##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13

OF THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year Ended December 31,
2003

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
    Incorporation or Organization)                             |  | (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


Securities Registered Pursuant to
Section 12(b) of the Act:

|                                |  |                                          
|------------------------------- |  | -----------------------------------------
|Title of Each Class             |  | Name of Each Exchange on Which Registered
|                                |  |                                          
|Common Stock, $0.01 par value   |  | New York Stock Exchange                  
|Preferred Share Purchase Rights |  | New York Stock Exchange                  

Securities Registered Pursuant to
Section 12(g) of the Act:

None


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 þ          No o

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 the 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.     o

Indicate by check
mark whether the registrant is an accelerated filer (as defined
in Exchange Act
Rule 12b-2).     Yes þ          No o

As of June 27,
2003, the aggregate market value of Dials common stock
(based on its closing price on such date) held by nonaffiliates
was approximately $1.8 billion.

As of March 4,
2004, 98,285,862 shares of Dials common stock were
outstanding.



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TABLE OF CONTENTS

|         |  |                                                                                                        |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|         |  |                                                                                                        |  | Page
|         |  |                                                                                                        |  |     
|PART I  
|Item 1   |  | Business                                                                                               |  |      | 1  | 
|Item 2   |  | Properties                                                                                             |  |      | 10 | 
|Item 3   |  | Legal Proceedings                                                                                      |  |      | 11 | 
|Item 4   |  | Submission of Matters to a
    Vote of Security Holders                                                |  |      | 12 | 
|PART II 
|Item 5   |  | Market for Registrants
    Common Equity and Related Stockholder Matters                              |  |      | 13 | 
|Item 6   |  | Selected Financial and Other
    Data                                                                  |  |      | 13 | 
|Item 7   |  | Managements Discussion
    and Analysis of Results of Operations and Financial Condition              |  |      | 15 | 
|Item 7A  |  | Quantitative and Qualitative
    Disclosure About Market Risk                                          |  |      | 32 | 
|Item 8   |  | Financial Statements and
    Supplementary Data                                                        |  |      | 33 | 
|Item 9   |  | Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosures              |  |      | 63 | 
|Item 9A  |  | Controls and Procedures                                                                                |  |      | 64 | 
|PART III
|Item 10  |  | Directors and Executive
    Officers of the Registrant                                                 |  |      | 65 | 
|Item 11  |  | Executive Compensation                                                                                 |  |      | 69 | 
|Item 12  |  | Security Ownership of
    Certain Beneficial Owners and Management and Related Stockholder
    Matters |  |      | 81 | 
|Item 13  |  | Certain Relationships and
    Related Transactions                                                     |  |      | 83 | 
|Item 14  |  | Principal Accountant Fees
    and Services                                                             |  |      | 84 | 
|Item 15  |  | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                                    |  |      | 85 | 
|EX-10.E 
|EX-10.F 
|EX-10.H 
|EX-10.P 
|EX-10(s)
|EX-21   
|EX-23   
|EX-31.A 
|EX-31.B 
|EX-32.A 
|EX-32.B 





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PART I

This Annual Report on Form 10-K contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. When used in this Form 10-K, the words
anticipates, intends, plans,
believes, estimates and similar
expressions are intended to identify forward-looking statements.
Such forward-looking statements included in this Form 10-K
include our belief that we have ample resources for most raw
material; the adequacy of our reserves for environmental
matters; our anticipated costs to comply with environmental
laws; our belief that our facilities are adequate and suitable
for their purposes and that manufacturing capacity is sufficient
for current needs; our belief that our relations with our
employees are satisfactory; our belief that our current net
deferred tax assets will be realized; our belief that our
success over the last three years will make comparisons
challenging in the future; our belief that we may need to
increase our spending to grow our sales of Purex detergents; our
belief that we will not be able to cut costs as rapidly or to
the extent that we have over the past few years; our belief that
the unpredictability of interest rates, foreign currency rates,
commodity prices and other factors may cause actual results to
differ materially from those projected; our belief that legal
claims relating to the merger agreement with Henkel KGaA are
without merit and our belief that liabilities from other legal
claims, after taking into account amounts already accrued and
inclusive of any potential insurance recovery, should not have a
material adverse effect on our financial position, cash flows or
operating results. These statements are based upon
managements beliefs, as well as on assumptions made by and
information currently available to management, and involve
various risks and uncertainties, which are beyond our control.
Our actual results could differ materially from those expressed
in any forward-looking statements made by, or on behalf of, us.
Factors that could cause actual results to differ include those
factors identified in Item 7. Managements
Discussion and Analysis of Results of Operations and Financial
Condition  Factors That May Affect Future Results and
Financial Condition on page 26 in this
Form 10-K.

Unless otherwise indicated, the industry data
contained herein are derived from confidential reports published
by AC Nielsen. AC Nielsen captures consumer purchases in
U.S. Food and Drug stores plus Kmart and Target via
scanners while consumer purchases from Wal-Mart are recorded by
AC Nielsens Homescan program panelists. A substantial
portion of our sales are to club and dollar stores. However,
consumer purchases in these stores are not included in market
share resources such as those provided by AC Nielsen. Unless
otherwise noted, all market share data are as of the
52 weeks ended December 31 and are based upon volume
and retail dollar sales in the U.S. market. Market share
volume of soap and detergent products are measured by ounces
sold. Market share volume of air fresheners and canned meats are
measured by units sold.

In the third quarter of 2003, we completed the
sale of our Argentina business. In addition, we sold our
Specialty Personal Care (SPC) business in the third
quarter of 2001. Accordingly, historical amounts and percentages
disclosed in this Form 10-K have been restated to reflect
our reporting of our former Argentina and SPC businesses as
discontinued operations in the accompanying consolidated
financial statements.See Item 1.
Business  Sale of Dial Argentina
Business and Business  Sale of Specialty
Personal Care Segment on page 4 in this
Form 10-K.






|        |         
|------- | --------
|Item 1. | Business

Pending Acquisition by Henkel KGaA

On December 14, 2003, we entered into an
Agreement and Plan of Merger (the Merger Agreement)
by and among Henkel KGaA, a Kommanditgesellschaft auf Aktien (a
partnership limited by shares) organized under the laws of the
Federal Republic of Germany (Henkel) and Henkel
Merger Corporation, a Delaware corporation and a wholly-owned
subsidiary of Henkel (Merger Sub) and us. Pursuant
to the Merger Agreement, Henkel will acquire us through a merger
of Merger Sub with and into us, with Dial surviving as a
wholly-owned subsidiary of Henkel (the Merger). Upon
the consummation of the Merger, each outstanding share of our
common stock will be converted into the right to receive $28.75
in cash. The completion of the Merger is subject to the
satisfaction or waiver of several conditions, including approval
of

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the Merger by our stockholders and other
customary conditions to the closing. Subject to the satisfaction
or waiver of these conditions, we expect to complete the Merger
in March 2004. A special stockholder meeting to approve the
Merger Agreement is scheduled for March 24, 2004.
Stockholders of record as of the close of business on
February 17, 2004 are entitled to be present and vote at
this special meeting. The foregoing description does not purport
to be complete and is qualified in its entirety by reference to
the Merger Agreement, a copy of which is incorporated by
reference herein as Exhibit 2.


General

We manufacture and sell consumer products. We
market our products primarily under such well-known household
brand names as Dial® soaps,
Purex® detergents,
Renuzit® air fresheners and
Armour® canned meats. We believe that our
brand names have contributed to our products achieving leading
market positions.

We are organized into two business segments:
(i) Domestic Branded and (ii) International and Other.
Information concerning the net sales, operating income and
assets of each of our business segments is set forth in
Note 17 to the consolidated financial statements included
in this Form 10-K. The following table sets forth the
percentage of our net sales represented by each of our segments:

|                        |       |      |    |      |   |      |    |     |   |  |    |     |  
|----------------------- | ----- | ---- | -- | ---- | - | ---- | -- | --- | - |  | -- | --- | -
|                        |       | 2003 |    | 2002 |   | 2001
|                        |       |      |    |      |   |     
|Domestic Branded        |       |      | 91 | %    |   |      | 92 | %   |   |  | 92 | %  
|International and Other |       |      | 9  |      |   |      | 8  |     |   |  | 8  |    
|                        |       |      |    |      |   |      |    |     |   |  |    |    
|                        | Total |      |    | 100  | % |      |    | 100 | % |  |    | 100 | %
|                        |       |      |    |      |   |      |    |     |   |  |    |    

Domestic
Branded

Our Domestic Branded business segment consists of
four franchises. The following table sets forth the percentage
of net sales represented by each franchise.

|               |       |      |    |      |   |      |    |     |   |  |    |     |  
|-------------- | ----- | ---- | -- | ---- | - | ---- | -- | --- | - |  | -- | --- | -
|               |       | 2003 |    | 2002 |   | 2001
|               |       |      |    |      |   |     
|Laundry Care   |       |      | 40 | %    |   |      | 39 | %   |   |  | 37 | %  
|Personal Care  |       |      | 31 |      |   |      | 31 |     |   |  | 32 |    
|Food Products  |       |      | 16 |      |   |      | 16 |     |   |  | 16 |    
|Air Fresheners |       |      | 13 |      |   |      | 14 |     |   |  | 15 |    
|               |       |      |    |      |   |      |    |     |   |  |    |    
|               | Total |      |    | 100  | % |      |    | 100 | % |  |    | 100 | %
|               |       |      |    |      |   |      |    |     |   |  |    |    

Within our Domestic Branded business segment, we
have chosen to focus our marketing and product development
efforts on the Dial, Purex, Renuzit and Armour
brands. Each of our four franchises is discussed below.
Additionally, see Item 7. Managements
Discussion and Analysis of Results of Operations and Financial
Condition  Non-Financial Key Performance
Indicators on page 23 in this Form 10-K for
additional market share data for each of our businesses.

Laundry
Care

Our Laundry Care business includes Purex
detergents, bleach and fabric softeners,
Zout® stain remover,
Trend® detergent,
Borateem® bleach, Sta-Flo®
starches, Boraxo® soap and 20 Mule
Team® borax and Fels Naptha®
laundry soap. In 2003, retail sales in the U.S. detergent
category were $4.9 billion. Although retail sales in the
category declined 0.6%, retail volume increased 4.1% over 2002
due to growth in value brands. Category volume growth was driven
by increased sales of value priced liquid detergent products.
Dry detergent products continue to decline due to a consumer
preference for liquid detergent products.

Our Laundry Care business had volume market share
of the U.S. detergent category of 14.9% and 13.7% for 2003
and 2002, respectively. Our Laundry Care business had dollar
market share of the U.S. detergent category of 9.4% and
8.6% for 2003 and 2002, respectively. Based on ounces sold,
Purex is the second largest brand of detergent in the U.S.

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The U.S. stain remover category accounted
for $199 million of retail sales in 2003, an increase of
6.6% from 2002. Zout is the number three brand in the
stain remover category.

Personal
Care

Our Personal Care business includes Dial,
Coast®, Tone® and
Pure & Natural® soaps and body
washes. In 2003, retail sales in the U.S. soap category measured
$2.2 billion, down 1% from 2002, with retail volume
increasing 0.4%. Our Personal Care business had volume market
share of the U.S. soap category of 19.9% for 2003 and 2002,
respectively. Our Personal Care business had dollar market share
of the U.S. soap category of 17.2% and 17.5% for 2003 and
2002, respectively.

Dialis
Americas leading deodorant bar soap brand. Overall, both
category and our own bar soap sales continue to decline due to a
consumer preference for body wash and liquid hand soap products.
Body wash was the fastest growing segment in the U.S. soap
category in 2003. We are the third largest marketer of body
washes including the Dial, Coast, Tone and
Pure & Natural brands. Dial is the second
largest liquid hand soap brand.

Sales of soap pellets and chemicals, principally
glycerin and fatty acids, which are by-products of the soap
making process, also are included in our Personal Care business.
These sales represented 4% of our Personal Care sales in 2003
and 2002.

Food
Products

Our Food Products business includes Armour
and Armour Star® canned meats, chili, hash,
meat spreads and meat snacks and Cream®
cornstarch. We also manufacture and sell shelf stable food
products for third parties. Private label and copack sales
represented 26% and 28% of the volume of our Food Products
business in 2003 and 2002, respectively.

Sales in the U.S. canned meat category were
$1.3 billion, a 2.4% increase over 2002. Our Armour branded
products within our Food Products business had unit market share
of the U.S. canned meat category of 21.6% and 21.2% for
2003 and 2002, respectively, and dollar market share of 10.8%
and 10.6% for 2003 and 2002, respectively. Market share data for
the private label portion of our Food Products business is not
available.

In 2003, Armour was the largest brand,
measured by unit sales, in the canned meat category.
Armour is the leading brand in the Vienna sausage and
potted meat segments. In the chili segment, Armour is the
fourth largest brand in unit sales. Armour Treet is the
second largest brand in the spiced meat segment.

Air
Fresheners

Our Air Fresheners business includes a wide
variety of air freshener forms and fragrances, all of which are
marketed and sold under the Renuzit brand. Sales in the
U.S. air freshener category were $1.3 billion in 2003,
a 2.5% increase over 2002. Category dollar growth in 2003 was
driven by the instant action, pillar scented candle and small
space segments. Our Air Fresheners business had volume market
share of the U.S. air freshener category of 21.3% and 20.4%
for 2003 and 2002, respectively. Our Air Fresheners business had
dollar market share of the U.S. air freshener category of
14.8% and 15.5% for 2003 and 2002, respectively.

At the end of 2003, Renuzit was the second
largest brand of air fresheners in the U.S. based on units
sold. Renuzits LongLast Adjustable solid air
freshener is the largest selling item in the U.S. air
freshener category. Renuzit is the third largest brand in
the instant action segment. In the instant action segment, we
sell Renuzit aerosols and Renuzit Super Odor
Neutralizer sprays. Renuzit Super Odor Neutralizer
Spray was introduced in the fourth quarter of 2002.
Renuzit discontinued its One Touch electric
scented oil air freshener and, as a result, does not have a
substantial presence in the electrics segment. We have tried to
overcome sales lost on this item with Renuzit Scented Oil
refills and Renuzit electric gel refills in the electrics
segment.

Renuzitcandles are
the second largest brand in the scented candle segment. The
candle segment sales, and our candle sales, have continued to
decline and we expect this trend to continue.

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International
and Other

Our International and Other segment includes our
international businesses and commercial markets.

International

Our international operations are focused in
Canada, Puerto Rico and exports to Asia and Latin America.
During 2003 and 2002, approximately 84% and 82%, respectively,
of our international sales came from these markets. In total,
international sales represent 5.2% and 4.4% of sales in 2003 and
2002, respectively.

In Canada, Purex is the number two brand
in the liquid laundry detergent category and continues to be a
catalyst for growth with retail dollar sales up 28%. With the
body wash category growing at 15%, Dial body wash
continues to be a major contributor to year over year growth
with retail sales up 33%. Despite the decline in the bar soap
category, Dial is leading the growth in the deodorant bar
segment due to our newly formatted bars which have seen a 46%
growth in retail sales.

In Mexico, we moved to a licensing arrangement in
2002 with a third party who previously served as our distributor
in Mexico. Under this licensing arrangement, we have licensed
our Dial, Breck and Renuzit trademarks to a third
party in exchange for a royalty based upon net sales. As a
result, we did not record sales in Mexico in 2003 or 2002, but
instead recorded royalty income. We recorded sales in Mexico of
$6.0 million in 2001.

Export sales, including royalty income from our
licensing arrangement in Mexico, grew by 15% versus 2002.
Dial body wash, Armour products, and
Renuzit Adjustables were the main contributors to this
increase in sales.

Commercial
Markets

We sell a broad range of branded and co-branded
products through various commercial channels, including amenity
products to lodging customers and soap and cleaning products to
healthcare and janitorial customers. According to the most
recent Kline & Company, Inc. Janitorial and
Housekeeping Cleaning Products report performed in 2002, total
consumption of liquid, bar, waterless and powder hand soaps and
cleaners was estimated at $638.5 million during 2002. Based
on this study, Dial is estimated to be the sixth largest
supplier of hand soaps and cleaners in the janitorial and
housekeeping commercial sectors. In the lodging sector, Dial is
estimated to be the third largest supplier of in-room amenity
products. The commercial markets business also sells products to
governmental agencies, including correctional facilities,
schools and the military. Key competitors include Marietta
Corporation and Guest Supply, Inc. in lodging, Ecolab, Inc. and
STERIS Corporation in healthcare and GOJO Industries and
Kimberly-Clark Corporation in janitorial.

Sale of Dial Argentina Business

On June 30, 2003, we completed the sale of
our discontinued Argentina business to an entity designated by
Southern Cross Group, a private equity investor in Argentina.
The transaction was structured as the sale of assets of Dial
Argentina, S.A., which included the stock of its two
subsidiaries, Sulfargen, S.A. and The Dial Corporation
San Juan, S.A. In December 2002, we recorded an after-tax
loss of $62.4 million on the pending sale and reclassified
our Argentina business as a discontinued operation.

Completion of the sale in 2003 resulted in higher
cash proceeds and lower projected exit and closing costs than
originally anticipated. Accordingly, in the second quarter of
2003 we recognized a $2.1 million after-tax
($3.4 million pre-tax) reduction in the previously recorded
loss on the disposal of our discontinued Argentina business. As
a result of the reclassification to discontinued operations, we
did not recognize any income from operation of this business
during 2003. The related assets and liabilities that were sold
were removed from our balance sheet.

For additional information concerning this
transaction, see Item 7. Managements
Discussion and Analysis of Results of Operations and Financial
Condition  Sale of Dial Argentina Business
on page 18 in this Form 10-K.

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Sale of Specialty Personal Care
Segment

On August 28, 2001, we completed the sale of
our Specialty Personal Care (SPC) business.
Businesses included in this segment consisted of a variety of
skin, hair, bath, body and foot care products sold under the
Freeman and Sarah Michaels brand names. As a result of the sale,
we incurred a one-time charge of $198.4 million, net of
income tax benefits and expected sale proceeds, related to the
write-off of SPC assets and an accrual for estimated exit costs.

For additional information concerning this
transaction, see Item 7. Managements
Discussion and Analysis of Results of Operations and Financial
Condition  Sale of Specialty Personal Care
Segment on page 19 in this Form 10-K.

Discontinuation of Dial/ Henkel Joint
Ventures

In April 1999, we formed Dial/ Henkel LLC, a
joint venture with Henkel. Dial and Henkel each owned 50% of
this joint venture. This joint venture was formed to develop and
market a range of enhanced laundry products in North America. In
1999, this joint venture acquired the Custom Cleaner home
dry cleaning business and launched Purex Advanced laundry
detergent.

In March 2000, we formed another joint venture
with Henkel named Dial/ Henkel Mexico S.A. de C.V. Henkel owned
51% and we owned 49% of this joint venture. This joint venture
was formed primarily to develop and market consumer detergent
and household cleaning products in Mexico. In May 2000, this
joint venture acquired 80% of Fabrica de Jabon Mariano Salgado,
S.A. de C.V., a manufacturer and marketer of consumer detergents
and household cleaning products in Mexico.

During the third quarter of 2000, the Dial/
Henkel LLC joint venture discontinued operations of Purex
Advanced laundry detergents. Our portion of the loss on
disposal of Purex Advanced was $12.6 million. This
charge consisted of recording inventory at net realizable value
and recording reserves for expected returns and deductions by
joint venture customers. In addition, we recorded a charge of
$5.4 million to write down to net realizable value the
fixed assets used to manufacture Purex Advanced.

During the fourth quarter of 2000, the Dial/
Henkel LLC joint venture recorded a $15 million special
charge relating to the Custom Cleaner home dry cleaning
business. This charge consisted of recording inventory at net
realizable value and writing down impaired goodwill and deferred
tax assets. Our share of this charge was $7.5 million.

In December 2000, we sold our interest in the
Dial/ Henkel Mexico joint venture to Henkel for
$18.9 million and recorded a $5.0 million loss on the
sale.

In the third quarter of 2001, Dial/ Henkel LLC
discontinued the Custom Cleaner home dry cleaning
business.

In the second quarter of 2002, Henkel received
certain intellectual property rights related to the former
Custom Cleaner business in exchange for its interest in
Dial/ Henkel LLC, which did not operate during 2002. We
accounted for our investments in these joint ventures under the
equity method of accounting. During 2002, we recorded a
$2.1 million gain related to lower than expected costs of
the joint venture associated with exiting the discontinued
Custom Cleaner business. During 2001, we recorded a
$3.0 million gain from lower than expected marketing costs
of the Custom Cleaner and Purex Advanced
businesses and lower than expected costs of exiting the joint
venture. During 2000, the two Dial/ Henkel joint ventures
resulted in net losses to us of $37.6 million, which
included $30.5 million in special charges related to exit
activities.

Customers

Our products are sold throughout the United
States primarily through mass merchandisers, supermarkets, drug
stores, membership club stores and other outlets. Generally, our
payment terms to customers are

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30 days, with discounts offered for early
payment. The table below sets forth our net sales by major
customer. Other than Wal-Mart, no customer accounted for more
than 10% of net sales in 2003, 2002 or 2001.


|                                                                  |  |      |    |      |  |      |    |   |  |  |    |  
|----------------------------------------------------------------- |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                                                                  |  | 2003 |    | 2002 |  | 2001
|                                                                  |  |      |    |      |  |     
|Wal-Mart                                                          |  |      | 28 | %    |  |      | 28 | % |  |  | 25 | %
|Remaining top ten customers                                       |  |      | 29 |      |  |      | 29 |   |  |  | 29 |  
|                                                                  |  |      |    |      |  |      |    |   |  |  |    |  
|Sales to top ten customers as a percentage of
    total net sales |  |      | 57 | %    |  |      | 57 | % |  |  | 54 | %
|                                                                  |  |      |    |      |  |      |    |   |  |  |    |  

Our products are also sold internationally
through the same channels, principally in Canada, Puerto Rico
and the Caribbean. Payment terms for international customers are
generally 30 days.

Sales

Sales within the United States were 95%, 96% and
95% of our total sales during 2003, 2002, and 2001,
respectively. Our customers are served by a national sales
organization of approximately 160 employees. The sales
organization is divided into regional divisions and account
teams for grocery sales and specialized sales operations that
sell to large mass merchandisers, membership club stores, chain
drug stores, vending and military customers. In addition, some
customers and regions are served by a national sales and
marketing agency.

The following table sets forth our U.S. net
sales by channel:

|                             |                      |      |      |       |   |      |      |       |   |  |      |       |  
|---------------------------- | -------------------- | ---- | ---- | ----- | - | ---- | ---- | ----- | - |  | ---- | ----- | -
|                             |                      | 2003 |      | 2002  |   | 2001
|                             |                      |      |      |       |   |     
|Food(1)                      |                      |      | 41.7 | %     |   |      | 42.1 | %     |   |  | 42.1 | %    
|Mass                         |                      |      | 35.5 |       |   |      | 36.6 |       |   |  | 36.9 |      
|Dollar, club and drug        |                      |      | 16.3 |       |   |      | 15.1 |       |   |  | 14.5 |      
|Commercial markets and other |                      |      | 6.5  |       |   |      | 6.2  |       |   |  | 6.5  |      
|                             |                      |      |      |       |   |      |      |       |   |  |      |      
|                             | Total U.S. net sales |      |      | 100.0 | % |      |      | 100.0 | % |  |      | 100.0 | %
|                             |                      |      |      |       |   |      |      |       |   |  |      |      



---



|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(1) | Includes all private label and copack food
    products that are sold through the Food channel.

Our international customers are primarily served
by salespeople at three foreign sales offices, consisting of 16
employees. In addition, independent distributors also service
some regions.

Distribution

We ship products to our customers primarily from
four full-line domestic distribution centers. The distribution
centers are operated by third parties, except for one full-line
distribution center that we operate. We use third party carriers
to transport our products.

We also ship full truckload quantities directly
to customers from our manufacturing facilities. Direct shipment
to customers is primarily limited to certain high volume
products, such as Purex liquid laundry detergent. The
percent of tonnage shipped directly from our plants to our
customers was approximately 25%, 25% and 23% in 2003, 2002, and
2001, respectively.

Suppliers

We rely on a number of third parties for
manufacturing, packaging and research and development. Some of
our arrangements related to new products contain limited mutual
exclusivity provisions. This is designed to permit the supplier
and us to profit from the product enhancement or innovation
before we use an alternative supplier or the supplier sells to
one of our competitors. Most of our supplier arrangements can be
terminated without material penalties.

Currently, we rely on a single company-owned
plant to manufacture our Dial bar soap and a single
supplier for Purex liquid laundry detergent bottles. If
this plant or supplier were unable to produce these

6



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##### Table of Contents



products for us for an extended period of time,
it could have a material adverse effect on our financial
condition and operating results.


Raw Materials

We believe that ample sources of raw materials
are available with respect to most of our major products. Paper,
fats and oils, detergent chemicals and resins used in
manufacturing bottles and meat have the most significant impact
on our costs. Generally, we purchase these raw materials from a
variety of suppliers in the United States. Increases in the
prices of certain raw materials could materially impact our
profit margins and financial results. For example, tallow (a key
ingredient in Dial bar soaps) and beef have experienced price
fluctuations that directly impact our costs.

In January 2004, the Secretary of the
U.S. Department of Health and Human Services announced new
public health measures that the U.S. Food and Drug
Administration may implement to significantly strengthen
existing safeguards against bovine spongiform encephalopathy
(BSE), commonly known as mad cow
disease. If implemented, these measures would prohibit
certain specific sources for the type of tallow currently used
in our bar soap manufacturing, which will likely result in
shortages in the supply of usable tallow. Shortages in turn will
likely result in significantly higher tallow prices which could
adversely impact our profitability. Additionally, some portion
of our tallow inventory could be rendered unusable. Tallow has
fluctuated within the range of $0.09 to $0.26 per pound
from January 1, 1998, to December 31, 2003. Recently,
the price of tallow has been trading at the high end of this
range. If prices increase further, we may not be able to
increase the prices of our Dial bar soaps to offset these
increases. In addition, because our competitors use less tallow
in their bar soap products, increases in tallow prices would
adversely impact us more than our competitors.

Due to recent world events, including outbreaks
of BSE in both the United States and other countries, the price
of beef also has experienced significant fluctuations. The
average price per pound of beef rose to $0.43 in 2003 versus
$0.40 in 2002 and is expected to continue to rise in 2004. Price
increases in beef would adversely impact our profitability.

We attempt to reduce our risk by entering into
contracts to provide six to twelve month supplies of tallow,
other raw materials and packaging materials. In the past, we
have used financial derivatives to mitigate price fluctuations
on the raw material component of the cardboard boxes and
packaging used in our business. Other long-term hedging
opportunities against price increases for these raw materials
are generally not available.

Competition

We compete primarily on the basis of brand
equity, brand advertising, customer service, product performance
and product quality at competitive retail price points. We
compete with numerous, well-established local, regional,
national and international companies. Some of these companies
have greater financial resources than we do and may be willing
to commit significant resources to protect their own market
shares or to capture market share from us.

Our principal competitors are as follows:

Personal Care



| |   |                                           
| | - | ------------------------------------------
| |  | The Procter & Gamble Company
    (P&G)  
|
| |  | Lever Brothers Co., a division of Unilever

PLC (Lever)




| |   |                                      
| | - | -------------------------------------
| |  | Colgate-Palmolive Company (Colgate)

Food Products



| |   |                    
| | - | -------------------
| |  | Hormel Foods Corp. 
|
| |  | ConAgra Foods, Inc.

7



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Laundry Care



| |   |                          
| | - | -------------------------
| |  | P&G                      
|
| |  | Lever                    
|
| |  | Church & Dwight, Inc.    
|
| |  | Colgate                  
|
| |  | S.C. Johnson & Son, Inc. 
|
| |  | Reckitt & Benckiser, Inc.
|
| |  | Huish Detergents, Inc.   
|
| |  | Orange Glo International 

Air Fresheners



| |   |                          
| | - | -------------------------
| |  | S.C. Johnson & Son, Inc. 
|
| |  | Reckitt & Benckiser, Inc.
|
| |  | Church & Dwight, Inc.    

Research and Development

We conduct research and development at our
facility in Scottsdale, Arizona. Our internal research and
development efforts are primarily directed at providing
technical assistance, supporting our manufacturing activities
and generating innovation for new and existing products. To
increase our innovative capacity, we also contract general
research and development activities in areas beyond our core
areas of expertise. Our total research and development
expenditures were approximately $19.0 million,
$16.2 million and $14.3 million in 2003, 2002 and
2001, respectively.

Marketing Research

We rely on industry data comprised of syndicated
market share data and various attitude and usage studies
prepared by independent marketing firms. We also obtain direct
sales information from our largest customers to identify
consumer purchases and anticipate shifts in consumer
preferences. This allows us to develop line extensions and new
products to meet changing demands.

Patents and Trademarks

Our trademarks include Dial, Purex, Renuzit,
Coast, Zout, Armour, Armour Star, Tone, Pure & Natural,
Trend, Treet, 20 Mule Team, Boraxo, Borateem and
Sta-Flo in addition to related trade names. In the U.S.,
we license the Armour and Armour Star trademarks
from ConAgra, Inc., which also sells food products under the
Armour trademark. We license the 20 Mule Team
trademark from U.S. Borax, Inc.

In 2001, we licensed our Breck trademarks
in the U.S., Canada, Puerto Rico, Europe and Asia to a third
party in exchange for a royalty based upon gross sales. This
license was terminated effective September 30, 2003. In
2002, we licensed our Breck trademark in Mexico to a
different third party in exchange for a royalty based upon net
sales. For further discussion of our licensing arrangement in
Mexico, see Item 1. Business 
International on page 4 in this Form 10-K.

United States trademark registrations are for a
term of 10 years, renewable every 10 years as long as
the trademarks are used in the regular course of trade. We
maintain a portfolio of trademarks representing substantial
goodwill in the businesses using these trademarks. We also have
a significant number of registered foreign trademarks.

United States patents are currently granted for a
term of 20 years from the date a patent application is
filed. We own a number of patents and believe that some of them
may provide competitive advantages in the marketplace.

Government Regulation

Substantially all of our operations are, or may
become, subject to various federal laws and agency regulations.
These include the Food, Drug and Cosmetic Act, which is
administered by the Food and Drug

8



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Administration (the FDA). The FDA
regulates the manufacturing, labeling and sale of our
over-the-counter drug and cosmetic products. The Insecticide,
Fungicide and Rodenticide Act and the Toxic Substances Control
Act are administered by the Environmental Protection Agency and
regulate our disinfectant products and certain substances used
in the manufacturing of our products. The Meat Inspection Act is
administered by the Department of Agriculture and regulates our
meat products. The Hazardous Substances Act is administered by
the Consumer Product Safety Commission and regulates the
labeling of our household products. The Fair Packaging and
Labeling Act is administered by the Federal Trade Commission
(the FTC) and regulates the packaging and labeling
of all of our products. Our products also are subject to
regulation by various state laws and various state regulatory
agencies. In addition, we are subject to similar laws and
regulations imposed by foreign jurisdictions.


Since the 1970s, the FDA has regulated
antibacterial soaps and hand washes under a proposed regulation.
Although the proposed regulation has not been finalized, the FDA
could ultimately set standards that result in limiting or even
precluding soap manufacturers from using some current
antibacterial ingredients or making antibacterial claims for
some product forms, such as bar soap. Dial, which uses
the antibacterial ingredient Triclosan in Liquid Dial and
Triclocarban in Dial bar soap, emphasizes the
antibacterial properties of its soap products in its marketing
campaigns and product labeling. Any final FDA regulation that
limits or precludes this type of advertising could require us to
develop new marketing campaigns, develop new products or utilize
different antibacterial ingredients in our products, all of
which could have a material adverse effect on our business,
operating results and financial condition.

Environmental Matters

We are subject to a variety of environmental and
health and safety laws in each jurisdiction in which we operate.
These laws and regulations pertain to our present and past
operations. Although we do not anticipate that the costs to
comply with environmental laws and regulations will have a
material adverse effect on our capital expenditures, earnings or
competitive position, the emergence of unforeseen claims and
liabilities or the imposition of increasingly stringent laws,
regulations and enforcement policies could result in material,
unreserved costs in the future. Since 1980, we have received
notices or requests for information with respect to
Superfund sites under the federal Comprehensive
Environmental Response, Compensation and Liability Act. We only
have one site that is currently active and we have executed a
consent decree to settle our liability with respect to that site
and are awaiting final court approval. Additionally, in 1999 and
in prior years we used nonlyphenol ethoxylate as an ingredient
in our liquid and powder detergents, and we continue to use it
as an ingredient in our Zout stain remover products. We
are in the process of reformulating our Zout stain
remover products to eliminate the use of nonlyphenol ethoxylate.
Certain environmental and regulatory groups have raised concerns
regarding toxicity of compounds produced from nonlyphenol
ethoxylate.

We do not currently anticipate that we will incur
significant capital expenditures in connection with matters
relating to environmental control or compliance in 2004. We do
not anticipate that the costs to comply with environmental laws
and regulations or the costs related to Superfund sites and the
clean up of closed plant sites will have a material adverse
effect on our financial results or condition. We believe our
accounting reserves are adequate, however these costs are
difficult to predict with certainty. There can be no assurance
that other developments, such as the emergence of unforeseen
claims or liabilities or the imposition of increasingly
stringent laws, regulations and enforcement policies, will not
result in material costs in the future.

Federal, state, local and foreign environmental
compliance may from time to time require changes in product
formulation or packaging. These changes have not had, and are
not expected to have, a material adverse effect on our financial
results or condition.

Employees

We employed approximately 2,500 individuals, of
whom approximately 1,020 were covered by collective bargaining
agreements, as of December 31, 2003.

Three of our five plants in the United States are
unionized. In 2003, we finalized negotiations of the labor
contract with the United Food and Commercial Workers union,
covering approximately 380 employees at our

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Fort Madison, Iowa plant, which expires in
September 2007. In 2002, we finalized negotiations of our other
two labor contracts. The first was with the International
Brotherhood of Teamsters for the St. Louis, Missouri plant
and Edwardsville, Illinois Distribution Center, covering
approximately 360 employees, which expires in June 2005. The
second was with the United Food and Commercial Workers union,
covering approximately 280 employees at the Aurora, Illinois
plant, which expires in September 2006. Although we believe that
our relations with our employees are satisfactory, there can be
no assurance that we will not face labor disputes in the future
or that such disputes will not be material to us.


Available Information

Copies of our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 are available free of charge
through our website (www.dialcorp.com) and in print upon
request as soon as reasonably practicable after we
electronically file the material with, or furnish it to, the
Securities and Exchange Commission (the SEC).

Additionally, the charters of our executive,
audit, executive compensation, finance management succession and
governance committees, as well as our Corporate Governance
Guidelines and Code of Ethics and Business Responsibilities, are
available on our website and in print upon request.






|        |           
|------- | ----------
|Item 2. | Properties

Our corporate headquarters in Scottsdale, Arizona
includes a 130,000-square-foot, single-tenant building adjacent
to the 200,000-square-foot Dial Center for Innovation. We occupy
both facilities under multi-year leases that expire in 2008.

Our principal facilities include the following:

|                             |          |             |         |           |  |                                                          | 
|---------------------------- | -------- | ----------- | ------- | --------- |  | -------------------------------------------------------- | 
|                             |          | Approximate |         |          
|Location                     |          | Sq. Feet    |         | Purpose  
|                             |          |             |         |          
|Manufacturing Facilities     |          |             |         |           |  |                                                         
|Aurora, Illinois             |          |             | 451,000 |           |  | Bar soaps                                               
|Fort Madison, Iowa           |          |             | 447,000 |           |  | Canned meats                                            
|St. Louis, Missouri          |          |             | 272,400 |           |  | Dry and liquid laundry detergents                       
|West Hazleton, Pennsylvania  |          |             | 214,500 |           |  | Liquid detergents, liquid soaps and fabric
    softeners
|Los Angeles, California      |          |             | 47,600  |           |  | Liquid detergents and powdered soap                     
|Guatemala City, Guatemala(1) |          |             | 100,000 |           |  | Bar soaps                                               
|                             |          |             |         |           |  |                                                         
|                             | Subtotal |             |         | 1,532,500 |  |                                                          | 
|Distribution Centers         |          |             |         |           |  |                                                         
|Allentown, Pennsylvania(2)   |          |             | 800,000 |           |  | Warehousing and distribution of finished goods          
|Ontario, California(2)       |          |             | 340,000 |           |  | Warehousing and distribution of finished goods          
|Edwardsville, Illinois(2)    |          |             | 812,000 |           |  | Warehousing and distribution of finished goods          
|Atlanta, Georgia(3)          |          |             | 253,700 |           |  | Warehousing and distribution of finished goods          
|                             |          |             |         |           |  |                                                         
|                             | Subtotal |             |         | 2,205,700 |  |                                                          | 
|                             | Total    |             |         | 3,738,200 |  |                                                          | 
|                             |          |             |         |           |  |                                                         



---



|    |                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Facility currently held for sale. See Note 3
    of the consolidated financial statements included in this
    Form 10-K for further information.
|   
|(2) | Leased facility                                                                                                                                  
|   
|(3) | Public warehouse                                                                                                                                 

10



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We believe that our facilities in the aggregate
are adequate and suitable for their purposes and that
manufacturing capacity is sufficient for current needs. We
believe that we will need an additional distribution center
sometime in 2004, as we are running out of capacity at our
Edwardsville, Illinois distribution center. We continue to seek
ways to cut costs and may close facilities as warranted.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

On December 16, 2003, Mr. Jeffrey
Berger (C.A. No. 116-N) filed a complaint in the Delaware
Court of Chancery, New Castle County against us, our directors
and Henkel, purporting to represent a class of all of our
stockholders (except the defendants and any person, firm, trust,
corporation, or other entity related to or affiliated with any
of the defendants) who are or will be threatened with injury
arising from the actions of the defendants. The complaint
alleges, among other things, that our board of directors
breached its fiduciary duties by agreeing to enter into the
Merger Agreement with Henkel on the terms provided in the Merger
Agreement. The complaint also seeks various forms of relief,
including preliminary and permanent injunctive relief to prevent
the closing of the Merger. On January 12, 2004 we filed a
motion to dismiss this complaint for failure to state a claim
upon which relief may be granted and a motion to stay discovery
in the action pending decision on the motion to dismiss. We, our
directors and Henkel believe that the allegations in this
complaint are without merit and we intend to vigorously defend
against the allegations asserted in the complaint.

On December 16, 2003, Messrs. Jeffrey
Silverberg (CV2003-023979) and Steven Rose (CV2003-023974) and,
on December 17, 2003, Ms. Mary Crescente
(CV2003-024012), each filed separate complaints in the Arizona
Superior Court, Maricopa County against us and our directors,
each purporting to represent a class of all of our stockholders
(except any person, firm, trust, corporation or other entity
related to or affiliated with any defendant) who are being and
will be harmed by the actions of the defendants. The complaints
allege, among other things, that our board of directors breached
its fiduciary duties by engaging in self-dealing by receiving
personal benefits under the terms of the Merger Agreement with
Henkel, and by potentially entering into an unfair transaction
with Henkel. On January 21, 2004, we filed motions to
dismiss these complaints, or, in the alternative, to stay these
actions in preference to the action filed by Mr. Berger in
the Delaware Court of Chancery. On January 26, 2004, the
Arizona Superior Court consolidated these actions. We and our
directors believe the allegations in these complaints are
without merit and we intend to vigorously defend against the
allegations asserted in these complaints. On March 1, 2004,
the Arizona Superior Court granted our motion to stay the
Arizona cases pending the outcome of the Delaware cases.

On January 6, 2004, Ms. Susan Soder
(C.A. No. 154-N) filed a complaint in the Delaware Court of
Chancery, New Castle County against us, our directors and
Henkel, purporting to represent a class of all of our
stockholders (except the defendants and any person, firm, trust,
corporation, or other entity related to or affiliated with any
of the defendants) who are or will be threatened with injury
arising from the actions of the defendants. The complaint
alleges, among other things, that our board of directors
breached its fiduciary duties by agreeing to enter into the
Merger Agreement on the terms provided in the Merger Agreement.
The complaint also seeks various forms of relief, including
preliminary and permanent injunctive relief to prevent the
closing of the Merger. On January 13, 2004, counsel for
Ms. Soder informed the Delaware Court of Chancery that
Ms. Soder did not intend to serve the summonses on the
defendants in this case at that time. We, our directors and
Henkel believe that the allegations in this complaint are
without merit and we intend to vigorously defend against the
allegations asserted in the complaint.

As we previously disclosed, we were defending a
lawsuit filed by the U.S. Equal Employment Opportunity
Commission (EEOC), which was pending in the
U.S. District Court for the Northern District of Illinois,
Eastern Division, and was entitled Equal Employment Opportunity
Commission v. The Dial Corporation, Civil Action
No. 99 C 3356. The EEOC alleged that we engaged in a
pattern and practice of discrimination against a class of female
employees at our Aurora, Illinois manufacturing facility by
subjecting them to sexual harassment and not taking prompt
remedial action after these employees complained. Most of the
potential claimants allegations relate to incidences that
allegedly occurred prior to 1996. The EEOC sought injunctive
relief and unspecified compensatory and punitive damages. On
April 29, 2003, we announced that we had reached a
settlement with the EEOC that involved a payment of
$10 million by Dial, which was made in the first quarter of
2004.

11



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##### Table of Contents



As is the case with many companies, we also face
exposure to actual or potential claims and lawsuits involving
our business and assets. We are currently party to a number of
lawsuits consisting of ordinary, routine litigation incidental
to our business, including general and product liability and
workers compensation claims. We believe that any
liabilities resulting from these claims, after taking into
account amounts already accrued and including any potential
insurance recovery, should not have a material adverse effect on
our financial position, cash flows or operating results.






|        |                                                        
|------- | -------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders

We did not submit any matter to a vote of our
stockholders during the fourth quarter of 2003.

A special meeting of our stockholders to approve
the Merger Agreement entered into with Henkel on
December 14, 2003, is scheduled for March 24, 2004.
Stockholders of record at the close of business on
February 17, 2004 are entitled to be present and vote at
the meeting. Definitive proxy materials relating to this special
stockholder meeting were filed with the SEC on February 18,
2004 and were mailed on February 19, 2004, to stockholders
of record as of the close of business on February 17, 2004.

