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 September 28, 2002
Commission file number 1-11793
THE DIAL CORPORATION
| DELAWARE (State or Other Jurisdiction of Incorporation or Organization) |
51-0374887 (I.R.S. Employer Identification No.) |
|
| 15501 NORTH DIAL BOULEVARD SCOTTSDALE, ARIZONA (Address of Principal Executive Offices) |
85260-1619 (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 [X] No [ ]
The number of shares of Common Stock, $.01 par value, outstanding as the close of business on October 25, 2002 was 95,082,229.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEET
| (Unaudited) | |||||||||||
| (in thousands, except share data) | September 28, 2002 | December 31, 2001 | |||||||||
ASSETS |
|||||||||||
Current Assets: |
|||||||||||
Cash and cash equivalents |
$ | 164,308 | $ | 29,414 | |||||||
Receivables, less allowance of $3,728 and $5,131 |
100,969 | 94,189 | |||||||||
Inventories |
138,832 | 129,977 | |||||||||
Deferred income taxes |
23,339 | 23,412 | |||||||||
Income tax receivable |
— | 12,567 | |||||||||
Other current assets |
7,442 | 9,492 | |||||||||
Total current assets |
434,890 | 299,051 | |||||||||
Property and equipment, net |
228,281 | 252,957 | |||||||||
Deferred income taxes |
46,786 | 49,817 | |||||||||
Intangibles, net |
359,984 | 403,811 | |||||||||
Other assets |
11,966 | 18,480 | |||||||||
| $ | 1,081,907 | $ | 1,024,116 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||
Current Liabilities: |
|||||||||||
Trade accounts payable |
$ | 104,184 | $ | 98,952 | |||||||
Income taxes payable |
39,046 | — | |||||||||
Other current liabilities |
146,694 | 151,630 | |||||||||
Total current liabilities |
289,924 | 250,582 | |||||||||
Long-term debt |
459,013 | 445,341 | |||||||||
Pension and other benefits |
224,535 | 239,286 | |||||||||
Other liabilities |
6,148 | 7,029 | |||||||||
Total liabilities |
979,620 | 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; 105,925,979 and 105,712,924 shares issued |
1,059 | 1,057 | |||||||||
Additional capital |
430,862 | 420,611 | |||||||||
Retained income |
41,730 | 6,736 | |||||||||
Accumulated other comprehensive loss |
(103,426 | ) | (75,502 | ) | |||||||
Employee benefits |
(51,531 | ) | (55,542 | ) | |||||||
Treasury stock, 10,895,104 and 10,847,386 shares held |
(216,407 | ) | (215,482 | ) | |||||||
Total stockholders’ equity |
102,287 | 81,878 | |||||||||
| $ | 1,081,907 | $ | 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) | September 28, 2002 | September 29, 2001 | |||||||||
Net sales |
$ | 347,236 | $ | 333,647 | |||||||
Costs and expenses: |
|||||||||||
Cost of products sold |
221,189 | 214,236 | |||||||||
Asset writedowns and other special items |
— | 10,940 | |||||||||
Total cost of products sold |
221,189 | 225,176 | |||||||||
Selling, general and administrative expenses |
66,777 | 71,060 | |||||||||
Special charges and other asset writedowns |
— | 486 | |||||||||
Total selling, general and administrative expenses |
66,777 | 71,546 | |||||||||
Total costs and expenses |
287,966 | 296,722 | |||||||||
Operating income |
59,270 | 36,925 | |||||||||
Interest and other expenses |
(9,741 | ) | (11,934 | ) | |||||||
Net income of joint ventures |
— | 986 | |||||||||
Income from continuing operations before income taxes |
49,529 | 25,977 | |||||||||
Income taxes on continuing operations |
18,427 | 12,114 | |||||||||
Income from continuing operations |
31,102 | 13,863 | |||||||||
Discontinued operation: |
|||||||||||
Loss from operation of discontinued Specialty Personal Care segment, |
|||||||||||
net of income tax benefit of $243 |
— | (876 | ) | ||||||||
Loss on disposal of discontinued Specialty Personal Care segment, net |
|||||||||||
of income tax of $40,000 |
— | (198,403 | ) | ||||||||
Total loss from discontinued operation |
— | (199,279 | ) | ||||||||
NET INCOME (LOSS) |
$ | 31,102 | $ | (185,416 | ) | ||||||
Basic net income per common share: |
|||||||||||
Income from continuing operations |
$ | 0.34 | $ | 0.15 | |||||||
Loss from discontinued operation |
— | (2.18 | ) | ||||||||
NET INCOME (LOSS) PER SHARE — BASIC |
$ | 0.34 | $ | (2.03 | ) | ||||||
Diluted net income per common share: |
|||||||||||
Income from continuing operations |
$ | 0.33 | $ | 0.15 | |||||||
Loss from discontinued operation |
— | (2.18 | ) | ||||||||
NET INCOME (LOSS) PER SHARE — DILUTED |
$ | 0.33 | $ | (2.03 | ) | ||||||
Weighted average basic shares outstanding |
92,539 | 91,494 | |||||||||
Weighted average equivalent shares |
2,112 | — | |||||||||
Weighted average diluted shares outstanding |
94,651 | 91,494 | |||||||||
NET INCOME (LOSS) |
$ | 31,102 | $ | (185,416 | ) | ||||||
Other comprehensive income (loss): |
|||||||||||
Foreign currency translation adjustment |
(483 | ) | (272 | ) | |||||||
COMPREHENSIVE INCOME (LOSS) |
$ | 30,619 | $ | (185,688 | ) | ||||||
See Notes to Consolidated Financial Statements.
