 Plan") for the grant of options and restricted stock, including performance-based 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. 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. 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) restricted stock, including performance-based stock. The Plan authorizes 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 10,000,000 shares of common stock shall be cumulatively available for grant of incentive options over the life of the Plan. In addition, 1,000,000 shares of Preferred Stock are reserved for distribution under the 1992 Plan. The stock options, SARs and LSARs outstanding at December 31, 1994 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. Information with respect to options granted and exercised for the years ended December 31 is as follows:
Average Option Price Per Shares Share ----------- -------- Options outstanding at December 31, 1991 7,785,750 $ 16.38 Pre spin-off of GFC Financial: Exercised (1,247,778) 15.91 Cancelled (1) (75,522) 16.92 Additional options due to the Distribution, net (2) 987,558 N/A Post spin-off of GFC Financial: Granted 1,971,800 18.45 Exercised (1,554,946) 12.91 Cancelled (1) (558,660) 12.61 ----------- Options outstanding at December 31, 1992 7,308,202 14.76 Granted 1,941,400 19.85 Exercised (631,958) 13.34 Cancelled (3) (850,904) 17.70 ----------- Options outstanding at December 31, 1993 7,766,740 15.83 Granted 1,449,800 22.98 Exercised (839,124) 14.31 Cancelled (1) (205,728) 19.59 ----------- Options outstanding at December 31, 1994 8,171,688 17.18 =========== (1) Includes stock options which ceased to be exercisable due to the exercise of related SARs during 1994 and 1992 (at average exercise prices indicated) with respect to 28,852 shares ($13.60) and 269,780 shares ($11.71), 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 $240,000 and $2,293,000 in 1994 and 1992, 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.
At December 31, 1994, stock options with respect to 6,004,118 shares are exercisable at an average price of $15.49 per share. Performance-based stock awards (184,100 and 151,800 shares awarded in 1994 and 1993, respectively) 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 (266,352 shares awarded in 1994) vest over periods not exceeding five years from the date of grant. There were no restricted stock awards in 1993 and 1992. However, 170,322 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. L. INCOME TAXES Deferred income tax assets (liabilities) included in the Consolidated Balance Sheet at December 31 related to the following:
(000 omitted) 1994 1993 ----------- ----------- Property and equipment $ (62,209) $ (55,954) Pension and other employee benefits 108,736 111,797 Provisions for losses 53,287 51,872 Amortization of intangibles 4,016 4,114 Unrealized loss on securities available for sale 13,415 Advertising and promotion costs capitalized for tax 11,423 14,729 Foreign loss carryforward 2,973 3,551 Deferred state income taxes 8,529 11,405 Other deferred income tax assets 39,538 33,460 Other deferred income tax liabilities (27,404) (20,505) ----------- ----------- 152,304 154,469 Foreign deferred tax liabilities included above 17,000 16,000 ----------- ----------- United States deferred tax assets $ 169,304 $ 170,469 =========== ===========
The consolidated provision for income taxes on income from continuing operations for the years ended December 31 consisted of the following:
(000 omitted) 1994 1993 1992 ----------- ----------- ----------- Current: United States: Federal $ 48,550 $ 13,730 $ 13,644 State 8,000 7,855 8,289 Foreign 5,443 3,848 5,135 ----------- ----------- ----------- 61,993 25,433 27,068 ----------- ----------- ----------- Deferred: United States 17,179 33,271 16,997 Foreign 2,212 2,672 1,918 ----------- ----------- ----------- 19,391 35,943 18,915 ----------- ----------- ----------- Provision for income taxes $ 81,384 $ 61,376 $ 45,983 =========== =========== ===========
Income taxes paid in 1994, 1993 and 1992 amounted to $62,127,000, $12,206,000 and $35,160,000, 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 $1,939,000, $1,913,000 and $5,382,000 in 1994, 1993 and 1992, 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:
(000 omitted) 1994 1993 1992 ----------- ----------- ----------- Computed income taxes at statutory federal income tax rate of 35% (1994 and 1993) and 34% (1992) $ 77,593 $ 60,077 $ 40,914 Nondeductible goodwill amortization 4,094 3,122 3,140 Minority interests 1,187 1,266 957 State income taxes 6,191 4,328 5,231 Tax-exempt income (5,133) (2,579) (379) Restructuring and other charges (1,649) Adjustment of deferred tax assets at January 1, 1993 for enacted change in tax rate (4,386) Other, net (2,548) (452) (2,231) ----------- ----------- ----------- Provision for income taxes $ 81,384 $ 61,376 $ 45,983 =========== =========== ===========
United States and foreign income before income taxes from continuing operations for the years ended December 31 was as follows:
(000 omitted) 1994 1993 1992 ----------- ----------- ----------- United States $ 198,836 $ 155,346 $ 101,214 Foreign 22,859 16,303 19,120 ----------- ----------- ----------- Income before income taxes $ 221,695 $ 171,649 $ 120,334 =========== =========== ===========
M. PENSION AND OTHER BENEFITS Pension Benefits. Net periodic pension cost for the years ended December 31 included the following components:
United States Foreign -------------------------------------- ------------------------------------- (000 omitted) 1994 1993 1992 1994 1993 1992 ----------- ----------- ----------- ---------- ---------- ---------- Service cost benefits earned during the period $ 11,632 $ 9,560 $ 9,238 $ 2,052 $ 2,097 $ 2,343 Interest cost on projected benefit obligation 20,434 19,323 17,647 6,147 6,106 6,238 Actual return on plan assets (1,388) (20,405) (19,675) (6,849) (6,390) (6,453) Net amortization and deferral (18,708) 4,415 4,869 97 122 205 Other items, primarily defined contribution and multiemployer plans 8,601 8,706 7,372 1,830 1,503 2,550 ---------- ---------- ----------- ---------- ---------- ---------- Net pension cost $ 20,571 $ 21,599 $ 19,451 $ 3,277 $ 3,438 $ 4,883 ========== ========== =========== ========== ========== ==========
Weighted average assumptions used were:
United States Foreign -------------------------------------- ------------------------------------- December 31, 1994 1993 1992 1994 1993 1992 ----------- ----------- ----------- ---------- ---------- ---------- Discount rate for obligation 8.5% 7.75% 9.0% 9.0% 9.0% 9.0% Rate of increase in compensation levels 5.0% 5.0% 6.0% 7.0% 7.0% 7.0-8.0% Long-term rate of return on assets 9.5% 9.5% 9.5% 9.0% 9.0% 9.0%
The following table indicates the plans' funded status and amounts recognized in Dial's consolidated balance sheet at December 31:
United States Foreign --------------------------------------------------- ------------------------ Underfunded and Overfunded Plans Unfunded Plans Overfunded Plans ------------------------ ------------------------ ------------------------ (000 omitted) 1994 1993 1994 1993 1994 1993 ----------- ----------- ----------- ---------- ---------- ---------- Actuarial present value of benefit obligations: Vested benefit obligation $ 127,574 $ 124,833 $ 79,029 $ 80,767 $ 50,156 $ 49,007 =========== ========== ========== ========== ========== ========== Accumulated benefit obligation $ 138,803 $ 136,544 $ 83,990 $ 85,700 $ 52,424 $ 50,900 =========== ========== ========== ========== ========== ========== Projected benefit obligation $ 172,148 $ 175,389 $ 90,153 $ 91,658 $ 67,610 $ 69,174 Market value of plan assets, primarily equity and fixed income securities 171,334 177,902 58,014 60,837 79,968 70,684 ----------- ---------- ---------- ---------- ---------- ---------- Plan assets over (under) projected benefit obligation (814) 2,513 (32,139) (30,821) 12,358 1,510 Unrecognized transition (asset) obligation (5,820) (6,609) 4,374 4,987 (4,294) (5,073) Unrecognized prior service cost (reduction) (601) 1,448 7,670 7,799 6,512 7,296 Unrecognized net (gain) loss 11,520 13,861 6,123 6,951 (3,422) 4,674 Additional minimum liability (13,010) (14,451) ----------- ---------- ---------- ---------- ---------- ---------- Prepaid (accrued) pension cost $ 4,285 $ 11,213 $ (26,982) $ (25,535) $ 11,154 $ 8,407 =========== ========== ========== ========== ========== ========== /TABLE Dial recorded an additional minimum liability for pensions of $13,010,000, an intangible asset of $6,084,000, a deferred tax asset of $2,424,000 and a reduction of retained income of $4,502,000 at December 31, 1994; and, an additional minimum liability for pensions 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. There are restrictions on the use of excess pension plan assets in the event of a defined change in control of Dial. 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). 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 recognized was 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:
(000 omitted) 1994 1993 ----------- ----------- Accumulated postretirement benefit obligation: Retirees $ 199,609 $ 221,847 Fully eligible active plan participants 22,245 25,107 Other active plan participants 50,343 54,369 ----------- ----------- Accumulated postretirement benefit obligation 272,197 301,323 Unrecognized prior service (cost) reduction (43) 133 Unrecognized net gain (loss) 18,750 (17,634) ----------- ----------- Accrued postretirement benefit cost $ 290,904 $ 283,822 =========== =========== Discount rate for obligation 8.5% 7.75%
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation was 13.5% in 1994 and 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 10% in 1994 and 11% in 1993 gradually declining to 5.5% by the year 2002 and remaining at that level thereafter for retirees above age 65. 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, 1994 by approximately 10% and the ongoing annual expense by approximately 13%. The net periodic postretirement benefit cost for the years ended December 31 includes the following components:
(000 omitted) 1994 1993 1992 ----------- ----------- ----------- Service cost--benefits attributed to service during the period $ 5,416 $ 4,233 $ 4,624 Interest cost on the accumulated postretirement benefit obligation 21,537 23,413 23,658 Net amortization and deferral 3 (10) ----------- ----------- ----------- Net periodic postretirement benefit cost (1) $ 26,956 $ 27,636 $ 28,282 =========== =========== =========== Curtailment gains due to termination of certain benefits $ (500) $ (5,475) =========== =========== (1) Includes benefit costs applicable to retirees of sold businesses, which are classified in the Statement of Consolidated Income under the caption, "Unallocated corporate expense and other items, net," totaling $12,800,000, $15,000,000 and $14,700,000 for 1994, 1993 and 1992, respectively.