12



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##### Table of Contents






PART II






|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and
    Related Stockholder Matters

Our common stock is traded on the New York
Stock Exchange (the NYSE) under the symbol DL. The
following table sets forth the high and low sale prices as
reported on the NYSE for the periods indicated as well as the
dividend paid with respect to these periods. The sale price of
the common stock on March 4, 2004, was $28.75 per
share.

|            |                |             |  |       |  |           |  |       |  |  |  |      | 
|----------- | -------------- | ----------- |  | ----- |  | --------- |  | ----- |  |  |  | ---- | 
|            |                |             |  |      
|            |                | Price Range |  |      
|            |                |             |  |      
|            |                | High        |  | Low   |  | Dividends
|            |                |             |  |       |  |          
|Fiscal 2003 |                |             |  |       |  |           |  |       |  |  |  |     
|            | Fourth Quarter |             |  | 28.70 |  |           |  | 21.31 |  |  |  | 0.09 | 
|            | Third Quarter  |             |  | 21.75 |  |           |  | 18.69 |  |  |  | 0.09 | 
|            | Second Quarter |             |  | 20.88 |  |           |  | 18.51 |  |  |  | 0.04 | 
|            | First Quarter  |             |  | 21.00 |  |           |  | 17.12 |  |  |  | 0.04 | 
|Fiscal 2002 |                |             |  |       |  |           |  |       |  |  |  |     
|            | Fourth Quarter |             |  | 22.15 |  |           |  | 20.37 |  |  |  | 0.04 | 
|            | Third Quarter  |             |  | 21.67 |  |           |  | 17.98 |  |  |  | 0.04 | 
|            | Second Quarter |             |  | 21.99 |  |           |  | 17.99 |  |  |  | 0.04 | 
|            | First Quarter  |             |  | 18.02 |  |           |  | 15.74 |  |  |  | 0.04 | 

In January 2004, the Board of Directors declared
a quarterly dividend of $0.09 per share, which is payable
on April 15, 2004 to stockholders of record at the close of
business on March 15, 2004.

The declaration and payment of dividends is
subject to the discretion of our board of directors. Any future
determination to pay dividends will depend on our results of
operations, financial condition, capital requirements,
contractual restrictions, whether or not the pending Merger with
Henkel is completed, and other factors deemed relevant at the
time by the board. As of March 4, 2004, there were
98,285,862 shares of common stock outstanding, which were
held by 26,754 stockholders of record.






|        |                                  
|------- | ---------------------------------
|Item 6. | Selected Financial and Other Data

The following table presents selected financial
information derived from our consolidated financial statements
and includes the reclassification of the Argentina and SPC
businesses as discontinued operations.

The following data should be read in conjunction
with our consolidated financial statements and notes thereto,
Item 7. Managements Discussion and Analysis
of Results of Operations and Financial Condition and
the other financial information included elsewhere or
incorporated by reference in this Form 10-K.

13



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SELECTED FINANCIAL AND OTHER DATA

|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |       |      | 
|--------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------------------- | --------- | ------- | ---- | ------- | --------- | ------- | ----- | ---- | --------- | --- | ----- | - | --------- | --- | ----- | - | --------- | ----- | ---- | 
|                                                                                                                |                                      |                                                        
|                                                                                                                |                                      | Year Ended December 31                                 
|                                                                                                                |                                      |                                                        
|                                                                                                                |                                      | 2003(1)                                                 |           | 2002(2) |      | 2001(3) |           | 2000(4) |       | 1999
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |     
|                                                                                                                |                                      |                                                        
|                                                                                                                |                                      | (In thousands, except per share data)                  
|Operations                                                                                                      |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Net sales                                                                                                       |                                      | $                                                       | 1,344,858 |         |      | $       | 1,282,231 |         |       | $    | 1,189,332 |     |       | $ | 1,077,646 |     |       | $ | 1,151,585 |      
|Cost of products sold                                                                                           |                                      |                                                         | 837,192   |         |      |         | 803,696   |         |       |      | 772,810   |     |       |   | 723,786   |     |       |   | 732,642   |      
|Special charges/(income) from asset write-downs,
    discontinued product inventories and other exit activities |                                      |                                                         | 7,403     |         |      |         | (1,707    | )       |       |      | 8,424     |     |       |   | 10,519    |     |       |   |          |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Total cost of products sold                                                                                     |                                      |                                                         | 844,595   |         |      |         | 801,989   |         |       |      | 781,234   |     |       |   | 734,305   |     |       |   | 732,642   |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Selling, general and administrative expenses                                                                    |                                      |                                                         | 259,108   |         |      |         | 259,900   |         |       |      | 244,695   |     |       |   | 207,447   |     |       |   | 205,646   |      
|Special charges and other asset write-downs                                                                     |                                      |                                                         |          |         |      |         |          |         |       |      | 330       |     |       |   | 6,734     |     |       |   |          |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|                                                                                                                |                                      |                                                         | 1,103,703 |         |      |         | 1,061,889 |         |       |      | 1,026,259 |     |       |   | 948,486   |     |       |   | 938,288   |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Operating income                                                                                                |                                      |                                                         | 241,155   |         |      |         | 220,342   |         |       |      | 163,073   |     |       |   | 129,160   |     |       |   | 213,297   |      
|Interest and other expenses, net                                                                                |                                      |                                                         | (35,211   | )       |      |         | (40,255   | )       |       |      | (47,990   | )   |       |   | (50,306   | )   |       |   | (32,712   | )    
|Other special charges                                                                                           |                                      |                                                         | (1,654    | )       |      |         |          |         |       |      |          |     |       |   |          |     |       |   |          |      
|Income/(loss) from Dial/ Henkel joint ventures                                                                  |                                      |                                                         |          |         |      |         | 2,086     |         |       |      | 2,990     |     |       |   | (37,615   | )   |       |   | (1,347    | )    
|Other income  gain on special items                                                                            |                                      |                                                         |          |         |      |         |          |         |       |      |          |     |       |   | 9,243     |     |       |   |          |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Income from continuing operations before income
    taxes                                                       |                                      |                                                         | 204,290   |         |      |         | 182,173   |         |       |      | 118,073   |     |       |   | 50,482    |     |       |   | 179,238   |      
|Income taxes                                                                                                    |                                      |                                                         | (80,536   | )       |      |         | (66,939   | )       |       |      | (43,765   | )   |       |   | (17,066   | )   |       |   | (62,441   | )    
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Income from continuing operations                                                                               |                                      |                                                         | 123,754   |         |      |         | 115,234   |         |       |      | 74,308    |     |       |   | 33,416    |     |       |   | 116,797   |      
|Discontinued operations:                                                                                        |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Income/(loss) from operations of discontinued
    businesses, net of tax                                        |                                      |                                                         |          |         |      |         | 3,582     |         |       |      | (8,156    | )   |       |   | (44,424   | )   |       |   | (31       | )    
|Adjustment to loss/(loss) on disposal of
    discontinued businesses, net of tax                                |                                      |                                                         | 2,150     |         |      |         | (58,616   | )       |       |      | (198,403  | )   |       |   |          |     |       |   |          |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Income/(loss) from discontinued operations                                                                      |                                      |                                                         | 2,150     |         |      |         | (55,034   | )       |       |      | (206,559  | )   |       |   | (44,424   | )   |       |   | (31       | )    
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Cumulative effect of change in accounting
    principle, net of tax                                             |                                      |                                                         |          |         |      |         | (43,308   | )       |       |      |          |     |       |   |          |     |       |   |          |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Net income (loss)                                                                                               |                                      | $                                                       | 125,904   |         |      | $       | 16,892    |         |       | $    | (132,251  | )   |       | $ | (11,008   | )   |       | $ | 116,766   |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|                                                                                                                | Diluted net income/(loss) per share: |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |       |     
|                                                                                                                |                                      | Income from continuing operations                       |           | $       | 1.29 |         |           | $       | 1.22  |      |           | $   | 0.81  |   |           | $   | 0.36  |   |           | $     | 1.17 | 
|                                                                                                                |                                      | Income/(loss) from discontinued operations              |           |         | 0.02 |         |           |         | (0.58 | )    |           |     | (2.24 | ) |           |     | (0.48 | ) |           |       |     | 
|                                                                                                                |                                      | Cumulative effect of change in accounting
    principle |           |         |     |         |           |         | (0.46 | )    |           |     |      |   |           |     |      |   |           |       |     | 
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Net income/(loss) per diluted share                                                                             |                                      | $                                                       | 1.31      |         |      | $       | 0.18      |         |       | $    | (1.43     | )   |       | $ | (0.12     | )   |       | $ | 1.17      |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Basic shares outstanding                                                                                        |                                      |                                                         | 93,968    |         |      |         | 92,359    |         |       |      | 91,451    |     |       |   | 92,237    |     |       |   | 98,255    |      
|                                                                                                                | Equivalent shares                    |                                                         |           | 2,215   |      |         |           | 2,072   |       |      |           | 787 |       |   |           | 279 |       |   |           | 1,810 |     
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      
|Diluted shares                                                                                                  |                                      |                                                         | 96,183    |         |      |         | 94,431    |         |       |      | 92,238    |     |       |   | 92,516    |     |       |   | 100,065   |      
|                                                                                                                |                                      |                                                         |           |         |      |         |           |         |       |      |           |     |       |   |           |     |       |   |           |      

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|                                   |  |                        |           |         |  |         |           |         |  |      |           |  |  |   |           |   |  |   |           | 
|---------------------------------- |  | ---------------------- | --------- | ------- |  | ------- | --------- | ------- |  | ---- | --------- |  |  | - | --------- | - |  | - | --------- | 
|                                   |  |                       
|                                   |  | Year Ended December 31
|                                   |  |                       
|                                   |  | 2003(1)                |           | 2002(2) |  | 2001(3) |           | 2000(4) |  | 1999
|                                   |  |                        |           |         |  |         |           |         |  |     
|Balance Sheet Data                 |  |                        |           |         |  |         |           |         |  |      |           |  |  |   |           |   |  |   |           | 
|Total assets                       |  | $                      | 1,264,256 |         |  | $       | 1,149,739 |         |  | $    | 1,024,116 |  |  | $ | 1,392,717 |   |  | $ | 1,286,568 | 
|Working capital (deficit)(5)       |  |                        | (18,531   | )       |  |         | 8,366     |         |  |      | 20,159    |  |  |   | (23,505   | ) |  |   | 8,579     | 
|Cash(6)                            |  |                        | 364,853   |         |  |         | 219,554   |         |  |      | 28,310    |  |  |   | 6,392     |   |  |   | 5,911     | 
|Total debt                         |  |                        | 457,171   |         |  |         | 458,393   |         |  |      | 445,341   |  |  |   | 581,038   |   |  |   | 344,803   | 
|Net debt (total debt less cash(6)) |  |                        | 92,318    |         |  |         | 238,839   |         |  |      | 417,031   |  |  |   | 574,646   |   |  |   | 338,892   | 
|Stockholders equity(7)            |  |                        | 307,265   |         |  |         | 148,998   |         |  |      | 81,878    |  |  |   | 293,907   |   |  |   | 411,271   | 
|Other Data                         |  |                        |           |         |  |         |           |         |  |      |           |  |  |   |           |   |  |   |           | 
|Depreciation and amortization      |  |                        | 39,121    |         |  |         | 35,964    |         |  |      | 43,806    |  |  |   | 43,855    |   |  |   | 35,672    | 
|Capital expenditures               |  |                        | 44,451    |         |  |         | 34,490    |         |  |      | 28,644    |  |  |   | 37,337    |   |  |   | 56,252    | 
|Dividends paid on common stock     |  |                        | 24,545    |         |  |         | 14,793    |         |  |      | 14,613    |  |  |   | 25,762    |   |  |   | 31,407    | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes a special charge of $7.4 million
    ($9.6 million after-tax or $0.10 per diluted share)
    from the net asset writedown associated with the impairment of
    our Guatemala manufacturing facility. Also includes a
    $1.7 million charge ($1.7 million after-tax or
    $0.02 per diluted share) related to costs associated with
    our pending acquisition by Henkel. See Note 3 of the
    consolidated financial statements included in this
    Form 10-K.                                                                                                                                                                                                                    
|   
|(2) | Includes special net gain of $1.7 million
    ($0.9 million after-tax or $0.01 per diluted share)
    from manufacturing asset sales and writedowns and reversal of
    restructure reserves. Also includes $2.1 million
    ($2.0 million after-tax or $0.02 per diluted share) of
    income from the liquidation of the Dial/ Henkel LLC joint
    venture. See Notes 3 and 5 of the consolidated financial
    statements included in this Form 10-K.                                                                                                                                                                                                                                         
|   
|(3) | Includes special charges of $8.8 million
    ($7.6 million after-tax or $0.08 per diluted share)
    from asset writedowns, discontinuing product inventories, and
    other exit costs. See Note 3 of the consolidated financial
    statements included in this Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) | Includes special charges of $17.3 million
    ($11.3 million after-tax or $0.12 per diluted share)
    from asset writedowns, discontinuing product inventories, and
    other exit costs. Also includes $30.5 million
    ($22.3 million after-tax or $0.24 per diluted share)
    resulting from exit activities undertaken by the Dial/ Henkel
    joint ventures during 2000. These charges are partially offset
    by $9.2 million ($7.2 million after-tax or
    $0.08 per diluted share) from the sale of land and a
    curtailment gain resulting from changes to retiree medical plan
    benefits. See Note 5 of the consolidated financial
    statements included in this Form 10-K.
|   
|(5) | Working capital calculation excludes cash and
    restricted cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(6) | Includes cash and restricted cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(7) | In 2003, stockholders equity was increased
    by $20.9 million related to an adjustment to the previously
    recorded additional minimum pension liability. In 2002,
    stockholders equity was reduced by $17.7 million for
    additional minimum pension liability. In 2001,
    stockholders equity was reduced $62.2 million for
    unrealized foreign currency translation charges related to the
    currency devaluation in Argentina and $11.9 million for
    additional minimum pension liability.                                                                                                                                                                              






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of
    Results of Operations and Financial Condition

Pending Acquisition By Henkel

As we have previously disclosed, our board of
directors determined in 2001 that the long-term interests of
Dial and our shareholders would be best served if we were part
of a larger enterprise. Accordingly, since that time, we have
disclosed that we have been working with Goldman,
Sachs & Co. to evaluate opportunities to be part of a
larger company.

15



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##### Table of Contents



On December 14, 2003, we entered into the
Merger Agreement, pursuant to which Henkel will acquire us
through the merger of Merger Sub with and into us, with Dial
surviving as a wholly-owned subsidiary of Henkel. Upon the
consummation of the Merger, each outstanding share of our common
stock will be converted into the right to receive $28.75 in
cash. The completion of the Merger is subject to the
satisfaction or waiver of several conditions, including approval
of the Merger by our stockholders and other customary conditions
to the closing. Subject to the satisfaction or waiver of these
conditions, we expect to complete the Merger in March 2004. A
special stockholder meeting to approve the Merger Agreement is
scheduled for March 24, 2004. Stockholders of record as of
the close of business on February 17, 2004 are entitled to
be present and vote at this special meeting. The foregoing
description does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement.

Overview

We manufacture and sell consumer products,
including Purex laundry detergents, Dial soaps,
Renuzit air fresheners and Armour canned meat products.
Our Purex laundry detergent business is our largest in
terms of sales and our Dial soap business is our most
profitable. Our Renuzit air fresheners business has a
higher return on invested capital because currently most of our
air freshener products are manufactured by third parties. Our
Armour canned meat business absorbs overhead for our other
businesses and we do not invest heavily in this business.

Currently, 95% of our sales are generated in the
U.S. U.S. markets for consumer products are mature and
characterized by high household penetration. The
U.S. market for consumer products is intensely competitive
and most of our competitors, such as The Procter &
Gamble Company, Lever Brothers Co., Colgate-Palmolive Company
and S.C. Johnson & Son, Inc., have greater financial
resources to manufacture, market and sell their products.

We sell our products in the U.S. primarily
to mass merchandisers, supermarkets, drug stores, membership
club stores and dollar stores. Approximately 57% of our sales
are made to our top 10 customers, with Wal-Mart and its
affiliate Sams Club accounting for 28% of our sales. As a
result, our sales and financial results are heavily dependent on
purchases by these customers. Moreover, because we are much
smaller than most of our competitors and do not sell as wide a
range of products, we believe that our leverage with our
customers in negotiating price and favorable merchandising and
promotional events is compromised.

To maintain our importance to our customers and
to consumers, we position most of our products as value
products. This means that we manufacture and sell products that
attempt to deliver the same or similar benefits to consumers at
the lower end of the competitive price range for these products.
As a result, we continually focus on keeping our manufacturing
and distribution costs and our selling, general and
administrative expenses low.

In selling our value priced consumer products, we
primarily use a push approach and promote our
products primarily to our customers with trade incentives to
obtain favorable shelf space and in-store promotional events. We
spend significantly more on trade incentives than we do on
consumer promotion and advertising. Some of our major
competitors use a pull approach and, as a result,
spend more on consumer promotion and advertising to promote
their products directly to consumers.

During the past three years, our sales have
outpaced the growth of the categories in which we compete. All
of our major brands have stable or growing market shares. We
believe that our sales growth has resulted from delivering value
priced products that provide the best balance of performance and
cost to consumers who are increasingly cost conscious,
particularly in light of recent U.S. economic conditions.
We also believe that our sales growth has resulted from our
emphasis on customer satisfaction and on providing our customers
with products sold under well-established brands that our
customers can sell through to our consumers with favorable
retail margins. We believe that our success over the last three
years will make comparisons challenging in the future.

The primary driver of our overall sales growth
during the past few years has been the significant increase in
sales of Purex liquid detergents. We believe that the
growth of Purex liquid detergents is due to increased

16



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##### Table of Contents



sales of value priced products and a consumer
preference trend for liquid laundry detergent over powder
laundry detergent products. We do not expect that we will be
able to continue to increase sales of Purex detergents at
the same rate as we have over the past few years. In fact, at
the beginning of 2004, we have experienced considerable
increased competitive activity in the value segment of the
laundry detergent market, particularly at Wal-Mart. We believe
that we may need to increase our spending to grow our sales of
Purex detergents, which could adversely impact our
profitability.


During this same period, and although our sales
of Personal Care products have increased significantly, we have
experienced a decline in our bar soap sales as there has been a
consumer preference trend towards body washes and liquid hand
soaps. We expect that this decline will continue. We currently
generate approximately 57% of our Personal Care sales from bar
soaps. Although we have been successful in increasing our sales
of body wash and Dial liquid hand soap products to offset the
sales decline in bar soaps, a continued decline in our bar soap
sales could adversely impact our profitability.

Due to the intense competition in
U.S. markets, we have not been able to increase the prices
for our products for a number of years and do not expect to be
able to do so in the near future. Instead, we have been forced
to match competition in providing more product to consumers at
the same price, primarily in the form of bonus packs. Moreover,
because of our value price positioning, we believe we have less
profit available to match competitive price decreases or trade
or consumer promotions.

With respect to our cost structure, we have been
successful over the past three years in improving our gross and
operating margins. These improvements have resulted primarily
from cost absorption benefits due to higher sales of our
products, lower manufacturing and distribution costs and
favorable raw material pricing. While we continue to focus on
cutting costs, we do not believe that we will be able to cut
costs as rapidly or to the extent that we have over the past few
years. Further, due to our inability to increase prices, changes
in raw material (such as tallow, meat and aluminum) and energy
costs significantly impact our profitability. Because our cost
structure is relatively fixed in the short term, increases or
decreases in sales, even modest ones, significantly impact our
profitability.

We generate a significant amount of cash, which
has enabled us to reduce debt substantially and has given us
flexibility to consider capital allocation alternatives to
increase shareholder value. As a result, we increased our
quarterly cash dividend from $.04 to $.09 per share and
announced a $100 million stock repurchase program in the
third quarter of 2003. We have not repurchased any stock since
August 2003 and do not expect to do so prior to the anticipated
closing of the Merger with Henkel.

Critical Accounting Policies and
Estimates

Managements discussion and analysis of
results of operations and financial condition are based upon our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States of America. The preparation of our financial
statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and
expenses. We routinely evaluate our estimates, including those
related to customer programs and incentives, product returns,
bad debts, income taxes, pension and other post retirement
benefits, long-lived assets, inventories, restructurings, self
insurance (primarily workers compensation), environmental
matters, exit cost reserves related to discontinued operations
and contingencies and litigation. We base our estimates on
historical experience and on various other assumptions that we
believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these
estimates under different assumptions and conditions.

Accounting policies are considered critical when
they are both significant to the portrayal of our financial
condition and results, and they require difficult, subjective,
or complex judgments or estimates. We consider our critical
accounting policies to include our calculation and treatment of
the following expenses:



| |   |                 
| | - | ----------------
| |  | sales incentives

17



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##### Table of Contents





| |   |                                     
| | - | ------------------------------------
| |  | pension and post retirement benefits
|
| |  | income taxes                        

Management has discussed these critical
accounting estimates with the Audit Committee of our Board of
Directors.



| |                 
| | ----------------
| | Sales Incentives

Customer sales are recorded net of allowances for
cash discounts, estimated sales returns and trade promotions.

We routinely commit to both one-time and on-going
trade promotion programs with customers that require us to
estimate and accrue the ultimate costs of such programs. Trade
promotion and cash discount costs are recorded as a reduction to
sales within the same period that the revenue was recognized.
Estimating the costs associated with trade promotion programs
and cash discount expense is based on our experience and
available historical information.

In determining liabilities for trade promotional
spending, we must rely on judgment and estimates which include,
but are not limited to, our understanding of trade promotional
spending patterns, knowledge of the status of trade promotional
activities, and the interpretation of historical spending trends
of the customer and category. If our estimates were to differ by
10%, the impact to promotional spending accruals would be
approximately $1.3 million.



| |                                         
| | ----------------------------------------
| | Pension and Post-Retirement
    Benefits

Our employee pension and other post-retirement
benefits (i.e. health care and life insurance) costs and
obligations are accounted for under the provisions of Financial
Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 87,
Employers Accounting for Pensions and
SFAS No. 106, Employers Accounting for
Postretirement Benefits Other Than Pensions. These
provisions require the following assumptions to estimate the
projected and accumulated benefit obligations: discount rates,
medical trend rates, expected long-term rate of return on plan
assets, salary growth rates, employee turnover, retirement and
mortality rates. These assumptions also affect the annual
expense recognized for these plans. The assumptions are based on
our historical experience as well as current facts and known
economic and market conditions. We use third-party actuaries to
assist in properly measuring the expense and obligations related
to these employee benefits. While we believe that the
assumptions used are appropriate, the use of different estimates
could result in variances in the amount of expense recognized.
The following are the key assumptions that were used to measure
the pension and post-retirement benefit expense in 2003 and the
approximate impact to this expense if they were to change by 10%:

|                           |  |           |       |                       |  |  |                  | 
|-------------------------- |  | --------- | ----- | --------------------- |  |  | ---------------- | 
|                           |  |           |       | Pre-Tax Impact of 10%
|Key Assumptions            |  | Rate Used |       | Rate Change          
|                           |  |           |       |                      
|                           |  |           |       | (In millions)        
|Rate of return on assets   |  |           | 8.75  | %                     |  |  | +/- $1.8         | 
|Discount rate              |  |           | 6.75  | %                     |  |  | - $1.7 to + $1.8 | 
|Salary growth rate         |  |           | 4.50  | %                     |  |  | +/- $0.5         | 
|Initial medical trend rate |  |           | 10.00 | %                     |  |  | - $2.2 to + $2.9 | 

We amortize gains and losses that may result from
differences between our assumptions and actual results over
future periods.

See Note 13 to the consolidated financial
statements included in this Form 10-K for more information
regarding the costs and obligations for pensions and
post-retirement benefits.



| |             
| | ------------
| | Income Taxes

Under SFAS No. 109, Accounting
for Income Taxes, income taxes are recorded based on
current year amounts payable or refundable, as well as the
consequences of events that give rise to deferred tax assets and

18



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##### Table of Contents



liabilities. We base our estimate of current and
deferred taxes on the tax laws and rates that are currently in
effect in the applicable jurisdiction. Changes in tax laws or
rates may affect the current amounts payable or refundable as
well as the amount of deferred tax assets or liabilities.


We currently have $23.4 million of net
deferred tax assets resulting primarily from differences between
book and tax treatment for certain items. We believe that these
net deferred tax assets will be realized based primarily on our
projected future earnings and scheduling of our deferred tax
liabilities. However, the amount of the deferred tax assets
actually realized could differ if we have little or no future
earnings.

At December 31, 2002, we had a full
valuation allowance for $19.4 million for deferred tax
assets related to a $52.3 million capital loss from the
sale of the Specialty Personal Care business. In 2003, we
utilized $0.7 million of that capital loss. The remaining
$51.6 million capital loss can only be utilized to offset
future net capital gains and will expire on December 31,
2006. SFAS No. 109 requires that a valuation allowance
be established when it is more likely than not that all or a
portion of a deferred tax asset will not be realized. Changes in
valuation allowances from period to period are included in our
tax provision in the period of the change. In determining
whether a valuation allowance is required, we take into account
all evidence with regard to the utilization of a deferred tax
asset including our past earnings history, expected future
earnings, the character and jurisdiction of such earnings,
unsettled circumstances that, if unfavorably resolved, would
adversely affect utilization of a deferred tax asset, carryback
and carryforward periods, and tax strategies that could
potentially enhance the likelihood of realization of a deferred
tax asset. We will maintain a full valuation allowance for the
capital loss until it is more likely than not to be utilized.

U.S. income tax is not provided when foreign
earnings are indefinitely reinvested in accordance with
Accounting Principles Board Opinion No. 23,
Accounting for Income Taxes, Special Areas. We
determine whether our foreign subsidiaries have invested or will
invest a significant portion of their undistributed earnings
indefinitely. We reassess our determination on a periodic basis.
Changes to our determination may be warranted based on our
experience as well as plans regarding future international
operations and expected tax payments. Changes in the
determination from period to period are included in our tax
provision in the period of change. As of December 31, 2003
and 2002, we had not provided for any U.S. taxes on
approximately $1.0 million and $14.0 million,
respectively, of undistributed earnings from our
non-U.S. subsidiaries since these earnings are indefinitely
reinvested.

Sale of Dial Argentina Business

On June 30, 2003, we completed the sale of
our discontinued Argentina business to an entity designated by
Southern Cross Group, a private equity investor in Argentina.
The transaction was structured as the sale of assets of Dial
Argentina, S.A., which included the stock of its two
subsidiaries, Sulfargen, S.A. and The Dial Corporation
San Juan, S.A. In December 2002, we recorded an after-tax
loss of $62.4 million on the pending sale and classified
our Argentina business as a discontinued operation. This
primarily non-cash loss includes the reversal of
$92.8 million in currency translation adjustments that had
previously been recorded as a reduction of equity and an accrual
for estimated exit and closing costs. This transaction also
resulted in current tax benefits of approximately
$61 million, which were utilized during 2003. During 2002,
we recorded $3.6 million in net income ($6.8 million
pre-tax) from operation of our discontinued Argentina business.

Completion of the sale in 2003 resulted in higher
cash proceeds and lower projected exit and closing costs than
originally anticipated. Accordingly, in the second quarter of
2003, we recognized a $2.1 million after-tax
($3.4 million pre-tax) reduction in the previously recorded
loss on the disposal of our discontinued Argentina business. As
of December 31, 2002, our consolidated balance sheet
included $18.5 million in current assets, $2.2 million
in non-current assets and $13.5 million in current
liabilities related to our discontinued Argentina

19



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##### Table of Contents



business. The following table summarizes the net
sales, operating gain/(loss) and net gain/(loss) of the
discontinued Argentina business for 2003, 2002 and 2001:


|                                                                                                |  |               |     |      |  |      |       |   |  |   |      |  
|----------------------------------------------------------------------------------------------- |  | ------------- | --- | ---- |  | ---- | ----- | - |  | - | ---- | -
|                                                                                                |  | 2003          |     | 2002 |  | 2001
|                                                                                                |  |               |     |      |  |     
|                                                                                                |  |              
|                                                                                                |  | (In millions)
|Net sales                                                                                       |  | $             |    |      |  | $    | 52.3  |   |  | $ | 80.8 |  
|Operating gain/(loss)(1)                                                                        |  |               |    |      |  |      | 6.8   |   |  |   | (4.5 | )
|Tax benefit/(expense) on operations                                                             |  |               |    |      |  |      | (3.2  | ) |  |   | 0.1  |  
|Income/(loss) from operations, net of tax                                                       |  |               |    |      |  |      | 3.6   |   |  | $ | (4.5 | )
|Net loss from disposal of Argentina business, net
    of $61.0 tax benefit                      |  |               |    |      |  | $    | (62.4 | ) |  |   |     |  
|Reduction of loss on disposal of discontinued
    Argentina business, net of income tax of $1.3 |  | $             | 2.1 |      |  |      |      |   |  |   |     |  



---



|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The loss for 2001 includes $2.0 million in
    special charges for asset writedowns and severance that have
    been reclassified to discontinued operations.

In the first quarter of 2002, we also recorded an
after-tax impairment charge of $43.3 million for the
Argentina business as a result of adopting SFAS No. 142,
Goodwill and Other Intangible Assets, which
established a new method of testing goodwill for impairment. The
impairment was calculated using a discounted cash flow model and
was recorded in our Statement of Consolidated Operations and
Comprehensive Income as a Cumulative effect of the change in
accounting principle and, therefore, is not included in
operating income.

Sale of Specialty Personal Care
Segment

On August 28, 2001, we completed the sale of
our SPC business. As a result of the sale, we incurred a
one-time charge of $198.4 million, net of income tax
benefits and expected sale proceeds, related to the write-off of
SPC assets and an accrual for estimated exit costs. Proceeds
from the sale were used to repay debt. In the first quarter of
2002, we entered into an agreement with the buyer of this
business to resolve disputes that arose in connection with the
sale. Under the terms of that agreement, we received
$2.0 million ($1.3 million after-tax) from the buyer
which was recorded as a reduction of the loss recognized on the
sale of the SPC business. In the fourth quarter of 2002, we
further reduced the loss previously recorded on the disposal of
the SPC business by $4.0 million ($2.5 million
after-tax) as a result of reversing certain exit cost accruals
due to lower than expected costs associated with exiting the SPC
discontinued operation.

Our loss on the sale included a current tax
benefit of approximately $40.0 million, which was realized
in 2001 and 2002. In addition, the sale resulted in
approximately $52.3 million in capital losses for which no
tax benefits were provided. In the second quarter of 2003, we
utilized $0.7 million of these capital losses. We will
realize additional tax benefits on these capital losses only to
the extent that we generate capital gains before
December 31, 2006. See Item 7.
Managements Discussion and Analysis of Results of
Operations and Financial Condition  Critical
Accounting Policies and Estimates  Income
Taxes.

Special Items



| |                                                        
| | -------------------------------------------------------
| | 2003 Special Items  Pre-Tax
    Charge of $9.1 million

In the fourth quarter of 2003, we decided to
transfer production of our translucent soap manufacturing
operations in Guatemala to our plant in Aurora, Illinois. We
expect to complete this move during the third quarter of 2004.
We are currently seeking a buyer for our operations in
Guatemala. As a result of this decision, we recorded an
impairment charge of $7.4 million and income tax expense of
$2.2 million during the fourth quarter to write down the
book value of those assets, primarily property and equipment, to
the estimated fair value less cost to sell of $2.0 million.
As of December 31, 2003, our consolidated balance sheet
included $1.8 million in current assets, $0.7 million
in non-current assets and $0.5 million in current
liabilities related to our Guatemala facility. We have
classified these assets and liabilities on the balance sheet as
held for sale.

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Additionally in the fourth quarter of 2003, we
recorded a $1.7 million pre-tax charge ($1.7 million
after tax) primarily for legal expenses incurred in connection
with the pending acquisition by Henkel.



| |                                                      
| | -----------------------------------------------------
| | 2002 Special Items  Pre-Tax Gain
    of $3.8 million

We recorded a net gain of $1.7 million
($0.9 million after-tax) associated with the sale of our
Mexico manufacturing facility and the reversal of special item
reserves established in 2001 and 2000 which were deemed no
longer necessary. This was offset in part by a writedown of the
carrying value of our Guatemala manufacturing facility. In
addition, we recorded a $2.1 million gain
($2.0 million after tax) associated with the previously
dissolved joint ventures for the reversal of reserves that were
no longer required.



| |                                                        
| | -------------------------------------------------------
| | 2001 Special Items  Pre-Tax
    Charge of $8.8 million

On August 30, 2001, we announced a special
charge to consolidate manufacturing facilities in the United
States and Argentina. In addition, in the third quarter of 2001
we incurred a special charge in connection with the closure of
our Mexico manufacturing facility. Excluding the
$2.0 million Argentina portion of the charge, which has
been reclassified to discontinued operations, we recorded
charges of $9.8 million ($8.3 million after-tax)
during 2001. During 2001, we also recorded a $1.0 million
pre-tax gain ($0.5 million after-tax) for the reversal of
special item reserves established in 2000, which were deemed no
longer necessary. The net charges of $8.8 million ($7.8 million
after tax) recorded against Operating Income in 2001 consist of
$8.4 million for manufacturing asset sales and writedowns,
discontinued product inventories and other exit activities, as
well as $0.3 million for selling, general and administrative
expenses related to asset writedowns, severance and other exit
costs.

We recorded employee separation charges related
to severance packages for 64 manufacturing employees in the
United States and 69 manufacturing and 33 general, selling and
administrative employees in Mexico. The predominately
involuntary packages were based on salary levels and past
service and were recorded upon acceptance of the package.

We wrote down the carrying value of the Compton,
California and Mexico manufacturing plants by approximately
$1.9 million. As a result of the closure of our Mexico
manufacturing facility, some inventory, primarily raw material,
became unusable. Accordingly, a charge was recorded for the
difference between cost and net realizable value.

We expensed the $2.8 million cumulative
currency translation adjustment related to our Mexico
operations, which was previously recorded as a charge to other
comprehensive income/(loss) in stockholders equity.

IT Outsourcing and SAP Implementation
Project

In July 2003, we entered into a seven-year
information technology outsourcing agreement with Electronic
Data Systems Corporation (EDS). Under this
agreement, EDS will provide information technology
infrastructure, support and management services. In addition,
EDS, teaming with SAP, is leading a complete SAP software
implementation for our enterprise operations, including the
manufacturing, supply chain, finance, accounting and performance
management environments, as well as customer relationship
management.

The implementation of SAP began in the third
quarter of 2003 and currently is expected to be completed in the
first quarter of 2005. As of December 31, 2003, we had
incurred $12.1 million of the anticipated
$35.5 million in total capital expenditures related to the
project. Additionally, for the year ended December 31,
2003, we recognized $2.1 million in accelerated
depreciation expense related to our current software system. In
2004, we will recognize an additional $5.4 million in
accelerated depreciation expense.

We expect capital and operating savings to total
approximately $21 million over the term of the agreement
with EDS, and anticipate realizing additional capital and
operating savings relating to efficiencies gained through the
use of the implemented SAP software.

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##### Table of Contents



Fiscal 2003 Compared With Fiscal
2002

Net sales information for the businesses is set
forth below:

|                                      |  |                    |         |                     |  |        |         |            |  |  |      |   |  |  |      |   
|------------------------------------- |  | ------------------ | ------- | ------------------- |  | ------ | ------- | ---------- |  |  | ---- | - |  |  | ---- | --
|                                      |  |                    |         |                     |  |       
|                                      |  | For the Year Ended |         |                    
|                                      |  | December 31        |         | Increase/(Decrease)
|                                      |  |                    |         |                    
|                                      |  | 2003               |         | 2002                |  | Amount |         | Percentage
|                                      |  |                    |         |                     |  |        |         |           
|                                      |  |                   
|                                      |  | (In millions)     
|Laundry Care                          |  | $                  | 489.9   |                     |  | $      | 466.6   |            |  |  | 23.3 |   |  |  | 5.0  | % 
|Personal Care                         |  |                    | 380.7   |                     |  |        | 367.8   |            |  |  | 12.9 |   |  |  | 3.5  | % 
|Food Products                         |  |                    | 194.1   |                     |  |        | 185.3   |            |  |  | 8.8  |   |  |  | 4.7  | % 
|Air Fresheners                        |  |                    | 161.8   |                     |  |        | 162.5   |            |  |  | (0.7 | ) |  |  | (0.4 | )%
|                                      |  |                    |         |                     |  |        |         |            |  |  |      |   |  |  |      |   
|Total Domestic Branded Segment        |  |                    | 1,226.5 |                     |  |        | 1,182.2 |            |  |  | 44.3 |   |  |  | 3.7  | % 
|Total International and Other Segment |  |                    | 118.4   |                     |  |        | 100.0   |            |  |  | 18.4 |   |  |  | 18.4 | % 
|                                      |  |                    |         |                     |  |        |         |            |  |  |      |   |  |  |      |   
|Total Company Net Sales               |  | $                  | 1,344.9 |                     |  | $      | 1,282.2 |            |  |  | 62.7 |   |  |  | 4.9  | % 
|                                      |  |                    |         |                     |  |        |         |            |  |  |      |   |  |  |      |   

Laundry Care net sales increased due to continued
higher volume sales of Purex liquid detergent, offset in
part by a decline in sales of powder detergent and additives.
The increase in Purex liquid detergent sales is due to
growth in value brands as well as the current consumer
preference for liquid detergent versus powder detergent
products. We expect that this consumer preference will continue
and will result in a continued decline in powder detergent
sales. Personal Care net sales increased primarily due to new
body wash and liquid hand soap products that were launched at
the end of 2002. These sales were partially offset by a decline
in bar soap sales driven by a growing consumer preference for
body washes and liquid hand soaps. We expect that this consumer
preference will continue and will result in a continued decline
in bar soap sales. Food Products net sales were higher primarily
as a result of strong sales of Armour branded products. Sales of
Armour branded products were driven in large part by segment
growth and increased promotions and distribution at dollar
stores.

Net sales in our International & Other
segment increased primarily as a result of increased sales in
Canada and in our branded commercial markets business. Canadian
sales were led by higher sales of Purex liquid laundry
detergent and foreign currency gains. Excluding foreign currency
gains, the International & Other segment increased
13.6%.

Our gross margin decreased 30 basis points
to 37.2% from 37.5% in 2002. This decrease resulted from asset
writedowns in 2003 versus gains on special items in 2002. Higher
production volumes, manufacturing efficiencies and lower trade
spending increased gross margin by 40 basis points.

Selling, general and administrative expenses
decreased $0.8 million, or 0.3%, due to lower employee
performance-based compensation and advertising expenses. This
reduction was partially offset by higher costs for research and
development, higher legal and insurance costs and accelerated
depreciation expense on our current software system due to the
implementation of SAP.

Interest expense decreased $4.2 million, or
14.2%, due to lower interest rates resulting from our current
and previously terminated interest rate swaps.

Our effective income tax rate on continuing
operations in 2003 increased to 39.4% from 36.7% in 2002. This
increase is primarily attributable to the net tax impact of 2003
special items, slightly higher state taxes, and nontaxable joint
venture income in 2002. These increases were offset in part by
higher tax benefits related to foreign sales in 2003.

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##### Table of Contents



Fiscal 2002 Compared With Fiscal
2001

Net sales information for the businesses is set
forth below:

|                                      |  |                    |         |          |  |        |         |            |  |   |      |  |  |  |      |  
|------------------------------------- |  | ------------------ | ------- | -------- |  | ------ | ------- | ---------- |  | - | ---- |  |  |  | ---- | -
|                                      |  |                    |         |          |  |       
|                                      |  | For the Year Ended |         |         
|                                      |  | December 31        |         | Increase
|                                      |  |                    |         |         
|                                      |  | 2002               |         | 2001     |  | Amount |         | Percentage
|                                      |  |                    |         |          |  |        |         |           
|                                      |  |                   
|                                      |  | (In millions)     
|Laundry Care                          |  | $                  | 466.6   |          |  | $      | 402.9   |            |  | $ | 63.7 |  |  |  | 15.8 | %
|Personal Care                         |  |                    | 367.8   |          |  |        | 352.9   |            |  |   | 14.9 |  |  |  | 4.2  | %
|Food Products                         |  |                    | 185.3   |          |  |        | 179.5   |            |  |   | 5.8  |  |  |  | 3.2  | %
|Air Fresheners                        |  |                    | 162.5   |          |  |        | 159.8   |            |  |   | 2.7  |  |  |  | 1.7  | %
|                                      |  |                    |         |          |  |        |         |            |  |   |      |  |  |  |      |  
|Total Domestic Branded Segment        |  |                    | 1,182.2 |          |  |        | 1,095.1 |            |  |   | 87.1 |  |  |  | 8.0  | %
|Total International and Other Segment |  |                    | 100.0   |          |  |        | 94.2    |            |  |   | 5.8  |  |  |  | 6.2  | %
|                                      |  |                    |         |          |  |        |         |            |  |   |      |  |  |  |      |  
|Total Company Net Sales               |  | $                  | 1,282.2 |          |  | $      | 1,189.3 |            |  | $ | 92.9 |  |  |  | 7.8  | %
|                                      |  |                    |         |          |  |        |         |            |  |   |      |  |  |  |      |  

Laundry Care sales increased primarily due to an
increase in Purex liquid detergent, resulting from growth
in value brands and a consumer preference for liquid detergent
products versus powder detergent products Personal Care sales
increased primarily due to the growth in body wash products
offset in part by higher promotional spending on bar soap to
defend against a new competitive entry. Sales in Food Products
increased due to growth of Armour branded products, primarily
Vienna sausage and chili, and private label products. Air
Fresheners sales increased primarily due to the growth of
Adjustables. This was offset in part by overall weakness in
candle products, other air freshener products and the
discontinuation of our One Touch electric scented oil
products and Fresh Gels products.

Net sales of our International & Other
segment increased primarily as a result of increased sales in
our branded commercial markets business and higher sales in
Canada.

Our gross margin improved 320 basis points
to 37.5% from 34.3% in 2001. This improvement resulted from
higher production volumes, manufacturing efficiencies, lower raw
material costs and gains on special items in 2002 versus losses
on special items in 2001. This was offset in part by higher
promotional expenses.

Selling, general and administrative expenses
increased $15.2 million, or 6.2%, as a result of higher
employee performance-based compensation and other employee
benefits. This increase was offset in part by lower intangible
amortization due to the implementation of SFAS No. 142
and the closure of our Mexico manufacturing facility.

Interest expense decreased $6.9 million, or
18.7%, due to lower interest rates, as a result of our
$250 million interest rate swaps, as well as lower average
debt levels.

