| Yes |
|
No |  |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 29, 2002
Commission file number 1-11793
THE DIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
| DELAWARE | 51-0374887 | |
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification No.) | |
| 15501 NORTH DIAL BOULEVARD | ||
| SCOTTSDALE, ARIZONA | 85260-1619 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (480) 754-3425
Indicate by check mark whether the registrant (1) has filed all Exchange Act reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.
| Yes |
|
No | |
The number of shares of Common Stock, $.01 par value, outstanding as the close of business on July 27, 2002 was 94,849,979.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEET
| (Unaudited) | ||||||||||
| (in thousands, except share data) | June 29, 2002 | December 31, 2001 | ||||||||
ASSETS |
||||||||||
Current Assets: |
||||||||||
Cash and cash equivalents |
$ | 127,054 | $ | 29,414 | ||||||
Receivables, less allowance of $2,953 and $5,131 |
95,472 | 94,189 | ||||||||
Inventories |
138,279 | 129,977 | ||||||||
Deferred income taxes |
25,449 | 23,412 | ||||||||
Income tax receivable |
— | 12,567 | ||||||||
Other current assets |
3,635 | 9,492 | ||||||||
Total current assets |
389,889 | 299,051 | ||||||||
Property and equipment, net |
230,526 | 252,957 | ||||||||
Deferred income taxes |
45,867 | 49,817 | ||||||||
Intangibles, net |
359,875 | 403,811 | ||||||||
Other assets |
20,092 | 18,480 | ||||||||
| $ | 1,046,249 | $ | 1,024,116 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||
Current Liabilities: |
||||||||||
Trade accounts payable |
$ | 106,718 | $ | 98,952 | ||||||
Income taxes payable |
34,893 | — | ||||||||
Other current liabilities |
146,981 | 151,630 | ||||||||
Total current liabilities |
288,592 | 250,582 | ||||||||
Long-term debt |
454,096 | 445,341 | ||||||||
Pension and other benefits |
224,559 | 239,286 | ||||||||
Other liabilities |
6,502 | 7,029 | ||||||||
Total liabilities |
973,749 | 942,238 | ||||||||
Stockholders’ Equity: |
||||||||||
Preferred stock, $.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding |
— | — | ||||||||
Common stock, $.01 par value, 300,000,000 shares
authorized; 105,712,924 and 105,712,924 shares issued |
1,057 | 1,057 | ||||||||
Additional capital |
425,733 | 420,611 | ||||||||
Retained income |
14,308 | 6,736 | ||||||||
Accumulated other comprehensive loss |
(102,943 | ) | (75,502 | ) | ||||||
Employee benefits |
(49,906 | ) | (55,542 | ) | ||||||
Treasury stock, 10,862,884 and 10,847,386 shares held |
(215,749 | ) | (215,482 | ) | ||||||
Total stockholders’ equity |
72,500 | 81,878 | ||||||||
| $ | 1,046,249 | $ | 1,024,116 | |||||||
See Notes to Consolidated Financial Statements.