N. LEASES Certain retail facilities, plants, offices and equipment are leased. The leases expire in periods ranging generally from one to 27 years and some provide for renewal options ranging from one to 37 years. Leases which expire are generally renewed or replaced by similar leases. At December 31, 1994, Dial's 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:
Rentals Receivable Rental Under (000 omitted) Payments Subleases ----------- ----------- 1995 $ 62,442 $ 3,402 1996 47,716 3,319 1997 36,331 3,025 1998 31,547 1,809 1999 26,422 1,243 Thereafter 182,461 847 ----------- ----------- Total $ 386,919 $ 13,645 =========== ===========
Excluding the cruise ships discussed below, at the end of the lease terms Dial has options to purchase certain leased assets for an aggregate purchase price of $26,100,000. If the purchase options are not exercised, Dial will make residual guarantee payments aggregating $18,500,000 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 February 1995 Dial purchased a cruise ship previously under a lease agreement and has entered into a four-year charter arrangement to lease the ship to a European operator. In addition, in April 1994 Dial notified the lessor of its intention to purchase Dial's other leased cruise ship when the current lease agreement expires in October 1995. The table above includes $10,200,000 of rental payments due in 1995 related to these cruise ships. Information regarding net operating lease rentals for the years ended December 31 is as follows:
(000 omitted) 1994 1993 1992 ----------- ----------- ----------- Minimum rentals $ 104,113 $ 113,324 $ 143,863 Contingent rentals 7,463 4,297 12,530 Sublease rentals (2,010) (23,204) (43,630) ----------- ----------- ----------- Total rentals, net (1) $ 109,566 $ 94,417 $ 112,763 =========== =========== =========== (1) Includes rentals of $10,800,000, $9,200,000 and $10,300,000 for 1994, 1993 and 1992, respectively, for the two cruise ships being purchased in 1995. Also includes net rentals of $7,700,000 and $9,419,000, for 1993 and 1992, respectively, for Dial's corporate headquarters building which was leased from a joint venture up to December 1993, when Dial acquired the remaining interest in the joint venture.
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 an unconsolidated 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. Dial accounts for its interest in the joint venture using the equity method. O. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS Financial Instruments 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 rates 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, market, interest rate and exchange rate risk in addition to amounts recognized in the financial statements. Dial does not hold or issue financial instruments for trading purposes. At December 31, 1994, Dial has agreements to sell undivided participating interests in a defined pool of trade accounts receivable from customers of Dial's consumer products and airline catering and services subsidiaries in an amount not to exceed $115,000,000 (increased to $140,000,000 in February 1995) as a means of accelerating cash flow. As collections reduce accounts receivable included in the pool, Dial sells participating interests in new receivables, providing a stable level of purchased accounts. Dial's expense of selling receivables amounted to approximately $4,900,000, $4,000,000 and $3,800,000 in 1994, 1993 and 1992, respectively. Such amounts are deducted in arriving at operating income. Under the terms of the agreement Dial has retained substantially the same risk of credit loss as if the receivables had not been sold as Dial is obligated to repurchase uncollectible receivables sold and replace those receivables with new accounts receivable. The agreements to sell accounts receivable, which were fully utilized at December 31, 1994 and December 31, 1993, mature in February of each year, but are expected to be extended annually by mutual agreement. They are currently extended to February 1996. The average balance of proceeds from the sale of accounts receivable was $101,700,000, $103,700,000 and $91,200,000 during 1994, 1993 and 1992, respectively. Dial enters into interest rate swap agreements as a means of managing its interest rate expense. 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. Dial maintains formal procedures for entering into interest rate swap transactions and management regularly monitors and reports to the Board of Directors on interest rate swap activity. 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 in the event of nonperformance by the counterparties. In addition, Dial continuously monitors the credit ratings of the counterparties and the likelihood of default is considered remote. The following table indicates the types of swaps used and their weighted average interest rates in effect at December 31. The floating rate portion of the interest rate swaps is based on LIBOR. Changes in the LIBOR interest rates could significantly affect the floating rate information and future cash flows.
1994 1993 ----------- ----------- Pay-fixed swaps: (1) Notional amount (000 omitted) $ 205,000 $ 140,000 Average pay rate 8.7% 9.3% Average receive rate 6.0% 3.4% Receive-fixed swaps: (1) Notional amount (000 omitted) $ 295,000 $ 250,000 Average pay rate 6.1% 3.4% Average receive rate 5.4% 5.6% (1) The pay-fixed swap agreements expire as follows: $100,000,000 (1995), $65,000,000 (1997) and $40,000,000 (1998). The receive-fixed swap agreements expire as follows: $50,000,000 (1995), $15,000,000 (1997), $30,000,000 (2002) and $200,000,000 (2003).
Dial has also entered into certain interest rate swap agreements in which Dial agreed to pay a fixed rate which exceeded the current market interest rate for identical instruments. The discounted present value of this rate "premium" was paid to Dial in cash at inception of the agreements. Dial has been amortizing these cash proceeds over the term of the swaps. Dial entered into such agreements to provide for an alternative cash source and for income tax planning purposes. In every case, Dial simultaneously entered into an exactly paired (with identical notional amount and term) agreement in which it agreed to receive a fixed rate. The result in each case was a pair of offsetting swaps which fixed, at a market discount rate, the future net payments to be made by Dial. The use of these paired swaps has not created any unusual risk to Dial. At December 31, 1994, Dial had $267,600,000 notional amount of such paired interest rate swap agreements which fixed 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 10.2% over the original terms of the paired agreements which expire as follows: $67,600,000 (1995), and $200,000,000 (1996). The terms of certain of these agreements have been extended which will result in additional pay-fixed swaps of $67,600,000 commencing in 1995 and $100,000,000 commencing in 1996, all of which will expire in 2000. These swaps will have a weighted average pay rate of 8.6% and a weighted average receive rate, based on LIBOR at December 31, 1994, of 7.0%. Cash consideration received on the paired swaps is amortized as an offset to expense from net swap payments over the life of the related swap. Net expense related to these paired swaps of $7,500,000, $6,700,000 and $11,500,000 for 1994, 1993 and 1992, respectively, is included in the Statement of Consolidated Income under the caption, "Unallocated corporate expense and other items, net." The unamortized balance of the cash consideration received on the paired swaps ($22,300,000 and $35,200,000 at December 31, 1994 and 1993, respectively) 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 identifiable foreign currency commitments including intercompany transactions with Dial's foreign subsidiaries. These contracts are purchased to reduce the impact of foreign currency fluctuations on operating results. Dial does not engage in foreign currency speculation. While the hedging instruments are subject to the risk of loss from changes in exchange rates, these losses would generally be offset by gains on the exposures being hedged. Gains and losses on those hedging instruments that are designated and effective as hedges of firmly committed foreign currency transactions are deferred and recognized in income in the same period as the hedged transaction. 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. The table below summarizes by major currency the contractual amounts (stated in U.S. dollar equivalent) to purchase foreign currencies at December 31, 1994. The contracts mature through January 1996, with 40% of such contracts expiring in January 1995. Contracts to sell foreign currencies are not material.
(000 omitted) Canadian dollar $ 29,096 Austrian schilling 17,943 British pound 16,349 Italian lira 14,923 French franc 12,361 Other 3,621 ----------- $ 94,293 ===========
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. 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 amortized cost and fair value of investments in debt and equity securities are disclosed in Note F of Notes to Consolidated Financial Statements. The carrying amounts and estimated fair values of Dial's other financial instruments at December 31 are as follows:
1994 1993 --------------------- --------------------- Carrying Fair Carrying Fair (000 omitted) Amount Value Amount Value --------- --------- --------- --------- Total debt $ (745,479) $ (716,631) $ (635,892) $(654,971) Interest rate swaps (1) (24,561) (63,392) (37,780) (71,362) Foreign exchange forward contracts -- (1,094) -- (1,436) (1) Carrying amount represents accrued interest and the unamortized cash proceeds related to certain interest rate swap agreements.
The methods and assumptions used to estimate the fair values of the financial instruments are summarized as follows: 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, 1994. Foreign exchange forward contracts--The fair value is estimated using quoted exchange rates of these or similar instruments. P. 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, 1994, with respect to these matters is not ascertainable, Dial believes that any resulting liability should not materially affect Dial's financial position 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. Although Dial is a party to certain environmental disputes, Dial believes that any liabilities resulting therefrom, after taking into consideration amounts already provided for, but exclusive of any potential insurance recovery, should not have a material adverse effect on Dial's financial position or results of operations. Q. PRINCIPAL BUSINESS SEGMENTS For 1994, Dial's principal business segments have been reclassified to include airplane fueling and ground handling activities along with airline catering as the Airline Catering and Services segment, in recognition of recent industry developments and the fact that all of Dial's airline related activities are now being jointly managed. The airplane fueling and ground handling operations were previously part of the Travel and Leisure and Payment Services segment, which now includes other foodservice operations, previously classified with airline catering as the Airline Catering and Other Food Services segment. 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. Unallocated corporate and other items, net, are then deducted from total operating income of principal business segments to arrive at total operating income.