Non-Financial Key Performance
Indicators

Volume market share and dollar market share
statistics are used by management in evaluating performance,
developing new products and allocating and planning future
marketing activities. These market share statistics are listed
below for several of our key sales categories. The industry data
contained below is derived from confidential reports published
by AC Nielsen. AC Nielsen captures consumer purchases in
U.S. Food and Drug stores plus Kmart and Target via
scanners while consumer purchases from Wal-Mart are recorded by
AC Nielsens Homescan program panelists. A substantial
portion of our sales are to club and dollar stores and are not
included in market share resources such as those provided by AC
Nielsen and, as a result, are not reflected in the market share
data set forth below. Market share volume of soap and detergent

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products are measured by ounces sold. Market
share volume of air fresheners and canned meats are measured by
units sold.


|                    |                  |                     |      |                     |  |      |      |      |  |      |      |      |  |  |      |     |  |  |      |     |  |  |      |     | 
|------------------- | ---------------- | ------------------- | ---- | ------------------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | --- |  |  | ---- | --- |  |  | ---- | --- | 
|                    |                  |                     |      |                    
|                    |                  | Volume Market Share |      | Dollar Market Share
|                    |                  |                     |      |                    
|                    |                  | 2003                |      | 2002                |  | 2001 |      | 2003 |  | 2002 |      | 2001
|                    |                  |                     |      |                     |  |      |      |      |  |      |      |     
|Soap                |                  |                     | 19.9 | %                   |  |      | 19.9 | %    |  |      | 19.4 | %    |  |  | 17.2 | %   |  |  | 17.5 | %   |  |  | 16.9 | %  
|                    | Deodorant Bars   |                     |      | 11.4                |  |      |      | 12.2 |  |      |      | 12.2 |  |  |      | 8.8 |  |  |      | 9.5 |  |  |      | 9.5 | 
|                    | Skin Care Bars   |                     |      | 0.9                 |  |      |      | 0.9  |  |      |      | 0.9  |  |  |      | 1.0 |  |  |      | 1.0 |  |  |      | 1.1 | 
|                    | Body Wash        |                     |      | 2.7                 |  |      |      | 2.2  |  |      |      | 1.7  |  |  |      | 3.5 |  |  |      | 3.2 |  |  |      | 2.6 | 
|                    | Liquid Hand Soap |                     |      | 4.4                 |  |      |      | 4.2  |  |      |      | 4.1  |  |  |      | 3.5 |  |  |      | 3.4 |  |  |      | 3.4 | 
|Laundry Detergent   |                  |                     | 14.9 |                     |  |      | 13.7 |      |  |      | 11.8 |      |  |  | 9.4  |     |  |  | 8.6  |     |  |  | 7.6  |    
|                    | Liquid           |                     |      | 13.8                |  |      |      | 12.3 |  |      |      | 10.0 |  |  |      | 8.3 |  |  |      | 7.2 |  |  |      | 6.0 | 
|                    | Powder           |                     |      | 1.0                 |  |      |      | 1.3  |  |      |      | 1.6  |  |  |      | 0.9 |  |  |      | 1.1 |  |  |      | 1.3 | 
|Zout Stain Removers |                  |                     | 5.5  |                     |  |      | 5.7  |      |  |      | 4.9  |      |  |  | 9.1  |     |  |  | 9.8  |     |  |  | 8.7  |    
|Air Fresheners      |                  |                     | 21.3 |                     |  |      | 20.4 |      |  |      | 22.8 |      |  |  | 14.8 |     |  |  | 15.5 |     |  |  | 17.3 |    
|                    | Instant Action   |                     |      | 2.9                 |  |      |      | 2.8  |  |      |      | 3.8  |  |  |      | 2.5 |  |  |      | 2.1 |  |  |      | 2.0 | 
|                    | Solids           |                     |      | 14.0                |  |      |      | 13.2 |  |      |      | 14.3 |  |  |      | 8.8 |  |  |      | 8.8 |  |  |      | 8.7 | 
|                    | Electrics        |                     |      | 3.4                 |  |      |      | 2.7  |  |      |      | 2.1  |  |  |      | 1.6 |  |  |      | 1.6 |  |  |      | 2.7 | 
|                    | Candles          |                     |      | 0.7                 |  |      |      | 1.1  |  |      |      | 2.0  |  |  |      | 1.5 |  |  |      | 2.3 |  |  |      | 3.4 | 
|Canned Meat         |                  |                     | 21.6 |                     |  |      | 21.2 |      |  |      | 19.1 |      |  |  | 10.8 |     |  |  | 10.6 |     |  |  | 10.2 |    
|                    | Heatables        |                     |      | 2.4                 |  |      |      | 2.2  |  |      |      | 2.2  |  |  |      | 2.2 |  |  |      | 2.1 |  |  |      | 2.1 | 
|                    | Snackables       |                     |      | 18.5                |  |      |      | 18.2 |  |      |      | 16.2 |  |  |      | 7.5 |  |  |      | 7.5 |  |  |      | 7.1 | 

|                  |                  |                  |     |                  |   |               |      |               |   |  |      |       |   |  |      |       |  
|----------------- | ---------------- | ---------------- | --- | ---------------- | - | ------------- | ---- | ------------- | - |  | ---- | ----- | - |  | ---- | ----- | -
|                  |                  |                  |     |                 
|                  |                  | Volume Category  |     | Dollar Category 
|                  |                  | Growth/(Decline) |     | Growth/(Decline)
|                  |                  |                  |     |                 
|                  |                  | 2003 vs. 2002    |     | 2002 vs. 2001    |   | 2003 vs. 2002 |      | 2002 vs. 2001
|                  |                  |                  |     |                  |   |               |      |              
|Soap              |                  |                  | 0.5 | %                |   |               | 0.7  | %             |   |  | (0.9 | )%    |   |  | 0.6  | %    
|                  | Deodorant Bars   |                  |     | (4.5             | ) |               |      | (2.1          | ) |  |      | (6.4  | ) |  |      | (2.2  | )
|                  | Skin Care Bars   |                  |     | (1.3             | ) |               |      | (1.9          | ) |  |      | (1.7  | ) |  |      | (1.0  | )
|                  | Body Wash        |                  |     | 13.6             |   |               |      | 13.0          |   |  |      | 4.8   |   |  |      | 5.8   |  
|                  | Liquid Hand Soap |                  |     | 2.4              |   |               |      | 1.5           |   |  |      | 0.1   |   |  |      | 1.8   |  
|Laundry Detergent |                  |                  | 4.1 |                  |   |               | 2.5  |               |   |  | (0.6 | )     |   |  | (0.9 | )    
|                  | Liquid           |                  |     | 9.1              |   |               |      | 6.6           |   |  |      | 5.7   |   |  |      | 4.0   |  
|                  | Powder           |                  |     | (8.3             | ) |               |      | (7.4          | ) |  |      | (10.7 | ) |  |      | (9.0  | )
|Stain Removers    |                  |                  | 7.5 |                  |   |               | (1.9 | )             |   |  | 6.6  |       |   |  | (3.5 | )    
|Air Fresheners    |                  |                  | 0.7 |                  |   |               | 24.9 |               |   |  | 2.5  |       |   |  | 2.2  |      
|                  | Instant Action   |                  |     | 8.9              |   |               |      | 10.5          |   |  |      | 10.6  |   |  |      | 12.0  |  
|                  | Solids           |                  |     | (1.9             | ) |               |      | 24.9          |   |  |      | (12.1 | ) |  |      | 32.2  |  
|                  | Electrics        |                  |     | (9.3             | ) |               |      | 76.9          |   |  |      | (3.0  | ) |  |      | 6.6   |  
|                  | Candles          |                  |     | (2.4             | ) |               |      | (8.2          | ) |  |      | 6.0   |   |  |      | (10.7 | )
|Canned Meat       |                  |                  | 3.7 |                  |   |               | 4.3  |               |   |  | 2.4  |       |   |  | 1.9  |      
|                  | Heatables        |                  |     | 2.1              |   |               |      | 1.3           |   |  |      | 1.3   |   |  |      | 1.5   |  
|                  | Snackables       |                  |     | 4.4              |   |               |      | 14.5          |   |  |      | 2.8   |   |  |      | 7.4   |  

Financial Condition and Liquidity

Our needs and access to funds are dependent on
future operating results, as well as external economic and
market conditions. Cash and cash equivalents and cash flow from
operations are expected to be sufficient to meet our anticipated
operating and capital expenditure requirements during the next
year.

24



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In August 2003, our Board of Directors approved a
125% increase in our quarterly dividend rate, which increased
the quarterly cash dividend from $0.04 per share to
$0.09 per share. At the same time, our Board also
authorized a repurchase of up to $100 million of our common
stock over a two-year period. The repurchase program may be
suspended at any time without notice. The timing of repurchases
and the actual number of shares repurchased will depend upon
market conditions, alternative uses of capital and other
considerations. In August of 2003, we repurchased
31,500 shares of common stock at an average price of
$19.52 per share. We do not plan to repurchase any
additional shares prior to the completion of the pending Merger
with Henkel.

Net cash provided by operations in 2003 was
$180.7 million versus $215.3 million in 2002 and
$156.9 million in 2001. Cash flow from operations was down
in 2003 primarily due to higher pension contributions of
$57.0 million versus $13.1 million in 2002 and $6.0
million in 2001. This decrease was partially offset by lower
working capital requirements and higher earnings. The increased
contributions helped reduce the shortfall between our pension
plan assets and projected pension liabilities. The increase in
net cash provided by operations in 2002 was primarily due to an
increase in net income and favorable tax benefits from the sale
of our SPC business in 2001 and the pending sale of our
Argentina business in 2002. Partially offsetting these benefits
were higher receivables and inventory levels in support of
higher sales. We anticipate that our cash flow from operations
in the first quarter of 2004 versus 2003 will be lower due to
decreased tax benefits from discontinued operations and our
$10.0 million EEOC settlement.

Net cash used in investing activities was
$77.1 million in 2003 versus $37.3 million in 2002 and
a source of cash of $12.2 million in 2001. The increase in
cash used in investing activities in 2003 is primarily related
to the funding of a benefit protection trust with
$42.3 million in cash, in connection with the announcement
of the pending Henkel transaction, and higher capital
expenditures related to our SAP implementation project. The
arrangements covered by the trust include Dials employee
compensation agreements, including change in control agreements,
employment agreements, supplemental pension plans, separation
pay plans and annual incentive and sales incentive plans. These
assets will be used solely to satisfy Dials obligations to
its employees under these plans or, in the event of Dials
bankruptcy or insolvency, the claims of Dials creditors.

Capital expenditures were $44.5 million in
2003 versus $34.5 million and $28.6 million in 2002
and 2001, respectively. The increase in capital expenditures in
2003 is primarily related to our SAP implementation project. We
expect capital expenditures in 2004 to be approximately
$53 million. These expenditures will be concentrated
primarily on equipment and information systems that provide
opportunities to reduce manufacturing, logistic, and
administrative costs or are required to maintain our existing
facilities. There can be no assurance as to the quantity and the
type of capital spending we may incur.

Proceeds from the disposition of discontinued
operations were $8.9 million in 2003 versus
$2.0 million in 2002 and $8.0 million in 2001. We did
not use any cash in 2003 for discontinued operations. In 2002 we
used cash of $6.7 million for discontinued operations
versus a source of cash of $31.4 million in 2001. Cash
proceeds received in 2003 related to the sale of our
discontinued Argentina business and the proceeds received in
2002 and 2001 related to the sale of our discontinued Specialty
Personal Care business.

Net cash used by financing activities was
$0.6 million in 2003 versus net cash provided of
$15.3 million in 2002 and net cash used of
$146.9 million in 2001. Dividends were $24.5 million
in 2003 versus $14.8 million and $14.6 million in 2002
and 2001, respectively. The quarterly dividend rate was
$0.04 per share for each of the four quarters of 2002 and
2001. In 2003, the quarterly dividend rate was $0.04 per
share in the first, second and third quarters and $0.09 in the
fourth quarter. During 2003, we repurchased 31,500 shares
for $0.6 million in common stock. We did not repurchase any
shares of common stock in 2002 or 2001.

At December 31, 2003, we had
$311.3 million invested in short-term investment vehicles
with low principal risk. The carrying values of cash and cash
equivalents, receivables, accounts payable and short-term bank
borrowings approximate fair values due to the short-term
maturities of these instruments. The fair value of our Senior
Notes is estimated based upon quoted market prices and was
$492.2 million at December 31, 2003.

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Capital Structure and Resources

Total debt was $457.2 million at
December 31, 2003 and $458.4 million at
December 31, 2002. The decrease in total debt is due to the
amortization of the fair market gain, in accordance with
SFAS No. 133 Accounting for Derivative
Instruments and Hedging Activities, associated with the
termination of interest rate swaps entered into in 2001. Cash
and cash equivalents, including restricted cash of
$42.3 million, were $364.9 million at
December 31, 2003 and $219.6 million at
December 31, 2002. Our outstanding debt has interest rates
ranging from 6.5% to 7.0% and matures in 2006 and 2008.

We have outstanding $250 million of
7.0% Senior Notes due 2006, which were issued in 2001. The
Indenture governing these Senior Notes imposes restrictions with
respect to, among other things, our ability to place liens on
certain properties and enter into certain sale and leaseback
transactions. In addition, the Indenture governing these Senior
Notes requires us to purchase from the holders of the Senior
Notes, upon the exercise of such purchase right by each holder,
all or any part of their Senior Notes at a purchase price equal
to 101% of the principal amount of the Senior Notes plus
interest, upon the occurrence of either (i) a change of
control of Dial that is followed by a rating decline or
(ii) a significant asset sale yielding gross proceeds to us
of $500 million or more in the aggregate that is followed
by a rating decline. A rating decline is deemed to
have occurred if, no later than 90 days after the public
notice of either the occurrence or intention to effect a change
of control or significant asset sale, either of the rating
agencies assigns a rating to the Senior Notes that is lower than
Baa3, in the case of a rating by Moodys, or BBB-, in the
case of a rating by Standard & Poors.

We also have outstanding $200 million of
6.5% Senior Notes due 2008, which were issued in 1998. The
Indenture governing these Senior Notes also imposes restrictions
with respect to, among other things, our ability to place liens
on certain properties and enter into certain sale and leaseback
transactions.

Credit ratings for our Senior Notes were assigned
by Standard and Poors at BBB-, by Fitchs at BBB and
by Moodys at Baa3.

The events of default under the Indentures
governing both of our Senior Notes include the following:



| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due                                                                                                                                                                                                         
|
| |  | failure to comply with covenants                                                                                                                                                                                                                      
|
| |  | commencing any proceeding for bankruptcy,
    insolvency or reorganization                                                                                                                                                                            
|
| |  | default under any other indebtedness for borrowed
    money having an aggregate principal amount outstanding of at
    least $50 million, which default results in such
    indebtedness being declared due and payable prior to its
    maturity date

At December 31, 2003, we were in compliance
with all covenants under our $250 million of
7.0% Senior Notes due 2006 and our $200 million of
6.5% Senior Notes due 2008.

In January 2003, we entered into two interest
rate swap contracts that effectively changed the interest rate
on a portion of our Senior Notes from fixed to variable. We
designated the swaps as fair value hedges. Accordingly, the fair
value of the swaps was recorded as an asset and the carrying
value of the underlying debt was increased by an equal amount in
accordance with SFAS No. 133. The $200 million
notional value of the interest rate swaps, which expire in
September 2008, effectively converted approximately 45% of our
total debt to variable interest rate debt. Under the interest
rate swaps, we pay a variable rate of interest based on the
6-month LIBOR plus 278 basis points and receive a fixed
interest rate of 6.5%. Variable interest rates are paid and
reset semi-annually. The swaps expose us to the risk of changes
in the LIBOR based interest rates. Each 50 basis point
change in the swaps floating rate would change pre-tax
interest expense by $1 million.

In 2001, we entered into two interest rate swap
contracts that effectively converted our $250 million
7% Senior Notes due in 2006 to floating rate debt. We
designated the swaps as fair value hedges. In 2002, the swaps
were terminated resulting in a net gain of $13.4 million.
The gain is recorded with total reported debt and is being
amortized as a reduction of interest expense over the remaining
term of the $250 million

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7% Senior Notes due in 2006. The
amortization of the gain effectively reduces the interest rate
on these notes to 5.6% annually.


During the first quarter of 2003, we renewed the
$100 million short-term commitment portion of our
$200 million revolving credit facility until March 2004.
The remaining $100 million long-term portion of our credit
facility, due in March 2005, has remained unchanged. The credit
facility requires us to pay commitment fees to the lenders.
Borrowings under the facility bear interest at our option, at
the banks prime rate or LIBOR plus a credit spread that
ranges from 0.475% to 1.125% depending on our current credit
rating. The commitment fees paid for the facility also vary
depending on our debt ratings. As of December 31, 2003,
there were no amounts outstanding under our credit facility. Due
to our pending acquisition by Henkel, we do not expect to renew
the $100.0 million of commitments that expire in March 2004.

Under our credit facility, we are required to
maintain minimum net worth of $100 million plus 50% of net
income (if positive) earned from the date of the facility. For
purposes of calculating our minimum net worth, we exclude
foreign currency translation gains or losses, gains or losses
relating to any sale or other disposition of our Argentina
business and the Armour food business and the $43.3 million
after-tax impairment charge taken in the first quarter of 2002
for Argentina. We also are limited to a maximum ratio of funded
debt to earnings before interest, taxes, depreciation and
amortization (EBITDA) of 3.0 to 1.0. At December 31,
2003, we were in compliance with this requirement as our funded
debt to EBITDA ratio was 1.61 to 1.0. Our credit facility also
limits our ability to incur additional unsecured indebtedness,
sell, lease or transfer assets, enter into sale and leaseback
transactions, place liens on properties and complete certain
acquisitions without our lenders consent.

The events of default under this
$200 million credit facility include the following:



| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due                                                                                                                     
|
| |  | failure to comply with covenants, representations
    and warranties under the credit agreement                                                                   
|
| |  | default in the payment of, or failure to comply
    with covenants relating to, other indebtedness with a principal
    amount outstanding of at least $15 million
|
| |  | default under any material contract which results
    in liabilities or damages in excess of $25 million                                                          
|
| |  | commencing any proceeding for bankruptcy,
    insolvency or reorganization                                                                                        
|
| |  | entry of a final, non-appealable judgment in
    excess of $25 million                                                                                            
|
| |  | a change in control of Dial                                                                                                                                       

As a result of our pending acquisition by Henkel,
we were not in compliance with the change in control covenant
under our $200 million credit facility at December 31,
2003. We have entered into a temporary waiver agreement with our
lenders until April 30, 2004 with respect to this event of
default.

Commitments and Contingencies

The following table outlines our future
contractual financial obligations, in millions, as of
December 31, 2003, due by period:

|                                            |  |       |       |           |  |       |      |       |  |         |       |  |  |   |       |  |  |   |     | 
|------------------------------------------- |  | ----- | ----- | --------- |  | ----- | ---- | ----- |  | ------- | ----- |  |  | - | ----- |  |  | - | --- | 
|                                            |  |       |       | Less Than |  | 1-3   |      | 4-5   |  | After 5
|                                            |  | Total |       | 1 Year    |  | Years |      | Years |  | Years  
|                                            |  |       |       |           |  |       |      |       |  |        
|Long-term debt(1)                           |  | $     | 447.2 |           |  | $     |     |       |  | $       | 248.2 |  |  | $ | 199.0 |  |  | $ |    | 
|Operating leases, net of sublease income(2) |  |       | 48.3  |           |  |       | 10.7 |       |  |         | 20.3  |  |  |   | 14.2  |  |  |   | 3.1 | 
|Unconditional purchase obligations(3)       |  |       | 11.6  |           |  |       | 11.4 |       |  |         | 0.2   |  |  |   |      |  |  |   |    | 
|                                            |  |       |       |           |  |       |      |       |  |         |       |  |  |   |       |  |  |   |     | 
|Total contractual cash obligations          |  | $     | 507.1 |           |  | $     | 22.1 |       |  | $       | 268.7 |  |  | $ | 213.2 |  |  | $ | 3.1 | 
|                                            |  |       |       |           |  |       |      |       |  |         |       |  |  |   |       |  |  |   |     | 



---



|    |                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes the fair market value of our current and
    previously terminated interest rate swaps. See Note 11 to
    the consolidated financial statements included in this
    Form 10-K for additional information.

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|    |                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | See Note 15 to the consolidated financial
    statements included in this Form 10-K for additional
    information concerning our operating leases.
|   
|(3) | Consists of obligations to purchase certain raw
    materials, which are expected to be used in the ordinary course
    of business.               

The following table outlines our other future
commercial commitments, in millions, as of December 31,
2003, by the amount of commitment that expires per period:

|                                |  |       |      |           |  |       |      |       |  |         |     |  |  |   |   |  |  |   |   | 
|------------------------------- |  | ----- | ---- | --------- |  | ----- | ---- | ----- |  | ------- | --- |  |  | - | - |  |  | - | - | 
|                                |  |       |      | Less Than |  | 1-3   |      | 4-5   |  | After 5
|                                |  | Total |      | 1 Year    |  | Years |      | Years |  | Years  
|                                |  |       |      |           |  |       |      |       |  |        
|Standby letters of credit       |  | $     | 3.4  |           |  | $     | 3.4  |       |  | $       |    |  |  | $ |  |  |  | $ |  | 
|Other commercial commitments(1) |  |       | 35.2 |           |  |       | 32.0 |       |  |         | 3.2 |  |  |   |  |  |  |   |  | 
|                                |  |       |      |           |  |       |      |       |  |         |     |  |  |   |   |  |  |   |   | 
|Total commercial commitments    |  | $     | 38.6 |           |  | $     | 35.4 |       |  | $       | 3.2 |  |  | $ |  |  |  | $ |  | 
|                                |  |       |      |           |  |       |      |       |  |         |     |  |  |   |   |  |  |   |   | 



---



|    |                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes expected commitments for our SAP
    implementation project, the EEOC settlement and other commercial
    commitments.

In addition to the commitments described above,
and as a result of our pending acquisition by Henkel, we will
incur estimated change in control, financing and other
transaction costs of approximately $109 million.

We made contributions of $58.0 million to
our pension plans (including supplemental payments made directly
to retirees) and payments of $20.3 million for our other
post-retirement plans in 2003, versus $15.1 million and
$20.1 million, in 2002, respectively. Increased
contributions to the pension plans were made in order to improve
the funded status of the plans after several years of declines
in the capital markets and in interest rates. Projected pension
and other post-retirement obligations decreased
$8.1 million to $489.2 million at December 31,
2003, as compared to $497.3 million at December 31,
2002. This decrease was primarily due to plan changes associated
with our retiree medical plans. If our pension funding
assumptions remain constant, we expect our total projected
contributions to be $14.4  $18.0 million over
the next five years. Additionally, we expect to pay out
approximately $90 million in post retirement benefits over
the next five years.

New Accounting Pronouncements

See Note 2 to the financial statements
included in this Form 10-K for a description of the recent
accounting pronouncements.

Factors That May Affect Future Results and
Financial Condition



| |   |                                                                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The failure of our stockholders to approve the
    Merger Agreement with Henkel or the occurrence of a termination
    event relating to the Merger Agreement resulting in our payment
    to Henkel of a termination fee could result in a substantial
    decrease in the price of our common stock and a significant
    reduction in our cash on hand.

On December 14, 2003, we entered into the
Merger Agreement. A special meeting of our stockholders to vote
on the Merger Agreement is scheduled for March 24, 2004.
The failure of our stockholders to approve the Merger Agreement
could result in the substantial decrease in the price of our
common stock. Also, the occurrence of a termination event
relating to the Merger Agreement could, under certain
circumstances, trigger a termination fee payment to Henkel in
the amount of $110 million, which would significantly
reduce our cash on hand.



| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We have developed and commenced sales of a number
    of new products, which, if they do not gain widespread customer
    acceptance or if they cannibalize sales of existing products,
    could harm our efforts to improve our financial performance.

We have introduced a number of new products in
the soap, detergent and air freshener categories. In addition,
we have committed to increase development efforts in our core
brands. The development and introduction of new products involve
substantial research, development and marketing expenditures,
which we

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may be unable to recoup if our new products do
not gain widespread market acceptance or we do not execute
product rollouts effectively. In addition, if our new products
merely cannibalize sales of our existing products, our financial
performance would be harmed.




| |   |                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------
| |  | We may discontinue products or product lines,
    which could result in returns, asset write-offs and shut down
    costs.

In the past, we have discontinued certain
products and product lines, which resulted in returns from
customers, asset write-offs, and shut down costs. We may suffer
similar results in the future to the extent we discontinue
products that do not meet expectations or no longer satisfy
consumer demand. Product returns, write-offs or shut down costs
would reduce our cash flow and earnings.



| |   |                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We face intense competition in a mature industry
    that may require us to increase expenditures and lower profit
    margins to preserve or maintain our market share. Unless the
    markets in which we compete grow substantially, a loss of market
    share will result in reduced sales levels and less favorable
    operating results.

Currently, 95% of our sales are generated in
U.S. markets. U.S. markets for consumer products are
mature and characterized by high household penetration,
particularly with respect to our most significant product
categories, including detergents and bar soaps. We may not be
able to succeed in implementing our strategies to increase
domestic revenues. Our unit sales growth in domestic markets
will depend on increasing usage by consumers, product innovation
and capturing market share from competitors.

The consumer products industry is intensely
competitive. To protect our existing market share or to capture
increased market share, we may need to increase expenditures for
promotions and advertising and to introduce and establish new
products. Increased expenditures may not prove successful in
maintaining or enhancing our market share and could result in
lower sales and profits.

Many of our competitors are large companies,
including The Procter & Gamble Company, Lever Brothers
Co., Colgate-Palmolive Company, and S.C. Johnson & Son,
Inc., which have greater financial resources than we do. They
have the capacity to outspend us in an attempt to take market
share from us.



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | Price-cutting measures in response to competitive
    pressures could result in decreased profit margins.

Consumer products, particularly those that are
value-priced, are subject to significant price competition. For
example, at the beginning of 2004, we have experienced
considerable increased competitive activity in the value segment
of the laundry detergent market, particularly at Wal-Mart. From
time to time, we may need to reduce the prices for some of our
products to respond to competitive and customer pressures and to
maintain market share. Any reduction in our prices to respond to
these pressures would harm our profit margins. In addition, if
our sales volumes fail to grow sufficiently to offset any
reduction in margins, our results of operations would suffer.



| |   |                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Providing price concessions or trade terms that
    are acceptable to our trade customers, or our failure to do so,
    could adversely affect our sales and profitability. In addition,
    reductions in inventory by our trade customers, including as a
    result of consolidations in the retail industry, could adversely
    affect our sales.

Because of the competitive environment facing
retailers, we face pricing pressure from these customers. Many
of our trade customers, particularly our high-volume retail
store customers, have increasingly sought to obtain pricing
concessions and better trade terms. These concessions or terms
could reduce our margins. Further, if we are unable to maintain
price or trade terms that are acceptable to our trade customers,
they could increase product purchases from our competitors,
which would harm our sales and profitability. In addition, from
time to time our retail customers have reduced inventory levels
in managing their working capital requirements. Any reduction in
inventory levels by our retail customers would harm our
operating results. In particular, consolidation within the
retail industry could potentially reduce inventory levels
maintained by our retail customers, which could adversely impact
our results of operations. Our performance is also dependent
upon the general health of the economy and of the retail
environment in particular and could be significantly harmed by
changes affecting retailing and by the financial difficulties of
our customers.

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| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | Loss of our principal customers could
    significantly decrease our sales and profitability.

Our top ten customers accounted for 57%, 57% and
54% of net sales in 2003, 2002 and 2001, respectively. Wal-Mart,
including its affiliate Sams Club, was our largest
customer, accounting for 28% of net sales in 2003, 28% of net
sales in 2002, and 25% of net sales in 2001. The loss of or a
substantial decrease in the volume of purchases by Wal-Mart or
any of our other top customers could harm our sales and
profitability.



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | Price increases in certain raw materials or
    energy costs could erode our profit margins, which would harm
    our operating results.

Increases in the prices of certain raw materials
or increases in energy costs could significantly impact our
profit margins. Paper, fats and oils, chemicals, resin and meat
have the most significant impact on our costs. Tallow (a key
ingredient in Dial bar soaps) has experienced price fluctuations
within the range of $0.09 and $0.26 per pound from
January 1, 1998, to December 31, 2003. Recently, the
price of tallow has been trading around the high-point of this
historical range. Due to recent world events, including
outbreaks of bovine spongiform encephalopathy (BSE), commonly
known as mad cow disease, in both the United States
and other countries, the price of beef also has experienced
significant fluctuations. The average price per pound of beef
rose to $0.43 in 2003 versus $0.40 in 2002 and is expected to
continue to rise in 2004. If prices increase further, we may not
be able to increase the prices of our Dial bar soaps to offset
these increases. Moreover, in light of recent world events,
crude oil, natural gas and energy costs are increasing and these
increases could adversely impact our profit margins and
operating results in 2004.



| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our failure to secure sufficient supplies of
    tallow could harm our operating results. Also, implementation of
    new public health measures may result in future shortages, in
    the supply of useable tallow, which could harm our operating
    results.

Tallow is a key ingredient in our bar soaps. Our
current supply of tallow and supplies of tallow in the
U.S. generally are at low levels. If we are unable to
secure sufficient supplies of tallow, we will need to
reformulate our bar soap products with substitute ingredients,
which could harm our operating results to the extent these
substitute ingredients cost more than tallow. If we are not able
to reformulate with substitute ingredients before our tallow
supply is depleted, we would not be able to manufacture bar soap
products and would lose sales, which also would harm our
operating results.

In late January 2004, the Secretary of the
U.S. Department of Health and Human Services announced new
public health measures that the U.S. Food and Drug
Administration may implement to significantly strengthen
existing safeguards against BSE. If implemented, these measures
would prohibit certain specific sources for the type of tallow
currently used in our bar soap manufacturing, which will likely
result in shortages in the supply of usable tallow. Shortages,
in turn, will likely result in significantly higher prices.
Additionally, some portion of our tallow inventory could be
rendered unusable. In addition, because our competitors use less
tallow in their bar soap products, increases in tallow prices
would adversely impact us more than our competitors.



| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We rely on single sources for some of our
    products and if our suppliers were unable to produce products
    for us for an extended period of time it could have a material
    adverse effect on our financial condition and operating results.

We rely on single sources for some of our
products. For example, we currently rely on a single
company-owned plant to manufacture our Dial bar soap and a
single supplier for Purex liquid laundry detergent
bottles. If any of our single sources were unable to produce
products for us for an extended period of time, it could have a
material adverse effect on our financial condition and operating
results.



| |   |                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The FDA could impose standards that negatively
    impact our ability to market some of our products as
    antibacterial, which could result in compliance costs and could
    make our products less attractive to our customers.

Since the 1970s, the Food and Drug Administration
has regulated antibacterial soaps and hand washes under a
proposed regulation. Although the proposed regulation has not
been finalized, the FDA ultimately could set standards that
result in limiting or even precluding soap manufacturers from
using some current

30



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antibacterial ingredients or making antibacterial
claims for some product forms, such as bar soap. We use the
antibacterial ingredient Triclosan in Liquid Dial and
Triclocarban in Dial bar soap, and emphasize the antibacterial
properties of our soap products in our marketing campaigns and
product labeling. Any final FDA regulation that limits or
precludes this type of advertising could require us to develop
new marketing campaigns, develop new products or utilize
different antibacterial ingredients in our products, all of
which could make our products less attractive to customers and
could seriously harm our business.




| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | We could become the subject of adverse publicity
    or product recalls that negatively impact our operations.

Adverse publicity regarding our products could
impact the sales of our products. Some news broadcasts by major
U.S. television and radio networks have focused on the use
of antibacterial agents to kill germs on various surfaces.
Triclosan, the active ingredient in Liquid Dial, also has been a
focus of these broadcasts. Although the broadcasts do not
dispute that Triclosan kills germs on the skin, some third party
experts question whether it provides any additional protection
beyond that provided by non-antibacterial soap products.
Although we have test results that we believe prove that
Triclosan provides consumers with additional protection in
limiting exposure to bacteria-related diseases, we cannot assure
you that our Triclosan products or other products will not be
the subject of adverse publicity in the future.

From time to time, consumer product companies,
including Dial, have had to recall products for various reasons.
The costs of recall or other related liabilities could
materially lower our profit margins. Adverse publicity regarding
any product recalls also could depress our sales.

In addition, we share the use of the Armour
trademark for food products with ConAgra Inc., the manufacturer
of Armour-branded non-canned meat products. Accordingly, we face
the added risk that consumer preferences and perceptions with
respect to any of our Armour products may be influenced by
adverse publicity affecting any of the Armour-branded products
of ConAgra, Inc.



| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The failure to timely implement SAP as our
    enterprise software system or the unsuccessful implementation of
    the SAP could adversely impact our operating results.

We commenced implementation of SAP in the third
quarter of 2003. We currently expect the implementation to be
completed within the next 15 months. However, there can be
no assurance that SAP will be implemented on a timely basis or
that it will be implemented successfully. If the implementation
of SAP is not completed on a timely basis or if it is not
successful, we could experience delays in business dealings with
our customers and suppliers, such as processing orders, which
may adversely impact our relationships with customers and
suppliers. In addition, delays or difficulties in implementing
SAP could increase our expected costs. Delays or difficulties
such as those described above could adversely impact our
operating results.



| |   |                                                                                     
| | - | ------------------------------------------------------------------------------------
| |  | We may incur unexpected expenses due to
    environmental, health or safety matters.

We are subject to a variety of environmental and
health and safety laws in each jurisdiction in which we operate.
These laws and regulations pertain to our present and past
operations. Although we currently do not anticipate that the
costs to comply with environmental laws and regulations will
have a material adverse effect on our capital expenditures,
earnings or competitive position, the emergence of unforeseen
claims or liabilities or the imposition of increasingly
stringent laws, regulations and enforcement policies could
result in material, unreserved costs in the future. Since 1980,
we have received notices or requests for information with
respect to Superfund sites under the federal
Comprehensive Environmental Response, Compensation and Liability
Act. We only have one site that is currently active and we have
executed a consent decree to settle our liability with respect
to that site and are awaiting final court approval. In addition,
in 1999 and in prior years we used nonlyphenol ethoxylate as an
ingredient in our liquid and powder detergent products and we
continue to use it as an ingredient in our Zout stain
remover products. We are in the process of reformulating our
Zout stain remover products to eliminate the use of
nonlyphenol ethoxylate. Certain environmental and regulatory
groups have raised concerns regarding the toxicity of compounds
produced from nonlyphenol ethoxylate. We believe our reserves
are adequate, but these costs are difficult to predict with
certainty.

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| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | Loss of key managerial personnel could negatively
    impact our operations.

Our operation requires managerial expertise. Of
our current key personnel, only our chief executive officer and
our new senior vice president of research and development have
employment contracts that are not conditioned on the closing of
the Merger with Henkel. We cannot be assured that any of our key
employees will remain employed by us. If we lose any of our key
personnel, our business could suffer.






|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure
    About Market Risk

The following discussion of our exposure to
various market risks contains forward looking
statements that involve risks and uncertainties. These
projected results have been prepared utilizing assumptions
considered reasonable in light of information currently
available to us. Nevertheless, because of the unpredictability
of interest rates, foreign currency rates, commodity prices and
other factors, actual results could differ materially from those
projected in this forward looking information.

Our use of financial instruments is limited to
purposes other than trading and primarily includes management of
interest and commodity expense. We may use financial instruments
for the management of interest rates, foreign currency or other
risks in the future.

Interest Rate Risk

At December 31, 2003, we had
$447.2 million in long-term debt outstanding, comprised of
$200 million ($199.0 million net of issue discount) of
6.5% Senior Notes due 2008, and $250 million
($248.2 million net of issue discount) of 7.0% Senior
Notes due 2006. Our senior notes have fixed interest rates to
maturity.

In January 2003, we entered into two interest
rate swap contracts that effectively changed the interest rate
on a portion of our Senior Notes from fixed to variable. The
total notional value of the interest rate swaps that expire in
September 2008 is $200 million, effectively converting 45%
of our total debt to variable interest rate debt. Under the
terms of the swaps, we pay a variable rate of interest based on
the 6-month LIBOR plus 278 basis points and receive a fixed
interest rate of 6.5%. Variable interest rates are paid and
reset semi-annually, in March and September. The six-month LIBOR
rate on September 15, 2003 was 1.18%. The swaps expose us
to the risk of changes in LIBOR based interest rates. Each
50 basis point change in the swaps floating rate
would change our pre-tax interest expense by $1 million.

At the time of the issuance of the
$250 million 7% Senior Notes due 2006, we entered into
two interest rate swaps, which together were designated as fair
value hedges of that issue. The interest rate swaps had a total
notional amount of $250 million. In August of 2002, the
interest rate swaps were terminated and we received a payment of
$13.4 million. The gain on the termination of the swaps was
deferred and is classified as a part of long-term debt. The
deferred gain is being amortized over the remaining term of the
$250 million 7% Senior Notes as a reduction of
interest expense. The amortization of the gain on the terminated
swaps effectively reduces the fixed rate of the
$250 million 7% Senior Notes to approximately 5.6%
annually.

We are currently investing our accumulated cash
balance in a variety of short-term investment vehicles with low
principal risk. The weighted average yield on the invested cash
at December 31, 2003 was 1.28%. Each 50 basis point
change in the yield on the invested cash would result in an
approximate $1.5 million change in the other expenses,
net line on our income statement.

Foreign Currency

We are currently exposed to risks from
fluctuations in the U.S. Dollar/ Canadian Dollar foreign
currency exchange rate. At December 31, 2003, one
U.S. Dollar was worth 1.3 Canadian Dollars. For the year
ended December 31, 2003, the U.S. Dollar/ Canadian
Dollar exchange rate fluctuated between 1:1.6 and 1:1.3. If
there were a 10% change in the exchange rates for the
U.S. Dollar to the Canadian Dollar from those at
December 31, 2003, the foreign currency gain or loss would
be immaterial.

32



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##### Table of Contents



Employee Benefit Plan Expense

We offer our directors and management deferred
compensation plans. In 2003, participants could defer a portion
of their compensation into a combination of Dial stock units or
various cash accounts. For deferrals made into stock units,
deferred compensation due to participants is included on the
balance sheet in stockholders equity under the caption
Unearned employee benefits with no
recognition of any investment gains or losses. The deferred
funds are placed in a Rabbi Trust using shares of Dial common
stock. The trust is also included on the balance sheet in
stockholders equity under the caption Unearned
employee benefits.

For deferrals into cash accounts, deferred
compensation due to participants and any accumulated investment
gains or losses is included on the balance sheet as a liability
under the captions Post-retirement and other employee
benefits and Other liabilities. We
place the deferred funds in a Rabbi Trust, which purchases life
insurance policies on the participants lives, with Dial as
the beneficiary. The policies have a cash surrender value that
accrues tax-free earnings largely based on the performance of
the S&P 500. The cash surrender value asset and any
accumulated investment gains or losses are included on the
balance sheet as an asset under the caption Pension and
other assets.

Participants in the deferred compensation plans
are not presently able to defer any portion of their
compensation into Dial stock units, due to the pending Merger
with Henkel. However, they will continue to be able to defer
into cash accounts.






|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

Our consolidated financial statements as of
December 31, 2003, and for each of the fiscal years in the
three-year period ended December 31, 2003, together with
related notes and the report of Deloitte & Touche LLP
are set forth on the following pages.

33



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Stockholders and Board of

Directors of The Dial Corporation:


We have audited the accompanying consolidated
balance sheets of The Dial Corporation and subsidiaries (the
Company) as of December 31, 2003, and 2002, and
the related consolidated statements of operations and
comprehensive income (loss), cash flows and stockholders
equity for each of the three years in the period ended
December 31, 2003. 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
auditing standards generally accepted in the United States of
America. 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 Corporation and subsidiaries as
of December 31, 2003, and 2002, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2003, in conformity with
accounting principles generally accepted in the United States of
America.

As discussed in Note 2 to the consolidated
financial statements, the Company changed its method of
accounting for goodwill and other intangible assets with
indefinite lives as required by Statement of Financial
Accounting Standards No. 142, Goodwill and Other
Intangible Assets, which was effective January 1,
2002.



| |                      
| | ---------------------
| | DELOITTE & TOUCHE LLP

Phoenix, Arizona

March 2, 2004


34



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##### Table of Contents



THE DIAL CORPORATION

CONSOLIDATED BALANCE SHEET

|                                                    |                                                                                                                 |                                            |         |          |           |  |         |          |           | 
|--------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | -------- | --------- |  | ------- | -------- | --------- | 
|                                                    |                                                                                                                 |                                           
|                                                    |                                                                                                                 | As of December 31                         
|                                                    |                                                                                                                 |                                           
|                                                    |                                                                                                                 | 2003                                       |         | 2002    
|                                                    |                                                                                                                 |                                            |         |         
|                                                    |                                                                                                                 |                                           
|                                                    |                                                                                                                 | (In thousands,                            
|                                                    |                                                                                                                 | except share data)                        
|ASSETS                                             
|Current Assets:                                     |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    | Cash and cash equivalents                                                                                       |                                            | $       | 322,537  |           |  | $       | 219,554  |          
|                                                    | Restricted cash                                                                                                 |                                            |         | 42,316   |           |  |         |         |          
|                                                    | Receivables, less allowance of $845 and $1,256                                                                  |                                            |         | 77,089   |           |  |         | 88,466   |          
|                                                    | Inventories                                                                                                     |                                            |         | 141,937  |           |  |         | 131,508  |          
|                                                    | Deferred income taxes                                                                                           |                                            |         | 11,878   |           |  |         | 23,255   |          
|                                                    | Income tax receivable                                                                                           |                                            |         |         |           |  |         | 7,901    |          
|                                                    | Current assets of discontinued operation                                                                        |                                            |         |         |           |  |         | 18,547   |          
|                                                    | Current assets held for sale                                                                                    |                                            |         | 1,795    |           |  |         |         |          
|                                                    | Other current assets                                                                                            |                                            |         | 8,629    |           |  |         | 7,605    |          
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    |                                                                                                                 | Total current assets                       |         |          | 606,181   |  |         |          | 496,836   | 
|Property and equipment, net                         |                                                                                                                 |                                            | 217,114 |          |           |  | 220,792 |         
|Deferred income taxes                               |                                                                                                                 |                                            | 11,522  |          |           |  | 57,012  |         
|Goodwill                                            |                                                                                                                 |                                            | 312,528 |          |           |  | 312,678 |         
|Other intangibles, net                              |                                                                                                                 |                                            | 54,191  |          |           |  | 51,070  |         
|Non-current assets of discontinued operation        |                                                                                                                 |                                            |        |          |           |  | 2,226   |         
|Non-current assets held for sale                    |                                                                                                                 |                                            | 702     |          |           |  |        |         
|Pension and other assets                            |                                                                                                                 |                                            | 62,018  |          |           |  | 9,125   |         
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    |                                                                                                                 | Total Assets                               |         | $        | 1,264,256 |  |         | $        | 1,149,739 | 
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                   
|LIABILITIES AND STOCKHOLDERS
    EQUITY           
|Current Liabilities:                                |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    | Trade accounts payable                                                                                          |                                            | $       | 93,311   |           |  | $       | 94,187   |          
|                                                    | Income taxes payable                                                                                            |                                            |         | 15,858   |           |  |         |         |          
|                                                    | Current liabilities of discontinued operation                                                                   |                                            |         |         |           |  |         | 13,512   |          
|                                                    | Current liabilities held for sale                                                                               |                                            |         | 497      |           |  |         |         |          
|                                                    | Other current liabilities                                                                                       |                                            |         | 150,193  |           |  |         | 161,217  |          
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    |                                                                                                                 | Total current liabilities                  |         |          | 259,859   |  |         |          | 268,916   | 
|Long-term debt                                      |                                                                                                                 |                                            | 457,171 |          |           |  | 458,393 |         
|Post-retirement and other employee benefits         |                                                                                                                 |                                            | 234,481 |          |           |  | 267,225 |         
|Other liabilities                                   |                                                                                                                 |                                            | 5,480   |          |           |  | 6,207   |         
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    |                                                                                                                 | Total liabilities                          |         |          | 956,991   |  |         |          | 1,000,741 | 
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|Commitments and contingencies (Notes 15 and
    19) |                                                                                                                 |                                            |        |          |           |  |        |         
|Stockholders Equity:                               |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    | Preferred stock, $0.01 par value,
    10,000,000 shares authorized; no shares issued and
    outstanding        |                                            |         |         |           |  |         |         |          
|                                                    | Common stock, $0.01 par value,
    300,000,000 shares authorized; 108,120,795 and
    106,372,531 shares issued |                                            |         | 1,081    |           |  |         | 1,064    |          
|                                                    | Additional paid-in capital                                                                                      |                                            |         | 478,814  |           |  |         | 436,262  |          
|                                                    | Retained income                                                                                                 |                                            |         | 110,194  |           |  |         | 8,835    |          
|                                                    | Accumulated other comprehensive loss                                                                            |                                            |         | (10,078  | )         |  |         | (32,350  | )        
|                                                    | Unearned employee benefits                                                                                      |                                            |         | (54,484  | )         |  |         | (48,103  | )        
|                                                    | Treasury stock, 10,987,984 and
    10,910,433 shares held                                                       |                                            |         | (218,262 | )         |  |         | (216,710 | )        
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    |                                                                                                                 | Total Stockholders Equity                 |         |          | 307,265   |  |         |          | 148,998   | 
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         
|                                                    |                                                                                                                 | Total Liabilities and Stockholders Equity |         | $        | 1,264,256 |  |         | $        | 1,149,739 | 
|                                                    |                                                                                                                 |                                            |         |          |           |  |         |         

See Notes to Consolidated Financial Statements.