2
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Quarter Ended | ||||||||||
| (in thousands, except per share data) | June 29, 2002 | June 30, 2001 | ||||||||
Net sales |
$ | 333,269 | $ | 315,656 | ||||||
Costs and expenses: |
||||||||||
Cost of products sold |
205,924 | 213,179 | ||||||||
Asset writedowns and other special items (net gain) |
(1,182 | ) | — | |||||||
Total cost of products sold |
204,742 | 213,179 | ||||||||
Selling, general and administrative expenses |
68,162 | 65,771 | ||||||||
Total costs and expenses |
272,904 | 278,950 | ||||||||
Operating income |
60,365 | 36,706 | ||||||||
Interest and other expenses |
(9,459 | ) | (12,023 | ) | ||||||
Net income of joint ventures |
1,749 | 4 | ||||||||
Income from continuing operations before income taxes |
52,655 | 24,687 | ||||||||
Income taxes on continuing operations |
19,222 | 8,728 | ||||||||
Income from continuing operations |
33,433 | 15,959 | ||||||||
Discontinued operation: |
||||||||||
Loss from operation of discontinued Specialty Personal Care segment,
net of income tax benefit of $327 |
— | (1,218 | ) | |||||||
Total loss from discontinued operation |
— | (1,218 | ) | |||||||
NET INCOME |
$ | 33,433 | $ | 14,741 | ||||||
Basic net income per common share: |
||||||||||
Income from continuing operations |
$ | 0.36 | $ | 0.17 | ||||||
Loss from discontinued operation |
— | (0.01 | ) | |||||||
NET INCOME PER SHARE — BASIC |
$ | 0.36 | $ | 0.16 | ||||||
Diluted net income per common share: |
||||||||||
Income from continuing operations |
$ | 0.35 | $ | 0.17 | ||||||
Loss from discontinued operation |
— | (0.01 | ) | |||||||
NET INCOME PER SHARE — DILUTED |
$ | 0.35 | $ | 0.16 | ||||||
Weighted average basic shares outstanding |
92,243 | 91,368 | ||||||||
Weighted average equivalent shares |
2,235 | 442 | ||||||||
Weighted average diluted shares outstanding |
94,478 | 91,810 | ||||||||
NET INCOME |
$ | 33,433 | $ | 14,741 | ||||||
Other comprehensive income: |
||||||||||
Foreign currency translation
adjustment |
(7,671 | ) | 224 | |||||||
COMPREHENSIVE INCOME |
$ | 25,762 | $ | 14,965 | ||||||
See Notes to Consolidated Financial Statements.
3
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Six Months Ended | ||||||||||
| (in thousands, except per share data) | June 29, 2002 | June 30, 2001 | ||||||||
Net sales |
$ | 640,738 | $ | 608,591 | ||||||
Costs and expenses: |
||||||||||
Cost of products sold |
401,574 | 413,168 | ||||||||
Asset writedowns and other special items (net gain) |
(1,182 | ) | — | |||||||
Total cost of products sold |
400,392 | 413,168 | ||||||||
Selling, general and administrative expenses |
131,420 | 124,137 | ||||||||
Total costs and expenses |
531,812 | 537,305 | ||||||||
Operating income |
108,926 | 71,286 | ||||||||
Interest and other expenses |
(20,483 | ) | (25,895 | ) | ||||||
Net income of joint ventures |
1,749 | 2,003 | ||||||||
Income from continuing operations before income taxes and cumulative
effect of the change in accounting principle |
90,192 | 47,394 | ||||||||
Income taxes on continuing operations |
33,187 | 16,741 | ||||||||
Income from continuing operations before cumulative effect of the change
in accounting principle |
57,005 | 30,653 | ||||||||
Discontinued operation: |
||||||||||
Loss from operation of discontinued Specialty Personal
Care segment, net of income tax benefit of $877 |
— | (2,815 | ) | |||||||
Adjustment of loss on disposal of discontinued Specialty Personal Care
segment, net of income tax provision of $740 |
1,260 | — | ||||||||
Total gain (loss) from discontinued operation |
1,260 | (2,815 | ) | |||||||
Cumulative effect of the change in accounting principle, net of income
tax of $661 |
(43,308 | ) | — | |||||||
NET INCOME |
$ | 14,957 | $ | 27,838 | ||||||
Basic net income per common share: |
||||||||||
Income from continuing operations |
$ | 0.62 | $ | 0.34 | ||||||
Income (loss) from discontinued operation |
0.01 | (0.03 | ) | |||||||
Cumulative effect of the change in accounting principle |
(0.47 | ) | — | |||||||
NET INCOME PER SHARE — BASIC |
$ | 0.16 | $ | 0.30 | ||||||
Diluted net income per common share: |
||||||||||
Income from continuing operations |
$ | 0.61 | $ | 0.33 | ||||||
Income (loss) from discontinued operation |
0.01 | (0.03 | ) | |||||||
Cumulative effect of the change in accounting principle |
(0.46 | ) | — | |||||||
NET INCOME PER SHARE — DILUTED |
$ | 0.16 | $ | 0.30 | ||||||
Weighted average basic shares outstanding |
92,020 | 91,326 | ||||||||
Weighted average equivalent shares |
1,840 | 299 | ||||||||
Weighted average diluted shares outstanding |
93,860 | 91,625 | ||||||||
NET INCOME |
$ | 14,957 | $ | 27,838 | ||||||
Other comprehensive income (loss): |
||||||||||
Foreign currency translation adjustment |
(34,695 | ) | (232 | ) | ||||||
COMPREHENSIVE INCOME (LOSS) |
$ | (19,738 | ) | $ | 27,606 | |||||
See Notes to Consolidated Financial Statements.