Year ended December 31, (000 omitted) 1994 1993 1992 1991 1990 ----------- ----------- ----------- ----------- ----------- Revenues: Consumer Products $ 1,511,362 $ 1,420,173 $ 1,275,447 $ 1,196,499 $ 1,122,726 ----------- ----------- ----------- ----------- ----------- Services: Airline Catering and Services 763,658 502,775 527,832 492,151 481,081 Convention Services 522,683 356,267 238,694 212,828 208,408 Travel and Leisure and Payment Services (1) 749,144 721,127 832,115 926,371 1,039,320 ----------- ----------- ----------- ----------- ----------- Total Services (1) 2,035,485 1,580,169 1,598,641 1,631,350 1,728,809 ----------- ----------- ----------- ----------- ----------- $ 3,546,847 $ 3,000,342 $ 2,874,088 $ 2,827,849 $ 2,851,535 =========== =========== =========== =========== =========== Operating Income: (3) Consumer Products $ 160,008 $ 139,213 $ 118,616 $ 110,605 $ 96,554 ----------- ----------- ----------- ----------- ----------- Services: Airline Catering and Services 61,533 41,385 40,783 34,444 27,663 Convention Services 50,614 27,849 20,281 16,795 18,786 Travel and Leisure and Payment Services (1) 58,065 66,846 43,036 34,434 96,706 ----------- ----------- ----------- ----------- ----------- Total Services (1) 170,212 136,080 104,100 85,673 143,155 ----------- ----------- ----------- ----------- ----------- Total principal business segments 330,220 275,293 222,716 196,278 239,709 Unallocated corporate expense and other items, net (2) (43,938) (42,734) (36,198) (60,412) (41,568) ----------- ----------- ----------- ----------- ----------- $ 286,282 $ 232,559 $ 186,518 $ 135,866 $ 198,141 =========== =========== =========== =========== =========== (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 $7,897,000, $3,967,000 and $982,000, for 1994, 1993 and 1992, respectively. (2) Expenses related to certain interest rate swap agreements have been reclassified to interest expense from unallocated corporate expense and other items, net. As a result, interest expense was increased and unallocated corporate expense was reduced by $5,983,000, $7,327,000, $7,321,000, $3,175,000 and $348,000 for 1994, 1993, 1992, 1991 and 1990, respectively. (3) 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 a total of $14,400,000 comprised of $6,800,000, $965,000, $749,000, $1,486,000 and $4,400,000 in 1992 for Consumer Products, Airline Catering and 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.
Services ------------------------------------------------- Airline Travel and Catering Leisure and Consumer and Convention Payment Total (000 omitted) Products Services Services Services Services Corporate Total ---------- ---------- ---------- ---------- ---------- ---------- ---------- 1994: Assets at year end: Before intangibles and restricted assets $ 550,013 $ 231,417 $ 127,191 $ 383,646 $ 742,254 $ 296,317 $ 1,588,584 Assets restricted for payment service obligations 1,371,877 1,371,877 1,371,877 Intangibles 337,360 291,337 112,870 74,102 478,309 4,766 820,435 ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 887,373 $ 522,754 $ 240,061 $ 1,829,625 $ 2,592,440 $ 301,083 $ 3,780,896 ========== ========== ========== ========== ========== ========== ========== Capital expenditures $ 37,471 $ 22,214 $ 11,415 $ 34,613 $ 68,242 $ 2,879 $ 108,592 ========== ========== ========== ========== ========== ========== ========== Depreciation and amortization: Depreciation $ 29,192 $ 20,125 $ 8,370 $ 27,878 $ 56,373 $ 4,982 $ 90,547 Amortization of intangibles 5,718 8,362 2,748 2,486 13,596 19,314 ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 34,910 $ 28,487 $ 11,118 $ 30,364 $ 69,969 $ 4,982 $ 109,861 ========== ========== ========== ========== ========== ========== ========== 1993: Assets at year end: Before intangibles and restricted assets $ 513,293 $ 143,085 $ 118,467 $ 359,828 $ 621,380 $ 306,851 $ 1,441,524 Assets restricted for payment service obligations 1,109,751 1,109,751 1,109,751 Intangibles 340,713 240,684 79,928 62,338 382,950 6,150 729,813 ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 854,006 $ 383,769 $ 198,395 $ 1,531,917 $ 2,114,081 $ 313,001 $ 3,281,088 ========== ========== ========== ========== ========== ========== ========== Capital expenditures $ 40,605 $ 16,125 $ 11,838 $ 44,419 $ 72,382 $ 1,637 $ 114,624 ========== ========== ========== ========== ========== ========== ========== Depreciation and amortization: Depreciation $ 28,071 $ 14,222 $ 8,181 $ 28,241 $ 50,644 $ 3,785 $ 82,500 Amortization of intangibles 5,512 7,041 743 4,364 12,148 17,660 ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 33,583 $ 21,263 $ 8,924 $ 32,605 $ 62,792 $ 3,785 $ 100,160 ========== ========== ========== ========== ========== ========== ========== 1992: Assets at year end: Before intangibles, restricted assets and discontinued operations $ 413,224 $ 141,508 $ 58,639 $ 354,666 $ 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 265,163 247,563 15,076 66,470 329,109 4,635 598,907 ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 678,387 $ 389,071 $ 73,715 $ 1,450,316 $ 1,913,102 $ 565,509 $ 3,156,998 ========== ========== ========== ========== ========== ========== ========== Capital expenditures $ 45,508 $ 14,509 $ 7,336 $ 41,024 $ 62,869 $ 754 $ 109,131 ========== ========== ========== ========== ========== ========== ========== Depreciation and amortization: Depreciation $ 25,036 $ 14,069 $ 4,466 $ 34,830 $ 53,365 $ 4,189 $ 82,590 Amortization of intangibles 6,506 7,004 241 4,594 11,839 18,345 ---------- ---------- ---------- ---------- ---------- ---------- ---------- $ 31,542 $ 21,073 $ 4,707 $ 39,424 $ 65,204 $ 4,189 $ 100,935 ========== ========== ========== ========== ========== ========== ==========
R. CONDENSED CONSOLIDATED QUARTERLY RESULTS (UNAUDITED)
First Quarter Second Quarter Third Quarter Fourth Quarter --------------------- ------------------- ------------------- ------------------- (000 omitted) 1994 1993 1994 1993 1994 1993 1994 1993 --------- --------- --------- --------- --------- --------- --------- --------- Revenues: Consumer Products $ 330,340 $ 293,183 $ 408,115 $ 385,140 $ 363,399 $ 345,260 $ 409,508 $ 396,590 --------- --------- --------- --------- --------- --------- --------- --------- Services: Airline Catering and Services 151,463 126,823 202,225 124,781 211,486 127,696 198,484 123,475 Convention Services 127,671 68,112 135,736 81,583 124,097 89,944 135,179 116,628 Travel and Leisure and Payment Services 175,428 149,938 185,872 182,491 213,541 207,501 174,303 181,197 --------- --------- --------- --------- --------- --------- --------- --------- Total Services 454,562 344,873 523,833 388,855 549,124 425,141 507,966 421,300 --------- --------- --------- --------- --------- --------- --------- --------- $ 784,902 $ 638,056 $ 931,948 $ 773,995 $ 912,523 $ 770,401 $ 917,474 $ 817,890 ========= ========= ========= ========= ========= ========= ========= ========= Operating Income: Consumer Products $ 30,152 $ 25,659 $ 49,978 $ 43,443 $ 40,427 $ 35,442 $ 39,451 $ 34,669 --------- --------- --------- --------- --------- --------- --------- --------- Services: Airline Catering and Services 8,421 7,856 16,540 11,565 19,947 11,918 16,625 10,046 Convention Services 12,392 5,988 14,957 7,419 11,539 4,972 11,726 9,470 Travel and Leisure and Payment Services 1,974 3,465 13,804 17,032 29,573 31,041 12,714 15,308 --------- --------- --------- --------- --------- --------- --------- --------- Total Services 22,787 17,309 45,301 36,016 61,059 47,931 41,065 34,824 --------- --------- --------- --------- --------- --------- --------- --------- Total principal business segments 52,939 42,968 95,279 79,459 101,486 83,373 80,516 69,493 Unallocated corporate expense and other items, net (1) (10,748) (10,549) (10,552) (11,075) (11,348) (10,775) (11,290) (10,335) --------- --------- --------- --------- --------- --------- --------- --------- $ 42,191 $ 32,419 $ 84,727 $ 68,384 $ 90,138 $ 72,598 $ 69,226 $ 59,158 ========= ========= ========= ========= ========= ========= ========= ========= Income (Loss): Continuing operations $ 17,210 $ 11,159 $ 43,393 $ 33,379 $ 45,428 $ 37,184 $ 34,280 $ 28,551 Discontinued operations (2) 3,472 6,294 22,354 Extraordinary charge (21,908) --------- --------- --------- --------- --------- --------- --------- --------- Net income $ 17,210 $ 14,631 $ 43,393 $ 39,673 $ 45,428 $ 37,630 $ 34,280 $ 28,551 ========= ========= ========= ========= ========= ========= ========= ========= Income (Loss) per Common Share (dollars): Continuing operations $ 0.20 $ 0.13 $ 0.50 $ 0.38 $ 0.52 $ 0.44 $ 0.39 $ 0.33 Discontinued operations (2) 0.04 0.08 0.26 Extraordinary charge (0.26) --------- --------- --------- --------- --------- --------- --------- --------- Net income per common share $ 0.20 $ 0.17 $ 0.50 $ 0.46 $ 0.52 $ 0.44 $ 0.39 $ 0.33 ========= ========= ========= ========= ========= ========= ========= ========= (1) Expenses related to certain interest rate swap agreements have been reclassified to interest expense from unallocated corporate expense and other items, net. As a result, interest expense was increased and unallocated corporate expense was reduced by $1,838,000, $1,711,000, $1,493,000 and $941,000 for the 1994 first, second, third and fourth quarters, respectively, and by $1,931,000, $1,907,000, $1,626,000 and $1,863,000 for the 1993 first, second, third and fourth quarters, respectively. (2) The third quarter of 1993 includes income from operations of the Transportation Manufacturing and Service Parts Group of $427,000, less than $0.01 per share, and a gain of $40,151,000, or $0.47 per share, attributable to the sale of the Transportation Manufacturing and Service Parts Group, and is after deducting $18,224,000, or $0.21 per share, for provisions related to previously discontinued businesses.