35



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##### Table of Contents



THE DIAL CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)

|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |           |          |  
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ | --------- | --------- | ----- | ---- | --------- | --------- | ------- | - | --------- | --------- | -------- | -
|                                                                        |                                                                                                                                            |                                                                                                             
|                                                                        |                                                                                                                                            | Year Ended December 31                                                                                      
|                                                                        |                                                                                                                                            |                                                                                                             
|                                                                        |                                                                                                                                            | 2003                                                                                                         |           | 2002      |       | 2001
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |     
|                                                                        |                                                                                                                                            |                                                                                                             
|                                                                        |                                                                                                                                            | (In thousands, except per share data)                                                                       
|Net sales                                                               |                                                                                                                                            | $                                                                                                            | 1,344,858 |           |       | $    | 1,282,231 |           |         | $ | 1,189,332 |          
|Costs and expenses:                                                     |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        | Cost of products sold                                                                                                                      |                                                                                                              |           | 837,192   |       |      |           | 803,696   |         |   |           | 772,810   |         
|                                                                        | Special charges (income) from manufacturing asset
    sales and writedowns, discontinued product inventories and other
    exit activities |                                                                                                              |           | 7,403     |       |      |           | (1,707    | )       |   |           | 8,424     |         
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        | Total cost of products sold                                                                                                                |                                                                                                              |           | 844,595   |       |      |           | 801,989   |         |   |           | 781,234   |         
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        | Selling, general and administrative expenses                                                                                               |                                                                                                              |           | 259,108   |       |      |           | 259,900   |         |   |           | 244,695   |         
|                                                                        | Special charges from asset writedowns, severance
    and other exit costs                                                                  |                                                                                                              |           |          |       |      |           |          |         |   |           | 330       |         
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        | Total costs and expenses                                                                                                                   |                                                                                                              |           | 1,103,703 |       |      |           | 1,061,889 |         |   |           | 1,026,259 |         
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Operating income                                                        |                                                                                                                                            |                                                                                                              | 241,155   |           |       |      | 220,342   |           |         |   | 163,073   |          
|Interest expense                                                        |                                                                                                                                            |                                                                                                              | (25,676   | )         |       |      | (29,922   | )         |         |   | (36,797   | )        
|Other expenses, net                                                     |                                                                                                                                            |                                                                                                              | (9,535    | )         |       |      | (10,333   | )         |         |   | (11,193   | )        
|Income from Dial/ Henkel joint ventures                                 |                                                                                                                                            |                                                                                                              |          |           |       |      | 2,086     |           |         |   | 2,990     |          
|Other special charges                                                   |                                                                                                                                            |                                                                                                              | (1,654    | )         |       |      |          |           |         |   |          |          
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Income from continuing operations before income
    taxes               |                                                                                                                                            |                                                                                                              | 204,290   |           |       |      | 182,173   |           |         |   | 118,073   |          
|Income taxes                                                            |                                                                                                                                            |                                                                                                              | (80,536   | )         |       |      | (66,939   | )         |         |   | (43,765   | )        
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Income from continuing operations                                       |                                                                                                                                            |                                                                                                              | 123,754   |           |       |      | 115,234   |           |         |   | 74,308    |          
|Discontinued operations:                                                |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        |                                                                                                                                            | Loss from operation of discontinued Specialty
    Personal Care segment, net of income tax                   |           |           |      |      |           |           |        |   |           |           | (3,691   | )
|                                                                        |                                                                                                                                            | Adjustment to loss/(loss) on disposal of
    discontinued Specialty Personal Care segment, net of income tax |           |           |      |      |           |           | 3,783   |   |           |           | (198,403 | )
|                                                                        |                                                                                                                                            | Income/(loss) from operation of discontinued
    Argentina business, net of income tax                       |           |           |      |      |           |           | 3,582   |   |           |           | (4,465   | )
|                                                                        |                                                                                                                                            | Adjustment to loss/(loss) on disposal of
    discontinued Argentina business, net of income tax              |           |           | 2,150 |      |           |           | (62,399 | ) |           |           |         |  
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Total income/(loss) from discontinued operations                        |                                                                                                                                            |                                                                                                              | 2,150     |           |       |      | (55,034   | )         |         |   | (206,559  | )        
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Cumulative effect of the change in accounting
    principle, net of tax |                                                                                                                                            |                                                                                                              |          |           |       |      | (43,308   | )         |         |   |          |          
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|NET INCOME/(LOSS)                                                       |                                                                                                                                            | $                                                                                                            | 125,904   |           |       | $    | 16,892    |           |         | $ | (132,251  | )        
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Basic net income/(loss) per common share:                               |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        |                                                                                                                                            | Income from continuing operations                                                                            |           | $         | 1.32  |      |           | $         | 1.25    |   |           | $         | 0.81     |  
|                                                                        |                                                                                                                                            | Income/(loss) from discontinued operations                                                                   |           |           | 0.02  |      |           |           | (0.60   | ) |           |           | (2.26    | )
|                                                                        |                                                                                                                                            | Effect of change in accounting principle                                                                     |           |           |      |      |           |           | (0.47   | ) |           |           |         |  
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|NET INCOME/(LOSS) PER SHARE 
    BASIC                                 |                                                                                                                                            | $                                                                                                            | 1.34      |           |       | $    | 0.18      |           |         | $ | (1.45     | )        
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Diluted net income/(loss) per common share:                             |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        |                                                                                                                                            | Income from continuing operations                                                                            |           | $         | 1.29  |      |           | $         | 1.22    |   |           | $         | 0.81     |  
|                                                                        |                                                                                                                                            | Income/(loss) from discontinued operations                                                                   |           |           | 0.02  |      |           |           | (0.58   | ) |           |           | (2.24    | )
|                                                                        |                                                                                                                                            | Effect of change in accounting principle                                                                     |           |           |      |      |           |           | (0.46   | ) |           |           |         |  
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|NET INCOME/(LOSS) PER SHARE 
    DILUTED                               |                                                                                                                                            | $                                                                                                            | 1.31      |           |       | $    | 0.18      |           |         | $ | (1.43     | )        
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Weighted average basic shares outstanding                               |                                                                                                                                            |                                                                                                              | 93,968    |           |       |      | 92,359    |           |         |   | 91,451    |          
|Weighted average equivalent shares                                      |                                                                                                                                            |                                                                                                              | 2,215     |           |       |      | 2,072     |           |         |   | 787       |          
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|Weighted average diluted shares outstanding                             |                                                                                                                                            |                                                                                                              | 96,183    |           |       |      | 94,431    |           |         |   | 92,238    |          
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|NET INCOME/(LOSS)                                                       |                                                                                                                                            | $                                                                                                            | 125,904   |           |       | $    | 16,892    |           |         | $ | (132,251  | )        
|                                                                        | Other comprehensive income/(loss):                                                                                                         |                                                                                                              |           |           |       |      |           |           |         |   |           |           |         
|                                                                        | Foreign currency translation adjustment                                                                                                    |                                                                                                              |           | 1,346     |       |      |           | 60,806    |         |   |           | (60,146   | )       
|                                                                        | Minimum pension liability adjustment, net of tax                                                                                           |                                                                                                              |           | 20,926    |       |      |           | (17,654   | )       |   |           | (11,891   | )       
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|                                                                        | Other comprehensive income/(loss)                                                                                                          |                                                                                                              |           | 22,272    |       |      |           | 43,152    |         |   |           | (72,037   | )       
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          
|COMPREHENSIVE INCOME/(LOSS)                                             |                                                                                                                                            | $                                                                                                            | 148,176   |           |       | $    | 60,044    |           |         | $ | (204,288  | )        
|                                                                        |                                                                                                                                            |                                                                                                              |           |           |       |      |           |           |         |   |           |          

See Notes to Consolidated Financial Statements

36



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##### Table of Contents





THE DIAL CORPORATION

STATEMENT OF CONSOLIDATED CASH FLOWS

|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |         |          |  
|------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------- | ------- | ------ | ------- | ---- | ------- | ------ | ------- | - | -------- | ------- | -------- | -
|                                                                                      |                                                                        |                                  
|                                                                                      |                                                                        | Year Ended December 31           
|                                                                                      |                                                                        |                                  
|                                                                                      |                                                                        | 2003                              |         | 2002   |         | 2001
|                                                                                      |                                                                        |                                   |         |        |         |     
|                                                                                      |                                                                        |                                  
|                                                                                      |                                                                        | (In thousands)                   
|CASH FLOWS PROVIDED BY OPERATING
    ACTIVITIES:                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Net income/(loss)                                                                     |                                                                        | $                                 | 125,904 |        |         | $    | 16,892  |        |         | $ | (132,251 | )      
|Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|                                                                                      | Argentina business discontinued operation, net of
    tax              |                                   |         | (2,150 | )       |      |         | 58,817 |         |   |          | 4,465   |         
|                                                                                      | Specialty Personal Care segment discontinued
    operation, net of tax |                                   |         |       |         |      |         | (3,783 | )       |   |          | 202,094 |         
|                                                                                      | Effect of change in accounting principle, net of
    tax               |                                   |         |       |         |      |         | 43,308 |         |   |          |        |         
|                                                                                      | Depreciation                                                           |                                   |         | 38,931 |         |      |         | 35,835 |         |   |          | 36,368  |         
|                                                                                      | Amortization                                                           |                                   |         | 190    |         |      |         | 129    |         |   |          | 7,438   |         
|                                                                                      | Deferred income taxes                                                  |                                   |         | 43,886 |         |      |         | 1,192  |         |   |          | (2,367  | )       
|                                                                                      | Special charges and asset writedowns                                   |                                   |         | 7,403  |         |      |         | (1,707 | )       |   |          | 8,754   |         
|                                                                                      | Tax benefits from employee stock option exercises                      |                                   |         | 6,010  |         |      |         |       |         |   |          |        |         
|                                                                                      | Change in operating assets and liabilities:                            |                                   |         |        |         |      |         |        |         |   |          |         |         
|                                                                                      |                                                                        | Receivables                       |         |        | 11,377  |      |         |        | (12,776 | ) |          |         | 26,747   |  
|                                                                                      |                                                                        | Inventories                       |         |        | (10,429 | )    |         |        | (9,478  | ) |          |         | 8,534    |  
|                                                                                      |                                                                        | Trade accounts payable            |         |        | (876    | )    |         |        | 3,630   |   |          |         | (23,141  | )
|                                                                                      |                                                                        | Income taxes payable              |         |        | 23,778  |      |         |        | 68,895  |   |          |         | (26, 456 | )
|                                                                                      |                                                                        | Pension contributions             |         |        | (57,000 | )    |         |        | (13,144 | ) |          |         | (6,037   | )
|                                                                                      |                                                                        | Other assets and liabilities, net |         |        | (6,322  | )    |         |        | 27,461  |   |          |         | 52,727   |  
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Net cash provided by operating activities                                             |                                                                        |                                   | 180,702 |        |         |      | 215,271 |        |         |   | 156,875  |        
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|CASH FLOWS PROVIDED/(USED) BY INVESTING
    ACTIVITIES:                               |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Increase in restricted cash                                                           |                                                                        |                                   | (42,316 | )      |         |      |        |        |         |   |         |        
|Capital expenditures                                                                  |                                                                        |                                   | (44,451 | )      |         |      | (34,490 | )      |         |   | (28,644  | )      
|Acquisition of businesses, net of cash acquired                                       |                                                                        |                                   |        |        |         |      | (1,096  | )      |         |   | (894     | )      
|Proceeds from disposition of discontinued
    operation                               |                                                                        |                                   | 8,880   |        |         |      | 2,000   |        |         |   | 8,000    |        
|Investment in and transfers from discontinued
    operation                           |                                                                        |                                   |        |        |         |      | (6,731  | )      |         |   | 31,442   |        
|Proceeds from sale of assets                                                          |                                                                        |                                   | 802     |        |         |      | 3,045   |        |         |   | 2,305    |        
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Net cash provided/(used) by investing activities                                      |                                                                        |                                   | (77,085 | )      |         |      | (37,272 | )      |         |   | 12,209   |        
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|CASH FLOWS PROVIDED/(USED) BY FINANCING
    ACTIVITIES:                               |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Net change in debt resulting from interest rate
    swap termination                  |                                                                        |                                   |        |        |         |      | 13,386  |        |         |   |         |        
|Decrease in short-term debt                                                           |                                                                        |                                   |        |        |         |      |        |        |         |   | (111,767 | )      
|Decrease in long-term debt                                                            |                                                                        |                                   | (2,488  | )      |         |      | (332    | )      |         |   | (23,930  | )      
|Common stock purchased for treasury                                                   |                                                                        |                                   | (616    | )      |         |      |        |        |         |   |         |        
|Dividends paid on common stock                                                        |                                                                        |                                   | (24,545 | )      |         |      | (14,793 | )      |         |   | (14,613  | )      
|Proceeds from stock option exercises                                                  |                                                                        |                                   | 27,015  |        |         |      | 17,052  |        |         |   | 3,370    |        
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Net cash provided/(used) by financing activities                                      |                                                                        |                                   | (634    | )      |         |      | 15,313  |        |         |   | (146,940 | )      
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Effects of foreign exchange rate changes on cash                                      |                                                                        |                                   |        |        |         |      | (2,068  | )      |         |   | (226     | )      
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|Net increase in cash and cash equivalents                                             |                                                                        |                                   | 102,983 |        |         |      | 191,244 |        |         |   | 21,918   |        
|Cash and cash equivalents, beginning of year                                          |                                                                        |                                   | 219,554 |        |         |      | 28,310  |        |         |   | 6,392    |        
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        
|CASH AND CASH EQUIVALENTS, END OF
    YEAR                                            |                                                                        | $                                 | 322,537 |        |         | $    | 219,554 |        |         | $ | 28,310   |        
|                                                                                      |                                                                        |                                   |         |        |         |      |         |        |         |   |          |        

See Notes to Consolidated Financial Statements.

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##### Table of Contents



THE DIAL CORPORATION

STATEMENT OF CONSOLIDATED STOCKHOLDERS
EQUITY

|                           |                             |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         |          |      |  
|-------------------------- | --------------------------- | ----------------------------------- | ------- | ---------- |  | -------- | ----- | -------- |  | -------- | ------- | ------------- | - | ---- | ------- | -------- | - | - | ------- | ------- | - | - | -------- | ------ | ---- | - | ------- | ------- | - | - | ------- | -------- | ---- | -
|                           |                             |                                     |         |            |  |          |       |          |  |          |         | Accumulated   |   |     
|                           |                             | Common Stock                        |         | Additional |  |          |       | Unearned |  |          |         | Other         |   |     
|                           |                             |                                     |         | Paid-in    |  | Retained |       | Employee |  | Treasury |         | Comprehensive |   |     
|                           |                             | Shares                              |         | Amount     |  | Capital  |       | Income   |  | Benefits |         | Stock         |   | Loss |         | Total   
|                           |                             |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |         
|                           |                             |                                    
|                           |                             | (In thousands)                     
|Balance, December 31, 2000 |                             |                                     | 105,680 |            |  | $        | 1,057 |          |  | $        | 402,024 |               |   | $    | 153,600 |          |   | $ | (45,128 | )       |   | $ | (214,181 | )      |      | $ | (3,465  | )       |   | $ | 293,907 |         
|                           | Exercise of stock options   |                                     |         |            |  |          |       |          |  |          |         | (1,381        | ) |      |         |          |   |   |         | 4,926   |   |   |          | (175   | )    |   |         |         |   |   |         | 3,370    |     
|                           | Dividends on common stock   |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         | (14,613  | ) |   |         |         |   |   |          |        |      |   |         |         |   |   |         | (14,613  | )   
|                           | Change in employee benefits |                                     |         | 33         |  |          |       |          |  |          |         | 19,968        |   |      |         |          |   |   |         | (15,340 | ) |   |          | (1,126 | )    |   |         |         |   |   |         | 3,502    |     
|                           | Net loss                    |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         | (132,251 | ) |   |         |         |   |   |          |        |      |   |         |         |   |   |         | (132,251 | )   
|                           | Other comprehensive loss    |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         | (72,037 | ) |   |         | (72,037  | )   
|                           |                             |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         |         
|Balance, December 31, 2001 |                             |                                     | 105,713 |            |  |          | 1,057 |          |  |          | 420,611 |               |   |      | 6,736   |          |   |   | (55,542 | )       |   |   | (215,482 | )      |      |   | (75,502 | )       |   |   | 81,878  |         
|                           | Exercise of stock options   |                                     |         | 641        |  |          |       | 6        |  |          |         | 7,721         |   |      |         |          |   |   |         | 10,097  |   |   |          | (772   | )    |   |         |         |   |   |         | 17,052   |     
|                           | Dividends on common stock   |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         | (14,793  | ) |   |         |         |   |   |          |        |      |   |         |         |   |   |         | (14,793  | )   
|                           | Change in employee benefits |                                     |         | 19         |  |          |       | 1        |  |          |         | 7,930         |   |      |         |          |   |   |         | (2,658  | ) |   |          | (456   | )    |   |         |         |   |   |         | 4,817    |     
|                           | Net income                  |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         | 16,892   |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         | 16,892   |     
|                           | Other comprehensive income  |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         | 43,152  |   |   |         | 43,152   |     
|                           |                             |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         |         
|Balance, December 31, 2002 |                             |                                     | 106,373 |            |  |          | 1,064 |          |  |          | 436,262 |               |   |      | 8,835   |          |   |   | (48,103 | )       |   |   | (216,710 | )      |      |   | (32,350 | )       |   |   | 148,998 |         
|                           | Exercise of stock options   |                                     |         | 1,667      |  |          |       | 16       |  |          |         | 25,916        |   |      |         |          |   |   |         | 7,447   |   |   |          | (354   | )    |   |         |         |   |   |         | 33,025   |     
|                           |                             | Common stock purchased for treasury |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        | (616 | ) |         |         |   |   |         |          | (616 | )
|                           | Dividends on common stock   |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         | (24,545  | ) |   |         |         |   |   |          |        |      |   |         |         |   |   |         | (24,545  | )   
|                           | Change in employee benefits |                                     |         | 81         |  |          |       | 1        |  |          |         | 16,636        |   |      |         |          |   |   |         | (13,828 | ) |   |          | (582   | )    |   |         |         |   |   |         | 2,227    |     
|                           | Net income                  |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         | 125,904  |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         | 125,904  |     
|                           | Other comprehensive income  |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         | 22,272  |   |   |         | 22,272   |     
|                           |                             |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         |         
|Balance, December 31, 2003 |                             |                                     | 108,121 |            |  | $        | 1,081 |          |  | $        | 478,814 |               |   | $    | 110,194 |          |   | $ | (54,484 | )       |   | $ | (218,262 | )      |      | $ | (10,078 | )       |   | $ | 307,265 |         
|                           |                             |                                     |         |            |  |          |       |          |  |          |         |               |   |      |         |          |   |   |         |         |   |   |          |        |      |   |         |         |   |   |         |         

See Notes to Consolidated Financial Statements.

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS



|        |                   
|------- | ------------------
|Note 1. | Nature of Business

We manufacture and sell consumer products. We
market our products primarily under such well-known household
brand names as Dial® soaps,
Purex® detergents,
Renuzit® air fresheners and
Armour® canned meats. These products are sold
to consumers primarily though supermarkets, mass merchandisers,
drug stores, membership club stores and other outlets.
Approximately 95% of our business is in the United States.

On December 14, 2003, we entered into an
Agreement and Plan of Merger, by and among Henkel KGaA, a
Kommanditgesellschaft auf Aktien (a partnership limited by
shares) organized under the laws of the Federal Republic of
Germany (Henkel) and Henkel Merger Corporation, a
Delaware corporation and a wholly-owned subsidiary of Henkel
(Merger Sub) and us (the Merger
Agreement). Pursuant to the Merger Agreement, Henkel will
acquire us through a merger of Merger Sub with and into us, with
Dial surviving as a wholly-owned subsidiary of Henkel (the
Merger). Upon the consummation of the Merger, each
outstanding share of our common stock will be converted into the
right to receive $28.75 in cash. The completion of the Merger is
subject to the satisfaction or waiver of several conditions,
including approval of the Merger by our stockholders and other
customary conditions to the closing. Subject to the satisfaction
or waiver of these conditions, we expect to complete the Merger
in March 2004. A special stockholder meeting to approve the
Merger Agreement is scheduled for March 24, 2004.
Stockholders of record as of the close of business on
February 17, 2004 are entitled to be present and vote at
this special meeting.

In 2003, we completed the sale of our Argentina
business and in 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 these businesses
as discontinued operations. Historical results of operations,
the loss on the related sales, and the subsequent adjustments to
the losses on disposal are reported as discontinued operations
in the accompanying consolidated financial statements.



|        |                                
|------- | -------------------------------
|Note 2. | Significant Accounting Policies

Principles of
Consolidation.The accompanying
consolidated financial statements include the accounts of The
Dial Corporation and all majority-owned subsidiaries. Prior to
our assumption of Henkels interest in Dial/ Henkel
LLCs operations in the second quarter of 2002, we
accounted for our investment in the Dial/ Henkel LLC joint
venture and our prior investment in the Dial/ Henkel Mexico
joint venture under the equity method of accounting.
Intercompany transactions and profits have been eliminated in
consolidation.

Use of Estimates.The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. We routinely
evaluate our estimates, including those related to customer
programs and incentives, product returns, bad debts, income
taxes, pension and other post-retirement benefits, long-lived
assets, inventories, restructurings, self insurance (primarily
workers compensation), environmental matters, exit cost
reserves related to discontinued operations and contingencies
and litigation. We base our estimates on historical experience
and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under
different assumptions and conditions.

Revenue Recognition.Sales are recorded when the risk of loss and title to the
product transfers to the purchaser. Sales are recorded net of
allowances for cash discounts, estimated sales returns, trade
promotions and other sales incentives.

Major Customers.Wal-Mart, including its affiliate Sams Club, was our
largest customer, accounting for 28%, 28%, and 25% of net sales
in 2003, 2002 and 2001, respectively. The loss of or a
substantial decrease in the volume of purchases by Wal-Mart or
any of our other top customers could harm our sales and
profitability.

39



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##### Table of Contents



Net sales to the food and mass channels
represented 77.2%, 78.7%, and 79.0% of our domestic sales in
2003, 2002 and 2001, respectively.

Marketing and Research and Development
Costs.All expenditures for marketing
and research and development are charged against earnings in the
period incurred and are reported in the statement of
consolidated operations under the caption Selling,
general and administrative expenses. Our total
research and development expenditures were approximately
$19.0 million, $16.2 million and $14.3 million in
2003, 2002 and 2001, respectively. Marketing costs include the
costs of advertising and various consumer-related marketing
programs.

Cash and Cash
Equivalents.We consider all highly
liquid investments with original maturities of three months or
less from the date of purchase to be cash equivalents.

Restricted Cash.In
connection with the announcement of our pending Merger
Agreement, we funded a benefit protection trust with
$42.3 million, which has been recorded as restricted cash
on our balance sheet. The arrangements covered by the trust
include our employee compensation agreements, including change
in control agreements, employment agreements, supplemental
pension plans, separation pay plans and annual incentive and
sales incentive plans. These assets will be used solely to
satisfy our obligations to our employees under these plans or,
in the event of our bankruptcy or insolvency, the claims of our
creditors.

Inventories.Inventories are stated at the lower of cost (first in, first out
and average cost methods) or market.

Long-Lived Assets with Definite
Lives.In accordance with Financial
Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets, we evaluate the recoverability of property and
equipment and intangibles held for use with definite lives
comparing the carrying amount of the asset or group of assets
against the estimated undiscounted future cash flows expected to
result from the use of the asset or group of assets and their
eventual disposition. If the undiscounted cash flows are less
than the carrying value of the asset or group of assets being
evaluated, an impairment loss is recorded. The loss is measured
as the difference between the fair value and carrying value of
the asset or group of assets being evaluated. Assets to be
disposed of are reported at the lower of the carrying amount or
the fair value less cost to sell. The estimated fair value is
based on the best information available under the circumstances,
including prices for similar assets or the results of valuation
techniques.

Property and
Equipment.Property and equipment are
stated at cost, net of accumulated depreciation. 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

Goodwill and
Intangibles.Prior to 2002, goodwill
that arose prior to November 1970 was not amortized, but other
goodwill and intangibles with indefinite lives were amortized
over useful lives ranging from 10 to 40 years. Effective
January 1, 2002, all goodwill and other intangibles with
indefinite lives ceased to be amortized in accordance with
SFAS No. 142, Goodwill and Other Intangible
Assets. Intangible assets with indefinite lives are
analyzed for impairment, on at least an annual basis, as
required by applicable guidance.

Other intangible assets with definite lives,
including trademarks, patents and customer lists, are amortized
on a straight-line basis over useful lives ranging from 10 to
40 years. Intangible assets with definite lives are
analyzed for impairment, as required by SFAS No. 144.

In June 2001, the FASB issued
SFAS No. 142, Goodwill and Other Intangible
Assets. Under the provisions of SFAS No. 142,
goodwill and intangible assets with indefinite lives are no
longer amortized but are subject to annual impairment tests.
SFAS No. 142 also established a new method of testing
goodwill for impairment. We adopted SFAS No. 142
effective January 1, 2002 and ceased the amortization of
goodwill and intangibles with indefinite lives. Amortization
expense of these items was $7.3 million ($0.05 per
diluted

40



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##### Table of Contents



share) in 2001. In addition, we recorded an
impairment charge on our Argentina intangible assets from the
change in accounting principle in the first quarter of 2002. The
amount of this charge was $43.3 million after tax
($44.0 million pre-tax) and is included within the
Cumulative effect of the change in accounting principle
line on the statement of consolidated operations and
comprehensive income/(loss).


Net Income/(Loss) Per Common
Share.Basic net income/(loss) per
common share is computed by dividing net income/(loss) by the
weighted average number of common shares outstanding during the
year before giving effect to stock options considered to be
dilutive common stock equivalents. Diluted net income/(loss) per
common share is computed by dividing net income/(loss) by the
weighted average number of common shares outstanding during the
year after giving effect to stock options considered to be
dilutive common stock equivalents. Shares held by the Employee
Equity Trust are not considered outstanding for net
income/(loss) per share calculations until the shares are
released from the Trust and transferred to an employee or
transferred on behalf of an employee. In accordance with
SFAS No. 128, Earnings per share, the same
number of potential common shares used in calculating the
diluted earnings per share for income from continuing operations
is used in calculating all other reported diluted earnings per
share amounts.

At December 31, 2003, there were
108,120,795 shares of common stock issued and there were
97,132,811 shares outstanding, including shares held by the
Employee Equity Trust. At December 31, 2003, and
December 31, 2002, a total of 1,872,786 and 2,365,901,
respectively, of the issued shares were held by the Employee
Equity Trust. At December 31, 2003, and December 31,
2002, a total of 10,987,984 and 10,910,433 shares of common
stock, respectively, were held in treasury.

In addition to common stock, we are authorized to
issue 10,000,000 shares of preferred stock, par value of
$0.01 per share, none of which has been issued.

Comprehensive
Income.Components of comprehensive
income are reported in the financial statements in the period in
which they are recognized. The components of comprehensive
income included in our statement of consolidated operations and
comprehensive income/(loss) are net income/(loss), foreign
currency translation adjustments and additional minimum pension
liability adjustments.

Stock Options.We
have two stock-based employee compensation plans, which are
described in more detail in Note 14. We account for these
plans under the recognition and measurement provisions of
Accounting Principles Board (APB) Opinion
No. 25, Accounting for Stock Issued to
Employees, and related interpretations. We have adopted
the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, as amended
by SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure.
Accordingly, no compensation cost has been recognized, as all
options under the stock-based compensation plans had an exercise
price equal to or greater than the fair market value of the
underlying common stock at the date of grant. Awards under our
plans vest over periods ranging from immediate vesting to five
years, depending upon the type of award. The following table
illustrates the effect on net income/(loss) and earnings/(loss)
per share if the fair value based method had been applied to all
outstanding and unvested awards in each period presented, using
the Black-Scholes valuation model.

|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------ | - |  | - | -------- | -
|                                                                                                                                              |  | 2003           |         | 2002 |  | 2001
|                                                                                                                                              |  |                |         |      |  |     
|                                                                                                                                              |  |               
|                                                                                                                                              |  | (In thousands)
|Net income/(loss) as reported                                                                                                                 |  | $              | 125,904 |      |  | $    | 16,892 |   |  | $ | (132,251 | )
|Deduct: Total stock-based employee compensation
    expense determined under fair value method for all awards, net
    of related tax effects |  |                | (7,275  | )    |  |      | (6,342 | ) |  |   | (6,290   | )
|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  
|Pro forma net income/(loss)                                                                                                                   |  | $              | 118,629 |      |  | $    | 10,550 |   |  | $ | (138,541 | )
|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  
|Net income/(loss) per share-basic-as reported                                                                                                 |  | $              | 1.34    |      |  | $    | 0.18   |   |  | $ | (1.45    | )
|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  
|Pro forma net income/(loss) per share-basic                                                                                                   |  | $              | 1.26    |      |  | $    | 0.11   |   |  | $ | (1.51    | )
|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  
|Net income/(loss) per share-diluted-as reported                                                                                               |  | $              | 1.31    |      |  | $    | 0.18   |   |  | $ | (1.43    | )
|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  
|Pro forma net income/(loss) per share 
    diluted                                                                                           |  | $              | 1.23    |      |  | $    | 0.11   |   |  | $ | (1.50    | )
|                                                                                                                                              |  |                |         |      |  |      |        |   |  |   |          |  

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Derivative Financial
Instruments.SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities, requires that all derivative financial
instruments that qualify for hedge accounting, such as interest
rate swap contracts and forward purchase contracts, are
recognized in the financial statements and measured at fair
value regardless of the purpose or intent for holding them.
Changes in the fair value of derivative financial instruments
are either recognized in income or stockholders equity (as
a component of comprehensive income/(loss)), depending on
whether the derivative is being used to hedge changes in fair
value or cash flows.

Our use of financial instruments is limited to
purposes other than trading and includes the management of
interest rate risk. The financial impacts of these hedging
instruments are offset in part or in whole by corresponding
changes in the underlying exposures being hedged. We may use
financial instruments for the management of foreign currency,
commodity expense or other risks in the future.

Reclassifications.Certain reclassifications of prior years amounts have been
made to conform to the current year presentation.



| |                              
| | -----------------------------
| | New Accounting Pronouncements

In December 2003, the FASB issued
SFAS No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement
Benefits. The provisions of this revised statement retain
the existing disclosure requirements of the original guidance in
SFAS No. 132 and contain additional requirements for
both annual and interim reporting. This revision also amends the
disclosure requirements under APB Opinion No. 28,
Interim Financial Reporting. The revised statement
is effective for fiscal years ending and interim periods
beginning after December 15, 2003. We have adopted the
additional annual disclosure requirements as noted above.

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity. This Statement requires, among other things, the
classification of certain financial instruments, previously
classified within the equity section of the balance sheet, to be
included in liabilities. This Statement is effective for
financial instruments entered into or modified after
May 31, 2003 and June 15, 2003 for all other
instruments. The adoption of this Statement had no impact on our
financial position or results of operations.

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement
No. 133 on Derivative Instruments and Hedging
Activities. This Statement amended and refined certain
characteristics of derivative instruments and hedges. The
adoption of this Statement had no impact on our financial
position or results of operations.

In January 2003, the FASB issued Interpretation
(FIN) No. 46, Consolidation of Variable
Interest Entities  An Interpretation of Accounting
Research Bulletin (ARB) No. 51. This
interpretation was subsequently revised by FIN 46 (Revised
2003) in December 2003. This revised interpretation states that
consolidation of variable interest entities will be required by
the primary beneficiary if the entities do not effectively
disperse risks among the parties involved. The requirements are
effective for fiscal years ending after December 15, 2003
for special-purpose entities and for all other types of entities
for periods ending after March 31, 2004. We have no
variable interest entities and do not believe that FIN
No. 46(R) will impact our future financial results.

In December 2002, the FASB issued
SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. This
Statement amends SFAS No. 123 to provide alternative
methods of transition for a voluntary change to the fair value
method of accounting for stock-based employee compensation.
SFAS No. 148 also amends the disclosure requirements
relating to stock options under SFAS No. 123 and APB
Opinion No. 28, Interim Financial Reporting. We
have adopted and applied the disclosure-only provisions of
SFAS No. 148 for 2003, and have elected to defer the
voluntary adoption of the fair value method of accounting for
stock-based employee compensation until it is required by the
FASB.

In November 2002, the FASB issued FASB
Interpretation No. 45, Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. This

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Interpretation clarifies that a guarantor is
required to recognize a liability for the fair value of the
obligation undertaken in issuing a guarantee and requires
certain related disclosures. The adoption of this Statement had
no impact on our financial statements.


In June 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146
supersedes guidance established in the FASBs Emerging
Issues Task Force (EITF) Issue No. 94-3
regarding certain exit and disposal costs. The provisions of
this Statement are effective for exit or disposal activities
that are initiated after December 31, 2002. The adoption of
this Statement had no impact on our financial statements.

In April 2002, the FASB issued
SFAS No. 145, Rescission of Statements 4, 44,
and 64, Amendment of SFAS No. 13 and Technical
Corrections. This statement rescinds SFAS No. 4
that required all gains and losses from the extinguishment of
debt to be aggregated and, if material, classified as an
extraordinary item. Gains and losses from the extinguishment of
debt will no longer be considered extraordinary.
SFAS No. 145 is effective for fiscal years beginning
after May 15, 2002. The adoption of this Statement had no
impact on our financial statements.



|        |              
|------- | -------------
|Note 3. | Special Items



| |                                                        
| | -------------------------------------------------------
| | 2003 Special Items  Pre-Tax charge
    of $9.1 million

In the fourth quarter of 2003, we decided to
transfer production of our translucent soap manufacturing
operations in Guatemala to our plant in Aurora, Illinois. We
expect to complete this move during the third quarter of 2004.
We are currently seeking a buyer for our operations in
Guatemala. As a result of this decision, we recorded an
impairment charge of $7.4 million and income tax expense of
$2.2 million during the fourth quarter to write down the
book value of those assets, primarily property and equipment, to
the estimated net realizable value of $2.0 million. As of
December 31, 2003, our consolidated balance sheet included
$1.8 million in current assets, $0.7 million in
non-current assets and $0.5 million in current liabilities
related to our Guatemala facility. We have classified these
assets and liabilities on the consolidated balance sheet as held
for sale.

Additionally in the fourth quarter of 2003, we
recorded a $1.7 million pre-tax charge ($1.7 million
after tax) primarily for legal expenses incurred in connection
with the pending acquisition by Henkel. See Note 1 in this
Form 10-K for further details regarding this acquisition.



| |                                                      
| | -----------------------------------------------------
| | 2002 Special Items  Pre-Tax Gain of
    $3.8 million

We recorded a net gain of $1.7 million
($0.9 million after-tax) associated with the sale of our
Mexico manufacturing facility and the reversal of special item
reserves established in 2001 and 2000 which were deemed no
longer necessary. This was offset in part by a writedown of the
carrying value of our Guatemala manufacturing facility. In
addition, we recorded a $2.1 million gain
($2.0 million after tax) associated with the previously
dissolved joint ventures for the reversal of reserves that were
no longer required.



| |                                                        
| | -------------------------------------------------------
| | 2001 Special Items  Pre-Tax Charge
    of $8.8 million

On August 30, 2001, we announced a special
charge to consolidate manufacturing facilities in the United
States and Argentina. In addition, in the third quarter of 2001
we incurred a special charge in connection with the closure of
our Mexico manufacturing facility. Excluding the
$2.0 million Argentina portion of the charge, which has
been reclassified to discontinued operations, we recorded
charges of $9.8 million ($8.3 million after-tax)
during 2001. During 2001, we also recorded a $1.0 million
pre-tax gain ($0.5 million after-tax) for the reversal of
special item reserves established in 2000, which were deemed no
longer necessary. The net charges of $8.8 million ($7.8 million
after tax) recorded against Operating Income in 2001 consist of
$8.4 million for manufacturing asset sales and writedowns,
discontinued product inventories and other exit activities, as
well as $0.3 million for selling, general and administrative
expenses related to asset writedowns, severance and other exit
costs.

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We recorded employee separation charges related
to severance packages for 64 manufacturing employees in the
United States and 69 manufacturing and 33 general, selling and
administrative employees in Mexico. The predominately
involuntary packages were based on salary levels and past
service and were recorded upon acceptance of the package.

We wrote down the carrying value of the Compton,
California and Mexico manufacturing plants by approximately
$1.9 million. As a result of the closure of our Mexico
manufacturing facility, some inventory, primarily raw material,
became unusable. Accordingly, a charge was recorded for the
difference between cost and net realizable value.

We expensed the $2.8 million cumulative
currency translation adjustment related to our Mexico
operations, which was previously recorded as a charge to other
comprehensive income/(loss) in stockholders equity.



|        |                        
|------- | -----------------------
|Note 4. | Discontinued Operations

Argentina
Operations.On June 30, 2003, we
completed the sale of our discontinued Argentina business to an
entity designated by Southern Cross Group, a private equity
investor in Argentina. The transaction was structured as the
sale of assets of Dial Argentina, S.A., which includes the stock
of its two subsidiaries, Sulfargen, S.A. and The Dial
Corporation San Juan, S.A. In December 2002, we recorded an
after-tax loss of $62.4 million on the pending sale and
classified our Argentina business as a discontinued operation.
This primarily non-cash loss includes the reversal of
$92.8 million in currency translation adjustments that had
previously been recorded as a reduction of equity and an accrual
for estimated exit and closing costs. This transaction also
resulted in current tax benefits of approximately
$61 million, which were utilized during 2003. During 2002,
we recorded $3.6 million in net income ($6.8 million
pre-tax) from operation of our discontinued Argentina business.

Completion of the sale in 2003 resulted in higher
cash proceeds and lower projected exit and closing costs than
originally anticipated. Accordingly, in the second quarter of
2003, we recognized a $2.1 million after-tax
($3.4 million pre-tax) reduction in the previously recorded
loss on the disposal of our discontinued Argentina business.
Assets and liabilities of the discontinued Argentina business
included in our consolidated financial statements as of
December 31, 2002 were as follows:

|                          |                                               |      |        |        | 
|------------------------- | --------------------------------------------- | ---- | ------ | ------ | 
|                          |                                               | 2002
|                          |                                               |     
|Cash and cash equivalents |                                               | $    | 1,657  |       
|Receivables               |                                               |      | 3,988  |       
|Inventories               |                                               |      | 10,483 |       
|Other current assets      |                                               |      | 2,419  |       
|                          |                                               |      |        |       
|                          | Current assets of discontinued operation      |      | $      | 18,547 | 
|                          |                                               |      |        |       
|Other non-current assets  |                                               |      | 2,226  |       
|                          |                                               |      |        |       
|                          | Non-current assets of discontinued operation  |      | $      | 2,226  | 
|                          |                                               |      |        |       
|Trade accounts payable    |                                               |      | 13,512 |       
|                          |                                               |      |        |       
|                          | Current liabilities of discontinued operation |      | $      | 13,512 | 
|                          |                                               |      |        |       

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The results of the discontinued Argentina
business are as follows, in thousands:

|                                                                                                                |  |      |       |      |  |      |         |   |  |   |        |  
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                                                                                |  | 2003 |       | 2002 |  | 2001
|                                                                                                                |  |      |       |      |  |     
|Net sales                                                                                                       |  |      |      |      |  | $    | 52,258  |   |  | $ | 80,843 |  
|Operating income/(loss)                                                                                         |  |      |      |      |  |      | 6,775   |   |  |   | (4,540 | )
|Tax benefit/(expense) from operations                                                                           |  |      |      |      |  |      | (3,193  | ) |  |   | 75     |  
|Income/(loss) from operations, net of tax                                                                       |  |      |      |      |  |      | 3,582   |   |  |   | (4,465 | )
|Loss on disposal of Argentina, net of $61,017 tax
    benefit                                                   |  |      |      |      |  | $    | (62,399 | ) |  |   |       |  
|Adjustment to previously recorded loss on
    disposal of discontinued Argentina business, net of tax of $1,263 |  | $    | 2,150 |      |  |      |        |   |  |   |       |  

In the first quarter of 2002, we also recorded an
after-tax impairment charge of $43.3 million for the
Argentina business as a result of adopting SFAS No. 142,
Goodwill and Other Intangible Assets, which
established a new method of testing goodwill for impairment. The
impairment was calculated using a discounted cash flow model and
was recorded in our Statement of Consolidated Operations and
Comprehensive Income/(loss) as a Cumulative effect of the
change in accounting principle and, therefore, is not
included in operating income.