4
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
| Six Months Ended | |||||||||||
| (in thousands) | June 29, 2002 | June 30, 2001 | |||||||||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: |
|||||||||||
Net income |
$ | 14,957 | $ | 27,838 | |||||||
Adjustments to reconcile net income to net cash provided
by operating activities: |
|||||||||||
Discontinued operations, net of tax |
(1,260 | ) | 2,815 | ||||||||
Effect of change in accounting principle, net of tax |
43,308 | ||||||||||
Depreciation |
18,194 | 19,339 | |||||||||
Amortization |
61 | 4,916 | |||||||||
Deferred income taxes |
(1,736 | ) | 1,594 | ||||||||
Asset writedowns and other special items, net |
(1,182 | ) | — | ||||||||
Change in operating assets and liabilities: |
|||||||||||
Receivables |
(12,107 | ) | 13,627 | ||||||||
Inventories |
(15,013 | ) | (765 | ) | |||||||
Trade accounts payable |
14,617 | (18,236 | ) | ||||||||
Income taxes payable |
43,433 | (4,706 | ) | ||||||||
Other assets and liabilities, net |
4,833 | 5,787 | |||||||||
Net cash provided by operating activities |
108,105 | 52,209 | |||||||||
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES: |
|||||||||||
Capital expenditures |
(12,741 | ) | (9,655 | ) | |||||||
Proceeds from disposition of discontinued operation |
2,000 | — | |||||||||
Investment in and transfers from discontinued operation |
— | 30,661 | |||||||||
Proceeds from sale of assets |
2,993 | 2,271 | |||||||||
Net cash (used) provided by investing activities |
(7,748 | ) | 23,277 | ||||||||
CASH FLOWS USED BY FINANCING ACTIVITIES: |
|||||||||||
Net change in long-term debt |
(492 | ) | (20,804 | ) | |||||||
Net change in short-term bank debt |
— | (46,777 | ) | ||||||||
Dividends paid on common stock |
(7,339 | ) | (7,288 | ) | |||||||
Cash proceeds from stock options |
6,549 | 627 | |||||||||
Net cash used by financing activities |
(1,282 | ) | (74,242 | ) | |||||||
Effects of foreign currency exchange rates on cash balances |
(1,435 | ) | — | ||||||||
Net increase in cash and cash equivalents |
97,640 | 1,244 | |||||||||
Cash and cash equivalents, beginning of period |
29,414 | 6,733 | |||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 127,054 | $ | 7,977 | |||||||
See Notes to Consolidated Financial Statements.
5
THE DIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Preparation
The accompanying consolidated financial statements include the accounts of The Dial Corporation and all majority-owned subsidiaries. This information should be read in conjunction with the financial statements set forth in The Dial Corporation Annual Report to Stockholders for the year ended December 31, 2001.
On August 28, 2001, we completed the sale of our Specialty Personal Care (“SPC”) business. The accompanying financial statements have been prepared to reflect our historical financial position and results of operations and cash flows as adjusted for the reclassification of the SPC business as a discontinued operation. The historical results of operations of the SPC business up to its date of disposition and the estimated loss on the sale of SPC are reported as a discontinued operation in the accompanying consolidated financial statements.
Accounting policies utilized in the preparation of the financial information herein presented are the same as set forth in Dial’s annual financial statements except as modified for interim accounting policies which are within the guidelines set forth in Accounting Principles Board Opinion No. 28, “Interim Financial Reporting.” The interim consolidated financial statements are unaudited. All adjustments, consisting of normal recurring accruals and accruals to record certain estimated exit costs and transaction costs necessary to dispose of the SPC business in 2001 and accruals to record certain special charges (see notes 2 and 5) necessary to present fairly the financial position as of June 29, 2002 and the results of operations and cash flows for the three months and six months ended June 29, 2002 and June 30, 2001, have been included. Interim results of operations are not necessarily indicative of the results of operations for the full year.
Note 2. Discontinued Operation
On August 28, 2001, we completed the sale of our Specialty Personal Care (“SPC”