EXHIBIT INDEX 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 Corporation and its subsidiaries on a consolidated basis. The Corporation 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, filed as Exhibit 4.B to Dial's 1993 Form 10-K, is hereby incorporated by reference. 4.B1 Copy of First Amendment to Amended and Restated Credit Agreement dated as of September 23, 1994.* 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 Dial's 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 Dial's 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 Dial's 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, filed as Exhibit 10.E to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 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.H1 Copy of Dial's 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.H2 Copy of amendment, effective August 1, 1994, to Dial's 1983 Stock Option and Incentive Plan.*+ 10.I1 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.I2 Copy of amendment, effective August 1, 1994, to The Dial Corp 1992 Stock Incentive Plan.*+ 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 Dial's 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, filed as Exhibit 10.L to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 10.M Copy of The Dial Corp Supplemental TRIM Plan.*+ 10.N Copy of Employment Agreement between GES 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 GES Exposition Services' 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, filed as Exhibit 10.P to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 10.Q Copy of The Dial Corp Deferred Compensation Plan, filed as Exhibit 10.Q to Dial's 1993 Form 10-K, is hereby incorporated by reference.+ 10.R Copy of form of The Dial Corp 1983 Stock Option and Incentive Plan Amended and Restated Restricted Stock Agreements dated August 12, 1994, between Dial and six executive officers.*+ 10.S Copy of form of The Dial Corp 1992 Stock Incentive Plan Restricted Stock Agreements dated August 12, 1994, between Dial and six executive officers.*+ 11 Statement Re Computation of Per Share Earnings.* 21 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.* 27 Financial Data Schedule.* * Filed herewith. + Management contract or compensation plan or arrangement. Note: The 1994 Annual Report to Securityholders will be furnished to the Commission when, or before, it is sent to securityholders. EX-4.B1 2 EXHIBIT 4.B1 FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This First Amendment to Amended and Restated Credit Agreement is dated as of September 23, 1994 (the "Amendment") and is entered into by and among The Dial Corp, a Delaware corporation (the "Borrower"), the Banks listed on the signature pages hereof (the "Banks"), Bank of America National Trust and Savings Association and Citibank, N.A., as agents (the "Agents") for the Banks, Citibank, as the funding agent for the Banks, and Bank of America National Trust and Savings Association, as reporting agent for the Banks, and is made with reference to that certain Amended and Restated Credit Agreement dated as of December 15, 1993 (the "Agreement"). Capitalized terms used herein without definitions have the respective meanings assigned to them in the Agreement. PRELIMINARY STATEMENT The Borrower has requested, and the Banks and the Agents are willing, to amend the Agreement on the terms and conditions set forth in this Amendment. AGREEMENT IN CONSIDERATION of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower, the Banks and the Agents hereby agree as follows: SECTION 1. AMENDMENT TO THE AGREEMENT. 1.1 AMENDMENT TO SECTION 1.01. A. Section 1.01 of the Agreement is hereby amended by deleting the table appearing in the definition of "Daily Margin" in its entirety and substituting the following therefor: 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% 0.3750% 0% 0.4250% Level 2 0% 0.4500% 0% 0.5000% Level 3 0% 0.5000% 0% 0.6000% Level 4 0.25% 0.7500% 0.25% 0.8500% B. Section 1.01 of the Agreement is hereby further amended by deleting the reference to "1997" in the definition of "Commitment Termination Date" and substituting "1999" therefor. 1.2 AMENDMENT TO SECTION 2.03(a). Section 2.03(a) of the Agreement is hereby amended by deleting the text appearing after the colon and before the period of the first sentence contained therein and substituting the following therefor: "(a) a rate of 0.10% 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 0.125% per annum with respect to each day during such period that such ratings were at Level 2, (c) a rate of 0.20% per annum with respect to each day during such period that such ratings were at Level 3, and (d) a rate of 0.350% per annum with respect to each day during such period that such ratings were at Level 4." 1.3 MODIFICATION OF SCHEDULE 1: LIST OF APPLICABLE LENDING OFFICES. Schedule 1 to the Agreement is hereby amended by deleting therefrom the references to Marine Midland Bank, N.A. and Credit Suisse and the corresponding lending office information. SECTION 2. DELETION OF MARINE MIDLAND BANK, N.A. AND CREDIT SUISSE AS A BANK; COMMITMENTS. The Agreement is hereby amended to delete each of Marine Midland Bank, N.A. ("Marine Midland") and Credit Suisse as a Bank thereunder to the extent set forth in the Acknowledgement executed by Marine Midland and Credit Suisse, as applicable, in the form of Annex A to this Amendment (the "Acknowledgement"). Accordingly, the Commitments set forth on the signature pages to the Agreement are hereby deleted and the Commitments set forth on the signature pages to this Amendment substituted therefor. SECTION 3. CONDITIONS TO EFFECTIVENESS. Section 1 of this Amendment shall become effective only upon the satisfaction of all of the following conditions precedent (the date of satisfaction or waiver of such conditions being referred to herein as the "First Amendment Effective Date") and the Agents receiving all of the following (with sufficient originally executed copies, where appropriate, for each Bank and the Agents), in form and substance satisfactory to the Agents and their counsel and, unless otherwise noted, dated the First Amendment Effective Date: (i) resolutions of the Borrower's board of directors approving and authorizing the execution, delivery, and performance of this Amendment, certified as of the First Amendment Effective Date by its corporate secretary or an assistant secretary as being in full force and effect without modification or amendment, (ii) executed copies of this Amendment, (iii) signature and incumbency certificates of the Borrower's officers executing this Amendment, (iv) such other evidence as the Agents may reasonably request to establish the consummation of the transactions contemplated hereby, the taking of all corporate proceedings in connection with this Amendment and the compliance with the conditions set forth herein, and (v) the Borrower shall have paid to the Funding Agent, for distribution to the Banks, an amount equal to 0.025% multiplied by each Lender's Commitment. SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Agents and the Banks that the following statements are true, correct and complete: (a) ORGANIZATION AND POWERS. The Borrower has all requisite corporate power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Agreement, as amended hereby (the "Amended Agreement"). (b) AUTHORIZATION OF AGREEMENT. The execution and delivery of this Amendment have been duly authorized by all necessary corporate actions by the Borrower. This Amendment has been duly executed and delivered by the Borrower. (c) NO CONFLICT. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement do not and will not (i) violate any provision of any law, rule or regulation applicable to the Borrower, the charter or bylaws of the Borrower or any order, judgment or decree of any court or other agency of government binding on the Borrower, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Borrower is a party or by which it is or its properties may be bound or affected, (iii) result in or require the creation or imposition of any Lien upon any of its properties or assets, or (iv) require any approval of stockholders or any approval or consent of any natural person, corporation, partnership, association, trust, bank or other organization, whether or not a legal entity, that is a party to any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Borrower is a party or by which it or any of its properties may be bound or affected. (d) GOVERNMENTAL CONSENTS. The execution and delivery by the Borrower of this Amendment and the performance by the Borrower of the Amended Agreement do not and will not require any registration with, consent or approval of, or notice to, or other action of, with or by, any federal, state or other governmental authority or regulatory body. (e) BINDING OBLIGATION. This Amendment and the Amended Agreement are the legally valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. (f) INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM AGREEMENT. The representations and warranties contained in Section 4.01 of the Amended Agreement are and will be true, correct and complete in all material respects on and as of the First Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true, correct and complete in all material respects on and as of such earlier date. (g) ABSENCE OF DEFAULT. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment which constitute an Event of Default or that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. SECTION 5. MISCELLANEOUS. (a) REFERENCE TO AND EFFECT ON THE AGREEMENT. (i) On and after the First Amendment Effective Date, each reference in the Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, shall mean and be a reference to the Agreement, as amended hereby. (ii) Except as specifically amended hereby, the terms, conditions and provisions of the Agreement shall remain in full force and effect and are hereby ratified and confirmed. (iii) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, (x) constitute a waiver or modification of any provisions of, or operate as a waiver of any right, power or remedy of the Banks or the Agents under, the Agreement or (y) prejudice any right or remedy that the Banks or the Agents may now have or may have in the future under or in connection with the Agreement or any instrument or agreement referred to herein. (b) EXECUTION IN COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. This Amendment shall become effective upon the execution hereof by Majority Banks, the Agents and the Borrower and receipt by the Borrower and the Agents of written notification of such execution and authorization of delivery thereof and upon satisfaction of the conditions set forth in Section 3 hereof. (c) COSTS, EXPENSES AND TAXES. The Borrower acknowledges that all costs, fees, and expenses as described in subsection 8.04 of the Agreement incurred by the Agents and their counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of the Borrower. (d) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. (e) HEADINGS. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first above written. THE DIAL CORP By /s/ R. G. Nelson Title: Vice President-Finance and Treasurer By /s/ Richard C. Stephan Title: Vice President-Controller 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 Commitment Bank: $36,000,000 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By /s/ Robert Troutman Title:Vice President $41,000,000 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/ Richard A. Barrow Title: Vice President $29,000,000 CHEMICAL BANK By /s/ Jeffry Howe Title: Vice President $29,000,000 CIBC, INC. By /s/ R. A. Mendoza Title: Vice President $24,000,000 BANK OF AMERICA ILLINOIS By /s/ Robert Troutman Title: Vice President 29,000,000 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 $24,000,000 FIRST INTERSTATE BANK OF ARIZONA, N.A. By /s/ Gary Frandson Title: Vice President $24,000,000 THE FIRST NATIONAL BANK OF CHICAGO By /s/ J. C. Wellings Title: Vice President $20,000,000 THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS ANGELES AGENCY By /s/ Steven Savoldelli Title: Senior Vice President $20,000,000 THE LONG-TERM CREDIT BANK OF JAPAN, LTD., LOS ANGELES AGENCY By /s/ Y. Kamisawa Title: Deputy General Manager By /s/ T. Morgan Edwards II Title: Vice President $20,000,000 MELLON BANK, N.A. By /s/ M. Wuit Title: First Vice President $24,000,000 THE MITSUI TRUST & BANKING CO., LTD. LOS ANGELES AGENCY By /s/ Ken Takahashi Title: General Manager & Agent $24,000,000 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ Diana H. Imhof Title: Associate $24,000,000 NBD BANK, N.A. By /s/ James R. Frye Title: First Vice President $20,000,000 THE NORTHERN TRUST COMPANY By /s/ Martin G. Alston Title: Vice President $20,000,000 UNION BANK By /s/ Ali Moghaddan Title: Vice President ANNEX A [FORM OF ACKNOWLEDGEMENT] [Insert name of Bank] agrees to the terms of this Amendment and acknowledges that, from and after the effective date of this Amendment, [insert name of Bank] is no longer a Bank for purposes of the Agreement and, other than as set forth in Section 2.11 and 8.04(c) of the Agreement, the rights and obligations of [insert name of Bank] under the Agreement are terminated. This acknowledgement is conditioned on the payment to [insert name of Bank] of the principal, accrued interest, fees and other costs due to it under the Agreement, all as set forth on Schedule 1 hereto. [BANK], as a Bank By:__________________________ Title:_______________________ EX-10.H2 3 EXHIBIT 10.H2 RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS OF THE DIAL CORP AUGUST 18, 1994 RESOLVED, that the 1983 Stock Option and Incentive Plan of the Corporation is amended as follows, effective August 1, 1994: Section 3 shall be amended to read in its entirety as follows: 3. ADMINISTRATION. The Plan shall be administered by the Executive Compensation Committee (the "Committee") of the Board or such other committee of the Board, composed of not less than two disinterested persons (as defined in Rule 16b-3 (c) (2), as promulgated by the Securities and Exchange Commission (the "Commission" under the Securities Exchange Act of 1934 (the "Exchange Act" or any successor definition adopted by the Commission). 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 shares to be subject to types of Awards generally, as well as to individual Awards granted under the Plan; (iii) determine the 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. Sections 4, 6, 7, 9 and 11, regarding the grant and terms of awards shall be amended to substitute the word "Committee" for "Board" wherever it appears. The first clause in Section 11(c) shall be replaced with the following clause: Each certificate issued in respect of shares of Restricted Stock awarded under the Plan shall be registered in the name of the Participant and deposited by the Participant except as otherwise set forth in the agreement referred to in paragraph (d) of this Section 11, The following sentence shall be added to Section 15: Notwithstanding the above provisions of this Section 15, a Participant holding a Nonqualified Stock Option and a related Limited Stock Appreciation Right and/or a related Stock Appreciation Right may designate as the transferee of any such Option or Right, at the discretion of the Committee, any member of such Participant's "Immediate Family" (as defined in Rule 16a, as promulgated by the Commission under the Exchange Act) or a trust whose beneficiaries are members of such Participant's Immediate Family, without payment of consideration, to have the power to exercise such Option or Right, and be subject to all the conditions of such Option or Right prior to such designation, such power to exercise to become effective only in the event that such Participant shall die prior to exercising such Option or Right. EX-10.I2 4 EXHIBIT 10.I2 RESOLUTION ADOPTED BY THE BOARD OF DIRECTORS OF THE DIAL CORP AUGUST 18, 1994 RESOLVED, that the 1992 Stock Incentive Plan of the Corporation is amended as follows, effective August 1, 1994: The following sentence shall be added to Section 5(e): Notwithstanding the above provisions of this Section 5(e), an optionee holding a Non-Qualified Stock Option may designate as the transferee of any such Option, at the discretion of the Committee, any member of such optionee's "Immediate Family" (as defined in Rule 16a, as promulgated by the Commission under the Exchange Act) or a trust whose beneficiaries are members of such optionee's Immediate Family, without payment of consideration, to have the power to exercise such Option and be subject to all the conditions of such Option prior to such designation, such power to exercise to become effective only in the event that such optionee shall die prior to exercising such Option. The first clause in the second sentence of the first paragraph of Section 7(b) shall be replaced with the following clause: Except as otherwise set forth in a Restricted Stock Agreement any certificate issued in respect of shares of Restricted Stock shall be registered in the name of such participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, EX-10.M 5 EXHIBIT 10.M THE DIAL CORP SUPPLEMENTAL TRIM PLAN (Amended and Restated effective January 1, 1994) 1. PURPOSE OF THE PLAN The purpose of the Supplemental TRIM Plan (the Plan) is to provide a select group of management or highly compensated employees who are officers and key employees of The Dial Corp (the Company) and its subsidiaries with an opportunity to accumulate pre-tax savings for retirement. 2. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Compensation Advisory Committee (the Committee) the members of which shall be appointed by the Chief Executive Officer of The Dial Corp. Subject to the express provisions of the Plan, 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 those officers and key employees of the Company and its subsidiaries whose pre-tax, elective deferrals to The Dial Companies Capital Accumulation Plan ("TRIM") are actually limited by the elective deferral limitations contained in Section 402 of the Internal Revenue Code to the extent such deferrals do not reach the maximum employer-matchable percentage of their base salary under the TRIM plan and whose timely written requests to defer the receipt of compensation, which may be owed to them for services rendered, are honored in whole or in part by the Committee, in its sole discretion. The Committee may, in its discretion, offer to any employee who is part of the select group of management or highly compensated employees who does not meet the requirements of the preceding sentence, the opportunity to participate in the Plan. A written request for deferral under paragraph 4 shall not be timely in any event unless it is duly submitted to the Committee before the services to which the base salary to be deferred is related have been rendered. No deferral of compensation need be made by a participant in the Plan as a condition to entitlement to the benefit described in paragraph 6(a)(iii). (b) If a participant in the Plan shall (1) sever his or her employment with the Company or one of its subsidiaries during or following such employment, (2) engage in any activity in competition with the Company 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 Company, his or her participation in the Plan shall automatically terminate, and the Committee may direct, in its sole discretion, that he or she be paid in a lump sum the aggregate amount credited to his or her deferred compensation account as of the date his or her employment is severed or the Committee determines that he or she has engaged in such competitive activity or that his or her employer is no longer a subsidiary of the Company. 4. REQUESTS FOR DEFERRAL All requests for deferral of compensation must be made in writing 30 days prior to the beginning of each quarter and shall be in such form and shall contain such terms and conditions as the Committee may determine. Each such request shall specify the percentage or dollar amount of base salary if any, but in no event shall the amount to be deferred in a Plan year be greater than the lesser of (i) $30,000 less the total amount of all contributions of whatever nature, to the Participant's TRIM account during the same time period, and (ii) 12% of the participant's base salary in the Plan year. Each such request shall also specify (1) the date when payment of the aggregate amount credited to the deferred compensation account is to commence (which shall not be earlier than age 55 nor later than the actual retirement date) and (2) whether such payment is then to be made in a lump sum or in quarterly or annual installments, and the period of time (not in excess of ten years) over which the installments are to be paid. The Committee shall not, under any circumstances, accept any request for deferral greater than the limits defined above, or any request which is not in writing or which is not timely submitted. 5. DEFERRAL OF COMPENSATION The Committee shall notify each individual who has submitted a request for deferral of compensation 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 percentage of his or her 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 compensation 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 a severe financial hardship on the participant or his or her 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 COMPENSATION ACCOUNT (a) A deferred compensation account shall be maintained for each participant of this Plan by his or her employer. The employer shall credit to each participant's account the following amounts, as appropriate: (i) The deferral duly elected under this Plan on the date the participant would have received such deferral as base salary; (ii) Based on the provision of the TRIM Plan in effect at the time, an amount with respect to the deferrals in (i), above, calculated on the same basis as the employer's then current matching contribution on elective deferrals under the TRIM Plan on the first day of each quarter. In no event shall this amount exceed the maximum amount of matching contributions which would be available, assuming the participant elects the maximum deferrals allowed under TRIM and the limitations on elective deferrals contained in Code Section 402 do not apply, less the amount of actual matching contributions made by the employer to the participant's TRIM account, if any, for the same period; (iii) Based on the provisions of the TRIM Plan in effect at the time, and not withstanding the amount, if any, of deferrals in (i) above, an amount equal to the employer matching contributions which would have been made to the participant's TRIM Plan account based on the amount of elective deferrals actually made by said participant to the TRIM Plan, but for the application of Code Section 401(a)(17) or any other similar law on the first day of each quarter; and (iv) Interest on the participant account balance at a per annum 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 or such other rate the Committee may determine in its sole discretion, credited quarterly prior to the termination of the participant's deferral period, or if the deferred compensation account is to be paid in installments, prior to the termination of such installment period. (b) The Company or employer, as the case may be, shall not be required to physically segregate any amounts of money or property or otherwise provide for funding of any amounts credited to the deferred compensation accounts of participants in the Plan. Participants have no claim, interest or right to any particular funds or property that the Company or any employer may choose to reserve or otherwise use to provide for its liabilities under this Plan and the participants of this Plan shall have the rights of general creditor only with respect to their interests 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 or her deferred compensation account shall be made in the event of his or her 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 PARTICIPANT 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 or her death, nor shall any such right, interest or benefit be subject to or liable for any debt, obligation, liability or default of any participant. In the event of any attempt to assign or transfer any right, interest or benefit under the Plan, or to subject any such right, interest or benefit to a debt, obligation, liability or default of a participant, his or her participation in the Plan shall terminate on the date such an attempt is made, and he or she shall be paid in a lump sum the aggregate amount credited to his or her deferred compensation account as of that date. 9. RIGHTS OF PARTICIPANTS A participant in the Plan shall have only those rights, interest or benefits as are expressly provided in the 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. 10. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN (a) The Board of Directors of the Company (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 consent of a participant, adversely affect such participant's right to receive payment of the entire amount credited to his or her deferred compensation 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 or her account either in a lump sum or in accordance with the Committee's prior determination regarding the method of payment. (b) Any action by The Dial Corp under the Plan may be by resolution of its Board of Directors, or by any person or persons duly authorized by resolution of said Board to take such action. 11. EFFECTIVE DATE The Plan shall become effective on the date of its approval by the Board or on such other date as the Board by direct. The Plan year is January 1, to December 31. EX-10.R 6 EXHIBIT 10.R THE DIAL CORP 1983 STOCK OPTION AND INCENTIVE PLAN AMENDED AND RESTATED RESTRICTED STOCK AGREEMENT AUGUST 12, 1994 WHEREAS, ________ shares of Restricted Stock have previously been awarded by The Dial Corp (the "Corporation"), a Delaware corporation, to ________________ (the "Employee") pursuant to the 1983 Stock Option and Incentive Plan of The Dial Corp (the "Plan") and upon the restrictions, terms and conditions set forth in Restricted Stock Agreements dated as of November 15, 1990 and August 15, 1991 (together, the "Original Agreement"); WHEREAS, each of the Employee and the Corporation desires to amend and restate the Original Agreement to read in its entirety as set forth herein; NOW, THEREFORE, the Original Agreement is amended and restated to read in its entirety as set forth herein (as amended and restated, this "Agreement"): 1. SHARE AWARD. The Corporation hereby affirms the awards made in 1990 and 1991 to the Employee of an aggregate of ________ shares (the "Restricted Shares") (as adjusted pursuant to a stock split) of Common Stock, par value $1.50 per share (the "Common Stock") of the Corporation pursuant to the Plan, upon the terms and conditions and subject to the restrictions set forth in the Plan and hereinafter. 2. SHARES TO BE HELD IN TRUST. All of the Restricted Shares shall be contributed to a trust account (the "Restricted Shares Account") established pursuant to The Dial Corp Restricted Stock Trust (the "Trust"). The Restricted Shares shall be held in the Trust until the termination of the "Trust Restriction Period," as set forth herein. The Restriction set forth in this Section shall be referred to herein as the "Trust Restriction". Except as provided in Paragraph 3 below, the Corporation shall have no further obligation hereunder to make contributions to the Trust for the benefit of the Employee. Except pursuant to paragraph 5 hereof, the Employee shall have no right to direct the investment of any assets held in the Restricted Shares Account. 3. DIVIDEND ACCOUNT. In addition to the Restricted Shares Account, the Corporation shall cause the Trustee to establish and maintain a dividend account under the Trust for the Employee (the "Dividend Account"). The Dividend Account shall be credited with cash equal to the regular cash dividends, and stock representing any stock dividends, paid from time to time by the Corporation attributable to the Restricted Shares credited to the Restricted Shares Account. The cash held in the Dividend Account will be invested by the Trustee in its discretion unless the Corporation directs the investment of the Dividend Account or, after the Termination Date (as defined herein) unless the Employee directs such investment pursuant to Paragraph 5. Except pursuant to paragraph 5 hereof, the Employee shall have no right to direct the investment of any assets held in the Dividend Account. 4. SERVICE RESTRICTION PERIOD. (a) SERVICE RESTRICTION PERIOD. During the period (the "Service Restriction Period") commencing on the date hereof (the "Commencement Date") and terminating on the date determined in accordance with the following schedule, the Restricted Shares credited to the Employee's Restricted Shares Account shall be subject to forfeiture. The Service Restriction Period shall lapse at the expiration of the Service Restriction Period with respect thereto, in accordance with the following schedule: DATE AMOUNT NONFORFEITABLE March 1, 1995 ________ shares August 15, 1995 ________ shares November 15, 1995 ________ shares August 15, 1996 ________ shares Subject to Section 11 of the Plan, the Executive Compensation Committee of the Board of Directors (the "Committee") shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Restricted Shares, prior to the expiration of the Service Restriction Period or the Trust Restriction Period with respect thereto, or to remove any or all of such restrictions, whenever the Committee may determine that such action is appropriate. Subject to Section 18 hereof, all assets credited to the Employee's Dividend Account pursuant to Paragraph 3 shall be nonforfeitable as of the date credited to the Dividend Account. (b) CHANGE IN CONTROL. Notwithstanding the above, in the event that there occurs a Change in Control (as defined in the Trust), all Restricted Shares credited to the Employee's Restricted Shares Account shall automatically vest and become nonforfeitable as of the date of the Change in Control, to the full extent of the original grant, and shall be distributed in accordance with the Trust. 5. ELECTION TO DIVERSIFY. (a) GENERAL. From and after (but not prior to) the Employee's Termination Date (as defined herein), the Employee shall have the right to direct the Trustee of the Trust to diversify the nonforfeitable amount (determined pursuant to Paragraph 4 and paragraph 6(a)) of the Restricted Shares credited to his Restricted Shares Account by selling all or a portion of said Restricted Shares and purchasing any other investment or investments that the Trustee of the Trust (the "Trustee") is permitted to make pursuant to the Trust. From and after (but not prior to) such Termination Date the Employee also shall have the right to direct the Trustee (subject to the terms of the Trust) concerning the investment of any amounts allocated to his Dividend Account. The Employee may change his directions, once made, in accordance with any policies or procedures adopted pursuant to Paragraph 5(d). Any direction by the Employee to purchase or sell Common Stock or any other security of the Corporation will be honored only if the Trustee has received an opinion acceptable to it that such purchase or sale does not contravene any applicable federal or state laws, rules or regulations, including, but not limited to, an opinion that such purchase or sale would not cause liability under Section 16 of the Securities and Exchange Act of 1934 and any rules or regulations relating thereto. (b) CHARGES. The Trustee is authorized to charge each of the Employee's Accounts for the reasonable expenses of carrying out investment instructions that are directly related to such Account. (c) RELIANCE ON DIRECTIONS. The Trustee and the Corporation shall not be liable for acting in accordance with the directions of the Employee pursuant to this Paragraph 5, or for failing to act in the absence of any such direction. Neither the Trustee nor the Corporation shall be responsible for any loss resulting from any direction made by the Employee and shall have no duty to review any direction made by the Employee. The Trustee shall have no obligation to consult with the Employee regarding the propriety or advisability of any directions made by the Employee. (d) POLICIES AND PROCEDURES. Subject to the terms of the Trust, the Trustee may, in its discretion, establish rules, policies, and procedures concerning the making of investment directions under this Paragraph 5. 6. TERMINATION OF EMPLOYMENT. (a) VESTING AND FORFEITURE. Subject to paragraph 4(b) hereof, if the Employee ceases to be an employee of the Corporation or any Affiliate of the Corporation for any reason (other than death, total or partial disability, or normal or early retirement), all Restricted Shares which at the time of such termination of employment are subject to the restrictions imposed by paragraph 4 above shall upon such termination of employment be forfeited and returned to the Corporation. If the Employee ceases to be an employee of the Corporation or any Affiliate of the Corporation by reason of death, total or partial disability, or normal or early retirement, the Service Restriction Period shall, immediately upon such termination, lapse with respect to all Restricted Shares credited to the Employee's Restricted Shares Account, and no such Restricted Shares shall hereafter be subject to forfeiture. (b) ENTITLEMENT TO DISTRIBUTION. Upon the Employee's termination of employment from the Corporation for any reason (the "Termination Date"), the Trust Restriction Period shall terminate, and the Employee shall be entitled to receive the nonforfeitable amount (determined pursuant to Paragraph 4 and paragraph 6(a)) of the Restricted Shares credited to his Restricted Shares Account and all of the amount credited to his Dividend Account under the Trust. For purposes of the preceding sentence, the Employee's nonforfeitable amount shall be determined as of the Termination Date. (c) COMMENCEMENT OF DISTRIBUTION. Any distribution to which the Employee may be entitled under this Agreement shall commence as of the first business day of the year following the year in which the Employee's Termination Date occurred. (d) IN-KIND DISTRIBUTION ONLY. Any distribution from the Trust to the Employee under this Agreement shall be made "in kind" and shall consist entirely of (i) shares of Common Stock, (ii) other investments made by the Trustee pursuant to paragraph 2 hereof or directed by the Employee pursuant to Paragraph 5 hereof, or (iii) a combination of such Common Stock and other investments. (e) FORM OF PAYMENT. The Employee irrevocably elects to receive the benefits to which he is entitled to under this Agreement in a single lump sum. 7. DESIGNATION OF BENEFICIARY. The Employee shall deliver to the Corporation a written instrument, in the form provided by the Corporation, designating one or more beneficiaries to whom payment of the amounts credited to his Restricted Shares Account and his Dividend Account shall be made in the event of the Employee's death. In the absence of a beneficiary designation, the amounts credited to the Employee's Accounts will be payable to the Employee's surviving spouse, or if the Employee does not leave a surviving spouse, to his estate. 8. CERTIFICATES FOR THE RESTRICTED SHARES. The Corporation shall deliver to the Trustee a certificate or certificates in respect of the Restricted Shares in the name of the Trust, the aggregate number of Restricted Shares of which shall equal the amount of the awards affirmed herein and the Trust shall hold each such certificate on deposit for the account of the Employee until delivery as contemplated by Section 6 above. Each such certificate shall bear the following legend: The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the 1983 Stock Option and Incentive Plan of The Dial Corp and an Agreement entered into between a participant under such Plan and The Dial Corp. Copies of such Plan and Agreement are on file at the offices of The Dial Corp, Dial Tower, Phoenix, Arizona 85077. The Employee further agrees that simultaneously with his acceptance of this Agreement, he (or the Trust on his behalf) shall execute a stock power covering such award endorsed in blank and that he (or the Trust on his behalf) shall promptly deliver such stock power to the Corporation. 9. EMPLOYEE'S RIGHTS. Except as otherwise provided herein, the Employee, with respect to the Restricted Shares, shall have all rights of a stockholder, including, but not limited to, the right to vote the shares and receive (in the manner set forth in paragraph 3) any dividends. 