The tax rates on the loss on disposal and the
impairment charge in 2002 were 49.4% and 4.5%, respectively.
These rates differ from the federal statutory rate in that no
tax benefit was provided on the impairment charge related to
nondeductible goodwill, which becomes fully deductible on the
disposal of Dial Argentina. The combined tax rate for these
related items was 36.9%.

Specialty Personal
Care.On August 28, 2001, we
completed the sale of our SPC business. Businesses included in
the sale segment consisted of a variety of skin, hair, bath,
body and foot care products sold under the Freeman and Sarah
Michaels brand names. The sale was in line with our strategy to
fix or jettison under-performing businesses. As a result of the
sale, we recorded an after-tax loss of $198.4 million
related to the write-off of assets and to record an accrual for
estimated exit costs. Proceeds from the sale were primarily used
to repay debt. As a result of this transaction, we sold the
stock of our wholly-owned subsidiary, Sarah Michaels, Inc., and
the inventories, fixed assets and intangibles of the business,
but retained the related receivables and liabilities arising on
or prior to closing.

As consideration for the sale, we received
aggregate purchase price consideration of $12.0 million,
which consisted of $8.0 million in cash and two
subordinated promissory notes in the amount of $2.0 million
each. On December 31, 2001, the $4.0 million in
promissory notes had not been recorded by us because of
uncertainties regarding the realizability of such amounts. In
the first quarter of 2002, we entered into an agreement with the
buyer of this business to resolve disputes that arose in
connection with the sale. Under the terms of that agreement, we
received full payment on one of these notes, forgave the other
note and agreed to bear the cost of some disputed expenses. In
the first quarter of 2002, we recorded the $2.0 million
($1.3 million after-tax) received as a reduction of the
loss previously recognized on the sale of the business. In the
fourth quarter of 2002, we further reduced the loss previously
recorded on the disposal of the business by $4.0 million
($2.5 million after-tax) as a result of reversing certain
exit cost accruals because of lower than expected costs
associated with exiting the discontinued operation. At
December 31, 2003, we still have approximately
$13.0 million of accruals related to the discontinued
business, primarily for future operating lease payments.

Our loss on the sale included a current tax
benefit of approximately $40.0 million, which was realized
in 2001 and 2002. The loss on the sale is primarily comprised of
the write-off of goodwill and inventories. In addition, the sale
resulted in approximately $52.3 million in capital losses
for which no tax benefits were provided. In the second quarter
of 2003, we utilized $0.7 million of these capital losses.
We will realize additional tax benefits on these capital losses
only to the extent that we generate capital gains before
December 31, 2006.

The consolidated financial statements included in
this Form 10-K have been prepared to reflect our historical
financial position and results of operations and cash flows as
adjusted for the reclassification of the

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SPC business as a discontinued operation. The
historical results of operations of the business up to its date
of disposition and the estimated loss on the sale are reported
as a discontinued operation in the consolidated financial
statements.




|        |                            
|------- | ---------------------------
|Note 5. | Dial/ Henkel Joint Ventures

In April 1999, we formed Dial/ Henkel LLC, a
joint venture with Henkel. Dial and Henkel each owned 50% of
this joint venture. This joint venture was formed to develop and
market a range of enhanced laundry products in North America. In
1999, this joint venture acquired the Custom Cleaner home
dry cleaning business and launched Purex Advanced laundry
detergent.

In the third quarter of 2000, the Dial/ Henkel
LLC joint venture discontinued the operations of Purex
Advanced Laundry detergent and in the third quarter of 2001,
discontinued the Custom Cleaner home dry cleaning
business.

In the second quarter of 2002, Henkel received
certain intellectual property rights related to the former
Custom Cleaner business in exchange for its interest in
Dial/ Henkel LLC, which did not operate during 2002. We
accounted for our investments in this joint venture under the
equity method of accounting. During 2002, we recorded a
$2.1 million gain related to lower than expected costs of
the joint venture associated with exiting the discontinued
Custom Cleaner business. During 2001, we recorded a
$3.0 million gain from lower than expected marketing costs
of the Custom Cleaner and Purex Advanced
businesses and lower than expected costs of exiting the joint
venture.



|        |            
|------- | -----------
|Note 6. | Inventories

Inventories consisted of the following at
December 31, in thousands:

|                           |  |      |         |      |  |   |         | 
|-------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                           |  | 2003 |         | 2002
|                           |  |      |         |     
|Raw materials and supplies |  | $    | 37,340  |      |  | $ | 34,575  | 
|Work in process            |  |      | 5,898   |      |  |   | 8,515   | 
|Finished goods             |  |      | 98,699  |      |  |   | 88,418  | 
|                           |  |      |         |      |  |   |         | 
|                           |  | $    | 141,937 |      |  | $ | 131,508 | 
|                           |  |      |         |      |  |   |         | 



|        |                       
|------- | ----------------------
|Note 7. | Property and Equipment

Property and equipment consisted of the following
at December 31, in thousands:

|                                     |  |      |          |      |  |   |          |  
|------------------------------------ |  | ---- | -------- | ---- |  | - | -------- | -
|                                     |  | 2003 |          | 2002
|                                     |  |      |          |     
|Land                                 |  | $    | 4,324    |      |  | $ | 4,507    |  
|Buildings and leasehold improvements |  |      | 78,179   |      |  |   | 79,081   |  
|Machinery and other equipment        |  |      | 433,696  |      |  |   | 423,423  |  
|Construction in progress             |  |      | 24,303   |      |  |   | 13,281   |  
|                                     |  |      |          |      |  |   |          |  
|                                     |  |      | 540,502  |      |  |   | 520,292  |  
|Less accumulated depreciation        |  |      | (323,388 | )    |  |   | (299,500 | )
|                                     |  |      |          |      |  |   |          |  
|                                     |  | $    | 217,114  |      |  | $ | 220,792  |  
|                                     |  |      |          |      |  |   |          |  

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|        |            
|------- | -----------
|Note 8. | Intangibles

Intangibles subject to amortization consisted of
the following at December 31, in thousands:

|                  |       |          |       |              |  |          |      |          |   |              |       |          |  |   |       |       |  |   |      |      |   |   |       |       | 
|----------------- | ----- | -------- | ----- | ------------ |  | -------- | ---- | -------- | - | ------------ | ----- | -------- |  | - | ----- | ----- |  | - | ---- | ---- | - | - | ----- | ----- | 
|                  |       |          |       |             
|                  |       | 2003     |       | 2002        
|                  |       |          |       |             
|                  |       | Gross    |       |              |  | Net      |      | Gross    |   |              |       | Net     
|                  |       | Carrying |       | Accumulated  |  | Carrying |      | Carrying |   | Accumulated  |       | Carrying
|                  |       | Value    |       | Amortization |  | Value    |      | Value    |   | Amortization |       | Value   
|                  |       |          |       |              |  |          |      |          |   |              |       |         
|Patents           |       | $        | 3,142 |              |  | $        | (279 | )        |   | $            | 2,863 |          |  | $ | 2,171 |       |  | $ | (149 | )    |   | $ | 2,022 |      
|Other intangibles |       |          | 900   |              |  |          | (638 | )        |   |              | 262   |          |  |   | 900   |       |  |   | (578 | )    |   |   | 322   |      
|                  |       |          |       |              |  |          |      |          |   |              |       |          |  |   |       |       |  |   |      |      |   |   |       |      
|                  | Total |          | $     | 4,042        |  |          | $    | (917     | ) |              | $     | 3,125    |  |   | $     | 3,071 |  |   | $    | (727 | ) |   | $     | 2,344 | 
|                  |       |          |       |              |  |          |      |          |   |              |       |          |  |   |       |       |  |   |      |      |   |   |       |      

Intangibles not subject to amortization consisted
of the following at December 31, in thousands:

|                            |  |      |         |      |  |   |         | 
|--------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                            |  | 2003 |         | 2002
|                            |  |      |         |     
|Goodwill                    |  | $    | 312,528 |      |  | $ | 312,678 | 
|Trademarks                  |  |      | 39,766  |      |  |   | 39,426  | 
|Pension related intangibles |  |      | 11,300  |      |  |   | 9,300   | 
|                            |  |      |         |      |  |   |         | 
|                            |  | $    | 363,594 |      |  | $ | 361,404 | 
|                            |  |      |         |      |  |   |         | 

In connection with the implementation of
SFAS No. 142, effective January 1, 2002, we
ceased amortizing our intangible assets with indefinite lives.
Amortization expense, net of tax, was approximately
$5.1 ($7.3 million pre-tax) million in 2001, or
$0.05 per diluted share. Accordingly, net loss and net loss
per diluted share, excluding this amortization expense, would
have been $127.2 million or $1.38 per diluted share in
2001. For the year ended December 31, 2003 amortization of
intangibles with definite lives was $0.2 million and is not
expected to materially change in the near future.

Effective January 1, 2002, we recorded a
$43.3 million after-tax impairment ($44.0 million
pre-tax) to intangibles as a result of implementing
SFAS No. 142. See Note 4 for further discussion of
this impairment charge.



|        |             
|------- | ------------
|Note 9. | Other Assets

Other assets consisted of the following at
December 31, in thousands:

|                         |  |      |        |      |  |   |       | 
|------------------------ |  | ---- | ------ | ---- |  | - | ----- | 
|                         |  | 2003 |        | 2002
|                         |  |      |        |     
|Prepaid pension benefits |  | $    | 50,317 |      |  | $ |      | 
|Cash surrender value     |  |      | 6,768  |      |  |   | 4,057 | 
|Unamortized debt expense |  |      | 3,326  |      |  |   | 4,370 | 
|Other assets             |  |      | 1,607  |      |  |   | 698   | 
|                         |  |      |        |      |  |   |       | 
|                         |  | $    | 62,018 |      |  | $ | 9,125 | 
|                         |  |      |        |      |  |   |       | 

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|         |                          
|-------- | -------------------------
|Note 10. | Other Current Liabilities

Other current liabilities consisted of the
following at December 31, in thousands:

|                                   |  |      |         |      |  |   |         | 
|---------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                   |  | 2003 |         | 2002
|                                   |  |      |         |     
|Accrued compensation               |  | $    | 48,214  |      |  | $ | 52,038  | 
|Accrued promotions and advertising |  |      | 22,538  |      |  |   | 33,629  | 
|Employee benefit liabilities       |  |      | 18,868  |      |  |   | 17,790  | 
|Interest payable                   |  |      | 14,607  |      |  |   | 15,037  | 
|Dividends payable                  |  |      | 8,360   |      |  |   | 3,477   | 
|Other                              |  |      | 37,606  |      |  |   | 39,246  | 
|                                   |  |      |         |      |  |   |         | 
|                                   |  | $    | 150,193 |      |  | $ | 161,217 | 
|                                   |  |      |         |      |  |   |         | 



|         |     
|-------- | ----
|Note 11. | Debt

Long-term debt consisted of the following at
December 31, in thousands:

|                                                                          |                         |      |         |         |  |   |         |         | 
|------------------------------------------------------------------------- | ----------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                          |                         | 2003 |         | 2002   
|                                                                          |                         |      |         |        
|$250 million 7.0% Senior Notes due
    2006, net of issue discount        |                         | $    | 248,152 |         |  | $ | 247,460 |        
|$200 million 6.5% Senior Notes due
    2008, net of issue discount        |                         |      | 198,995 |         |  |   | 198,785 |        
|                                                                          |                         |      |         |         |  |   |         |        
|Total long-term debt                                                      |                         |      | 447,147 |         |  |   | 446,245 |        
|Fair market value of interest rate swaps entered
    into in January 2003 |                         |      | 1,266   |         |  |   |        |        
|Deferred gain on interest rate swaps terminated
    in August 2002        |                         |      | 8,758   |         |  |   | 12,148  |        
|                                                                          |                         |      |         |         |  |   |         |        
|                                                                          | Reported long-term debt |      | $       | 457,171 |  |   | $       | 458,393 | 
|                                                                          |                         |      |         |         |  |   |         |        

We have outstanding $250 million of
7.0% Senior Notes due 2006, which were issued in 2001. The
Indenture governing these Senior Notes imposes restrictions with
respect to, among other things, our ability to place liens on
certain properties and enter into certain sale and leaseback
transactions. In addition, the Indenture governing these Senior
Notes requires us to purchase from the holders of the Senior
Notes, upon the exercise of such purchase right by each holder,
all or any part of their Senior Notes at a purchase price equal
to 101% of the principal amount of the Senior Notes plus
interest, upon the occurrence of either (i) a change of
control of Dial that is followed by a rating decline or
(ii) a significant asset sale yielding gross proceeds to us
of $500 million or more in the aggregate that is followed
by a rating decline. A rating decline is deemed to
have occurred if, no later than 90 days after the public
notice of either the occurrence or intention to effect a change
of control or significant asset sale, either of the rating
agencies assigns a rating to the Senior Notes that is lower than
Baa3, in the case of a rating by Moodys, or BBB-, in the
case of a rating by Standard & Poors.

We also have outstanding $200 million of
6.5% Senior Notes due 2008, which were issued in 1998. The
Indenture governing these Senior Notes also imposes restrictions
with respect to, among other things, our ability to place liens
on certain properties and enter into certain sale and leaseback
transactions.

Credit ratings for our Senior Notes were assigned
by Standard and Poors at BBB-, by Fitchs at BBB and
by Moodys at Baa3.

The events of default under the Indentures
governing both of our Senior Notes include the following:



| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | failure to pay principal or interest when due                             
|
| |  | failure to comply with covenants                                          
|
| |  | commencing any proceeding for bankruptcy,
    insolvency or reorganization

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| |   |                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | default under any other indebtedness for borrowed
    money having an aggregate principal amount outstanding of at
    least $50 million, which default results in such
    indebtedness being declared due and payable prior to its
    maturity date

At December 31, 2003, we were in compliance
with all covenants under our $250 million of
7.0% Senior Notes due 2006 and our $200 million of
6.5% Senior Notes due 2008.

In January 2003, we entered into two interest
rate swap contracts that effectively changed the interest rate
on a portion of our Senior Notes from fixed to variable. We
designated the swaps as fair value hedges. Accordingly, the fair
value of the swaps was recorded as an asset and the carrying
value of the underlying debt was increased by an equal amount in
accordance with SFAS No. 133. The $200 million
notional value of the interest rate swaps, which expire in
September 2008, effectively converted approximately 45% of our
total debt to variable interest rate debt. Under the interest
rate swaps, we pay a variable rate of interest based on the
6-month LIBOR plus 278 basis points and receive a fixed
interest rate of 6.5%. Variable interest rates are paid and
reset semi-annually. The swaps expose us to the risk of changes
in the LIBOR based interest rates. Each 50 basis point
change in the swaps floating rate would change pre-tax
interest expense by $1 million.

In 2001, we entered into two interest rate swap
contracts that effectively converted our $250 million
7.0% Senior Notes due in 2006 to floating rate debt. We
designated the swaps as fair value hedges. In 2002, the swaps
were terminated resulting in a net gain of $13.4 million.
The gain is recorded with total reported debt and is being
amortized as a reduction of interest expense over the remaining
term of the $250 million 7.0% Senior Notes due in
2006. The amortization of the gain effectively reduces the
interest rate on these notes to 5.6% annually.

During the first quarter of 2003, we renewed the
$100 million short-term commitment portion of our
$200 million revolving credit facility until March 2004.
The remaining $100 million long-term portion of our credit
facility, due in March 2005, has remained unchanged. The credit
facility requires us to pay commitment fees to the lenders.
Borrowings under the facility bear interest at our option, at
the banks prime rate or LIBOR plus a credit spread that
ranges from 0.475% to 1.125% depending on our current credit
rating. The commitment fees paid for the facility also vary
depending on our debt ratings. As of December 31, 2003,
there were no amounts outstanding under our credit facility. Due
to our pending acquisition by Henkel, we do not expect to renew
the $100.0 million of commitments that expire in March 2004.

Under our credit facility, we are required to
maintain minimum net worth of $100 million plus 50% of net
income (if positive) earned from the date of the facility. For
purposes of calculating our minimum net worth, we exclude
foreign currency translation gains or losses, gains or losses
relating to any sale or other disposition of our Argentina
business and the Armour food business and the $43.3 million
after-tax impairment charge taken in the first quarter of 2002
for Argentina. We also are limited to a maximum ratio of funded
debt to earnings before interest, taxes, depreciation and
amortization (EBITDA) of 3.0 to 1.0. At December 31,
2003, we were in compliance with this requirement as our funded
debt to EBITDA ratio was 1.61 to 1.0. Our credit facility also
limits our ability to incur additional unsecured indebtedness,
sell, lease or transfer assets, enter into sale and leaseback
transactions, place liens on properties and complete certain
acquisitions without our lenders consent.

The events of default under this
$200 million credit facility include the following:



| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due                                                                                                                     
|
| |  | failure to comply with covenants, representations
    and warranties under the credit agreement                                                                   
|
| |  | default in the payment of, or failure to comply
    with covenants relating to, other indebtedness with a principal
    amount outstanding of at least $15 million
|
| |  | default under any material contract which results
    in liabilities or damages in excess of $25 million                                                          
|
| |  | commencing any proceeding for bankruptcy,
    insolvency or reorganization                                                                                        
|
| |  | entry of a final, non-appealable judgment in
    excess of $25 million                                                                                            

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| |   |                            
| | - | ---------------------------
| |  | a change in control of Dial

As a result of our pending acquisition by Henkel,
we were not in compliance with the change in control covenant
under our $200 million credit facility at December 31,
2003. We have entered into a temporary waiver agreement with our
lenders until April 30, 2004 with respect to this event of
default.

Interest expense incurred in 2003, 2002 and 2001
was, in thousands, $25,676, $29,922 and $36,797, respectively.
Interest paid to lenders net of amounts received on our interest
rate swaps in 2003, 2002 and 2001 was, in thousands, $27,274,
$29,890 and $37,071, respectively.

The fair value of our Senior Notes was, in
thousands, $492,203 and $477,687 at December 31, 2003 and
2002, respectively.



|         |             
|-------- | ------------
|Note 12. | Income Taxes

The following table presents the U.S. and
international components of income from continuing operations
before income taxes and the provision/(benefit) for income
taxes, for the years ended December 31:

|                                                           |                    |          |         |        |        |      |         |        |        |   |         |        |        |  
|---------------------------------------------------------- | ------------------ | -------- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | - | ------- | ------ | ------ | -
|                                                           |                    | 2003     |         | 2002   |        | 2001
|                                                           |                    |          |         |        |        |     
|Income from continuing operations before
    income taxes: |                    |          |         |        |        |      |         |        |        |   |         |       
|United States                                              |                    | $        | 208,581 |        |        | $    | 177,878 |        |        | $ | 121,971 |       
|International                                              |                    |          | (4,291  | )      |        |      | 4,295   |        |        |   | (3,898  | )     
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       
|Income from continuing operations before income
    taxes  |                    | $        | 204,290 |        |        | $    | 182,173 |        |        | $ | 118,073 |       
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       
|Provision/(benefit) for income
    taxes:                  |                    |          |         |        |        |      |         |        |        |   |         |       
|Current Tax Expense:                                       |                    |          |         |        |        |      |         |        |        |   |         |       
|                                                           | U.S. federal       |          | $       | 31,056 |        |      | $       | 55,851 |        |   | $       | 40,090 |       
|                                                           | U.S. state & local |          |         | 2,000  |        |      |         | 7,523  |        |   |         | 6,426  |       
|                                                           | International      |          |         | 3,594  |        |      |         | 2,373  |        |   |         | (384   | )     
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       
|                                                           |                    | Subtotal |         |        | 36,650 |      |         |        | 65,747 |   |         |        | 46,132 |  
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       
|Deferred Tax Expense:                                      |                    |          |         |        |        |      |         |        |        |   |         |       
|                                                           | U.S. federal       |          |         | 36,881 |        |      |         | 1,548  |        |   |         | 13     |       
|                                                           | U.S. state & local |          |         | 6,889  |        |      |         | 78     |        |   |         | (2,394 | )     
|                                                           | International      |          |         | 116    |        |      |         | (434   | )      |   |         | 14     |       
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       
|                                                           |                    | Subtotal |         |        | 43,886 |      |         |        | 1,192  |   |         |        | (2,367 | )
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       
|Provision for income taxes                                 |                    | $        | 80,536  |        |        | $    | 66,939  |        |        | $ | 43,765  |       
|                                                           |                    |          |         |        |        |      |         |        |        |   |         |       

Income tax paid/(refunds) in 2003, 2002 and 2001
amounted to, in thousands, $8,884, $2,274, and $(7,316)
respectively.

The following table presents a reconciliation of
the statutory U.S. federal income tax rate to our effective
tax rate on continuing operations, for the years ended
December 31:

|                            |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                            |  | 2003 |      | 2002 |  | 2001
|                            |  |      |      |      |  |     
|Federal statutory rate      |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State income taxes          |  |      | 2.8  |      |  |      | 2.6  |   |  |  | 2.2  |  
|Impact of foreign tax rates |  |      | 2.5  |      |  |      | 0.2  |   |  |  | (0.9 | )
|Foreign sales exclusion     |  |      | (0.5 | )    |  |      | (0.2 | ) |  |  | (0.6 | )
|Other, net                  |  |      | (0.4 | )    |  |      | (0.9 | ) |  |  | 1.4  |  
|                            |  |      |      |      |  |      |      |   |  |  |      |  
|Effective income tax rate   |  |      | 39.4 | %    |  |      | 36.7 | % |  |  | 37.1 | %
|                            |  |      |      |      |  |      |      |   |  |  |      |  

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The following table presents the components of
deferred income tax assets and liabilities from continuing
operations at December 31:

|                                             |                                |      |         |        |  |   |         |         | 
|-------------------------------------------- | ------------------------------ | ---- | ------- | ------ |  | - | ------- | ------- | 
|                                             |                                | 2003 |         | 2002  
|                                             |                                |      |         |       
|Deferred income tax assets:                  |                                |      |         |        |  |   |         |        
|Pension and other employee benefits          |                                | $    | 54,546  |        |  | $ | 73,382  |        
|Reserves, accruals and other                 |                                |      | 17,292  |        |  |   | 36,730  |        
|Deferred state income taxes                  |                                |      |        |        |  |   | 7,859   |        
|Capital and net operating loss carryforwards |                                |      | 19,103  |        |  |   | 27,039  |        
|Valuation allowance                          |                                |      | (19,103 | )      |  |   | (19,368 | )      
|                                             |                                |      |         |        |  |   |         |        
|                                             | Total deferred tax assets      |      | $       | 71,838 |  |   | $       | 125,642 | 
|                                             |                                |      |         |        |  |   |         |        
|Deferred income tax liabilities:             |                                |      |         |        |  |   |         |        
|Property, plant and equipment                |                                | $    | 47,596  |        |  | $ | 45,375  |        
|Deferred state income taxes                  |                                |      | 842     |        |  |   |        |        
|                                             |                                |      |         |        |  |   |         |        
|                                             | Total deferred tax liabilities |      | $       | 48,438 |  |   | $       | 45,375  | 
|                                             |                                |      |         |        |  |   |         |        

SFAS No. 109, Accounting for
Income Taxes requires that a valuation allowance be
established when it is more likely than not that all or a
portion of a deferred tax asset will not be realized. Changes in
the valuation allowance from period to period are included in
the tax provision in the period of change. In determining
whether a valuation allowance is required, we take into account
all evidence with regard to utilization of the deferred tax
asset including our past earnings history, expected future
earnings, the character and jurisdiction of such earnings,
unsettled circumstances that, if unfavorably resolved, would
adversely affect utilization of a deferred tax asset, carryback
and carryforward periods, and tax strategies that could
potentially enhance the likelihood of realization of a deferred
tax asset.

At December 31, 2002, we had a full
valuation allowance for $19.4 million of deferred tax
assets related to a $52.3 million capital loss from the
sale of the Specialty Personal Care business. In 2003, we
utilized $0.7 million of that capital loss. The remaining
$51.6 million capital loss can only be utilized to offset
future net capital gains, and will expire on December 31,
2006. As of December 31, 2003, we continue to maintain a
full valuation allowance against the remaining $19.1 of
potential future tax benefits relating to the capital loss
carryforward, and we will to continue to maintain a full
valuation allowance on those potential future tax benefits until
it is more likely than not that the capital losses will be
utilized.

U.S. Income tax is not provided when foreign
earnings are indefinitely reinvested in accordance with
Accounting Principles Board Opinion No. 23,
Accounting for Income Taxes, Special Areas. We
determine whether our foreign subsidiaries have invested or will
invest a significant portion of their undistributed earnings
indefinitely. We reassess our determination on a periodic basis.
Changes to our determination may be warranted based on our
experience as well as plans regarding future international
operations, and expected tax remittances. Changes in the
determination from period to period are included in our tax
provision in the period of change. As a result of the net asset
impairment on our Guatemalan manufacturing facility and
managements decision to transfer operations to the United
States, we determined that the accumulated earnings of those
operations were no longer indefinitely reinvested. As of
December 31, 2003 and December 31, 2002 we had not
provided for any U.S. taxes on approximately $1.0 million
and $14.0 million, respectively, of undistributed earnings
from our non-U.S. subsidiaries since these earnings are
indefinitely reinvested.

Note 13.     Pension
and Other Benefits

Pension Plans.Trusteed, noncontributory pension
plans cover substantially all employees, with benefit levels
supplemented in most cases by defined matching contributions to
employees 401(k) plans. We amended the pension plan to
calculate benefits using an age and pay-based credit formula,
beginning January 1, 2001. Under the former plan, defined
benefits were based primarily on final average salary and years
of service. The accrued pension benefit under the former plan
was frozen as of December 31, 2000, and

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will grow to reflect increases in employees
base pay. Funding policies provide that payments to defined
benefit pension trusts shall be at least equal to the minimum
funding required by applicable regulations.


The following tables provide information on the
status of the plans at December 31, in thousands:

|                                                  |  |      |         |      |  |   |         |  
|------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                  |  | 2003 |         | 2002
|                                                  |  |      |         |     
|Change in Projected Benefit
    Obligation:       |  |      |         |      |  |   |         |  
|Projected benefit obligation at beginning of year |  | $    | 249,056 |      |  | $ | 216,349 |  
|Service cost                                      |  |      | 6,286   |      |  |   | 5,924   |  
|Interest cost                                     |  |      | 17,049  |      |  |   | 16,094  |  
|Plan amendments                                   |  |      | 3,172   |      |  |   | 2,356   |  
|Actuarial loss                                    |  |      | 17,029  |      |  |   | 20,438  |  
|Benefits paid                                     |  |      | (13,155 | )    |  |   | (12,105 | )
|                                                  |  |      |         |      |  |   |         |  
|Projected benefit obligation at end of year       |  | $    | 279,437 |      |  | $ | 249,056 |  
|                                                  |  |      |         |      |  |   |         |  
|Change in Plan Assets:                            |  |      |         |      |  |   |         |  
|Fair value of plan assets at beginning of year    |  | $    | 159,380 |      |  | $ | 154,659 |  
|Actual return on plan assets                      |  |      | 26,820  |      |  |   | 1,771   |  
|Company contributions                             |  |      | 58,043  |      |  |   | 15,055  |  
|Benefits paid                                     |  |      | (13,155 | )    |  |   | (12,105 | )
|                                                  |  |      |         |      |  |   |         |  
|Fair value of plan assets                         |  | $    | 231,088 |      |  | $ | 159,380 |  
|                                                  |  |      |         |      |  |   |         |  
|Reconciliation of Funded Status:                  |  |      |         |      |  |   |         |  
|Funded status                                     |  | $    | (48,349 | )    |  | $ | (89,676 | )
|Unrecognized transition obligation                |  |      |        |      |  |   | (16     | )
|Unrecognized prior service cost                   |  |      | 8,345   |      |  |   | 6,026   |  
|Unrecognized actuarial loss                       |  |      | 78,234  |      |  |   | 70,965  |  
|                                                  |  |      |         |      |  |   |         |  
|Accrued pension cost                              |  | $    | 38,230  |      |  | $ | (12,701 | )
|                                                  |  |      |         |      |  |   |         |  

The weighted-average assumptions below were used
to measure the benefit obligations as of December 31, 2003
and 2002.

|                                                           |  |      |         |      |  |   |         |  
|---------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                           |  | 2003 |         | 2002
|                                                           |  |      |         |     
|Assumptions:                                               |  |      |         |      |  |   |         |  
|Discount rate                                              |  |      | 6.25    | %    |  |   | 6.75    | %
|Salary increase rate                                       |  |      | 4.50    | %    |  |   | 4.50    | %
|Amounts Recognized in the Consolidated Balance
    Sheet:  |  |      |         |      |  |   |         |  
|Prepaid pension cost                                       |  | $    | 50,317  |      |  | $ | 5,658   |  
|Accrued benefit liability                                  |  |      | (12,087 | )    |  |   | (18,359 | )
|Additional minimum liability                               |  |      | (25,258 | )    |  |   | (57,142 | )
|Intangible Asset                                           |  |      | 11,300  |      |  |   | 9,301   |  
|Equity  Accumulated other
    comprehensive loss, pre-tax |  |      | 13,958  |      |  |   | 47,841  |  
|                                                           |  |      |         |      |  |   |         |  
|Net amount recognized                                      |  | $    | 38,230  |      |  | $ | (12,701 | )
|                                                           |  |      |         |      |  |   |         |  

We use a measurement date of September 30
for our qualified pension plans.

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The pension plans, with accumulated benefit
obligations in excess of plan assets, have projected benefit
obligations, accumulated benefit obligations and fair values of
plan assets as detailed below, in thousands:

|                               |  |             |        |      |  |   |         | 
|------------------------------ |  | ----------- | ------ | ---- |  | - | ------- | 
|                               |  |            
|                               |  | December 31
|                               |  |            
|                               |  | 2003        |        | 2002
|                               |  |             |        |     
|Number of Plans                |  |             | 3      |      |  |   | 4       | 
|Projected benefit obligation   |  | $           | 77,867 |      |  | $ | 249,056 | 
|Accumulated benefit obligation |  |             | 76,062 |      |  |   | 228,544 | 
|Fair value of plan assets      |  |             | 42,679 |      |  |   | 159,380 | 

The accumulated benefit obligation for all
pension plans was, in thousands, $256,690, as of
December 31, 2003 and $228,544, as of December 31,
2002.

The expected employer contributions to plan
trusts in 2004, in thousands, is $4,790. The employer
contributions expected to be made directly to plan participants
in the form of benefit payments in 2004, in thousands, is $1,077.

The benefit payments expected to be paid from the
pension plans for the years 2004 to 2013, reflecting expected
future service, in thousands, are detailed below:

|                           |  |      |        |      |  |      |        |      |  |      |        |           |  |   |        |  |  |   |        |  |  |   |         | 
|-------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | --------- |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|                           |  | 2004 |        | 2005 |  | 2006 |        | 2007 |  | 2008 |        | 2009-2013
|                           |  |      |        |      |  |      |        |      |  |      |        |          
|Expected benefits payments |  | $    | 13,850 |      |  | $    | 14,763 |      |  | $    | 16,026 |           |  | $ | 16,806 |  |  | $ | 17,856 |  |  | $ | 105,586 | 

Components of the net periodic pension cost are
summarized in the following table, in thousands:

|                                              |                                |      |         |       |   |      |         |     |   |   |         |        |  
|--------------------------------------------- | ------------------------------ | ---- | ------- | ----- | - | ---- | ------- | --- | - | - | ------- | ------ | -
|                                              |                                | 2003 |         | 2002  |   | 2001
|                                              |                                |      |         |       |   |     
|Calculation of Net Periodic Pension
    Cost: |                                |      |         |       |   |      |         |     |   |   |         |       
|Service cost                                  |                                | $    | 6,286   |       |   | $    | 5,924   |     |   | $ | 4,746   |       
|Interest cost                                 |                                |      | 17,049  |       |   |      | 16,094  |     |   |   | 15,352  |       
|Expected return on plan assets                |                                |      | (18,082 | )     |   |      | (16,812 | )   |   |   | (17,601 | )     
|Amortization of:                              |                                |      |         |       |   |      |         |     |   |   |         |       
|                                              | Net transition obligation      |      |         | (16   | ) |      |         | (18 | ) |   |         | (18    | )
|                                              | Unrecognized past service cost |      |         | 854   |   |      |         | 623 |   |   |         | 622    |  
|                                              | Actuarial loss/(gain)          |      |         | 1,024 |   |      |         | 221 |   |   |         | (1,006 | )
|                                              |                                |      |         |       |   |      |         |     |   |   |         |       
|Net periodic pension cost                     |                                | $    | 7,115   |       |   | $    | 6,032   |     |   | $ | 2,095   |       
|                                              |                                |      |         |       |   |      |         |     |   |   |         |       
|Other Comprehensive (Income)/ Loss, pre tax   |                                | $    | (33,883 | )     |   | $    | 27,813  |     |   | $ | 20,028  |       
|                                              |                                |      |         |       |   |      |         |     |   |   |         |       

The weighted-average assumptions listed below
were used to measure the net periodic pension cost for the years
ended, December 31:

|                                    |  |      |      |      |  |      |      |   |  |  |       |  
|----------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ----- | -
|                                    |  | 2003 |      | 2002 |  | 2001
|                                    |  |      |      |      |  |     
|Assumptions:                        |  |      |      |      |  |      |      |   |  |  |       |  
|Discount rate for obligation        |  |      | 6.75 | %    |  |      | 7.25 | % |  |  | 8.00  | %
|Long-term rate of investment return |  |      | 8.75 | %    |  |      | 9.00 | % |  |  | 10.00 | %
|Salary increase rate                |  |      | 4.50 | %    |  |      | 4.00 | % |  |  | 4.00  | %

The expected rate of return on plan assets was
determined by taking an average of the actual rate of return on
plan assets over the past seven years.

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The asset allocation for our pension plans at
December 31, 2003 and 2002, and the target allocation for
2004, by asset category, is as follows:

|                  |  |            |       |                |  |      |     |   |  |  |     |  
|----------------- |  | ---------- | ----- | -------------- |  | ---- | --- | - |  |  | --- | -
|                  |  |            |       |               
|                  |  |            |       | Percentage of 
|                  |  |            |       | Plan Assets at
|                  |  | Target     |       | December 31:  
|                  |  | Allocation |       |               
|Asset Category    |  | 2004       |       | 2003           |  | 2002
|                  |  |            |       |                |  |     
|Equity securities |  |            | 60-72 | %              |  |      | 72  | % |  |  | 51  | %
|Debt securities   |  |            | 25-35 | %              |  |      | 27  | % |  |  | 42  | %
|Private equity    |  |            | 0-4   | %              |  |      | 1   | % |  |  | 1   | %
|Cash              |  |            | 0     | %              |  |      | 0   | % |  |  | 6   | %
|                  |  |            |       |                |  |      |     |   |  |  |     |  
|Total             |  |            | 100   | %              |  |      | 100 | % |  |  | 100 | %

At December 31, 2003 and 2002, the equity
securities of the plans included 84,367 shares of common stock
of the Company, valued at $2.4 million (1% of total plan
assets) and $1.7 million (1% of total plan assets),
respectively.

Our investment strategy is designed to provide
funding for the full satisfaction of our pension plan benefit
liabilities, while at the same time minimizing our contributions
to the Pension Trust. The investment strategy is the product of
an analysis that considers the following factors: the expected
investment returns of various asset classes, the expected
volatility of those asset classes, the funded status of our
pension plans, the timing and amount of future pension benefit
payments, and economic variables (such as interest rates,
inflation, etc.) that could impact any of these items.

We have determined, with the assistance of a
pension investment consultant and an actuarial consultant, that
75% to 80% of the pension trust assets can be invested in asset
classes with higher expected returns and higher expected
volatility such as domestic and international equities and
private equity partnerships. The equity portion of the Pension
Trust investment portfolio is designed to produce higher total
investment returns over the long term, meeting longer-term
pension benefit obligations while minimizing our required
contributions. The remaining 20% to 25% of the pension assets
are invested in asset classes such as U.S. fixed income
securities that have a lower expected return, but lower expected
volatility as well. The fixed income portfolio is designed to
provide more stable returns so that the pension trust has
satisfactory funding and liquidity to meet projected pension
benefit payments over the next five to eight years.

Defined Contribution
Plans.We maintain two 401(k) defined
contribution plans whereby employees can contribute up to 21% of
their total pay. We contribute to these plans throughout the
year. For the years ended December 31, 2003, 2002, and
2001, defined contribution plan expense was, in thousands,
$5,844, $6,128 and $5,613, respectively.

Multi-Employer Pension
Plans.We participate in one
multi-employer pension plan. For the years ended
December 31, 2003, 2002, and 2001, our related costs were,
in thousands, $1,639, $1,612 and $1,713, respectively.

Post-Retirement Benefits Other Than
Pensions:

We have defined benefit post-retirement plans
that provide medical and life insurance for eligible employees,
retirees and dependents. In addition, we retained the
obligations for such benefits for eligible retirees of Armour
and Company (sold in 1983).

On December 8, 2003, the President signed
into law the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, which provides a prescription drug
benefit under Medicare, as well as a federal subsidy to sponsors
of retiree health care benefit plans. In accordance with the
related FASB Staff Position No. 106-1, we have elected to
defer recognition of this legislation until specific accounting
guidance is available. Accordingly, our accumulated post
retirement benefit obligations and post retirement benefit

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expense do not reflect the impact of this
legislation. The issuance of specific authoritative guidance on
accounting for the federal subsidy by the FASB is currently
pending, and when issued, could require changes to previously
reported information.


We accrue post-retirement benefits other than
pensions during the years that the eligible employees provide
services. The status of the plans is as follows as of
December 31, in thousands:

|                                                         |  |      |          |      |  |   |          |  
|-------------------------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|                                                         |  | 2003 |          | 2002
|                                                         |  |      |          |     
|Change in Benefit Obligation:                            |  |      |          |      |  |   |          |  
|Benefit obligation at beginning of year                  |  | $    | 248,260  |      |  | $ | 200,902  |  
|Service cost                                             |  |      | 2,038    |      |  |   | 1,648    |  
|Interest cost                                            |  |      | 15,445   |      |  |   | 15,051   |  
|Plan participants contributions                         |  |      | 956      |      |  |   | 939      |  
|Amendments                                               |  |      | (52,319  | )*   |  |   | 2,404    |  
|Actuarial loss                                           |  |      | 16,635   |      |  |   | 48,314   |  
|Benefits paid                                            |  |      | (21,300  | )    |  |   | (20,998  | )
|                                                         |  |      |          |      |  |   |          |  
|Benefit obligation at end of year                        |  | $    | 209,715  |      |  | $ | 248,260  |  
|                                                         |  |      |          |      |  |   |          |  
|Change in Plan Assets:                                   |  |      |          |      |  |   |          |  
|Fair value of plan assets at beginning of year           |  | $    |         |      |  | $ |         |  
|Employer contribution                                    |  |      | 20,344   |      |  |   | 20,059   |  
|Plan participants contributions                         |  |      | 956      |      |  |   | 939      |  
|Benefits paid                                            |  |      | (21,300  | )    |  |   | (20,998  | )
|                                                         |  |      |          |      |  |   |          |  
|Fair value of plan assets at end of year                 |  | $    |         |      |  | $ |         |  
|                                                         |  |      |          |      |  |   |          |  
|Funded status                                            |  | $    | (209,715 | )    |  | $ | (248,260 | )
|Unrecognized net loss                                    |  |      | 77,337   |      |  |   | 64,464   |  
|Unrecognized prior service cost                          |  |      | (63,464  | )    |  |   | (13,666  | )
|                                                         |  |      |          |      |  |   |          |  
|Accrued benefit cost                                     |  | $    | (195,842 | )    |  | $ | (197,462 | )
|                                                         |  |      |          |      |  |   |          |  
|Amounts Recognized in the Consolidated Balance
    Sheet |  | $    | (195,842 | )    |  | $ | (197,462 | )
|                                                         |  |      |          |      |  |   |          |  



|  |                                                                                                                                                                                                                                                                     
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Includes $37.2 million related to changes in
    our past practice of certain survivor benefit payments, which
    constituted an amendment to the substantive plan. The remaining
    $15.1 million resulted from a re-negotiation of post
    retirement benefits.

We use a measurement date of December 31 for
our post retirement benefit plans. Accordingly, the
weighted-average assumptions below were used to measure the
benefit obligations as of December 31, 2003 and 2002.

|                            |  |      |       |      |  |  |       |  
|--------------------------- |  | ---- | ----- | ---- |  |  | ----- | -
|                            |  | 2003 |       | 2002
|                            |  |      |       |     
|Assumptions:                |  |      |       |      |  |  |       |  
|Discount Rate               |  |      | 6.25  | %    |  |  | 6.75  | %
|Health care cost trend rate |  |      | 10.00 | %    |  |  | 10.00 | %

The assumed health care cost trend rate used to
measure the accumulated post-retirement benefit obligation for
retirees both above and below the age of 65 for 2004 is 10.0%,
gradually declining to an ultimate rate of 5% in 2011.

The benefits expected to be paid from the
postretirement welfare plans for the years 2004 to 2008 are in
thousands, $17,370, $17,794, $18,177, $18,390 and $18,411,
respectively. The total benefit payments expected to be paid
from the postretirement welfare plans for the years 2009 to 2013
are $88,839.

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Components of the net periodic benefit cost are
summarized in the following table, in thousands:

|                                              |                                 |      |        |        |   |      |        |        |   |   |        |        |  
|--------------------------------------------- | ------------------------------- | ---- | ------ | ------ | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|                                              |                                 | 2003 |        | 2002   |   | 2001
|                                              |                                 |      |        |        |   |     
|Calculation of Net Periodic Benefit
    Cost: |                                 |      |        |        |   |      |        |        |   |   |        |       
|Service cost                                  |                                 | $    | 2,038  |        |   | $    | 1,648  |        |   | $ | 1,295  |       
|Interest cost                                 |                                 |      | 15,445 |        |   |      | 15,051 |        |   |   | 14,458 |       
|Amortization of:                              |                                 |      |        |        |   |      |        |        |   |   |        |       
|                                              | Unrecognized prior service cost |      |        | (2,520 | ) |      |        | (2,458 | ) |   |        | (2,534 | )
|                                              | Actuarial loss                  |      |        | 3,759  |   |      |        | 2,838  |   |   |        | 196    |  
|                                              |                                 |      |        |        |   |      |        |        |   |   |        |       
|Net periodic benefit cost                     |                                 | $    | 18,722 |        |   | $    | 17,079 |        |   | $ | 13,415 |       
|                                              |                                 |      |        |        |   |      |        |        |   |   |        |       

The weighted-average assumptions listed below
were used to measure the net periodic benefit cost for the years
ended December 31:

|                             |  |      |       |      |  |      |      |   |  |  |       |     
|---------------------------- |  | ---- | ----- | ---- |  | ---- | ---- | - |  |  | ----- | ----
|                             |  | 2003 |       | 2002 |  | 2001
|                             |  |      |       |      |  |     
|Assumptions:                 |  |      |       |      |  |      |      |   |  |  |       |     
|Discount rate for obligation |  |      | 6.75  | %    |  |      | 7.25 | % |  |  | 8.00  | %   
|Health care cost trend rate  |  |      | 10.00 | %    |  |      | 6.50 | % |  |  | 10.00 | %(1)



---



|    |  |                                                                                                                                                                              
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | The health care cost trend rate used to measure
    the net periodic benefit cost in 2001 was 10% for eligible
    participants under age 65 and 12.5% for those over age 65.