3
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Nine Months Ended | ||||||||||
| (in thousands, except per share data) | September 28, 2002 | September 29, 2001 | ||||||||
Net sales |
$ | 987,974 | $ | 942,238 | ||||||
Costs and expenses: |
||||||||||
Cost of products sold |
622,763 | 627,404 | ||||||||
Asset writedowns and other special items, net (gain) charge |
(1,182 | ) | 10,940 | |||||||
Total cost of products sold |
621,581 | 638,344 | ||||||||
Selling, general and administrative expenses |
198,196 | 195,197 | ||||||||
Special charges and other asset writedowns |
— | 486 | ||||||||
Total selling, general and administrative expenses |
198,196 | 195,683 | ||||||||
Total costs and expenses |
819,777 | 834,027 | ||||||||
Operating income |
168,197 | 108,211 | ||||||||
Interest and other expenses |
(30,225 | ) | (37,829 | ) | ||||||
Net income of joint ventures |
1,749 | 2,990 | ||||||||
Income
from continuing operations before income taxes and cumulative
effect of the change in accounting principle |
139,721 | 73,372 | ||||||||
Income taxes on continuing operations |
51,614 | 28,855 | ||||||||
Income from continuing operations before cumulative effect of the change in accounting principle |
88,107 | 44,517 | ||||||||
Discontinued operation: |
||||||||||
Loss from operation of discontinued Specialty Personal Care segment, net of income tax benefit of $1,120 |
— | (3,691 | ) | |||||||
Adjustment (loss) on disposal of discontinued Specialty Personal Care segment, net of tax of $40,000 |
1,260 | (198,403 | ) | |||||||
Total adjustment (loss) from discontinued operation |
1,260 | (202,094 | ) | |||||||
Cumulative effect of change in accounting principle, net of income tax of $661 |
(43,308 | ) | — | |||||||
NET INCOME (LOSS) |
$ | 46,059 | $ | (157,577 | ) | |||||
Basic net income per common share: |
||||||||||
Income from continuing operations |
$ | 0.96 | $ | 0.49 | ||||||
Income (loss) from discontinued operation |
0.01 | (2.21 | ) | |||||||
Cumulative effect of the change in accounting principle |
(0.47 | ) | 0.00 | |||||||
NET INCOME (LOSS) PER SHARE — BASIC |
$ | 0.50 | $ | (1.72 | ) | |||||
Diluted net income per common share: |
||||||||||
Income from continuing operations |
$ | 0.94 | $ | 0.49 | ||||||
Income (loss) from discontinued operation |
0.01 | (2.21 | ) | |||||||
Cumulative effect of the change in accounting principle |
(0.46 | ) | 0.00 | |||||||
NET INCOME (LOSS) PER SHARE — DILUTED |
$ | 0.49 | $ | (1.72 | ) | |||||
Weighted average basic shares outstanding |
92,188 | 91,385 | ||||||||
Weighted average equivalent shares |
1,974 | — | ||||||||
Weighted average diluted shares outstanding |
94,162 | 91,385 | ||||||||
NET INCOME (LOSS) |
$ | 46,059 | $ | (157,577 | ) | |||||
Other comprehensive income (loss): |
||||||||||
Foreign currency translation adjustment |
(35,179 | ) | (504 | ) | ||||||
COMPREHENSIVE INCOME (LOSS) |
$ | 10,880 | $ | (158,081 | ) | |||||
See Notes to Consolidated Financial Statements.
4
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)
| Nine Months Ended | |||||||||||
| (in thousands) | September 28, 2002 | September 29, 2001 | |||||||||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES: |
|||||||||||
Net income (loss) |
$ | 46,059 | $ | (157,577 | ) | ||||||
Adjustments to reconcile net income to net cash provided by |
|||||||||||
operating activities: |
|||||||||||
Loss (adjustment) from discontinued operation |
(1,260 | ) | 202,094 | ||||||||
Effect of change in accounting principle, net of tax |
43,308 | — | |||||||||
Depreciation |
27,727 | 29,196 | |||||||||
Amortization |
93 | 7,486 | |||||||||
Deferred income taxes |
(404 | ) | (595 | ) | |||||||
Asset writedowns and other special items, net |
(1,182 | ) | 11,787 | ||||||||
Change in operating assets and liabilities: |
|||||||||||
Receivables |
(16,946 | ) | 13,413 | ||||||||
Inventories |
(14,712 | ) | (3,156 | ) | |||||||
Trade accounts payable |
12,088 | (20,961 | ) | ||||||||
Income taxes payable |
47,539 | (41,856 | ) | ||||||||
Other assets and liabilities, net |
409 | 44,124 | |||||||||
Net cash provided by operating activities |
142,719 | 83,955 | |||||||||
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES: |
|||||||||||
Capital expenditures and purchase price adjustment of acquisition |
(21,925 | ) | (17,631 | ) | |||||||
Proceeds from disposition of discontinued operation |
2,000 | 8,000 | |||||||||
Investment in and transfers from discontinued operation |
— | 46,345 | |||||||||
Proceeds from sale of assets |
2,937 | 2,260 | |||||||||
Net cash (used) provided by investing activities |
(16,988 | ) | 38,974 | ||||||||
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES: |
|||||||||||
Net change in debt resulting from interest rate swap termination |
13,386 | — | |||||||||
Repayment and amortization of debt |
285 | 11,665 | |||||||||
Net change in short-term bank debt |
— | (125,776 | ) | ||||||||
Dividends paid on common stock |
(11,074 | ) | (10,950 | ) | |||||||
Cash proceeds from stock options |
8,809 | 1,969 | |||||||||
Net cash provided (used) by financing activities |
11,406 | (123,092 | ) | ||||||||
< | |||||||||||