10. EXPIRATION OF VESTING RESTRICTION PERIOD. Upon the lapse of the Service Restriction Period with respect to any Restricted Shares, the Corporation shall deliver to the Trust the stock power held by the Corporation in respect of such Restricted Shares pursuant to paragraph 8 above. The Restricted Shares as to which the Service Restriction Period shall have lapsed shall be free of the restrictions referred to in paragraph 8 above. To the extent permissible under applicable tax, securities, and other laws, the Corporation may, in its sole discretion, permit the Employee to satisfy a tax withholding requirement by directing the Corporation to apply Restricted Shares to which the Employee is entitled as a result of termination of the Service Restriction Period with respect to any Restricted Shares, in such manner as the Corporation shall choose in its discretion to satisfy such requirement. 11. NONASSIGNABILITY OF EMPLOYEE'S RIGHTS. No benefit which shall be payable under the Agreement to the Employee or his beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of the same shall be void. No benefit shall in any manner be subject to the debts, contracts, liabilities, engagements, or torts of the Employee or his beneficiary, nor shall it be subject to attachment or legal process for or against the Employee or his beneficiary, except to the extent as may be required by law. 12. STATUS OF EMPLOYEE AS UNSECURED CREDITOR. All benefits under this Agreement shall be the unsecured obligations of the Corporation and, except for those assets which will be placed in the Trust established in connection with this Agreement, no assets will be placed in trust or otherwise segregated from the general assets of the Corporation, as applicable, for the payment of obligations hereunder. To the extent that the Employee or his beneficiary acquires a right to receive payments hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation. The Employee shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. 13. FEDERAL AND STATE TAXES. The Corporation or, if required by the Trust, the Trustee shall make provision for the reporting and withholding of any federal, state, or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of this Agreement. To the extent permissible under applicable tax, securities, and other Stock or other securities received, as a result of the foregoing, by the Employee with respect to Restricted Shares subject to the restrictions contained in paragraph 2 or paragraph 4 above also shall be subject to such restrictions, as the case may be, and if required by the Committee the certificate(s) or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Corporation, along with an executed stock power, in the manner provided in paragraph 8 above. IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by its officers thereunto duly authorized, and the Employee has hereunto set his hand as of the day and year first above written. THE DIAL CORP By: /s/ F.E. Emerson Its: V.P. Secretary /s/ Employee EX-10.S 7 EXHIBIT 10.S THE DIAL CORP 1992 STOCK INCENTIVE PLAN RESTRICTED STOCK AGREEMENT August 12, 1994 1. SHARE AWARD. The Dial Corp (the "Corporation") hereby awards to _______________ (the "Employee") ________ shares (the "Restricted Shares") of Common Stock, par value $1.50 per share (the "Common Stock") of the Corporation pursuant to The Dial Corp 1992 Stock Incentive Plan (the "Plan"), upon the terms and conditions and subject to the restrictions set forth in the Plan and in this Agreement (the "Agreement"). 2. SHARES TO BE HELD IN TRUST. All of the Restricted Shares shall be contributed by the Corporation to a trust account (the "Restricted Shares Account") established pursuant to The Dial Corp Restricted Stock Trust (the "Trust"). The Restricted Shares shall be held in the Trust until the termination of the "Trust Restriction Period," as set forth herein. The Restriction set forth in this Section shall be referred to herein as the "Trust Restriction". Except as provided in Paragraph 3 below, the Corporation shall have no further obligation hereunder to make contributions to the Trust for the benefit of the Employee. Except pursuant to paragraph 5 hereof, the Employee shall have no right to direct the investment of any assets held in the Restricted Shares Account. 3. DIVIDEND ACCOUNT. In addition to the Restricted Shares Account, the Corporation shall cause the Trustee to establish and maintain a dividend account under the Trust for the Employee (the "Dividend Account"). The Dividend Account shall be credited with cash equal to the regular cash dividends, and stock representing any stock dividends, paid from time to time by the Corporation attributable to the Restricted Shares credited to the Restricted Shares Account. The cash held in the Dividend Account will be invested by the Trustee in its discretion unless the Corporation directs the investment of the Dividend Account or, after the Termination Date (as defined herein) unless the Employee directs such investment pursuant to Paragraph 5. Except pursuant to paragraph 5 hereof, the Employee shall have no right to direct the investment of any assets held in the Dividend Account. 4. SERVICE RESTRICTION PERIOD. (a) SERVICE RESTRICTION PERIOD. During the period (the "Service Restriction Period") commencing on the date hereof (the "Commencement Date") and terminating on the date determined in accordance with the following schedule, the Restricted Shares credited to the Employee's Restricted Shares Account shall be subject to forfeiture. The Service Restriction Period shall lapse at the expiration of the Service Restriction Period with respect thereto, in accordance with the following schedule: DATE AMOUNT NONFORFEITABLE March 1, 1995 ________ shares August 15, 1995 ________ shares November 15, 1995 ________ shares August 15, 1996 ________ shares Subject to Section 7 of the Plan, the Executive Compensation Committee of the Board of Directors (the "Committee") shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to any Restricted Shares, prior to the expiration of the Service Restriction Period or the Trust Restriction Period with respect thereto, or to remove any or all of such restrictions, whenever the Committee may determine that such action is appropriate. Subject to Section 18 hereof, all assets credited to the Employee's Dividend Account pursuant to Paragraph 3 shall be nonforfeitable as of the date credited to the Dividend Account. (b) CHANGE IN CONTROL. Notwithstanding the above, in the event that there occurs a Change in Control (as defined in the Trust), all Restricted Shares credited to the Employee's Restricted Shares Account shall automatically vest and become nonforfeitable as of the date of the Change in Control, to the full extent of the original grant, and shall be distributed in accordance with the Trust. 5. ELECTION TO DIVERSIFY. (a) GENERAL. From and after (but not prior to) the Employee's Termination Date (as defined herein), the Employee shall have the right to direct the Trustee of the Trust to diversify the nonforfeitable amount (determined pursuant to Paragraph 4 and paragraph 6(a)) of the Restricted Shares credited to his Restricted Shares Account by selling all or a portion of said Restricted Shares and purchasing any other investment or investments that the Trustee of the Trust (the "Trustee") is permitted to make under the Plan. From and after (but not prior to) such Termination Date the Employee also shall have the right to direct the Trustee (subject to the terms of the Trust) concerning the investment of any amounts allocated to his Dividend Account. The Employee may change his directions, once made, in accordance with any policies or procedures adopted pursuant to Paragraph 5(d). Any direction by the Employee to purchase or sell Common Stock or any other security of the Corporation will be honored only if the Trustee has received an opinion acceptable to it that such purchase or sale does not contravene any applicable federal or state laws, rules or regulations, including, but not limited to, an opinion that such purchase or sale would not cause liability under Section 16 of the Securities and Exchange Act of 1934 and any rules or regulations relating thereto. (b) CHARGES. The Trustee is authorized to charge each of the Employee's Accounts for the reasonable expenses of carrying out investment instructions that are directly related to such Account. (c) RELIANCE ON DIRECTIONS. The Trustee and the Corporation shall not be liable for acting in accordance with the directions of the Employee pursuant to this Paragraph 5, or for failing to act in the absence of any such direction. Neither the Trustee nor the Corporation shall be responsible for any loss resulting from any direction made by the Employee and shall have no duty to review any direction made by the Employee. The Trustee shall have no obligation to consult with the Employee regarding the propriety or advisability of any directions made by the Employee. (d) POLICIES AND PROCEDURES. Subject to the terms of the Trust, the Trustee may, in its discretion, establish rules, policies, and procedures concerning the making of investment directions under this Paragraph 5. 6. TERMINATION OF EMPLOYMENT. (a) VESTING AND FORFEITURE. Subject to paragraph 4(b) hereof, if the Employee ceases to be an employee of the Corporation or any Affiliate of the Corporation for any reason (other than death, total or partial disability, or normal or early retirement), all Restricted Shares which at the time of such termination of employment are subject to the restrictions imposed by paragraph 4 above shall upon such termination of employment be forfeited and returned to the Corporation. If the Employee ceases to be an employee of the Corporation or any Affiliate of the Corporation by reason of death, total or partial disability, or normal or early retirement, the Service Restriction Period shall, immediately upon such termination, lapse with respect to all Restricted Shares credited to the Employee's Restricted Shares Account and no such Restricted Shares shall thereafter be subject to forfeiture. (b) ENTITLEMENT TO DISTRIBUTION. Upon the Employee's termination of employment from the Corporation for any reason (the "Termination Date"), the Trust Restriction Period shall terminate, and the Employee shall be entitled to receive the nonforfeitable amount (determined pursuant to Paragraph 4 and paragraph 6(a)) of the Restricted Shares credited to his Restricted Shares Account and all of the amount credited to his Dividend Account under the Trust. For purposes of the preceding sentence, the Employee's nonforfeitable amount shall be determined as of the Termination Date. (c) COMMENCEMENT OF DISTRIBUTION. Any distribution to which the Employee may be entitled under this Agreement shall commence as of the first business day of the year following the year in which the Employee's Termination Date occurred. (d) IN-KIND DISTRIBUTION ONLY. Any distribution from the Trust to the Employee under this Agreement shall be made "in kind" and shall consist entirely of (i) shares of Common Stock, (ii) other investments made by the Trustee pursuant to Paragraph 2 hereof or directed by the Employee pursuant to Paragraph 5 hereof, or (iii) a combination of such Common Stock and other investments. (e) FORM OF PAYMENT. The Employee irrevocably elects to receive the benefits to which he is entitled to under this Agreement in a single lump sum. 7. DESIGNATION OF BENEFICIARY. The Employee shall deliver to the Corporation a written instrument, in the form provided by the Corporation, designating one or more beneficiaries to whom payment of the amounts credited to his Restricted Shares Account and his Dividend Account shall be made in the event of the Employee's death. In the absence of a beneficiary designation, the amounts credited to the Employee's Accounts will be payable to the Employee's surviving spouse, or if the Employee does not leave a surviving spouse, to his estate. 8. CERTIFICATES FOR THE RESTRICTED SHARES. The Corporation shall deliver to the Trustee a certificate or certificates in respect of the Restricted Shares in the name of the Trust, the aggregate number of Restricted Shares of which shall equal the amount of the award granted herein and the Trust shall hold each such certificate on deposit for the account of the Employee until delivery as contemplated by Section 6 hereof. Each such certificate shall bear the following legend: The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in The Dial Corp 1992 Stock Incentive Plan and an Agreement entered into between a participant under such Plan and The Dial Corp. Copies of such Plan and Agreement are on file at the offices of The Dial Corp, Dial Tower, Phoenix, Arizona 85077. The Employee further agrees that simultaneously with his acceptance of this Agreement, he (or the Trust on his behalf) shall execute a stock power covering such award endorsed in blank and that he (or the Trust on his behalf) shall promptly deliver such stock power to the Corporation. 