The assumed health care cost trend rate used to
calculate the 2003 net periodic benefit cost was 10%, gradually
declining to an ultimate rate of 5% in 2006.

The 2003, 2002 and 2001 components of net
periodic post retirement benefit cost reflect expense of
approximately $12.9 million, $12.3 million and $10.8
million, respectively, incurred on the Armour employee benefit
liabilities, which are included in Other expenses,
net in the Statement of Consolidated Operations.



| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Effect of one-percentage-point change in
    assumed health care cost trend rates, in thousands:

|                                                                |  |          |        |            |  |   |         |  
|--------------------------------------------------------------- |  | -------- | ------ | ---------- |  | - | ------- | -
|                                                                |  | Increase |        | (Decrease)
|                                                                |  |          |        |           
|Effect on the total of service and interest cost
    components |  | $        | 1,686  |            |  | $ | (1,442  | )
|Effect on accumulated post-retirement benefit
    obligation    |  | $        | 19,418 |            |  | $ | (16,673 | )

Note 14.     Stock
Options

On August 15, 1996, we were spun-off from
our former parent. Options granted between 1990 and 1996 to
certain officers and employees to acquire our common stock were
granted under our former parents stock option plans. These
options have been adjusted for stock splits and the spin-off.
These options were granted at the market prices on the dates of
grant, became exercisable 50% after one year and 100% after two
years and expire after 10 years. No additional options will
be granted under these plans.

We adopted The Dial Corporation Stock Incentive
Plan in 1996 (1996 Plan), which is administered by
the Executive Compensation Committee of our Board of Directors.
Under the 1996 Plan, the aggregate number of shares of common
and preferred stock covered by awards to any one individual
cannot exceed 1,000,000 shares for any three-year period and no
more than 9,600,000 shares are cumulatively available for
options intended to qualify as incentive stock
options under the Internal Revenue Code of 1986 as amended
(the Code). In 2003, the Plan was amended such that
the maximum number of shares of stock that may be made the
subject of awards granted under the Plan shall be 5 million
shares, plus the number of shares subject to outstanding awards
under the Plan as of June 27, 2003. The term of the options
is 10 years for options granted in 2002 and prior. For
options granted subsequent to 2002, the term of the options is
7 years. The Plan provides that options are generally to be
granted at the market price on the date of grant; however, the
Executive Compensation Committee may grant options at less than
such market price. The 1996 Plan also

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authorizes the issuance of stock appreciation
rights and restricted stock. During the year ended
December 31, 2003, 50,000 shares of restricted stock were
awarded.


Under the 1996 Plan, options to purchase
3,147,249 shares were granted at the market price on the dates
of grant during 2003. These options, which are all classified as
non-qualified options, become one-third exercisable
after one year, two-thirds exercisable after two years, and 100%
exercisable after three years. The options expire after
10 years.

During 2003, options to purchase 78,400 shares
were also granted to non-employee members of the Board of
Directors at the market price on the date of grant. The options
issued are 50% exercisable after one year and 100% after two
years. The options expire after 10 years.

A summary of the status of our stock option plans
as of December 31, 2003, and changes during the fiscal
years 2001, 2002 and 2003, are presented below:

|                                         |           |        |            |            |   |   |       |       | 
|---------------------------------------- | --------- | ------ | ---------- | ---------- | - | - | ----- | ----- | 
|                                         |           |        |            | Weighted  
|                                         |           |        |            | Average   
|                                         |           |        |            | Exercise  
|                                         |           | Shares |            | Price     
|                                         |           |        |            |           
|Outstanding at December 31,
    2000     |           |        | 8,247,388  |            |   | $ | 16.29 |      
|                                         | Granted   |        |            | 4,647,366  |   |   |       | 13.72 | 
|                                         | Exercised |        |            | (311,583   | ) |   |       | 10.26 | 
|                                         | Canceled  |        |            | (432,717   | ) |   |       | 18.57 | 
|Outstanding at December 31,
    2001     |           |        | 12,150,454 |            |   |   | 15.41 |      
|                                         | Granted   |        |            | 397,256    |   |   |       | 19.58 | 
|                                         | Exercised |        |            | (1,182,706 | ) |   |       | 12.39 | 
|                                         | Canceled  |        |            | (399,580   | ) |   |       | 17.51 | 
|                                         |           |        |            |            |   |   |       |      
|Outstanding at December 31,
    2002     |           |        | 10,965,424 |            |   |   | 15.81 |      
|                                         | Granted   |        |            | 3,225,649  |   |   |       | 18.02 | 
|                                         | Exercised |        |            | (2,082,696 | ) |   |       | 13.34 | 
|                                         | Canceled  |        |            | (678,340   | ) |   |       | 18.60 | 
|                                         |           |        |            |            |   |   |       |      
|Outstanding at December 31,
    2003     |           |        | 11,430,037 |            |   |   | 16.72 |      
|                                         |           |        |            |            |   |   |       |      
|Options exercisable at December 31, 2003 |           |        | 5,935,182  |            |   | $ | 14.27 |      
|                                         |           |        |            |            |   |   |       |      

Tax benefits on options exercised are recorded as
increases to additional paid-in capital and totaled
$6.0 million, $3.3 million, and $0.1 million in
2003, 2002 and 2001, respectively.

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The following table summarizes information about
stock options outstanding and exercisable at December 31,
2003:

|                         |  |             |            |             |  |          |     |             |  |          |       |  |  |  |           |  |  |   |       | 
|------------------------ |  | ----------- | ---------- | ----------- |  | -------- | --- | ----------- |  | -------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                         |  |             |            | Weighted    |  |          |     |             |  |         
|                         |  |             |            | Average     |  |          |     |             |  |         
|                         |  |             |            | Remaining   |  | Weighted |     |             |  | Weighted
|                         |  |             |            | Contractual |  | Average  |     |             |  | Average 
|                         |  | Options     |            | Life        |  | Exercise |     | Options     |  | Exercise
|Range of Exercise Prices |  | Outstanding |            | (in years)  |  | Price    |     | Exercisable |  | Price   
|                         |  |             |            |             |  |          |     |             |  |         
|$7.31-$10.96             |  |             | 197,999    |             |  |          | 6.7 |             |  | $        | 10.87 |  |  |  | 197,999   |  |  | $ | 10.87 | 
|$10.97-$14.61            |  |             | 5,065,448  |             |  |          | 5.1 |             |  |          | 13.28 |  |  |  | 4,000,514 |  |  |   | 13.22 | 
|$14.62-$18.26            |  |             | 4,138,446  |             |  |          | 6.0 |             |  |          | 16.95 |  |  |  | 1,360,427 |  |  |   | 15.31 | 
|$18.27-$21.92            |  |             | 769,075    |             |  |          | 7.1 |             |  |          | 20.16 |  |  |  | 192,173   |  |  |   | 20.91 | 
|$21.93-$25.57            |  |             | 174,600    |             |  |          | 5.3 |             |  |          | 23.51 |  |  |  | 71,600    |  |  |   | 23.47 | 
|$25.58-$29.22            |  |             | 138,469    |             |  |          | 5.0 |             |  |          | 27.46 |  |  |  | 110,969   |  |  |   | 27.68 | 
|$29.23-$32.88            |  |             | 943,500    |             |  |          | 4.9 |             |  |          | 29.73 |  |  |  | 1,500     |  |  |   | 29.72 | 
|$32.89-$36.53            |  |             | 2,500      |             |  |          | 5.3 |             |  |          | 35.23 |  |  |  |          |  |  |   |      | 
|                         |  |             |            |             |  |          |     |             |  |          |       |  |  |  |           |  |  |   |       | 
|                         |  |             | 11,430,037 |             |  |          | 5.6 |             |  | $        | 16.72 |  |  |  | 5,935,182 |  |  | $ | 14.27 | 
|                         |  |             |            |             |  |          |     |             |  |          |       |  |  |  |           |  |  |   |       | 

We apply Accounting Principles Board Opinion
No. 25 and related interpretations in accounting for our
stock option plans. We have adopted the disclosure-only
provisions of SFAS No. 123, Accounting for
Stock-Based Compensation, as amended by SFAS No. 148.
Accordingly, no compensation cost has been recognized for the
stock option plans. Had compensation cost for our stock option
plans been determined based on the fair value at the grant date
consistent with the provisions of SFAS No. 123 and the
amendment of SFAS No. 148, our net income/(loss) and net
income/(loss) per share would have been reduced to the pro forma
amounts indicated below.

Average assumptions used in determining the
estimated fair value of stock options under the Black-Scholes
valuation model, and the estimated fair values are as follows.

|                                           |  |      |      |      |  |      |      |   |  |   |      |  
|------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                           |  | 2003 |      | 2002 |  | 2001
|                                           |  |      |      |      |  |     
|Estimated fair value of options, per share |  | $    | 5.18 |      |  | $    | 6.74 |   |  | $ | 3.99 |  
|Expected average risk-free interest rate   |  |      | 2.6  | %    |  |      | 3.8  | % |  |   | 4.8  | %
|Expected life in years                     |  |      | 5.0  |      |  |      | 5.0  |   |  |   | 3.0  |  
|Expected volatility                        |  |      | 33.0 | %    |  |      | 34.6 | % |  |   | 35.6 | %
|Expected dividend rate                     |  |      | 1.4  | %    |  |      | 0.8  | % |  |   | 0.3  | %

|                                                    |  |                |         |      |  |      |        |  |  |   |          |  
|--------------------------------------------------- |  | -------------- | ------- | ---- |  | ---- | ------ |  |  | - | -------- | -
|                                                    |  | 2003           |         | 2002 |  | 2001
|                                                    |  |                |         |      |  |     
|                                                    |  |               
|                                                    |  | (in thousands)
|Net income/(loss) as reported                       |  | $              | 125,904 |      |  | $    | 16,892 |  |  | $ | (132,251 | )
|                                                    |  |                |         |      |  |      |        |  |  |   |          |  
|Pro forma net income/(loss)                         |  | $              | 118,629 |      |  | $    | 10,550 |  |  | $ | (138,541 | )
|                                                    |  |                |         |      |  |      |        |  |  |   |          |  
|Net income/(loss) per share-basic-as reported       |  | $              | 1.34    |      |  | $    | 0.18   |  |  | $ | (1.45    | )
|                                                    |  |                |         |      |  |      |        |  |  |   |          |  
|Pro forma net income/(loss) per share-basic         |  | $              | 1.26    |      |  | $    | 0.11   |  |  | $ | (1.51    | )
|                                                    |  |                |         |      |  |      |        |  |  |   |          |  
|Net income/(loss) per share-diluted-as reported     |  | $              | 1.31    |      |  | $    | 0.18   |  |  | $ | (1.43    | )
|                                                    |  |                |         |      |  |      |        |  |  |   |          |  
|Pro forma net income/(loss) per share 
    diluted |  | $              | 1.23    |      |  | $    | 0.11   |  |  | $ | (1.50    | )
|                                                    |  |                |         |      |  |      |        |  |  |   |          |  

We adopted the Dial Corporation Employee Stock
Purchase Plan (ESPP) in 2000. Under this plan, up to
650,000 shares of common stock may be purchased by eligible Dial
employees through payroll deductions of up to 15% of their
eligible compensation, not to exceed $25,000. The purchase price
is equal to the lesser of (a) 85% of the fair market value
of the stock on first day of the offering period or (b) 85%
of the fair market value of the stock on the last day of the
offering period. During 2003, employees purchased approximately

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50,840 shares under this Plan. Due to the pending
Merger with Henkel, employees are not presently permitted to
purchase shares under the ESPP.


Note
15.     Leases

Certain sales offices, warehouses and
administration offices and equipment are leased. These leases
expire in periods ranging generally from one to five years, and
some provide for renewal options ranging from one to eight
years. Leases that expire are generally renewed or replaced by
similar leases, depending on business needs at that time. Net
rent paid in 2003, 2002 and 2001 totaled, in thousands, $11,020,
$12,186, $13,032, respectively.

At December 31, 2003, our future minimum
rental payments and anticipated rental income with respect to
non-cancelable operating subleases with terms in excess of one
year were as follows, in thousands:

|                                 |  |      |        |      |  |      |        |      |  |      |        |       |  |   |       |  |  |   |       |  |  |   |       | 
|-------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ----- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                 |  | 2004 |        | 2005 |  | 2006 |        | 2007 |  | 2007 |        | After
|                                 |  |      |        |      |  |      |        |      |  |      |        |      
|Future minimum rental payments   |  | $    | 12,971 |      |  | $    | 12,128 |      |  | $    | 11,124 |       |  | $ | 9,283 |  |  | $ | 4,903 |  |  | $ | 3,126 | 
|Future anticipated rental income |  |      | 2,297  |      |  |      | 1,865  |      |  |      | 1,104  |       |  |   |      |  |  |   |      |  |  |   |      | 
|                                 |  |      |        |      |  |      |        |      |  |      |        |       |  |   |       |  |  |   |       |  |  |   |       | 
|Net future rental commitments    |  | $    | 10,674 |      |  | $    | 10,263 |      |  | $    | 10,020 |       |  | $ | 9,283 |  |  | $ | 4,903 |  |  | $ | 3,126 | 
|                                 |  |      |        |      |  |      |        |      |  |      |        |       |  |   |       |  |  |   |       |  |  |   |       | 

Future anticipated rental income is the result of
sub-lease agreements on non-cancelable leases that we hold. The
total rental obligations related to these sub-leases for 2004,
2005 and 2006 in thousands, are $2,501, $1,878, and $1,221,
respectively. We have accrued for the difference between the
lease obligations and the expected sub-lease income related to
our discontinued operations and closed plants, where applicable.

Note
16.     Financial Instruments with
Off-Balance-Sheet Risk and Fair Value of Financial
Instruments



| |                                                      
| | -----------------------------------------------------
| | Financial Instruments with
    Off-Balance-Sheet Risk

Our use of financial instruments is limited to
purposes other than trading and primarily includes management of
interest and commodity expense. We may use financial instruments
for the management of interest rate risk or other risks in the
future.



| |                              
| | -----------------------------
| | Interest Rate Risk Management

At December 31, 2003, we had
$447.2 million in long-term debt outstanding, comprised of
$200 million ($199.0 million net of issue discount) of
6.5% Senior Notes due 2008, and $250 million ($248.2
million net of issue discount) of 7.0% Senior Notes due 2006.
Our Senior Notes have fixed interest rates to maturity.

In January 2003, we entered into two interest
rate swap contracts that effectively changed the interest rate
on a portion of our Senior Notes from fixed to variable. The
total notional value of the interest rate swaps that expire in
September 2008 is $200 million, effectively converting 45%
of our total debt to variable interest rate debt. Under the
terms of the swaps, we pay a variable rate of interest based on
the 6-month LIBOR plus 278 basis points and receive a fixed
interest rate of 6.5%. Variable interest rates are paid and
reset semi-annually, in March and September. The six-month LIBOR
rate on September 15, 2003 was 1.18%. The swaps expose us
to the risk of changes in LIBOR based interest rates. Each 50
basis point change in the swaps floating rate would change
our pre-tax interest expense by $1 million.

At the time of the issuance of the
$250 million 7% Senior Notes due 2006, we entered into two
interest rate swaps, which together were designated as fair
value hedges of that issue. The interest rate swaps had a total
notional amount of $250 million. In August of 2002, the
interest rate swaps were terminated resulting in a net gain of
$13.4 million. The gain on the termination of the swaps was
deferred and is classified as a part of long-term debt. This
deferred gain is being amortized over the remaining term of the
$250 million 7% Senior Notes as a reduction of interest
expense. The amortization of the gain on the terminated swaps
effectively reduces the fixed rate of the $250 million 7%
Senior Notes to approximately 5.6% annually.

We are currently investing our accumulated cash
balance in a variety of short-term investment vehicles with low
principal risk. The weighted average yield on the invested cash
at December 31, 2003 was 1.28%.

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Each 50 basis point change in the yield on the
invested cash would result in an approximate $1.5 million change
in the Other expenses, netline on our income statement.




| |                 
| | ----------------
| | Foreign Currency

We are currently exposed to risks from
fluctuations in the U.S. Dollar/ Canadian Dollar foreign
currency exchange rate. At December 31, 2003, one U.S.
Dollar was worth 1.3 Canadian Dollars. For the year ended
December 31, 2003, the U.S. Dollar/ Canadian Dollar
exchange rate fluctuated between 1:1.6 and 1:1.3. If there were
a 10% change in the exchange rates for the U.S. Dollar to the
Canadian Dollar from those at December 31, 2003, the
foreign currency gain or loss would be immaterial.



| |                              
| | -----------------------------
| | Employee Benefit Plan Expense

We offer our directors and management deferred
compensation plans. In 2003, participants could defer a portion
of their compensation into a combination of Dial stock units or
various cash accounts. For deferrals made into stock units,
deferred compensation due to participants is included on the
balance sheet in stockholders equity under the caption
Unearned employee benefits with no
recognition of any investment gains or losses. The deferred
funds are placed in a Rabbi Trust using shares of Dial common
stock. The trust is also included on the balance sheet in
stockholders equity under the caption Unearned
employee benefits.

For deferrals into cash accounts, deferred
compensation due to participants and any accumulated investment
gains or losses is included on the balance sheet as a liability
under the captions Post-retirement and other employee
benefits and Other liabilities. We
place the deferred funds in a Rabbi Trust, which purchases life
insurance policies on the participants lives, with Dial as
the beneficiary. The policies have a cash surrender value that
accrues tax-free earnings largely based on the performance of
the S&P 500. The cash surrender value asset and any
accumulated investment gains or losses are included on the
balance sheet as an asset under the caption Pension and
other assets.

Participants in the deferred compensation plans
are not presently able to defer any portion of their
compensation into Dial stock units, due to the pending Merger
with Henkel. However, they will continue to be able to defer
into cash accounts.



| |                                        
| | ---------------------------------------
| | Fair Value of Financial
    Instruments

The carrying values of cash and cash equivalents,
receivables, accounts payable and short-term bank borrowings
approximate fair values due to the short-term maturities of
these instruments. The fair value of our Senior Notes is
estimated based upon quoted market prices. The fair value of the
Senior Notes was $492.2 million at December 31, 2003.

Note 17.     Segments
of an Enterprise

We are organized into two business segments:
(i) Domestic Branded and (ii) International and Other. The
segments were identified based on the economic characteristics,
types of products sold, the customer base and method of
distribution. Effective January 1, 2002, we began to
include the International operating segment in the International
and Other business segment due to its immaterial size. Prior to
January 1, 2002, we included sales of industrial chemicals,
which includes soap pellets and chemicals, principally glycerin
and fatty acids that are by-products of the soap making process,
in the International and Other business segment. Effective
January 1, 2002, we began to include industrial chemicals
in the Personal Care operating segment within the Domestic
Branded business segment. Prior to the fourth quarter of 2001,
we included discontinued product activity in the International
and Other business segment. In the fourth quarter of 2001, we
began to include discontinued activity in the business segment
that launched the product. The historical segment information
has been restated to reflect the changes.

In the third quarter of 2003, we completed the
sale of our Argentina business and on August 28, 2001 we
disposed of our SPC segment. The segment information has been
restated to reflect historical segment

60



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information as adjusted for the reclassification
of the Argentina Business and Specialty Personal Care segment as
discontinued operations.


The Domestic Branded business segment consists of
four aggregated operating segments that manufacture and market
non-durable consumer packaged goods through grocery store, drug
store and mass merchandiser retail outlets. It is comprised of
the Personal Care, Laundry Care, Air Fresheners and Food
Products operating segments. Our subsidiary, ISC International,
Ltd., a manufacturer of translucent soaps, is included in the
Personal Care operating segment. The following table sets forth
the percentage of net sales represented by each franchise within
the Domestic Branded segment:

|               |       |      |    |      |   |      |    |     |   |  |    |     |  
|-------------- | ----- | ---- | -- | ---- | - | ---- | -- | --- | - |  | -- | --- | -
|               |       | 2003 |    | 2002 |   | 2001
|               |       |      |    |      |   |     
|Laundry Care   |       |      | 40 | %    |   |      | 39 | %   |   |  | 37 | %  
|Personal Care  |       |      | 31 |      |   |      | 31 |     |   |  | 32 |    
|Food Products  |       |      | 16 |      |   |      | 16 |     |   |  | 16 |    
|Air Fresheners |       |      | 13 |      |   |      | 14 |     |   |  | 15 |    
|               |       |      |    |      |   |      |    |     |   |  |    |    
|               | Total |      |    | 100  | % |      |    | 100 | % |  |    | 100 | %
|               |       |      |    |      |   |      |    |     |   |  |    |    

Our International and Other business segment
includes our commercial markets and international businesses.
Our international operations are focused in Canada, Puerto Rico
and exports to Asia and Latin America. During 2003, 2002 and
2001, approximately 84%, 82% and 72%, respectively, of our
international sales came from these markets. In total,
international sales represent 5.2%, 4.4% and 4.6% of sales in
2003, 2002 and 2001, respectively. Our commercial markets
business sells our products, both branded and non-branded,
through the commercial channel to hotels, hospitals, schools and
other institutional customers.

Information as to our operations in different
business segments is set forth below. The calculation of
operating income/(loss) for each segment includes an allocation
of certain general and administrative expenses based on each
segments share of consolidated net sales. The accounting
policies of the business segments are the same as those
described in the summary of significant accounting policies
(Note 2).

|                         |         |                |   |               |  |       |   |         |   |  |   |           | 
|------------------------ | ------- | -------------- | - | ------------- |  | ----- | - | ------- | - |  | - | --------- | 
|                         |         | Domestic       |   | International |  |      
|                         |         | Branded        |   | and Other     |  | Total
|                         |         |                |   |               |  |      
|                         |         |               
|                         |         | (In thousands)
|Net Sales:               |         |                |   |               |  |       |   |         |   |  |   |          
|                         | 2003    |                | $ | 1,226,476     |  |       | $ | 118,382 |   |  | $ | 1,344,858 | 
|                         | 2002    |                |   | 1,182,263     |  |       |   | 99,968  |   |  |   | 1,282,231 | 
|                         | 2001    |                |   | 1,095,115     |  |       |   | 94,217  |   |  |   | 1,189,332 | 
|Operating Income/(loss): |         |                |   |               |  |       |   |         |   |  |   |          
|                         | 2003(1) |                |   | 223,864       |  |       |   | 17,291  |   |  |   | 241,155   | 
|                         | 2002(2) |                |   | 208,394       |  |       |   | 11,948  |   |  |   | 220,342   | 
|                         | 2001(3) |                |   | 169,288       |  |       |   | (6,215  | ) |  |   | 163,073   | 
|Capital Expenditures:    |         |                |   |               |  |       |   |         |   |  |   |          
|                         | 2003    |                |   | 44,150        |  |       |   | 301     |   |  |   | 44,451    | 
|                         | 2002    |                |   | 33,601        |  |       |   | 889     |   |  |   | 34,490    | 
|                         | 2001    |                |   | 26,550        |  |       |   | 2,094   |   |  |   | 28,644    | 
|Assets at year end:(4)   |         |                |   |               |  |       |   |         |   |  |   |          
|                         | 2003    |                |   | 1,252,562     |  |       |   | 11,694  |   |  |   | 1,264,256 | 
|                         | 2002    |                |   | 1,135,218     |  |       |   | 14,521  |   |  |   | 1,149,739 | 



---



|    |                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes a special charge of $7.4 million in
    Domestic Branded from the net asset writedown associated with
    the pending sale of our Guatemala manufacturing facility.

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|    |                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes special net gain of $1.7 million
    gain ($2.4 million gain in International and Other offset
    in part by $0.7 million charge in Domestic Branded) from
    manufacturing asset sales and writedowns and reversal of
    restructure reserves.
|   
|(3) | Includes special charges of $8.8 million in
    Domestic Branded from asset writedowns, discontinuing product
    inventories and other exit costs.                                                                                                        
|   
|(4) | Goodwill at December 31, 2003 and 2002 is
    included in Domestic Branded.                                                                                                                                                                                

Wal-Mart, including its affiliate Sams
Club, was our largest customer in 2003, 2002, and 2001,
accounting for approximately 28%, 28% and 25%, respectively, of
net sales. No other customer accounted for more than 10% of net
sales in 2003, 2002 or 2001.



|         |                                                         
|-------- | --------------------------------------------------------
|Note 18. | Condensed Consolidated Quarterly Results
    (Unaudited)

|                                           |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      |  |   |         |      |  |   |         |       |  
|------------------------------------------ | ---------------------------------------- | ----------------------------------------- | ------- | -------------- |  | ------------- | ------- | -------------- | - | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ---- |  | - | ------- | ----- | -
|                                           |                                          |                                           |         |                |  |               |         |               
|                                           |                                          | First Quarter                             |         | Second Quarter |  | Third Quarter |         | Fourth Quarter
|                                           |                                          |                                           |         |                |  |               |         |               
|                                           |                                          | 2003                                      |         | 2002           |  | 2003          |         | 2002           |   | 2003 |         | 2002 |  | 2003 |         | 2002
|                                           |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |     
|                                           |                                          |                                          
|                                           |                                          | (In thousands, except for per share data)
|Net sales                                  |                                          | $                                         | 312,401 |                |  | $             | 294,579 |                |   | $    | 332,491 |      |  | $    | 320,015 |      |  | $ | 353,242 |      |  | $ | 334,003 |      |  | $ | 346,724 |      |  | $ | 333,634 |      
|Gross profit                               |                                          |                                           | 118,906 |                |  |               | 108,407 |                |   |      | 124,214 |      |  |      | 123,179 |      |  |   | 132,671 |      |  |   | 123,591 |      |  |   | 124,472 |      |  |   | 125,065 |      
|Operating income                           |                                          |                                           | 57,071  |                |  |               | 47,600  |                |   |      | 61,769  |      |  |      | 57,586  |      |  |   | 64,964  |      |  |   | 57,632  |      |  |   | 57,351  |      |  |   | 57,524  |      
|Income from continuing operations          |                                          |                                           | 29,648  |                |  |               | 23,096  |                |   |      | 33,381  |      |  |      | 31,778  |      |  |   | 35,803  |      |  |   | 30,184  |      |  |   | 24,922  |      |  |   | 30,176  |      
|Income/(loss) from discontinued operations |                                          |                                           |        |                |  |               | 1,736   |                |   |      | 2,150   |      |  |      | 1,654   |      |  |   |        |      |  |   | 918     |      |  |   |        |      |  |   | (59,342 | )    
|Effect of Change in Accounting Principle   |                                          |                                           |        |                |  |               | (43,308 | )              |   |      |        |      |  |      |        |      |  |   |        |      |  |   |        |      |  |   |        |      |  |   |        |      
|Net income/(loss)                          |                                          | $                                         | 29,648  |                |  | $             | (18,476 | )              |   | $    | 35,531  |      |  | $    | 33,432  |      |  | $ | 35,803  |      |  | $ | 31,102  |      |  | $ | 24,922  |      |  | $ | (29,166 | )    
|Net income/(loss) per share:               |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      |  |   |         |      |  |   |         |      
| Basic                                    |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      |  |   |         |      |  |   |         |      
|                                           | Continuing operations                    |                                           | $       | 0.32           |  |               | $       | 0.25           |   |      | $       | 0.36 |  |      | $       | 0.34 |  |   | $       | 0.38 |  |   | $       | 0.33 |  |   | $       | 0.26 |  |   | $       | 0.32  |  
|                                           | Discontinued operations                  |                                           |         |               |  |               |         | 0.02           |   |      |         | 0.02 |  |      |         | 0.02 |  |   |         |     |  |   |         | 0.01 |  |   |         |     |  |   |         | (0.64 | )
|                                           | Effect of Change in Accounting Principle |                                           |         |               |  |               |         | (0.47          | ) |      |         |     |  |      |         |     |  |   |         |     |  |   |         |     |  |   |         |     |  |   |         |      |  
|                                           |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      |  |   |         |      |  |   |         |      
|                                           | Net income/(loss)                        |                                           |         | 0.32           |  |               |         | (0.20          | ) |      |         | 0.38 |  |      |         | 0.36 |  |   |         | 0.38 |  |   |         | 0.34 |  |   |         | 0.26 |  |   |         | (0.31 | )
| Diluted                                  |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      |  |   |         |      |  |   |         |      
|                                           | Continuing operations                    |                                           |         | 0.31           |  |               |         | 0.25           |   |      |         | 0.35 |  |      |         | 0.34 |  |   |         | 0.37 |  |   |         | 0.32 |  |   |         | 0.26 |  |   |         | 0.32  |  
|                                           | Discontinued operations                  |                                           |         |               |  |               |         | 0.02           |   |      |         | 0.02 |  |      |         | 0.02 |  |   |         |     |  |   |         | 0.01 |  |   |         |     |  |   |         | (0.62 | )
|                                           | Effect of Change in Accounting Principle |                                           |         |               |  |               |         | (0.47          | ) |      |         |     |  |      |         |     |  |   |         |     |  |   |         |     |  |   |         |     |  |   |         |      |  
|                                           |                                          |                                           |         |                |  |               |         |                |   |      |         |      |  |      |         |      |  |   |         |      |  |   |         |      |  |   |         |      |  |   |         |      
|                                           | Net income/(loss) per share              |                                           | $       | 0.31           |  |               | $       | (0.20          | ) |      | $       | 0.37 |  |      | $       | 0.35 |  |   | $       | 0.37 |  |   | $       | 0.33 |  |   | $       | 0.26 |  |   | $       | (0.31 | )

Note 19.     Litigation
and Claims

On December 16, 2003, Mr. Jeffrey
Berger (C.A. No. 116-N) filed a complaint in the Delaware
Court of Chancery, New Castle County against us, our directors
and Henkel, purporting to represent a class of all of our
stockholders (except the defendants and any person, firm, trust,
corporation, or other entity related to or affiliated with any
of the defendants) who are or will be threatened with injury
arising from the actions of the defendants. The complaint
alleges, among other things, that our board of directors
breached its fiduciary duties by agreeing to enter into the
Merger Agreement with Henkel on the terms provided in the Merger
Agreement. The complaint also seeks various forms of relief,
including preliminary and permanent injunctive relief to prevent
the closing of the Merger. On January 12, 2004 we filed a
motion to dismiss this complaint for failure to state a claim
upon which relief may be granted and a motion to stay discovery
in the action pending decision on the motion to dismiss. We, our
directors and Henkel believe that the allegations in this
complaint are without merit and we intend to vigorously defend
against the allegations asserted in the complaint.

On December 16, 2003, Messrs. Jeffrey
Silverberg (CV2003-023979) and Steven Rose (CV2003-023974) and,
on December 17, 2003, Ms. Mary Crescente
(CV2003-024012), each filed separate complaints in the Arizona
Superior Court, Maricopa County against us and our directors,
each purporting to represent a class of all of our stockholders
(except any person, firm, trust, corporation or other entity
related to

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or affiliated with any defendant) who are being
and will be harmed by the actions of the defendants. The
complaints allege, among other things, that our board of
directors breached its fiduciary duties by engaging in
self-dealing by receiving personal benefits under the terms of
the Merger Agreement with Henkel, and by potentially entering
into an unfair transaction with Henkel. On January 21,
2004, we filed motions to dismiss these complaints, or, in the
alternative, to stay these actions in preference to the action
filed by Mr. Berger in the Delaware Court of Chancery. On
January 26, 2004, the Arizona Superior Court consolidated
these actions. We and our directors believe the allegations in
these complaints are without merit and we intend to vigorously
defend against the allegations asserted in these complaints. On
March 1, 2004, the Arizona Superior Court granted our
motion to stay the Arizona cases pending the outcome of the
Delaware cases.


On January 6, 2004, Ms. Susan Soder
(C.A. No. 154-N) filed a complaint in the Delaware Court of
Chancery, New Castle County against us, our directors and
Henkel, purporting to represent a class of all of our
stockholders (except the defendants and any person, firm, trust,
corporation, or other entity related to or affiliated with any
of the defendants) who are or will be threatened with injury
arising from the actions of the defendants. The complaint
alleges, among other things, that our board of directors
breached its fiduciary duties by agreeing to enter into the
Merger Agreement on the terms provided in the Merger Agreement.
The complaint also seeks various forms of relief, including
preliminary and permanent injunctive relief to prevent the
closing of the Merger. On January 13, 2004, counsel for
Ms. Soder informed the Delaware Court of Chancery that
Ms. Soder did not intend to serve the summonses on the
defendants in this case at that time. We, our directors and
Henkel believe that the allegations in this complaint are
without merit and we intend to vigorously defend against the
allegations asserted in the complaint.

As we previously disclosed, we were defending a
lawsuit filed by the U.S. Equal Employment Opportunity
Commission (EEOC), which was pending in the
U.S. District Court for the Northern District of Illinois,
Eastern Division, and was entitled Equal Employment Opportunity
Commission v. The Dial Corporation, Civil Action
No. 99 C 3356. The EEOC alleged that we engaged in a
pattern and practice of discrimination against a class of female
employees at our Aurora, Illinois manufacturing facility by
subjecting them to sexual harassment and not taking prompt
remedial action after these employees complained. Most of the
potential claimants allegations relate to incidences that
allegedly occurred prior to 1996. The EEOC sought injunctive
relief and unspecified compensatory and punitive damages. On
April 29, 2003, we announced that we had reached a
settlement with the EEOC that involved a payment of
$10 million by Dial, which will be made in the first
quarter of 2004.

As is the case with many companies, we also face
exposure to actual or potential claims and lawsuits involving
our business and assets. We are currently party to a number of
lawsuits consisting of ordinary, routine litigation incidental
to our business, including general and product liability and
workers compensation claims. We believe that any
liabilities resulting from these claims, after taking into
account amounts already accrued and exclusive of any potential
insurance recovery, should not have a material adverse effect on
our financial position, cash flows or operating results.

We are subject to a variety of environmental and
health and safety laws in each jurisdiction in which we operate.
These laws and regulations pertain to our present and past
operations. Although we do not anticipate that the costs to
comply with environmental laws and regulations will have a
material adverse effect on our capital expenditures, earnings or
competitive position, the emergence of unforeseen claims and
liabilities or the imposition of increasingly stringent laws,
regulations and enforcement policies could result in material,
unreserved costs in the future. Since 1980, we have received
notices or requests for information with respect to
Superfund sites under the federal Comprehensive
Environmental Response, Compensation and Liability Act,
including one site for which we have executed a consent decree
to settle our liability and are awaiting final court approval.






|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants
    on Accounting and Financial Disclosure

We have never filed a Current Report on
Form 8-K to report a change in or disagreement with,
accountants.

63



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##### Table of Contents








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Our management, with the participation of our
Chief Executive Officer and Chief Financial Officer, has
evaluated the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) as of the end of the fiscal period covered by this
Form 10-K. Based upon such evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of
the end of such period, our disclosure controls and procedures
are effective in recording, processing, summarizing and
reporting information required to be disclosed by us in the
reports we file or submit under the Exchange Act within the time
periods specified in the SECs rules and forms. There have
not been any changes in our internal control over financial
reporting (as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) during the fiscal period
covered by this Form 10-K that have materially affected, or
are reasonably likely to materially affect, our internal control
over financial reporting.

MANAGEMENTS REPORT ON RESPONSIBILITY FOR
FINANCIAL REPORTING

The management of The Dial Corporation 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 prepared using generally accepted accounting principles
generally accepted in the United States of America. The
financial statements reflect, where applicable,
managements best estimates and judgments and include
disclosures and explanations that are relevant to understanding
our financial affairs.

Our financial statements have been audited by
Deloitte & Touche LLP. Management has made available to
Deloitte & Touche LLP all of our financial records and
other relevant 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 is designed to provide reasonable
assurance that transactions are authorized and properly
recorded, that assets are protected and that materially
inaccurate financial reporting is prevented and detected. The
appropriate segregation of responsibilities and careful
selection of employees are components of the system of internal
controls. The internal control system is independently monitored
and evaluated by an internal auditing program.

The Board of Directors, acting through its Audit
Committee, oversees the adequacy of our internal control
environment. The Audit Committee meets regularly with management
representatives and, jointly and separately, with
representatives of Deloitte & Touche LLP and internal
auditing management to review accounting, auditing and financial
reporting matters.



| |                                                       
| | ------------------------------------------------------
| | /s/ HERBERT M. BAUM                                   
| |                                                       
| | Herbert M. Baum                                       
| | Chairman, President & Chief Executive
    Officer     
|
| | /s/ CONRAD A. CONRAD                                  
| |                                                       
| | Conrad A. Conrad                                      
| | Executive Vice President & Chief
    Financial Officer

64



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PART III






|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

Information concerning Dials directors and
executive officers is set forth below.

|                                   |  |     |    |          |  |                                                                 
|---------------------------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------
|Name                               |  | Age |    | Position
|                                   |  |     |    |         
|Herbert M. Baum(1)(6)              |  |     | 67 |          |  | Chairman of the Board, President and Chief
    Executive Officer
|Conrad A. Conrad                   |  |     | 58 |          |  | Executive Vice President and Chief Financial
    Officer        
|Bernhard J. Welle                  |  |     | 55 |          |  | Executive Vice President  Shared
    Services                  
|Stephen D. Blum                    |  |     | 60 |          |  | Senior Vice President  Investor
    Relations                  
|Arthur E. Hanke                    |  |     | 55 |          |  | Senior Vice President  Sales                                   
|Elizabeth M. Harvey                |  |     | 41 |          |  | Senior Vice President and General
    Manager  Air Fresheners  
|Evon L. Jones                      |  |     | 39 |          |  | Senior Vice President and Chief Information
    Officer         
|Christopher J. Littlefield         |  |     | 37 |          |  | Senior Vice President, General Counsel and
    Secretary        
|Richard F. Theiler                 |  |     | 54 |          |  | Senior Vice President 
    Research & Development              
|John F. Tierney                    |  |     | 51 |          |  | Senior Vice President and Controller                            
|Greg A. Tipsord                    |  |     | 37 |          |  | Senior Vice President and General
    Manager  Laundry Care    
|Stephen L. Tooker                  |  |     | 44 |          |  | Senior Vice President and General
    Manager  Personal Care   
|Joy A. Amundson(4)(5)              |  |     | 49 |          |  | Director                                                        
|Joe T. Ford(1)(3)(4)               |  |     | 66 |          |  | Director                                                        
|Thomas L. Gossage(1)(2)(5)         |  |     | 69 |          |  | Director                                                        
|Donald E. Guinn(1)(2)(4)           |  |     | 71 |          |  | Director                                                        
|George J. Harad(2)(3)              |  |     | 59 |          |  | Director                                                        
|James E. Oesterreicher(1)(2)(3)(6) |  |     | 62 |          |  | Director                                                        
|Michael T. Riordan(4)(5)(6)        |  |     | 53 |          |  | Director                                                        
|Barbara S. Thomas(3)(5)            |  |     | 54 |          |  | Director                                                        
|Salvador M. Villar(2)(3)           |  |     | 53 |          |  | Director                                                        



---



|    |                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Member of the Executive Committee                                                                                                                                                                                                                
|   
|(2) | Member of the Audit Committee. Dials Board
    of Directors has determined that all members of the Audit
    Committee are independent and are audit committee
    financial experts as defined pursuant to Item 401(h)
    of Regulation S-K.
|   
|(3) | Member of the Executive Compensation Committee                                                                                                                                                                                                   
|   
|(4) | Member of the Finance Committee                                                                                                                                                                                                                  
|   
|(5) | Member of the Governance Committee Member of the
    Management Succession Committee                                                                                                                                                             

Herbert M. Baum.Mr. Baum has been Chairman of the Board, President and
Chief Executive Officer of Dial since August 2000 and a Director
of Dial since 1997. Mr. Baum served as President and Chief
Operating Officer of Hasbro, Inc., a manufacturer and marketer
of toys, from January 1999 to August 2000. Mr. Baum also
served as Chairman and Chief Executive Officer of Quaker State
Corporation from 1993 to 1999. Mr. Baum also is a director
of Action Performance Companies, Inc.; America West Holdings
Corporation; the Cosmetic, Toiletry and Fragrance Association;
Grocery Manufacturers of America; Meredith Corporation and
PepsiAmericas, Inc.

Conrad A. Conrad.Mr. Conrad has served as Executive Vice President and Chief
Financial Officer since January 2001. From August 2000 to
January 2001, he served as Senior Vice President and Chief

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Financial Officer. Mr. Conrad joined Quaker
State in 1974 and held various positions in Quaker States
audit and finance divisions until he was named President and
Chief Operating Officer in 1990 and Vice Chairman and Chief
Financial Officer in 1994. Mr. Conrad also is a director of
Universal Technical Institute, Inc.


Bernhard J. Welle.Mr. Welle has served as Executive Vice
President  Shared Services of Dial since August 2000.
From August 1996 to August 2000, he served as Senior Vice
President  Human Resources of Dial. From 1987 to
August 1996, Mr. Welle served as Vice President, Human
Resources of the Consumer Products Business of the Predecessor
Company.

Stephen D. Blum.Mr. Blum has served as Senior Vice President 
Investor Relations of Dial since March 2002. From September 2000
to March 2002, Mr. Blum served as Vice
President  Investor Relations of Dial. From May 1999
to September 2000, he served as Director-Investor Relations of
J.C. Penney Company, Inc., a department store, drugstore,
catalog and e-commerce retailer. From March 1994 to May 1999,
Mr. Blum served as Senior Vice President-Corporate
Relations of Quaker State Corporation.

Arthur E. Hanke.Mr. Hanke has served as Senior Vice President 
Worldwide Sales of Dial since April 2003. From January 1999 to
April 2003, Mr. Hanke served as Senior Vice President-Sales
of Dial. From September 1998 to January 1999, he served as Vice
President  Corporate Sales of Dial, and from the
spin-off of Dial from our former parent, to September 1998, he
served as Vice President  Customer Management of Dial.

Elizabeth M. Harvey.Ms. Harvey has served as Senior Vice President &
General Manager-Air Fresheners of Dial since August 2003. From
August 2000 to July 2003, she served as Marketing
Director  Global Antiperspirants/ Deodorants of
Procter & Gamble, a consumer products company, and from
February 1998 to July 2000, she was the Marketing/ Innovation
Director-Global Health Care New Business Development for
Procter & Gamble.

Evon L. Jones.Mr. Jones has served as Senior Vice President and Chief
Information Officer of Dial since May 2001. From 1998 to 2001,
Mr. Jones served as Senior Vice President and Chief
Information Officer for America West Holdings Corporation.

Christopher J.
Littlefield.Mr. Littlefield has
served as Senior Vice President, General Counsel and Secretary
of Dial since September 2000. From August 1998 to September
2000, Mr. Littlefield served as Vice President and
Associate General Counsel of Dial. From January 1998 to August
1998, he served as Corporate Counsel of Dial. Prior to joining
Dial, Mr. Littlefield served as a corporate and securities
attorney for the law firm of Snell & Wilmer, L.L.P.

Richard F. Theiler.Mr. Theiler has served as Senior Vice President 
Research & Development of Dial since March 2003. From
1998 to March 2003, Mr. Theiler served as Vice President,
Global Fabric Care Research & Development, Technology
Effectiveness, Latin-America Technology at Colgate-Palmolive
Co., a global consumer products company focused on oral care,
personal care, household surface care, fabric care and pet
nutrition.

John F. Tierney.Mr. Tierney has served as Senior Vice President and
Controller of Dial since September 2000. From February 1999 to
August 2000, Mr. Tierney served as Vice President and
Controller of Dial.

Greg A. Tipsord.Mr. Tipsord has served as Senior Vice President and General
Manager  Laundry Care since October 2002. From March
2002 to October 2002, Mr. Tipsord served as Senior Vice
President and General Manager  Personal Cleansing and
from August 2000 to March 2002, he served as Vice President and
General Manager  Personal Cleansing. From April 2000
to August 2000, Mr. Tipsord served as Vice
President  Marketing and from October 1996 to April
2000, he served as Marketing Director  Personal
Cleansing.

Stephen L. Tooker.Mr. Tooker has served as Senior Vice President and General
Manager  Personal Care since October 2002. From March
2002 to October 2002, Mr. Tooker served as Senior Vice
President and General Manager  Laundry Care and from
August 2000 to March 2002, he served as Vice President and
General Manager  Laundry Care. Mr. Tooker also
served as President  Dial/ Henkel LLC, the joint

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venture between Dial and Henkel KGaA, from
September 2000 to April 2002. Mr. Tooker served as Vice
President-Detergents Marketing for Dial/ Henkel LLC from June
1999 to August 2000. From December 1998 to June 1999, he served
as Marketing Director  Laundry Care. From the
spin-off of Dial from our former parent, until December 1998,
Mr. Tooker served as Assistant Controller 
Planning and Development.


Joy A. Amundson.Ms. Amundson has been a Director of Dial since 1997 and
currently serves on the Finance and Governance Committees of the
Board of Directors. Ms. Amundson is a principal in Amundson
Partners, Inc., a healthcare consulting practice. She was Senior
Vice President of Abbott Laboratories, a diversified health care
products and services company until October 2001.
Ms. Amundson was also President of Ross Products, a
division of Abbott Laboratories. She held a number of management
positions after joining Abbott Laboratories in 1982.
Ms. Amundson also is the non-executive Chairman and
director of ILEX, Inc., as well as a director of INAMED
Corporation, Lutheran General Hospital and Oridion Medical, Inc.

Joe T. Ford.Mr. Ford was a Director of the Predecessor Company from
1991 through 1996, and has continued as a Director of Dial since
the spin-off of Dial from our former parent. Mr. Ford
currently serves on the Executive, Executive Compensation and
Finance Committees of the Board of Directors. Mr. Ford is
Chairman of ALLTEL Corporation (ALLTEL), a
telecommunications and information services company.
Mr. Ford served as Chief Executive Officer of ALLTEL from
1987 to July 2002. He became Chairman of the ALLTEL Board in
1991. Mr. Ford also is a director of EnPro Industries,
Inc.; Stephens Group, Inc. and Textron, Inc.

Thomas L. Gossage.Mr. Gossage was a Director of the Predecessor Company from
1993 through 1996, and has continued as a Director of Dial since
the spin-off of Dial from our former parent. Mr. Gossage
currently serves on the Executive, Audit and Governance
Committees of the Board of Directors. Mr. Gossage retired
as the Interim Chief Executive Officer of Hercules Incorporated
(Hercules), a worldwide producer of chemicals and
related products in May 2001. Mr. Gossage had originally
retired from Hercules in January 1997. Mr. Gossage also is
a director of Fluor Corporation.

Donald E. Guinn.Mr. Guinn was a Director of the Predecessor Company from
1986 through 1996, and has continued as a Director of Dial since
the spin-off of Dial from our former parent. Mr. Guinn
currently serves on the Executive, Audit and Finance Committees
of the Board of Directors. Mr. Guinn is Chairman Emeritus
of Pacific Telesis Group, a telecommunications holding company
(known as PacTel), which merged with SBC
Communications Inc. in 1997. Mr. Guinn served as Chairman
and Chief Executive Officer of PacTel from 1984 through his
retirement in 1988. He also is a director of Bank of America
Corporation; Pacific Mutual Life Insurance Company and its
affiliate, Pacific LifeCorp.

George J. Harad.Mr. Harad has been a Director of Dial since 2003 and
currently serves on the Audit and Executive Compensation
Committees of the Board of Directors. Mr. Harad has been
the Chief Executive Officer of Boise Cascade Corporation
(Boise), an international distributor of office
supplies and paper and an integrated manufacturer and
distributor of paper, packaging, and building materials, since
1994. Mr. Harad has been the Chairman of Boise since 1995.
Mr. Harad has been with Boise since 1971 and held a number
of other management positions.

James E.
Oesterreicher.Mr. Oesterreicher
has been a Director of Dial since 2000 and currently serves on
the Executive, Audit, Executive Compensation and Management
Succession Committees of the Board of Directors.
Mr. Oesterreicher retired as Chairman and Chief Executive
Officer of J.C. Penney Company, Inc., a department store,
drugstore, catalog and e-commerce retailer, in September 2000.
Mr. Oesterreicher had been with J.C. Penney since 1964 and
held a number of other management positions. He also is a
director of Brinker International, Inc. and TXU Corp.

Michael T. Riordan.Mr. Riordan has been a Director of Dial since 1997 and
currently serves on the Finance, Governance and Management
Succession Committees of the Board of Directors. He was most
recently Chairman, President and Chief Executive Officer of
Paragon Trade Brands, Inc. (Paragon), a leading
manufacturer of private label disposable diapers and related
products, prior to the acquisition of Paragon by Tyco
Healthcare, Inc., a subsidiary of Tyco International, in January
2002. Mr. Riordan also served as President and Chief
Operating Officer of Fort James Corporation, a paper
products manufacturer,

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from 1997 to 1998. Prior to the merger of
Fort Howard Corporation with James River Corporation,
Mr. Riordan served as Chairman of the Board, President and
Chief Executive Officer of Fort Howard Corporation from
1996 to 1997 and as President and Chief Operating Officer of
Fort Howard Corporation from 1992 to 1996. Mr. Riordan
also is a director of American Medical Security, Inc.; Potlatch
Corporation and RR Donnelley.


Barbara S. Thomas.Ms. Thomas has been a Director of Dial since 1997 and
currently serves on the Executive Compensation and Governance
Committees of the Board of Directors. Ms. Thomas served as
Interim Chief Executive Officer of Ocean Spray Cranberries,
Inc., a cooperative of cranberry and grapefruit growers in the
United States and Canada, from November 2002 to March 2003.
Ms. Thomas served as President of Warner-Lambert Consumer
Healthcare, the over-the-counter pharmaceuticals business of the
Warner-Lambert Company, from 1997 until its purchase by Pfizer
Inc. in July 2000. Ms. Thomas was with the Pillsbury
Company from 1993 to 1997, serving last as President of
Pillsbury Canada Ltd. Prior to joining Pillsbury,
Ms. Thomas served as Senior Vice President of Marketing for
Nabisco Brands, Inc. Ms. Thomas also is a director of the
Rayovac Corporation.

Salvador M. Villar.Mr. Villar has been a Director of Dial since 1998 and is
currently serving on the Audit and Executive Compensation
Committees of the Board of Directors. Mr. Villar is
President and Chief Executive Officer of California Commerce
Bank, a unit of Citigroup. Mr. Villar has been with
California Commerce Bank since 1981. Mr. Villar also is a
director of Banamex USA Bancorp.

Code of Ethics

We have adopted a Code of Ethics &
Business Responsibilities (our Code of Ethics) that
applies to our principal executive officer, principal financial
officer, principal accounting officer or controller and persons
performing similar functions. Our Code of Ethics is available on
our website (www.dialcorp.com) and in print upon request. Any
amendments or waivers to our Code of Ethics that apply to the
principal executive officer or senior financial officers will be
promptly disclosed on our website as required by law or by the
SEC or the NYSE.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16(a) of the Securities and Exchange
Act of 1934 requires our directors and executive officers to
file reports of holdings and transactions in our stock with the
Securities and Exchange Commission and the New York Stock
Exchange. Based upon our records and other information we
believe that all SEC filing requirements applicable to our
directors and executive officers with respect to 2003 were met,
except that (1) Joy A. Amundson inadvertently filed a
Form 4 six days late for the acquisition of 31.55
restricted stock units in April 2003 and (2) Barbara S.
Thomas inadvertently filed a Form 4 six days late for the
acquisition of 47.36 restricted stock units in April 2003.

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|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



| |                       
| | ----------------------
| | Executive Compensation

The following table sets forth compensation for
fiscal years 2003, 2002 and 2001 of the Chief Executive Officer
and four next most highly compensated executive officers at the
end of 2003 (the Named Executive Officers).

|                           |                            |                     |      |              |  |            |         |                 |  |                        |           |           |  |                 |        |        |  |  |        |         |  |  |         |         |  |  |         |         |     
|-------------------------- | -------------------------- | ------------------- | ---- | ------------ |  | ---------- | ------- | --------------- |  | ---------------------- | --------- | --------- |  | --------------- | ------ | ------ |  |  | ------ | ------- |  |  | ------- | ------- |  |  | ------- | ------- | ----
|                           |                            |                     |      |              |  |            |         |                 |  |                       
|                           |                            |                     |      |              |  |            |         |                 |  | Long-Term Compensation
|                           |                            |                     |      |             
|                           |                            | Annual Compensation |      | Restricted   |  | Securities |         |                
|                           |                            |                     |      | Stock        |  | Underlying |         |                
|Name and                   |                            |                     |      | Other Annual |  | Awards     |         | Options/        |  | All Other             
|Principal Position         |                            | Year                |      | Salary($)    |  | Bonus($)   |         | Compensation($) |  | $(1)                   |           | SARS #    |  | Compensation($)
|                           |                            |                     |      |              |  |            |         |                 |  |                        |           |           |  |                
|Herbert M. Baum            |                            |                     | 2003 |              |  |            | 849,616 |                 |  |                        | 1,713,682 |           |  |                 | 40,954 | (2)    |  |  | 12,852 |         |  |  | 225,000 |         |  |  | 174,197 | (3)    
|                           | Chairman, President and    |                     |      | 2002         |  |            |         | 800,000         |  |                        |           | 1,788,000 |  |                 |        | 51,602 |  |  |        | 80,335  |  |  |         | 0       |  |  |         | 197,489 |     
|                           | Chief Executive Officer    |                     |      | 2001         |  |            |         | 800,000         |  |                        |           | 1,785,000 |  |                 |        | 73,430 |  |  |        | 248,465 |  |  |         | 225,000 |  |  |         | 562,058 |     
|Conrad A. Conrad           |                            |                     | 2003 |              |  |            | 394,711 |                 |  |                        | 530,757   |           |  |                 | 9,246  | (2)    |  |  | 30,772 |         |  |  | 100,000 |         |  |  | 87,891  | (4)    
|                           | Executive Vice President   |                     |      | 2002         |  |            |         | 381,635         |  |                        |           | 526,656   |  |                 |        | 32,625 |  |  |        | 29,248  |  |  |         | 0       |  |  |         | 95,534  |     
|                           | Chief Financial Officer    |                     |      | 2001         |  |            |         | 364,404         |  |                        |           | 494,192   |  |                 |        | 40,136 |  |  |        | 50,933  |  |  |         | 140,000 |  |  |         | 91,473  |     
|Bernhard J. Welle          |                            |                     | 2003 |              |  |            | 384,250 |                 |  |                        | 516,691   |           |  |                 | 0      |        |  |  | 0      |         |  |  | 100,000 |         |  |  | 56,202  | (5)    
|                           | Executive Vice President   |                     |      | 2002         |  |            |         | 366,539         |  |                        |           | 505,823   |  |                 |        | 0      |  |  |        | 409     |  |  |         | 0       |  |  |         | 48,495  |     
|                           | Shared Services            |                     |      | 2001         |  |            |         | 343,173         |  |                        |           | 471,211   |  |                 |        | 12,665 |  |  |        | 928     |  |  |         | 140,000 |  |  |         | 38,975  |     
|Arthur E. Hanke, Jr.       |                            |                     | 2003 |              |  |            | 269,096 |                 |  |                        | 301,539   |           |  |                 | 0      |        |  |  | 0      |         |  |  | 60,000  |         |  |  | 37,152  | (6)    
|                           | Senior Vice President      |                     |      | 2002         |  |            |         | 243,270         |  |                        |           | 300,000   |  |                 |        | 22,388 |  |  |        | 36      |  |  |         | 0       |  |  |         | 30,197  |     
|                           | Sales                      |                     |      | 2001         |  |            |         | 232,577         |  |                        |           | 300,000   |  |                 |        | 0      |  |  |        | 75      |  |  |         | 70,000  |  |  |         | 18,443  |     
|Christopher J. Littlefield |                            |                     | 2003 |              |  |            | 263,269 |                 |  |                        | 295,009   |           |  |                 | 46,656 | (7)    |  |  | 71     |         |  |  | 60,000  |         |  |  | 35,064  | (8)    
|                           | Senior Vice President      |                     |      | 2002         |  |            |         | 246,539         |  |                        |           | 283,519   |  |                 |        | 0      |  |  |        | 135     |  |  |         | 0       |  |  |         | 30,282  | (9) 
|                           | General Counsel, Secretary |                     |      | 2001         |  |            |         | 223,000         |  |                        |           | 255,168   |  |                 |        | 0      |  |  |        | 3,476   |  |  |         | 100,000 |  |  |         | 14,611  | (10)



---



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The amounts shown represent the fair market value
    of discounted Dial restricted stock units (DRSUs) as
    of the date acquired under the Management Deferred Compensation
    Plan. For the first three years that an employee is eligible to
    participate in this plan, the DRSUs are acquired at a 20%
    discount to market. DRSUs representing this discount vest
    immediately following the last day of the second calendar year
    after the calendar year in which the salary and bonus amounts
    were originally deferred or, If earlier, upon a change in
    control. Dividend equivalents equal to the dividends paid on
    common stock are credited on DRSUs, which amounts are deemed
    reinvested in additional DRSUs. The total number of discounted
    DRSUs credited and the value of such DRSUs at
    December 31, 2003 to the Named Executive Officers was as
    follows:

|                           |  |          |        |          |  |  |         | 
|-------------------------- |  | -------- | ------ | -------- |  |  | ------- | 
|Name                       |  | DRSUs(#) |        | Value($)
|                           |  |          |        |         
|Herbert M. Baum            |  |          | 21,608 |          |  |  | 614,955 | 
|Conrad A. Conrad           |  |          | 6,404  |          |  |  | 182,245 | 
|Bernhard J. Welle          |  |          | 0      |          |  |  | 0       | 
|Arthur E. Hanke, Jr.       |  |          | 0      |          |  |  | 0       | 
|Christopher J. Littlefield |  |          | 229    |          |  |  | 6,524   | 



| |  |                                                                                                                                                                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In 2000, Mr. Littlefield was granted
    9,500 shares of restricted stock that vest in equal
    portions over five years. Mr. Littlefields restricted
    stock vests immediately upon a change in control. The value of
    these shares at December 31, 2003 was $108,000.



| |     |                                                                                                                                                                                                                                                                                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Reflects income tax gross-ups.                                                                                                                                                                                                                                                                       
|
| | (3) | Includes temporary living expenses of $21,184, a
    401(k) Plan (The Dial Corporation Future Investment Plan) match
    of $4,179, a supplemental 401(k) Plan (The Dial Corporation
    Future Investment Restoration Plan) match of $98,353, and a
    profit sharing plan contribution of $50,481.

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| |     |                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (4) | Includes temporary living expenses of $4,278, a
    401(k) Plan match of $8,131, a supplemental 401(k) Plan match of
    $28,888, a profit sharing plan contribution of $17,637 and
    relocation reimbursements of $28,957.
|
| | (5) | Includes a 401(k) Plan match of $10,492, a
    supplemental 401(k) Plan match of $28,669, and a profit sharing
    plan contribution of $17,041.                                                                             
|
| | (6) | Includes a 401(k) Plan match of $11,509, a
    supplemental 401(k) Plan match of $14,759 and a profit sharing
    plan contribution of $10,884.                                                                              
|
| | (7) | Includes $16,656 of income tax gross-ups and
    discretionary cash awards totaling $30,000.                                                                                                                                 
|
| | (8) | Includes a 401(k) Plan match of $8,153, a
    supplemental 401(k) Plan match of $16,043 and a profit sharing
    plan contribution of $10,868.                                                                               
|
| | (9) | Includes a 401(k) Plan match of $6,984, a
    supplemental 401(k) Plan match of $13,664 and a profit sharing
    plan contribution of $9,634.                                                                                



|     |                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes a 401(k) Plan match of $7,599, a
    supplemental 401(k) Plan match of $3,612 and a profit sharing
    plan contribution of $3,400.



| |                                      
| | -------------------------------------
| | Option Grants in Last Fiscal
    Year

The following table sets forth information
concerning non-qualified stock options granted to each of the
Named Executive Officers during 2003.

|                           |  |                   |         |                            |  |                |      |                             |  |       |         |        |  |  |           |  |  |  |           |  |  |  |           | 
|-------------------------- |  | ----------------- | ------- | -------------------------- |  | -------------- | ---- | --------------------------- |  | ----- | ------- | ------ |  |  | --------- |  |  |  | --------- |  |  |  | --------- | 
|                           |  |                   |         |                            |  |               
|                           |  | Individual Grants |         |                           
|                           |  |                   |         | Potential Realizable Value
|                           |  | Number of         |         | % of Total                 |  |                |      | at Assumed Annual Rates    
|                           |  | Securities        |         | Options                    |  |                |      | of Stock Price Appreciation
|                           |  | Underlying        |         | Granted to                 |  |                |      | for Option Term(2)         
|                           |  | Options           |         | Employees in               |  | Exercise Price |      | Expiration                  |  |      
|Name                       |  | Granted(#)        |         | Fiscal Year                |  | ($/Share)(1)   |      | Date                        |  | 5%($) |         | 10%($)
|                           |  |                   |         |                            |  |                |      |                             |  |       |         |       
|Herbert M. Baum            |  |                   | 225,000 |                            |  |                | 7.15 | %                           |  |       | 17.7700 |        |  |  | 3/12/2010 |  |  |  | 1,627,695 |  |  |  | 3,793,208 | 
|Conrad A. Conrad           |  |                   | 100,000 |                            |  |                | 3.18 | %                           |  |       | 17.7700 |        |  |  | 3/12/2010 |  |  |  | 723,420   |  |  |  | 1,685,870 | 
|Bernhard J. Welle          |  |                   | 100,000 |                            |  |                | 3.18 | %                           |  |       | 17.7700 |        |  |  | 3/12/2010 |  |  |  | 723,420   |  |  |  | 1,685,870 | 
|Arthur E. Hanke, Jr.       |  |                   | 60,000  |                            |  |                | 1.91 | %                           |  |       | 17.7700 |        |  |  | 3/12/2010 |  |  |  | 434,052   |  |  |  | 1,011,522 | 
|Christopher J. Littlefield |  |                   | 60,000  |                            |  |                | 1.91 | %                           |  |       | 17.7700 |        |  |  | 3/12/2010 |  |  |  | 434,052   |  |  |  | 1,011,522 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The exercise prices are the fair market values of
    the common stock on the grant dates. Each option contains the
    right to surrender the option for cash, which right is
    exercisable only upon a change in control. One-third of the
    options become exercisable after one year has elapsed since the
    date of grant. Another one-third of the options become
    exercisable after two years have elapsed since the date of
    grant. The final one-third of the options becomes exercisable
    after three years have elapsed since the date of grant. The
    maximum term of the options is 7 years. In the event of a change
    in control, all options become fully vested and exercisable.
|   
|(2) | Potential realizable values are net of exercise
    price, but before taxes associated with the exercise. Amounts
    represent hypothetical gains that could be achieved for the
    options if exercised at the end of the option terms. The assumed
    5% and 10% rate of stock price appreciation are provided in
    accordance with SEC rules and do not represent our estimate or
    projection of future stock price. Actual gains, if any, on stock
    option exercises will depend on future market prices on the date
    of exercise. Accordingly, there can be no assurance that these
    potential values will be realized.                                                                       

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| |                                                                                            
| | -------------------------------------------------------------------------------------------
| | Aggregated Stock Option Exercises in Last
    Fiscal Year and Fiscal Year-End Option Values

The following table sets forth information
concerning stock options exercised by the Named Executive
Officers during 2003 and the value of unexercised options at the
end of 2003.

|                           |  |             |        |             |  |                        |         |                              |  |             |         |                  |  |  |         |  |  |   |           |  |  |   |           | 
|-------------------------- |  | ----------- | ------ | ----------- |  | ---------------------- | ------- | ---------------------------- |  | ----------- | ------- | ---------------- |  |  | ------- |  |  | - | --------- |  |  | - | --------- | 
|                           |  |             |        |             |  |                        |         |                              |  |            
|                           |  |             |        |             |  | Number of Securities   |         |                             
|                           |  |             |        |             |  | Underlying Unexercised |         | Value of Unexercised In-the-
|                           |  | Shares      |        |             |  | Options at FY-End(#)   |         | Money Options at FY-End($)  
|                           |  | Acquired on |        | Value       |  |                        |         |                             
|Name                       |  | Exercise(#) |        | Realized($) |  | Exercisable            |         | Unexercisable                |  | Exercisable |         | Unexercisable(1)
|                           |  |             |        |             |  |                        |         |                              |  |             |         |                 
|Herbert M. Baum            |  |             | 0      |             |  |                        | 0       |                              |  |             | 547,100 |                  |  |  | 300,000 |  |  | $ | 8,692,355 |  |  | $ | 3,530,250 | 
|Conrad A. Conrad           |  |             | 50,000 |             |  |                        | 330,500 |                              |  |             | 60,000  |                  |  |  | 130,000 |  |  |   | 900,072   |  |  |   | 1,520,036 | 
|Bernhard J. Welle          |  |             | 6,333  |             |  |                        | 54,174  |                              |  |             | 340,534 |                  |  |  | 211,667 |  |  |   | 5,039,468 |  |  |   | 1,770,061 | 
|Arthur E. Hanke, Jr.       |  |             | 0      |             |  |                        | 0       |                              |  |             | 195,706 |                  |  |  | 168,333 |  |  |   | 2,762,882 |  |  |   | 1,029,547 | 
|Christopher J. Littlefield |  |             | 0      |             |  |                        | 0       |                              |  |             | 115,241 |                  |  |  | 105,833 |  |  |   | 1,674,740 |  |  |   | 1,142,035 | 



---



|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the amount by which the closing price
    of Dials common stock exceeded the exercise prices of
    unexercised options at the end of 2003.



| |              
| | -------------
| | Pension Plans

Effective January 1, 2001, The Dial
Corporation Retirement Income Plan was renamed The Dial
Corporation Future Security Plan and amended to convert the
plans final average pay formula to a pay-based credit
design. At retirement or termination after five years of
service, a participant will receive a benefit equal to the sum
of the participants accrued benefit under the final
average pay formula as of December 31, 2000, plus the
participants benefit accrued under a pay-based credit
formula for service after December 31, 2000.

Under the pay-based credit design, the pension
benefit earned after December 31, 2000 is expressed as a
cash balance account. Each year a participants cash
balance account is credited with (1) a pay-based credit
based on the participants age and eligible pay (total of
base salary and bonus) for that year based on the following
table:

|                   |  |           |    |  
|------------------ |  | --------- | -- | -
|                   |  | Pay-based
|Age on December 31 |  | Credit   
|                   |  |          
|Under 30           |  |           | 3  | %
|30-34              |  |           | 4  | %
|35-39              |  |           | 5  | %
|40-44              |  |           | 6  | %
|45-49              |  |           | 8  | %
|50 or more         |  |           | 10 | %

and, (2) an interest credit based on the
participants account balance as of the end of the previous
year and an interest rate based on the average 30-year
U.S. Treasury bond rate in effect during November of the
previous calendar year. The minimum interest rate is 5% and the
maximum rate is 10%. When a participant retires or terminates
after five years of service, the amount credited to the
participants account may be converted to an annuity.

Effective February 2002, the U.S. Treasury
Department eliminated 30-year Treasury bonds; however, the
30-year Treasury Constant Maturities yield for pension purposes
will still exist and can be extrapolated.

In addition, a participants accrued benefit
as of December 31, 2000 will increase each year at the same
rate the participants base salary increases. At
retirement, a participant will receive these benefits paid in
the form of an annuity, in addition to the pay-based credit
formula benefits described above.

The Code and the Employee Retirement Income
Security Act (ERISA) limit the annual benefits which
may be paid from a tax-qualified retirement plan. As permitted
by the Code and ERISA, Dial has a Future Security Restoration
Plan which authorizes the payment of benefits calculated under
provisions of the

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retirement plan which may be above the limits
permitted under the Code and ERISA for those executives entitled
to participate in the Future Security Restoration Plan.


The following table reflects the estimated annual
annuity under the final average pay formula and the estimated
lump-sum benefit earned under the new pay-based credit formula
payable at age 65 (Normal Retirement Age) for each of the
Named Executive Officers.

|                           |  |                     |         |                      |  |  |           | 
|-------------------------- |  | ------------------- | ------- | -------------------- |  |  | --------- | 
|                           |  | Estimated Annual    |         | Estimated Lump-Sum  
|                           |  | Annuity Under Final |         | Benefit Earned Under
|                           |  | Average Pay         |         | Pay-Based Credit    
|Name                       |  | Formula($)(1)       |         | Formula($)(2)       
|                           |  |                     |         |                     
|Herbert M. Baum(3)         |  |                     | 6,348   |                      |  |  | 1,079,079 | 
|Conrad A. Conrad           |  |                     | 3,287   |                      |  |  | 1,018,740 | 
|Christopher J. Littlefield |  |                     | 32,620  |                      |  |  | 4,493,086 | 
|Bernhard J. Welle          |  |                     | 173,565 |                      |  |  | 1,374,403 | 
|Arthur E. Hanke, Jr.       |  |                     | 85,108  |                      |  |  | 912,545   | 



---



|    |                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Calculated assuming each named executive
    continues working for Dial until age 65 and base salary
    increases 4.5% per year beginning January 1, 2004.                                                                                                                                                                                           
|   
|(2) | Calculated assuming each named executive
    continues working for Dial until age 65, the account
    balance receives future annual interest credits of 6%, pension
    eligible pay increases 4.5% per year beginning
    January 1, 2004, target bonus is achieved, and the Future
    Security Plan continues unchanged until the projection date.
|   
|(3) | Calculated assuming named executive continues
    working for Dial until February 1, 2006 (contract end date).                                                                                                                                                                                                                                        

Other Agreements

Upon joining Dial as Chairman, President and
Chief Executive Officer, Mr. Baum received a pension
supplement in the form of a $67,000 single life annuity (in
monthly installments) commencing upon his termination of
employment. This pension supplement is subject to an offset for
any pension benefit that he may earn from Dial.

Upon continued employment with Dial until
August 15, 2005, Mr. Bernhard J. Welle would become
entitled to a $50,000 single life annuity (in monthly
installments) commencing on the later of his attainment of
age 65 or his termination of employment. The pension
supplement vests immediately upon stockholder approval of the
Merger with Henkel, and, upon subsequent termination of
Mr. Welles employment, he will receive a lump sum
payment of the then present value of the pension supplement.



| |                          
| | -------------------------
| | Compensation of Directors



| |     
| | ----
| | Fees

The following fees were paid to Directors who
were not Dial employees during 2003:

|                                                                |  |   |        | 
|--------------------------------------------------------------- |  | - | ------ | 
|Annual retainer                                                 |  | $ | 35,000 | 
|Additional annual retainer for Audit Committee
    chairperson  |  | $ | 5,000  | 
|Additional annual retainer for other Committee
    chairpersons |  | $ | 2,500  | 
|Fee for each Board meeting                                      |  | $ | 1,500  | 
|Fee for each Audit Committee meeting                            |  | $ | 2,000  | 
|Fee for other Committee meetings                                |  | $ | 1,000  | 



| |                           
| | --------------------------
| | Deferred Compensation Plan

Our Directors Deferred Compensation Plan allows
directors who are participants in the plan to defer their
retainer fees and meeting fees. Certain directors who
participate in the plan may have elected to receive full

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payment of their deferred compensation in a lump
sum upon completion of the merger. Other directors who
participate in the plan may have elected to have their deferred
compensation continue to be held in a trust related to the plan
and its payment will be governed by the terms and conditions of
the plan.




| |              
| | -------------
| | Stock Options

We granted each director, upon his or her first
election as a director, non-qualified stock options to purchase
common stock. Each year we also granted each director
non-qualified stock options to purchase common stock in
connection with the annual meeting of stockholders. After each
five years of completed service, we granted each director
non-qualified stock options to purchase common stock. The
exercise price of all options granted to directors is the fair
market value of the common stock on the grant date. The number
of shares subject to each option granted to directors is equal
to the amount of the annual retainer divided by one-fourth of
the fair market value of the common stock on the grant date. The
number of shares calculated under this formula is rounded to the
nearest 100 shares. A director elected during the course of
a year receives the initial grant described above, as well as a
pro rata annual grant for the year in which the director is
elected.

In June 2003, 7,300 non-qualified stock options
to purchase common stock were granted to each non-employee
director at an exercise price of $19.1950.

Until January 1, 2004, directors could elect
to receive non-qualified stock options in lieu of retainer and
meeting fees. The exercise price of these options is the fair
market value of the common stock on the date the retainer and
meeting fees otherwise would have been paid in cash. The number
of shares subject to these options is equal to the amount of the
retainer or meeting fee divided by one-third of the fair market
value of the common stock on the date the retainer or meeting
fee otherwise would have been paid in cash. Options granted in
lieu of retainer and meeting fees are 100% vested on the date of
grant. None of the Companys directors elected to receive
stock options in lieu of retainer and meeting fees during 2003.
Information regarding non-qualified stock options granted to
directors in lieu of retainer and meeting fees during 2003 is
set forth below:



| |          
| | ---------
| | Insurance

We provide non-employee directors with accidental
death and dismemberment insurance benefits of $300,000. We also
provide travel accident insurance benefits of $250,000 when
directors travel on company business.



| |                         
| | ------------------------
| | Charitable Award Program

Messrs. Ford, Gossage and Guinn, who were
directors of Viad Corp at the time of the spin-off of Dial from
our former parent, continue to participate in Viads
charitable award program for directors. Under this program, each
of them may contribute to one or more charitable organizations a
total of $100,000 per year over a period of 10 years
following the directors death. The program is funded
through the purchase of life insurance, with the Company as
beneficiary.



| |                                                  
| | -------------------------------------------------
| | Employment and Change in Control
    Arrangements



| |                      
| | ---------------------
| | Employment Agreements

Mr. Baums employment agreement, dated
August 15, 2002, provides that he is to serve as Chairman,
President and Chief Executive Officer of Dial through
February 1, 2006. Under the employment agreement,
Mr. Baum receives an annual base salary of $850,000 and is
eligible to receive an annual bonus. In addition, Mr. Baum
is eligible to participate in all employee benefit plans
available to Dials other senior executives. Dial entered
into an Amended and Restated Employment Agreement with
Mr. Baum on December 14, 2003, which will become
effective upon the completion of the Merger with Henkel and
supersede his prior employment agreement dated August 15,
2002. The agreement provides that Mr. Baum will serve as
President and CEO of Dial for a period up to February 1,
2006. Mr. Baum will also serve as Dials Chairman of
the Board unless either Dr. Lehner or Dr. Morwind
serves as Chairman, in which case, Mr. Baum will serve as

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Vice-Chairman. The agreement provides for payment
of salary of $850,000 and for a bonus opportunity to be based on
Mr. Baums current target bonus. The agreement also
provides for certain welfare benefits no less favorable than
those currently provided which are subject to a tax gross up, as
well as participation in a cash-based long-term incentive plan
on terms that are no less favorable than the benefits provided
to similarly situated U.S. employees of subsidiaries of
Henkel. Mr. Baum will also be entitled to certain welfare,
retiree medical and pension benefits which are generally
available to other senior executives of Dial. In addition, he
will be entitled, even if terminated from employment, to certain
welfare and pension benefit coverage and payments for a
three-year period following the Merger. Upon expiration of his
term of employment, Mr. Baum shall be entitled to a minimum
guaranteed life insurance annuity payment of $67,000, reduced by
any defined benefit pension benefit earned under Dials
plans. The agreement provides for payment of certain benefits
following termination of employment for good reason by
Mr. Baum or without cause by Dial which include severance
payments, payable over a 24-month period, equal to the greater
of (a) his salary during the period from termination to
February 1, 2006, or (b) one times the sum of his
annual base salary plus full target bonus with respect to the
fiscal year in which his termination occurs. Mr. Baum will
also be entitled to continued welfare benefits until the later
of February 1, 2006, and one year following termination of
employment, in addition to being treated as a retiree under all
benefit plans. Mr. Baums employment agreement
provides an excise tax gross-up payment and a make-whole payment
for any deductions disallowed because of the inclusion of the
tax payment in his adjusted gross income. His employment
agreement also contains certain confidentiality and
non-competition provisions.


In connection with the Merger Agreement, Dial
entered into employment agreements with each of the Named
Executive Officers (not including Mr. Baum, whose
employment agreement is described in Item 11.
Executive Compensation  Employment and Change in
Control Arrangements  Employment
Agreements), and with six other executives and three
senior managers of Dial, which will become effective upon the
completion of the Merger and which provide for a two-year term
of employment. These agreements provide for payment of each
Named Executive Officers, executives or senior
managers current salary and for his or her bonus
opportunity to be based on his or her current target bonus. They
also provide for certain fringe benefits no less favorable than
those currently provided, as well as participation in a
cash-based long-term incentive plan on terms that are no less
favorable than the benefits provided to similarly situated
U.S. employees of subsidiaries of Henkel. Each such Named
Executive Officer, executive and senior manager will also be
entitled to certain welfare, retiree medical and pension
benefits which are to be substantially similar in the aggregate
to those provided prior to the Merger. The agreements provide
for payment of certain benefits following termination of
employment for good reason by each such Named Executive Officer,
executive or senior manager, or termination of employment
without cause by Dial. These benefits include a lump sum
severance payment equal to the salary that would have been paid
from the date of termination to the end of the second
anniversary of the Merger, and an annual bonus for the year of
termination and continued benefits during the severance period
which lasts until the second anniversary of the completion of
the Merger. In addition, nine of the executive officers will
also be entitled, even if terminated from employment, to certain
welfare and pension benefit coverage and payments for a
three-year period following the Merger. The remaining four
individuals will also be entitled, even if terminated from
employment, to certain welfare benefits coverage for a two-year
period following the merger. The employment agreements also
contain confidentiality and non-competition provisions.



| |                  
| | -----------------
| | Change of Control

Dial has entered into change in control
agreements with all of its executive officers and with many of
its management employees. Under these agreements, if, within two
years after a change in control, their employment terminates
involuntarily or they leave for good reason, executive vice
presidents and senior vice presidents who report directly to the
Chief Executive Officer (1) receive three times the sum of their
base salary and their highest bonus in the past three years;
(2) continue to receive welfare benefits for three years;
and (3) receive credit for three additional years of
service under Dials retirement plans. Senior vice
presidents who do not report directly to the Chief Executive
Officer and vice presidents (1) receive two times the sum
of their base salary and their highest bonus in the past three
years; and (2) continue to receive welfare benefits for two
years. The agreements also provide a tax gross-up feature to
compensate for any excise taxes imposed

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on these payments for executive vice presidents,
senior vice presidents and vice presidents who report directly
to the Chief Executive Officer.


In connection with the Merger, each of the Named
Executive Officers, along with six other executives and three
senior managers of Dial, entered into change of control
agreements which, effective as of the Merger, will amend the
terms and conditions of their pre-existing change of control
agreements or, with respect to Mr. Baum, the change of
control provisions in his pre-existing employment contract.
These replacement agreements provide for termination of the
existing change of control agreements and the change of control
provisions contained within Mr. Baums employment
contract; however, certain terms, including the right to a
gross-up payment for any excise taxes imposed under
Section 4999 of the Code on those executives or senior
managers and their confidentiality obligations, as employees of
Dial, are preserved.

Under the terms of the replacement change of
control agreements entered into with each of the Named Executive
Officers (not including Mr. Baum, whose employment
agreement is described in Item 11. Executive
Compensation  Employment and Change in Control
Arrangements  Employment Agreements) and
the other executives and senior managers of Dial, following
completion of the Merger and provided that the individual
remains employed with us up to the date of the Merger and does
not terminate employment within that period for good reason as
defined in his or her prior change of control agreement, the
Named Executive Officer, other executive or senior manager of
Dial will receive a lump sum cash payment upon the completion of
the Merger, equal to 80% of an amount which is either three
times (with respect to nine of the executives) or two times
(with respect to the remaining four individuals) the sum of his
or her annual base salary and highest annual bonus in the past
three years. If a Named Executive Officer, other executive or
senior manager remains employed for a two-year period following
the Merger, the individual will receive the remaining 20% of the
change of control payment referred to above, plus 10% interest
thereon. If the individual remains employed following the
Merger, and thereafter is terminated without cause by Dial or
voluntarily resigns for good reason prior to the end of the
two-year period, he or she will be entitled to the 20% payment
at an interest rate of 10% from the date of the Merger to the
date of termination. If termination occurs during that two-year
period for any other reason, interest on the 20% will be at an
annual rate of 3%. The change of control agreements also provide
for cancellation of stock options in exchange for the payment of
the option consideration pursuant to the Merger Agreement.

Effective upon the completion of the Merger, the
change of control provisions currently in Mr. Baums
Employment Agreement will be superseded by the terms contained
in the change of control agreement he entered into on
December 14, 2003. Under the terms of this change of
control agreement, Mr. Baum will be entitled to the same
change of control payments referred to in the preceding
paragraph and upon the same terms and conditions, except that if
he terminates employment for good reason (as defined in his
prior employment agreement) before the Merger, he will be
treated as having terminated after the Merger for purposes of
his new employment agreement. Mr. Baums change of
control agreement also provides for cancellation of his stock
options in exchange for the payment of the option consideration
under the Merger Agreement.

Dial established the Benefits Protection Trust
for Change in Control Arrangements (sometimes referred to as a
Rabbi Trust) to provide a degree of security for
certain of Dials compensation obligations to its
employees, including the executive officers, following a change
in control of Dial. The compensation arrangements covered by the
Rabbi Trust consist of Mr. Baums employment
agreement, the change of control agreements, Dials
supplemental retirement plans, Dials separation pay plan,
Dials annual incentive plan and Dials sales
incentive plan. The trusts provisions required Dial to
fund the trust within two business days after signing the Merger
Agreement. The amount of the required funding was an amount for
trust expenses plus an amount between 5% and 60% of the maximum
amount that may become payable under the covered arrangements,
as determined by our chief executive officer and chief financial
officer. On December 16, 2003, in accordance with the
trusts provisions, we contributed $42,316,000 to the
trust. The trust assets will be used solely to satisfy
Dials obligations to its employees under the covered
arrangements, the trustees obligations under the trust and
trust expenses or, in the event of Dials bankruptcy or
insolvency, the claims of Dials creditors.

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| |              
| | -------------
| | Stock Options

See the discussion regarding Stock Options under
Executive Compensation Committee Report on Executive
Compensation below.



| |                 
| | ----------------
| | Restricted Stock

The restrictions on any restricted shares of Dial
common stock held by an executive officer will lapse generally
upon stockholder approval of the Merger. Any such shares will
participate in the Merger with all other shares of Dial common
stock and the holder will receive $28.75 in cash per share,
without interest and less any applicable withholding tax, upon
completion of the Merger.

The following table sets forth the number of
restricted shares of Dial common stock held by individuals who
have served as executive officers of Dial since the beginning of
2003.

|                                        |  |            |        | 
|--------------------------------------- |  | ---------- | ------ | 
|                                        |  | Restricted
|Name                                    |  | Shares(#) 
|                                        |  |           
|Herbert M. Baum                         |  |            | 0      | 
|Conrad A. Conrad                        |  |            | 0      | 
|Bernhard J. Welle                       |  |            | 0      | 
|Arthur E. Hanke, Jr.                    |  |            | 0      | 
|Christopher J. Littlefield              |  |            | 3,800  | 
|Remaining executive officers as a group |  |            | 46,000 | 



| |                      
| | ---------------------
| | Deferred Compensation

See the discussion regarding Deferred
Compensation under Executive Compensation Committee Report
on Executive Compensation below.



| |                                                                      
| | ---------------------------------------------------------------------
| | Executive Compensation Committee Report on
    Executive Compensation



| |           
| | ----------
| | Objectives

Dials executive compensation program aims
to:



| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | Support, communicate and drive achievement of
    business strategies and goals;                                
|
| |  | Attract and retain the highest caliber executive
    officers;                                                  
|
| |  | Motivate high performance in an entrepreneurial,
    incentive-driven culture, free of any sense of entitlement;
|
| |  | Closely align the interests of executive officers
    and employees with stockholders interests;               
|
| |  | Promote and maintain high ethical standards and
    business practices; and                                     
|
| |  | Reward results and the creation of stockholder
    value.                                                       



| |                                                   
| | --------------------------------------------------
| | Factors Considered in Determining
    Compensation

The Executive Compensation Committee makes
executive compensation decisions on the basis of total
compensation, rather than on separate freestanding components.
The committee attempts to create an integrated total
compensation program structured to balance short- and long-term
financial and strategic goals. A significant amount of executive
compensation is paid only if performance goals are achieved.
Total executive compensation is targeted at the 50th percentile
of Dials comparator companies, with the opportunity to
meet or exceed the 75th percentile based on performance.

An independent consulting firm assists the
committee in evaluating Dials executive compensation
program. This consultant compares Dials compensation
practices to marketplace survey data as well as to a

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group of comparator companies. This group of
comparator companies is similar to Dial with respect to national
and international business operations and sales volumes, market
capitalization and number of employees. The committee reviews
and approves the companies included in this comparator group.
Substantially all of the companies chosen for Dials
comparator group are included in the peer group index in the
graph entitled Comparison of Cumulative Total Return to
Stockholders presented below. However, the committee
believes that Dials competitors for executive talent are
not limited to these comparator companies.




| |              
| | -------------
| | Base Salaries

The committee regularly reviews each executive
officers base salary. Base salaries generally are targeted
at the 50th percentile of Dials comparator companies. Base
salaries for executive officers are initially determined by
evaluating executives levels of responsibility, prior
experience and breadth of knowledge, as well as internal equity
issues and external pay practices. Base salaries offer security
to executives and allow Dial to attract executive talent and
maintain a stable management team. Base salaries also reward
executives for individual performance, which encourages the
development of executives.