9. EMPLOYEE'S RIGHTS. Except as otherwise provided herein, the Employee, with respect to the Restricted Shares, shall have all rights of a stockholder, including, but not limited to, the right to vote the shares and receive (in the manner set forth in paragraph 3) any dividends. 10. EXPIRATION OF VESTING RESTRICTION PERIOD. Upon the lapse of the Service Restriction Period with respect to any Restricted Shares, the Corporation shall deliver to the Trust the stock power held by the Corporation in respect of such Restricted Shares pursuant to paragraph 8 above. The Restricted Shares as to which the Service Restriction Period shall have lapsed shall be free of the restrictions referred to in paragraph 4 above. To the extent permissible under applicable tax, securities, and other laws, the Corporation may, in its sole discretion, permit the Employee to satisfy a tax withholding requirement by directing the Corporation to apply Restricted Shares to which the Employee is entitled as a result of termination of the Service Restriction Period with respect to any Restricted Shares, in such manner as the Corporation shall choose in its discretion to satisfy such requirement. 11. NONASSIGNABILITY OF EMPLOYEE'S RIGHTS. No benefit which shall be payable under the Agreement to the Employee or his beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, or otherwise dispose of the same shall be void. No benefit shall in any manner be subject to the debts, contracts, liabilities, engagements, or torts of the Employee or his beneficiary, nor shall it be subject to attachment or legal process for or against the Employee or his beneficiary, except to the extent as may be required by law. 12. STATUS OF EMPLOYEE AS UNSECURED CREDITOR. All benefits under this Agreement shall be the unsecured obligations of the Corporation and, except for those assets which will be placed in the Trust established in connection with this Agreement, no assets will be placed in trust or otherwise segregated from the general assets of the Corporation, as applicable, for the payment of obligations hereunder. To the extent that the Employee or his beneficiary acquires a right to receive payments hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation. The Employee shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. 13. FEDERAL AND STATE TAXES. The Corporation or, if required by the Trust, the Trustee shall make provision for the reporting and withholding of any federal, state, or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of this Agreement. To the extent permissible under applicable tax, securities, and other laws, the Corporation may, in its sole discretion, permit the Employee to satisfy a tax withholding requirement by directing the Corporation to apply Restricted Shares to which the Employee is entitled as a result of termination of the Restricted Period with respect to any Restricted Shares, in such manner as the Corporation shall choose in its discretion to satisfy such requirement. 14. NO "GROSS-UP". The Employee understands and agrees that the Employee will not be entitled to any compensation from the Corporation for the amount of any income and employment taxes that the Executive may be required to pay as any restrictions on the Restricted Shares lapse. 15. GOVERNING LAW. This Agreement shall be interpreted and administered under the laws of the State of Delaware. 16. AMENDMENT, SUSPENSION, OR TERMINATION. This Agreement may be amended, suspended, or terminated by a written agreement executed by the Corporation and the Employee. Any such amendment, suspension, or termination shall be made only upon the mutual consent of the parties. 17. COMPLIANCE WITH LAWS. The obligation of the Corporation and the Trustee to undertake any act under this Agreement (including but not limited to, purchasing and selling shares of Common Stock) shall be subject to all applicable laws, rules, and regulations, and to such approvals by government agencies as may be required. The Corporation shall be under no obligation to register under the Securities Act of 1933 (the "Act") any of the shares of Common Stock payable under this Agreement. If the shares of Common Stock paid under this Agreement may in certain circumstances be exempt from registration under the Act, the Corporation may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption. 18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, extraordinary distribution with respect to the Common Stock or other change in corporate structure affecting the Common Stock, subsequent to the date hereof, during the Trust Restriction Period, the number of shares of Common Stock subject to restrictions as set forth herein shall be appropriately adjusted and the determination of the Board of Directors of the Corporation, or the Committee, as the case may be, as to any such adjustments shall be final, conclusive and binding upon the Employee. Any shares of Common Stock or other securities received, as a result of the foregoing, by the Employee with respect to Restricted Shares subject to the restrictions contained in paragraph 2 or paragraph 4 above also shall be subject to such restrictions, as the case may be, and if required by the Committee the certificate(s) or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Corporation, along with an executed stock power, in the manner provided in paragraph 8 above. IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed by its officers thereunto duly authorized, and the Employee has hereunto set his hand as of the day and year first above written. THE DIAL CORP By: /s/ F.E. Emerson Its: V.P. Secretary /s/ Employee EX-11 8 Exhibit 11 THE DIAL CORP STATEMENT RE COMPUTATION OF NET INCOME (LOSS) PER COMMON SHARE (000 omitted)
Year ended December 31, ------------------------------------------ 1994 1993 1992 ------------ ------------ ------------ PRIMARY: Net income (loss) $ 140,311 $ 120,485 $ (81,515) Less: Preferred stock dividends (1,123) (1,122) (1,122) Dilution due to outstanding options of subsidiaries considered common stock equivalents (9) ----------- ----------- ----------- $ 139,179 $ 119,363 $ (82,637) =========== =========== =========== Weighted average common shares outstanding before common equivalents 85,069 84,004 82,326 Common equivalent stock options 1,577 1,402 1,700 ----------- ----------- ----------- 86,646 85,406 84,026 =========== =========== =========== Net income (loss) per share (dollars) $ 1.61 $ 1.40 $ (0.98) =========== =========== ============ FULLY DILUTED: Adjusted net income (loss) per above $ 139,179 $ 119,363 $ (82,637) Less: Additional dilution due to outstanding options of subsidiaries considered common stock equivalents (9) ----------- ----------- ----------- $ 139,179 $ 119,354 $ (82,637) =========== =========== =========== Average common and equivalent shares per above 86,646 85,406 84,026 Common equivalent stock options 84 ----------- ----------- ----------- 86,646 85,490 84,026 =========== =========== =========== Net income (loss) per share (dollars) $ 1.61 $ 1.40 $ (0.98) =========== =========== ============
EX-21 9 EXHIBIT 21 THE DIAL CORP SUBSIDIARIES AND AFFILIATES* AS OF MARCH 15, 1995 AIRLINE CATERING & SERVICES GROUP 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) Greyhound Support Services, Inc. (Delaware) (Inactive) Greyhound Maintenance, Inc. (Arizona) 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 INTERNATIONAL COMPANY (Arizona) AIC Foreign Sales Corporation (Virgin Islands) Armour-Dial del Ecuador, S.A. (Ecuador) Armour Foods (Benelux) N.V. (Belgium) Armour Foods (Deutschland) GmbH (Germany) The Dial Corp. (Deutschland) mbH (Germany) The Dial Corporation (Panama), S.A. (Panama) The Dial Corp (International) (Arizona) 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) The Dial Corp. (Korea) Ltd. (Korea) Ft. Madison Dial, Inc. (Iowa) Purex de Panama, S.A. (Panama) CONVENTION SERVICES GROUP EXHIBITGROUP INC. (Delaware) Exhibitgroup (Canada) Ltd. (Canada) Exhibitgroup Portland Inc. (Oregon) David H. Gibson Company, Inc. (Texas) Longchamp International, Inc. (Nevada) GES (Canada) Limited (Ontario) Panex Show Services Ltd. (Canada) Stampede Display and Convention Services Ltd. (Alberta) GES EXPOSITION SERVICES, INC. (Nevada) Expo-Tech Electrical & Plumbing Services, Inc. (California) 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) TRAVEL & LEISURE & PAYMENT SERVICES GROUP Air Agency, Inc. (Florida) AIRCRAFT SERVICE INTERNATIONAL, INC. (Delaware) ASII Holding GmbH (Germany) Bahamas Airport Services Limited (Bahama) Freeport Flight Services Limited (Bahama) Crystal Holidays, Inc. (Colorado) Dial Service Companies Limited (United Kingdom) Aircraft Service Limited (United Kingdom) Crystal Holidays, Limited (United Kingdom) Dial Consumer Products (UK) Limited (United Kingdom)@ Armour International Limited (United Kingdom)@ Dobbs International (U.K.) Limited (United Kingdom) # Charles Grimsey Associates Limited (United Kingdom) Greyhound World Travel Limited (United Kingdom) Jetsave Limited (United Kingdom) Jetsave Transatlantic Limited (United Kingdom) 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) 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) Cascade Holdings (Banff) Inc. (Alberta) 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 50% or less. # Indicates an Airline Catering & Services Group Subsidiary @ Indicates a Consumer Products Group Subsidiary ~~ Indicates a Corporate and Other Subsidiary + Indicates a Travel & Leisure & Payment Services Group Subsidiary EX-23 10 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT To the Board of Directors of The Dial Corp: We consent to the incorporation by reference in The Dial Corp's Registration Statements No.'s 33-41870, 33-57630, 33-65420, 33- 65422, 33-65424 and 33-56531 on Form S-8 and No.'s 33-54465, 33- 56841 and 33-55360 on Form S-3 of our report dated February 24, 1995, appearing in this Annual Report on Form 10-K of The Dial Corp for the year ended December 31, 1994. /s/Deloitte & Touche LLP Deloitte & Touche LLP Phoenix, Arizona March 23, 1995 EX-24 11 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, 1994, 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 16, 1995 /s/ Thomas L. Gossage February 16, 1995 /s/ Donald E. Guinn February 16, 1995 /s/ Jess Hay February 16, 1995 /s/ Judith K. Hofer February 16, 1995 /s/ Jack F. Reichert February 16, 1995 /s/ Linda Johnson Rice February 16, 1995 /s/ Dennis C. Stanfill February 16, 1995 /s/ A. Thomas Young February 16, 1995 EX-27 12
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DIAL CORP'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 AND FROM THE DIAL CORP'S FORM 10-K FOR THE FISCAL YEARS ENDED DECEMBER 31, 1994 AND 1993 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE SUMMARY FINANCIAL INFORMATION FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994 AND FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 HAVE BEEN AMENDED TO REFLECT THE RECLASSIFICATION OF EXPENSES RELATED TO CERTAIN INTEREST RATE SWAP AGREEMENTS TO INTEREST EXPENSE FROM UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET. 1,000
Exhibit 27 Page 1 of 3 THE DIAL CORP FINANCIAL DATA SCHEDULE DEC-31-1994 DEC-31-1994 DEC-31-1993 DEC-31-1994 SEP-30-1994 DEC-31-1993 YEAR 9-MOS YEAR 33,222 16,059 10,659 0 0 0 231,388 197,726 199,996 20,453 21,668 22,597 229,273 217,989 216,837 Exhibit 27 Page 2 of 3 1,244,217 992,300 1,052,604 1,434,386 1,420,718 1,307,729 621,002 616,595 567,005 3,780,896 3,528,441 3,281,088 2,056,760 1,808,819 1,748,758 721,718 732,027 624,662 145,663 145,663 72,832 6,590 6,589 6,624 0 0 0 409,430 398,135 396,856 3,780,896 3,528,441 3,281,088 1,511,362 1,101,854 1,420,173 3,546,847 2,629,373 3,000,342 1,351,354 981,297 1,280,960 3,216,627 2,379,669 2,725,049 43,938 32,648 42,734 0 0 0 61,195 44,755 57,291 221,695 169,260 171,649 81,384 63,229 61,376 140,311 106,031 110,273 0 0 32,120 Exhibit 27 Page 3 of 3 0 0 (21,908) 0 0 0 140,311 106,031 120,485 1.61 1.22 1.40 1.61 1.22 1.40