Increases to base salaries are driven by
individual performance. Individual performance is evaluated
based on sustained levels of contribution to Dial. The committee
considers the executives efforts in promoting Dials
objectives; continuing educational and management training;
improving product quality; developing relationships with
customers, suppliers and employees; demonstrating leadership
abilities among co-workers and other goals.



| |                                                
| | -----------------------------------------------
| | Compensation of the Chief Executive
    Officer

As Chairman, President and Chief Executive
Officer of Dial, Mr. Baums compensation for 2003 was
based upon his employment agreement which established the terms
and conditions of his employment with Dial, including a minimum
base salary, the minimum benefits to which he is entitled under
the compensation plans available to Dials senior executive
officers and payments or benefits he is entitled to upon
termination of his employment. The Executive Compensation
Committee typically reviews the base salary of the Chief
Executive Officer annually pursuant to the same policies the
committee uses to evaluate the base salaries of other executive
officers. In January 2003, the committee approved an increase in
Mr. Baums base salary to $850,000. This was
Mr. Baums first increase in base salary since joining
Dial in August 2000.

In light of his strong performance in 2003, the
committee awarded Mr. Baum an incentive bonus of
$1,713,682. The committee based its decision on the strong
performance of Dials business in 2003, as evidenced by a
4.9% increase in sales and a 16% increase in earnings per share
from continuing operations, excluding special charges. As
discussed below, this performance resulted in above target
performance with respect to revenue and earnings per share
measures and maximum performance with respect to return on
invested capital and cash flow. The committee also based its
decision on the substantial increase in stockholder value during
2003 as evidenced by the 39.8% increase in Dials stock
price.



| |               
| | --------------
| | Annual Bonuses

Dials Annual Incentive Plan promotes
Dials pay-for-performance philosophy by providing for
annual cash bonuses based on achievement of specific company and
business unit performance goals. Annual bonus objectives
communicate specific goals that are of primary importance during
the year and motivate executives to achieve these goals.

Each year, the Executive Compensation Committee
establishes specific goals relating to each executives
bonus opportunity. Eligible executives are assigned threshold,
target and maximum bonus levels based on a percentage of base
salary. Executives earn bonuses if the goals are achieved,
although the committee can adjust awards in certain cases.

Dials Annual Incentive Plan for 2003
focused on important key financial measures and supported
Dials business unit model. Company performance goals in
2003 were based upon revenue, earnings, return on invested
capital and cash flow. Business unit performance goals in 2003
were based upon revenue, operating

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income, inventory turnover and market share.
Incentive awards to business unit participants in 2003 were
based 40% on company performance and 60% on business unit
performance. Employees not dedicated to a particular business
unit were measured solely on total company performance measures.


2003 performance goals were considered by the
committee to be challenging, but achievable. Dial was above the
target goal for revenue and earnings per share performance and
above the maximum goal for return on invested capital and cash
flow performance. Employee incentive awards can be leveraged up
to 200% for each measure based on the level of performance
achieved. In 2003, participants earned 195% of target for total
company performance; the results varied for individual business
units based on performance. In addition, employees
incentive awards could be increased by an additional 15% if
Dials earnings per share growth for 2003 placed Dial in
the top quartile of its comparator group. Dials earnings
per share growth was second best among its comparator group and
this additional payment was made. The amounts shown in the
Summary Compensation Table below reflect the bonuses paid to the
Named Executive Officers for 2003.



| |              
| | -------------
| | Stock Options

In keeping with Dials commitment to
performance-based pay, long-term incentives (consisting
primarily of stock options) comprised the largest portion of an
executives total compensation package. When awarding
long-term incentives, the Executive Compensation Committee
considered the executives level of responsibility and
prior experience, as well as historical award data, various
performance criteria and compensation practices of comparator
companies. The committee attempted to provide executives with
competitive long-term incentive award opportunities. In certain
instances, these opportunities were above or below market level,
based on an executives experience and actual performance.

Stock options under Dials 1996 Stock
Incentive Plan were granted at the fair market value of the
common stock on the date of grant. Accordingly, stock options
have value only if the stock price appreciates after the grant
date. From the spin-off of Dial from our former parent until
August 1999, stock options vested based on stock price
appreciation and time or, in any event, at the end of five years
after the date of grant. Beginning in March 2000, stock options
generally vested in three equal installments on the first,
second and third anniversary of the grant date.

In March 2003, the committee authorized an annual
stock option grant to executive officers and other employees.
The committee believed that such grants were in Dials best
interest to retain employees during a period in which our future
was uncertain. The committee did not make further grants of
stock options in 2003 to those who received the annual grant,
except in the case of promotion or significant increase in
responsibility.

The following table sets forth the number of
stock options to acquire shares of Dial common stock held by
individuals who have served as a director or an executive
officer of Dial since the beginning of 2003.

|                                        |  |            |         |                  |  |            |         |                  |  |  |         |  |  |  |         | 
|--------------------------------------- |  | ---------- | ------- | ---------------- |  | ---------- | ------- | ---------------- |  |  | ------- |  |  |  | ------- | 
|                                        |  |            |         | Weighted         |  |            |         | Weighted        
|                                        |  | Unvested   |         | Average Exercise |  | Vested     |         | Average Exercise
|Name                                    |  | Options(#) |         | Price($)         |  | Options(#) |         | Price($)        
|                                        |  |            |         |                  |  |            |         |                 
|Herbert M. Baum                         |  |            | 225,000 |                  |  |            | 17.7700 |                  |  |  | 622,100 |  |  |  | 12,6926 | 
|Conrad A. Conrad                        |  |            | 100,000 |                  |  |            | 17.7700 |                  |  |  | 90,000  |  |  |  | 13.4688 | 
|Bernhard J. Welle                       |  |            | 100,000 |                  |  |            | 17.7700 |                  |  |  | 387,201 |  |  |  | 13.6469 | 
|Arthur E. Hanke, Jr.                    |  |            | 60,000  |                  |  |            | 17.7700 |                  |  |  | 239,039 |  |  |  | 15.2930 | 
|Christopher J. Littlefield              |  |            | 60,000  |                  |  |            | 17.7700 |                  |  |  | 148,574 |  |  |  | 13.8349 | 
|Remaining executive officers as a group |  |            | 465,944 |                  |  |            | 18.1708 |                  |  |  | 514,405 |  |  |  | 13.4430 | 
|Non-employee directors as a group       |  |            | 94,100  |                  |  |            | 19.4736 |                  |  |  | 349,120 |  |  |  | 15.3686 | 



---



|  |                                                                             
|- | ----------------------------------------------------------------------------
|* | Only includes options with an exercise price per
    share less than $28.75.

All unvested stock options vest and become
exercisable generally upon stockholder approval of the Merger.
Subject to the consent of the option holders, upon the
completion of the Merger, each option holder

78



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will receive an amount equal to the excess, if
any, of $28.75 in cash per share subject to each option then
outstanding over the exercise price for the option, multiplied
by the number of shares subject to the option. Those options
will automatically be cancelled upon the completion of the
Merger. If the option holder withholds consent, the option
holders Dial options will instead be converted into the
right to receive a cash payment based on the trading price of
Henkels preferred shares. The conversion will be made by a
formula using the value of Dial common stock at the time of the
Merger and the average closing price of Henkel shares for the
20 days preceding the Merger. The conversion will be
subject to the right of the option holder to elect, within
60 days following stockholder approval of the Merger, to
receive a cash payment per share of Dial common stock subject to
an option equal to the excess of (a) the greater of (1) the
highest price at which Dial common stock traded in the
60 days preceding stockholder approval and (2) the
price paid for Dial common stock in the Merger over (b) the
exercise price of the option. Each of Mr. Baum and the
other executives and senior managers with replacement change of
control agreements has consented to surrender his or her
outstanding options to acquire shares of Dial common stock for
cancellation in exchange for the cash consideration, if any,
calculated as noted above.




| |                      
| | ---------------------
| | Deferred Compensation

Our Management Deferred Compensation Plan allows
participants in the plan to defer a portion of their base
salaries and bonuses. Certain executive officers who participate
in the plan may have elected to receive full payment of their
deferred compensation in a lump sum upon completion of the
Merger or upon a termination of employment following completion
of the Merger. During the first three years of participation in
the plan, if a participant in the plan chooses to have part or
all of the deferrals invested in Dial stock units, the
participants plan account is credited with certain
matching Dial stock units equal to 20% of the deferrals invested
in Dial stock units. Each Dial stock unit is equivalent in value
to a share of Dial common stock. The matching Dial stock units
normally vest immediately following the end of the second
calendar year after the calendar year in which the related
amounts were deferred. Any unvested matching Dial stock units
vest upon completion of the Merger and their value will be
included in any payments made to participants. Dial stock units
will no longer be an investment option under the plan after
December 31, 2003. As a consequence, participants who had
elected to defer their 2003 annual bonuses and to have these
deferrals invested in Dial stock units will be credited with an
additional cash amount equal in value to the matching Dial stock
units, if any, to which they would have otherwise been entitled.
If a participant has a provision governing the treatment of
excess parachute payments in another plan or agreement, that
provision applies. If not, the participants payments under
this plan are reduced to the extent that they are excess
parachute payments. Certain participants may have elected to
receive full payment of their deferred compensation in a lump
sum upon completion of the Merger. Other participants may have
elected to have their deferred compensation continue to be held
in a trust related to the plan and its payment will be governed
by the terms and conditions of the plan.

Upon completion of the Merger, each participant
in Dials Annual Incentive Plan, including the executive
officers, will be paid a pro-rata bonus based on the greater of
the participants target award for the year in which the
Merger is completed or the estimated actual performance
projected for the year.

79



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| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Deductibility of Executive Compensation Under
    Internal Revenue Code Section 162(m)

Section l62(m) of the Code provides that
certain executive compensation in excess of $1 million is
not deductible for corporate income tax purposes unless it is
performance-based and is paid under a plan meeting requirements
set forth in Section l62(m). The Committee intends to
ensure that Dials executive compensation programs continue
to satisfy the requirements of Section l62(m). However, the
Committee may determine, based on business considerations, that
compensation should be paid even if it is not deductible under
Section l62(m).



| |                                 
| | --------------------------------
| | EXECUTIVE COMPENSATION COMMITTEE
| | Joe T. Ford (Chairman)          
| | George J. Harad                 
| | James E. Oesterreicher          
| | Barbara S. Thomas               
| | Salvador M. Villar              

80



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| |                                                                
| | ---------------------------------------------------------------
| | Compensation Committee Interlocks and
    Insider Participation

None of the members of the Executive Compensation
Committee is presently, nor in the past has ever been, an
officer or employee of Dial, nor has any member had any
relationship requiring disclosure under applicable securities
regulations.

THE DIAL CORPORATION

Comparison of Cumulative Total Return to
Stockholders


December 31, 1998 to December 31,
2003


(PERFORMANCE GRAPH)

|                         |  |            |       |            |  |            |       |            |  |            |       |            |  |             |      |  |  |   |      |  |  |   |       |  |  |  |      |  
|------------------------ |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | ----------- | ---- |  |  | - | ---- |  |  | - | ----- |  |  |  | ---- | -
|                         |  |            |       |            |  |            |       |            |  |            |       |            |  | Compound   
|                         |  |            |       |            |  |            |       |            |  |            |       |            |  | Annual     
|                         |  | 12/31/1998 |       | 12/31/1999 |  | 12/29/2000 |       | 12/31/2001 |  | 12/31/2002 |       | 12/31/2003 |  | Return Rate
|                         |  |            |       |            |  |            |       |            |  |            |       |            |  |            
|The Dial Corporation     |  | $          | 100.0 |            |  | $          | 85.1  |            |  | $          | 39.4  |            |  | $           | 61.9 |  |  | $ | 74.1 |  |  | $ | 104.8 |  |  |  | 0.9  | %
|S&P 500 Consumer Staples |  |            | 100.0 |            |  |            | 84.9  |            |  |            | 99.2  |            |  |             | 92.9 |  |  |   | 88.9 |  |  |   | 99.2  |  |  |  | 0.2 | %
|S&P 500 Index            |  |            | 100.0 |            |  |            | 121.0 |            |  |            | 110.0 |            |  |             | 97.0 |  |  |   | 75.6 |  |  |   | 97.2  |  |  |  | 0.6 | %






|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters

On December 14, 2003, we entered into the
Merger Agreement, pursuant to which Henkel will acquire us
through the merger of Merger Sub with and into us, with Dial
surviving as a wholly-owned subsidiary of Henkel. Upon the
consummation of the Merger, each outstanding share of our common
stock will be converted into the right to receive $28.75 in
cash. The completion of the Merger is subject to the
satisfaction or waiver of several conditions, including approval
of the Merger by our stockholders and other customary conditions
to the closing. Subject to the satisfaction or waiver of these
conditions, we expect to complete the Merger in March 2004. A
special stockholder meeting to approve the Merger Agreement is
scheduled for March 24, 2004. Stockholders of record as of
the close of business on February 17, 2004 are entitled to
be present and vote at this special meeting. The foregoing
description does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement, a copy of
which is incorporated by reference herein as Exhibit 2.

The following table sets forth the Dial common
stock beneficially owned by (a) each person who is known by
us to beneficially own 5% or more of the outstanding Dial common
stock, (b) certain of our executive officers, (c) each
of our directors and (d) all of our directors and executive
officers as a group, as of

81



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March 4, 2004. Except as otherwise noted,
the address of each person listed in the table is c/o The
Dial Corporation,15501 North Dial Boulevard, Scottsdale, Arizona
85260-1619.


|                                                                                                             |  |              |           |            |  |  |      |  
|------------------------------------------------------------------------------------------------------------ |  | ------------ | --------- | ---------- |  |  | ---- | -
|                                                                                                             |  | Amount and   |           |           
|                                                                                                             |  | Nature of    |           |           
|                                                                                                             |  | Beneficial   |           | Percent of
|Name                                                                                                         |  | Ownership(1) |           | Class     
|                                                                                                             |  |              |           |           
|Mario J. Gabelli(2)
    Gabelli Asset Management Inc.
    Once Corporate Center
    Rye, New York 10580-1435 |  |              | 8,496,200 |            |  |  | 8.82 | %
|Joy A. Amundson                                                                                              |  |              | 60,140    |            |  |  | *    |  
|Herbert M. Baum                                                                                              |  |              | 808,307   |            |  |  | *    |  
|Conrad A. Conrad                                                                                             |  |              | 167,991   |            |  |  | *    |  
|Joe T. Ford                                                                                                  |  |              | 145,016   |            |  |  | *    |  
|Thomas L. Gossage                                                                                            |  |              | 108,714   |            |  |  | *    |  
|Donald E. Guinn(3)                                                                                           |  |              | 129,842   |            |  |  | *    |  
|Arthur E. Hanke, Jr.                                                                                         |  |              | 286,133   |            |  |  | *    |  
|George J. Harad                                                                                              |  |              | 0         |            |  |  | *    |  
|Christopher J. Littlefield(3)                                                                                |  |              | 183,540   |            |  |  | *    |  
|James E. Oesterreicher                                                                                       |  |              | 23,697    |            |  |  | *    |  
|Michael T. Riordan                                                                                           |  |              | 56,204    |            |  |  | *    |  
|Barbara S. Thomas                                                                                            |  |              | 51,027    |            |  |  | *    |  
|Salvador M. Villar                                                                                           |  |              | 33,776    |            |  |  | *    |  
|Bernhard J. Welle(3)                                                                                         |  |              | 519,858   |            |  |  | *    |  
|All directors and executive officers as a group                                                              |  |              | 3,249,044 |            |  |  | 3.0  | %



---



| |   |                      
| | - | ---------------------
| | * | Less than one percent



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes shares subject to options that are
    presently exercisable or will become exercisable within
    60 days (other than in connection with an acceleration
    resulting from the merger) and vested Dial restricted stock
    units, or DRSUs. The numbers of shares subject to exercisable
    options and vested DRSUs for each person named above and for all
    directors and executive officers as a group are as follows:

|                                                |  |             |           |        |  |  |         | 
|----------------------------------------------- |  | ----------- | --------- | ------ |  |  | ------- | 
|                                                |  | Exercisable |           | Vested
|                                                |  | Options     |           | DRSUs 
|                                                |  |             |           |       
|Joy A. Amundson                                 |  |             | 47,600    |        |  |  | 11,540  | 
|Herbert M. Baum                                 |  |             | 697,100   |        |  |  | 100,909 | 
|Conrad A. Conrad                                |  |             | 123,334   |        |  |  | 29,074  | 
|Joe T. Ford                                     |  |             | 93,060    |        |  |  | 9,996   | 
|Thomas L. Gossage                               |  |             | 70,960    |        |  |  | 23,793  | 
|Donald E. Guinn(3)                              |  |             | 93,860    |        |  |  | 7,640   | 
|Arthur E. Hanke, Jr.                            |  |             | 259,039   |        |  |  | 1,133   | 
|George J. Harad                                 |  |             | 0         |        |  |  | 0       | 
|Christopher J. Littlefield(3)                   |  |             | 168,574   |        |  |  | 0       | 
|James E. Oesterreicher                          |  |             | 17,400    |        |  |  | 2,797   | 
|Michael T. Riordan                              |  |             | 50,900    |        |  |  | 4,304   | 
|Barbara S. Thomas                               |  |             | 41,200    |        |  |  | 8,827   | 
|Salvador M. Villar                              |  |             | 28,000    |        |  |  | 3,201   | 
|Bernhard J. Welle(3)                            |  |             | 420,535   |        |  |  | 28,136  | 
|All directors and executive officers as a group |  |             | 2,728,189 |        |  |  | 244,989 | 

82



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The ownership information set forth in this proxy
    statement is based on material contained in a
    Schedule 13D/A, filed with the SEC on March 3, 2004,
    by Mario J. Gabelli and various entities which he directly or
    indirectly controls or for which he acts as chief investment
    officer. According to the Schedule 13D/A, Gabelli Funds,
    LLC has sole voting power and sole dispositive power over
    3,681,600 shares; GAMCO Investors, Inc. has sole voting
    power over 3,708,800 shares and sole dispositive power over
    3,889,700 shares; MJG Associates, Inc. has sole voting
    power and sole dispositive power over 93,000 shares;
    Gabelli Securities, Inc. has sole voting power and sole
    dispositive power over 558,700 shares; Gabelli &
    Company, Inc. Profit Sharing Plan has sole voting power and sole
    dispositive power over 25,000 shares; Gabelli Foundation,
    Inc. has sole voting power and sole dispositive power over
    20,000 shares; Gabelli Group Capital Partners, Inc. has
    sole voting power and sole dispositive power over no shares;
    Gabelli Asset Management Inc. has sole voting power and sole
    dispositive power over 228,200 shares and Mario J. Gabelli
    has sole voting power and sole dispositive power over no shares.
|   
|(3) | The following individuals share voting and
    dispositive powers with respect to the indicated number of
    shares of Common Stock: Mr. Guinn 
    28,342 shares; Mr. Littlefield 
    7,102 shares; and Mr. Welle 
    54,487 shares. All of the other individuals have sole
    voting and dispositive powers with respect to their shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

We maintain the predecessor 1992 Stock Incentive
Plan (the 1992 Plan), the 1996 Plan, and the
Employee ESPP, pursuant to which we may grant equity awards to
eligible persons.

The following table gives information about
equity awards under these plans.

|                                                               |       |                   |            |                  |  |                      |       |     |  |  |    |         | 
|-------------------------------------------------------------- | ----- | ----------------- | ---------- | ---------------- |  | -------------------- | ----- | --- |  |  | -- | ------- | 
|                                                               |       | (a)               |            | (b)              |  | (c)                 
|                                                               |       |                   |            |                  |  |                     
|                                                               |       |                   |            |                  |  | Number of           
|                                                               |       |                   |            |                  |  | Securities          
|                                                               |       | Number of         |            | Weighted-        |  | Remaining Available 
|                                                               |       | Securities to be  |            | Average Exercise |  | for Future Issuance 
|                                                               |       | Issued Upon       |            | Price of         |  | Under Equity        
|                                                               |       | Exercise of       |            | Outstanding      |  | Compensation Plans  
|                                                               |       | Outstanding       |            | Options,         |  | (Excluding          
|                                                               |       | Options, Warrants |            | Warrants and     |  | Securities Reflected
|Plan Category                                                  |       | and Rights        |            | Rights           |  | in Column (a))      
|                                                               |       |                   |            |                  |  |                     
|Equity compensation plans approved by security
    holders     |       |                   | 11,454,928 | (1)              |  | $                    | 16.72 | (2) |  |  | (3 | )(4)(5)
|Equity compensation plans not approved by
    security holders |       |                   | 0          |                  |  | $                    | 0.00  |     |  |  | 0  |        
|                                                               |       |                   |            |                  |  |                      |       |     |  |  |    |        
|                                                               | Total |                   |            | 11,454,928       |  |                      |       |     |  |  |    |         | 



---



|    |                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 24,891 shares under the ESPP and
    11,430,037 shares under the 1992 and 1996 Plans.                                                       
|   
|(2) | Exercise price for the outstanding shares under
    the ESPP was $16.4858.                                                                           
|   
|(3) | At December 31, 2003, there were
    471,026 shares remaining available for future issuance
    under the ESPP.                                      
|   
|(4) | At December 31, 2003, there were no shares
    remaining available for future issuance under the 1992 Plan.                                          
|   
|(5) | At December 31, 2003, there were
    4,773,901 shares remaining available for future issuance of
    non-qualified stock options under the 1996 Plan.






|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

During the last fiscal year, there were no
relationships or related transactions that are required to be
disclosed herein.

83



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##### Table of Contents








|         |                                           
|-------- | ------------------------------------------
|Item 14. | Principal Accountant Fees and
    Services

Aggregate fees billed to Dial by
Deloitte & Touche LLP, the member firms of Deloitte
Touche Tohmatsu, and their respective affiliates were as follows:

|                      |  |      |         |         |  |   |         | 
|--------------------- |  | ---- | ------- | ------- |  | - | ------- | 
|                      |  | 2002 |         | 2003(4)
|                      |  |      |         |        
|Audit Fees            |  | $    | 681,000 |         |  | $ | 723,000 | 
|Audit-Related Fees(1) |  |      | 80,000  |         |  |   | 152,000 | 
|Tax Fees(2)           |  |      | 318,000 |         |  |   | 281,000 | 
|All Other Fees(3)     |  | $    | 12,000  |         |  | $ |        | 



---



|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(1) | Includes fees related to employee benefit plan
    audits in 2002 and 2003 and Sarbanes-Oxley Rule 404 in 2003.
|   
|(2) | Includes fees for tax compliance and consultation.                                                             
|   
|(3) | Includes fees for actuarial consulting.                                                                        
|   
|(4) | 100% of the fees were approved by the Audit
    Committee                                                      

Audit Committee Pre-Approval Procedures for
Independent Auditor-Provided Services

Our Audit Committee must pre-approve all
allowable services provided by our independent auditors and
related fees associated with those services. The following
procedures govern the pre-approval process for audit and
permitted non-audit services provided by our independent
auditors.



| |               
| | --------------
| | Audit Services

Any specific audit service incorporated within
the independent auditors engagement letter approved by the
Audit Committee is deemed pre-approved. The following specific
audit services and estimated fees are identified in the
independent auditors annual service plan approved by our
Audit Committee each March:



| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | Annual audit of Dials consolidated
    financial statements    
|
| |  | Audit services related to Dials quarterly
    Form 10-Q filings
|
| |  | Statutory and regulatory compliance audits                      

The pre-approval requirement is therefore met for
these specific audit services.



| |                                                  
| | -------------------------------------------------
| | Accounting Research and Consultation
    Services

The independent auditors may provide accounting
research and consultation services to assist with analysis and
decision-making and to evaluate the impact on financial
statements of new accounting pronouncements. Estimated fees for
these services are collectively budgeted in the independent
auditors annual service plan under other accounting
research and consultation. Because this line item
represents a broad category of services, specific services
falling within this category must be individually pre-approved.



| |                                                       
| | ------------------------------------------------------
| | Tax Compliance, Consultation and Planning
    Services

Management often requests the independent
auditors to provide advice, consultation and research on various
tax planning and compliance issues. Estimated fees for these
services are collectively budgeted in the independent
auditors annual service plan under tax planning,
consulting and compliance. Because this line item
represents a broad category of services, specific services
falling within this category must be individually pre-approved.

84



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| |                        
| | -----------------------
| | Pre-Approval Procedures

The following pre-approval procedures are
followed for proposed permitted, non-audit services:



| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | Management documents the purpose, scope and
    estimated fees of the proposed service.
|
| |  | Our Audit Committee considers the proposed
    service for approval, including:        



| |   |                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Business purpose                                                                                                                                    
|
| |  | Reasonableness of estimated fees                                                                                                                    
|
| |  | Potential impact on external auditor independence
    (relative to both the service individually and collectively with
    other non-audit services)



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | Approved non-audit services and related fees will
    be noted in meeting minutes of our Audit Committee.



| |                         
| | ------------------------
| | Monitoring and Reporting

At each regular Audit Committee meeting:



| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Audit Committee Chair will review any
    non-audit services and related fees pre-approved subsequent to
    the last committee meeting.                                                                   
|
| |  | Management will summarize independent auditor
    services and fees paid to date and report whether such services
    and fees have been pre-approved in accordance with the required
    pre-approval process.






|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K

(a) Financial Statements and
Schedules

|                                                                                                                                                                 |                                    |                                                                       |    |  |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | --------------------------------------------------------------------- | -- |  | -- | 
|                                                                                                                                                                 |                                    | Page                                                                 
|                                                                                                                                                                 |                                    |                                                                      
|                                                                                                                                                                 | (i) Financial Statements           |                                                                       |    |  |   
|                                                                                                                                                                 |                                    | (1) Independent Auditors Report                                      |    |  | 34 | 
|                                                                                                                                                                 |                                    | (2) Consolidated Financial Statements:                                |    |  |    | 
|Consolidated Balance Sheet at December 31,
    2003, and December 31, 2002                                                                                       |                                    |                                                                       | 35 | 
|Statement of Consolidated Operations and
    Comprehensive Income (Loss) for the years ended
    December 31, 2003, December 31, 2002, and
    December 31, 2001 |                                    |                                                                       | 36 | 
|Statement of Consolidated Cash Flows for the
    years ended December 31, 2003, December 31, 2002, and
    December 31, 2001                                     |                                    |                                                                       | 37 | 
|Statement of Consolidated Stockholders
    Equity for the years ended December 31, 2003,
    December 31, 2002, and December 31, 2001                           |                                    |                                                                       | 38 | 
|Notes to Consolidated Financial Statements                                                                                                                       |                                    |                                                                       | 39 | 
|                                                                                                                                                                 |                                    | (3) Managements Report on Responsibility
    for Financial Reporting |    |  | 64 | 
|                                                                                                                                                                 | (ii) Financial Statement Schedules |                                                                       |    |  |   

Schedules have been omitted because of the
absence of conditions under which they are required or because
the required material information is included in consolidated
financial statements or notes to the consolidated financial
statements included herein.

(b) Reports on Form 8-K

We filed a Current Report on Form 8-K, dated
October 6, 2003, reporting that we issued a press release
relating to the conference call to announce its third quarter
2003 results to be held on Wednesday, October 22, 2003, a
copy of which was furnished as Exhibit 99.

85



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We also filed a Current Report on Form 8-K,
dated October 14, 2003, reporting that we issued a press
release declaring a quarterly dividend on our common stock, a
copy of which was furnished as Exhibit 99.

We also filed a Current Report on Form 8-K,
dated October 21, 2003, reporting that we issued a press
release announcing that our chief executive officer and chief
financial officer would present to the Consumer Analyst Group of
New York, a copy of which was furnished as Exhibit 99.

We also filed a Current Report on Form 8-K,
dated October 22, 2003, reporting that we issued a press
release relating to our financial results for the third quarter
ended September 27, 2003 and its outlook for the balance of
2003, a copy of which was furnished as Exhibit 99.

We also filed a Current Report on Form 8-K,
dated October 27, 2003, reporting that, as previously
announced in our press release dated October 20, 2003, we
would make a presentation to the Consumer Analyst Group of
New York on October 27, 2003, a copy of which was
furnished as Exhibit 99.1.

We also filed a Current Report on Form 8-K,
dated December 15, 2003, reporting that we entered into the
Merger Agreement. A copy of the press release dated
December 15, 2003, announcing the execution of the Merger
Agreement was filed as Exhibit 99.1. A copy of the Merger
Agreement was filed as Exhibit 2.1 and certain other
agreements and documents relating to the Merger were also filed
as exhibits thereto.

We also filed a Current Report on Form 8-K,
dated January 26, 2004, reporting that we issued a press
release relating to our financial results for the fourth quarter
ended December 31, 2003 and full year 2003, a copy of which
was furnished as Exhibit 99.1. We previously announced in a
press release dated January 16, 2004, that we would not
host a conference call to discuss these reported financial
results. A copy of the press release was furnished as
Exhibit 99.2.

We also filed a Current Report on Form 8-K,
dated January 27, 2004, reporting that we issued a press
release declaring a quarterly dividend on our common stock, a
copy of which was filed as Exhibit 99.1.

We also filed a Current Report on Form 8-K,
dated February 4, 2004, reporting that we issued a press
release announcing the record and meeting dates for the special
meeting of stockholders, a copy of which was filed as
Exhibit 99.1.

We also filed a Current Report on Form 8-K,
dated March 4, 2004, reporting that we notified our
directors and executive officers of a temporary suspension of
trading under Dials employee benefits plans and that a
blackout period would be in effect beginning at 4:00 p.m.
EST on March 24, 2004 and ending during the week of
April 12, 2004.

(c) Exhibits

|        |  |                                                                                                                                                   |  |                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                   |  |                                                                                                                         
|Number  |  | Description                                                                                                                                       |  | Method of Filing                                                                                                        
|        |  |                                                                                                                                                   |  |                                                                                                                         
|2       |  | Agreement and Plan of Merger dated as of
    December 14, 2003, by and among, Henkel KGaA, Henkel Merger
    Corporation and The Dial Corporation |  | Incorporated by reference to Exhibit 2.1 of
    the Form 8-K, dated December 15, 2003 (the
    December 15, 2003 8-K).
|3(a)    |  | Restated Certificate of Incorporation of The Dial
    Corporation                                                                                 |  | Incorporated by reference to Exhibit 3(a) of
    Dials Form 10/A (Am. No. 2), dated July 26, 1996
    (the Form 10). 
|3(b)    |  | Bylaws of The Dial Corporation                                                                                                                    |  | Incorporated by reference to Exhibit 3(b) of
    Dials Form 10-Q for the quarter ended July 4, 1998.                   
|4(a)    |  | Form of Rights Agreement between The Dial
    Corporation and the Rights Agent                                                                    |  | Incorporated by reference to Exhibit 4 of
    the Form 10.                                                              
|4(b)    |  | First Amendment to Rights Agreement between The
    Dial Corporation and the Rights Agent                                                         |  | Incorporated by reference to Exhibit 4.1 of
    the December 15, 2003 8-K.                                              

86



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##### Table of Contents



|        |      |                                                                                                                    |                                                                                                                              |                                                                                                                                         |                                                                                                                                          
|------- | ---- | ------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                                                                                                                    |                                                                                                                              |                                                                                                                                        
|Number  |      | Description                                                                                                        |                                                                                                                              | Method of Filing                                                                                                                       
|        |      |                                                                                                                    |                                                                                                                              |                                                                                                                                        
|        | 4(c) |                                                                                                                    | Indenture, dated September 23, 1996, between
    The Dial Corporation and Norwest Bank Arizona, N.A.                         |                                                                                                                                         | Incorporated by reference to Exhibit 4(b) of
    Dials Form 10-K for the fiscal year ended
    December 31, 1998 (the 1998 Form 10-K).
|        | 4(d) |                                                                                                                    | First Supplemental Indenture, dated
    September 23, 1996, between The Dial Corporation and
    Norwest Bank Arizona, N.A.  |                                                                                                                                         | Incorporated by reference to Exhibit 4(c) of
    the 1998 Form 10-K.                                                                     
|        | 4(e) |                                                                                                                    | Second Supplemental Indenture, dated
    August 17, 2001 between The Dial Corporation and Wells
    Fargo Bank Arizona, N.A. |                                                                                                                                         | Incorporated by reference to Exhibit 4.1 of
    the Form 8-K dated August 17, 2001.                                                      
|10(a)   |      | Directors Indemnification
    Agreement+                                                                          |                                                                                                                              | Incorporated by reference to Exhibit 10(a)
    of the Form 10-Q for the quarter ended September 28, 1996
    (the Q3 1996 Form 10-Q).
|10(b)   |      | Officers Indemnification
    Agreement+                                                                           |                                                                                                                              | Incorporated by reference to Exhibit 10(b)
    of the Q3 1996 Form 10-Q.                                                               
|10(c)   |      | The Dial Corporation Future Investment
    Restoration Plan+                                                       |                                                                                                                              | Incorporated by reference to Exhibit 10(d)
    of the Form 10-K for the fiscal year ended December 31,
    2001 (the 2001 Form 10-K).
|10(d)   |      | The Dial Corporation Future Security Restoration
    Plan+                                                         |                                                                                                                              | Incorporated by reference to Exhibit 10(e)
    of the 2001 Form 10-K.                                                                  
|10(e)   |      | The Dial Corp 1992 Stock Incentive Plan+*                                                                          |                                                                                                                              |                                                                                                                                        
|10(f)   |      | Amendment to the Dial Corp 1992 Stock Incentive
    Plan+*                                                         |                                                                                                                              |                                                                                                                                        
|10(g)   |      | The Dial Corporation Amended & Restated 1996
    Stock Incentive Plan+                                             |                                                                                                                              | Incorporated by reference to Exhibit 10(e)
    of the Form 10-K for the fiscal year ended
    December 31, 2002 (the 2002 Form 10-K).
|10(h)   |      | Amendment to The Dial Corporation
    Amended & Restated 1996 Stock Incentive Plan dated
    December 14, 2003+*   |                                                                                                                              |                                                                                                                                        
|10(i)   |      | Annual Incentive Plan Agreement+                                                                                   |                                                                                                                              | Incorporated by reference to Exhibit 10(f)
    of the Form 10-K for the fiscal year ended December 28,
    1996.                       
|10(j)   |      | Form of The Dial Corporation Directors
    Charitable Award Program+                                              |                                                                                                                              | Incorporated by reference to Exhibit 10(f)
    of the Form 10.                                                                         
|10(k)   |      | Form of Change of Control Agreements with certain
    Executive Officers of The Dial Corporation+                  |                                                                                                                              | Incorporated by reference to Exhibit 10(h)
    of the 1998 Form 10-K.                                                                  
|10(l)   |      | Form of Amendment to Change of Control Agreements
    with certain Executive Officers of The Dial
    Corporation+ |                                                                                                                              | Incorporated by reference to Exhibit 10.1 of
    the December 15, 2003 8-K.                                                            
|10(m)   |      | Form of Employment Agreement with certain
    Executive Officers of The Dial Corporation+                          |                                                                                                                              | Incorporated by reference to Exhibit 10.2 of
    the December 15, 2003 8-K.                                                            
|10(n)   |      | The Dial Corporation Benefits Protection Trust
    for Change-In-Control Arrangements +                            |                                                                                                                              | Incorporated by reference to Exhibit 10(a)
    of the Form 10-Q for the quarter ended March 30, 2002.                                  
|10(o)   |      | Credit Agreement                                                                                                   |                                                                                                                              | Incorporated by reference to Exhibit 10(j)
    of the 2002 Form 10-K.                                                                  
|10(p)   |      | Temporary Waiver Agreement for Credit Agreement
    dated December 23, 2003*                                       |                                                                                                                              |                                                                                                                                        
|10(q)   |      | Form of The Dial Corporation Employee Equity Trust                                                                 |                                                                                                                              | Incorporated by reference to Exhibit 10(k)
    of the Form 10.                                                                         

87



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|                    |  |                                                                                                                                            |  |                                                                                                  
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------
|Exhibit             |  |                                                                                                                                            |  |                                                                                                  
|Number              |  | Description                                                                                                                                |  | Method of Filing                                                                                 
|                    |  |                                                                                                                                            |  |                                                                                                  
|10(r)               |  | The Dial Corporation Amended and Restated
    Directors Deferred Compensation Plan+                                                        |  | Incorporated by reference to Exhibit 10(k)
    of the 2001 Form 10-K.                            
|10(s)               |  | Amendment to The Dial Corporation Amended &
    Restated Directors Deferred Compensation Plan+*                                            |  |                                                                                                  
|10(t)               |  | The Dial Corporation Amended and Restated
    Management Deferred Compensation Plan+                                                       |  | Incorporated by reference to Exhibit 10(l)
    of the 2001 Form 10-K.                            
|10(u)               |  | Amended and Restated Employment Agreement, dated
    as of December 14, 2003, by and between The Dial
    Corporation and Herbert M. Baum+ |  | Incorporated by reference to Exhibit 10.3 of
    the December 15, 2003 8-K.                      
|10(v)               |  | Letter Agreement among Henkel KGaA, The Dial
    Corporation and Herbert M. Baum, dated as of December 14,
    2003+                       |  | Incorporated by reference to Exhibit 10.4 of
    the December 15, 2003 8-K.                      
|10(x)               |  | Employment Agreement with Richard F. Theiler
    dated March 22, 2003.                                                                     |  | Incorporated by reference to Exhibit 10.2 of
    the 10-Q/A for the quarter ended March 29, 2003.
|21                  |  | List of Significant Subsidiaries*                                                                                                          |  |                                                                                                  
|23                  |  | Consent of Deloitte & Touche LLP*                                                                                                          |  |                                                                                                  
|24                  |  | Power of Attorney                                                                                                                          |  | See Signature Page.                                                                              
|31(a) and
    31(b) |  | Certifications pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002+#                                                             |  |                                                                                                  
|32(a) and
    32(b) |  | Certifications pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002+#                                                             |  |                                                                                                  
|99(a)               |  | Code of Ethics & Business
    Responsibilities                                                                                             |  | Incorporated by reference to Exhibit 99(c)
    of the 2002 Form 10-K.                            
|99(b)               |  | Corporate Governance Guidelines                                                                                                            |  | Incorporated by reference to Exhibit 99(d)
    of the 2002 Form 10-K.                            



---

+Management
contract or compensatory plan or arrangement.



|  |                
|- | ---------------
|* | Filed herewith.

#Furnished
herewith.

88



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##### Table of Contents



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 Scottsdale, Arizona, on
March 10, 2004.



| |                     
| | --------------------
| | THE DIAL CORPORATION



| |     |                    
| | --- | -------------------
| | By: | /s/ HERBERT M. BAUM

| |                                          
| | -----------------------------------------
| |                                          
| | Herbert M. Baum                          
| | Chairman of the Board,                   
| | President and Chief Executive
    Officer

KNOW ALL PERSONS BY THESE PRESENT that the
persons whose signatures appear below, constitute and appoint
Herbert M. Baum and Conrad A. Conrad, and each of them, as their
true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for them and in their names,
places and steads, in any and all capacities, to sign the Annual
Report on Form 10-K for the fiscal year ended
December 31, 2003, and any and all amendments to the
Form 10-K, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every
act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as they might or
could do in person, thereby ratifying and confirming all that
said attorney-in-fact and agent, or any of them, or their or his
or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.

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 as of March 10, 2004.

|                                       |  |                                                                                                |  | 
|-------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | 
|                                       |  |                                                                                               
|Signature                              |  | Title                                                                                         
|                                       |  |                                                                                               
|                                      
|/s/ HERBERT M. BAUMHerbert M. Baum     |  | Chairman of the Board, President and
    Chief Executive Officer (Principal Executive Officer)
|                                      
|/s/ CONRAD A. CONRADConrad A. Conrad   |  | Executive Vice President and Chief Financial
    Officer (Principal Financial Officer)        
|                                      
|/s/ JOHN F. TIERNEYJohn F. Tierney     |  | Senior Vice President and Controller
    (Principal Accounting Officer)                       
|                                      
|/s/ JOY A. AMUNDSONJoy A. Amundson     |  | Director                                                                                      
|                                      
|/s/ JOE T. FORDJoe T. Ford             |  | Director                                                                                      
|                                      
|/s/ THOMAS L. GOSSAGEThomas L. Gossage |  | Director                                                                                      
|                                      
|/s/ DONALD E. GUINNDonald E. Guinn     |  | Director                                                                                      

89



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##### Table of Contents



|                                                 |  |          |  | 
|------------------------------------------------ |  | -------- |  | 
|                                                 |  |         
|Signature                                        |  | Title   
|                                                 |  |         
|                                                
|/s/ GEORGE J. HARADGeorge J. Harad               |  | Director
|                                                
|/s/ JAMES E. OESTERREICHERJames E. Oesterreicher |  | Director
|                                                
|/s/ MICHAEL T. RIORDANMichael T. Riordan         |  | Director
|                                                
|/s/ BARBARA S. THOMASBarbara S. Thomas           |  | Director
|                                                
|/s/ SALVADOR M. VILLARSalvador M. Villar         |  | Director

90



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##### Table of Contents



EXHIBIT INDEX

|        |      |                                                                                                                  |                                                                                                                                                 |                                                                                                                                         |                                                                                                                                          
|------- | ---- | ---------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                                                                                                                  |                                                                                                                                                 |                                                                                                                                        
|Number  |      | Description                                                                                                      |                                                                                                                                                 | Method of Filing                                                                                                                       
|        |      |                                                                                                                  |                                                                                                                                                 |                                                                                                                                        
|        | 2    |                                                                                                                  | Agreement and Plan of Merger dated as of
    December 14, 2003 by and among Henkel KGaA, Henkel Merger
    Corporation and The Dial Corporation |                                                                                                                                         | Incorporated by reference to Exhibit 2.1 of
    the Form 8-K, dated December 15, 2003 (the
    December 15, 2003 8-K).                 
|        | 3(a) |                                                                                                                  | Restated Certificate of Incorporation of The Dial
    Corporation                                                                               |                                                                                                                                         | Incorporated by reference to Exhibit 3(a) of
    Dials Form 10/A (Am. No. 2), dated July 26, 1996
    (the Form 10).                  
|        | 3(b) |                                                                                                                  | Bylaws of The Dial Corporation                                                                                                                  |                                                                                                                                         | Incorporated by reference to Exhibit 3(b) of
    Dials Form 10-Q for the quarter ended July 4, 1998.                                    
|        | 4(a) |                                                                                                                  | Form of Rights Agreement between The Dial
    Corporation and the Rights Agent                                                                  |                                                                                                                                         | Incorporated by reference to Exhibit 4 of
    the Form 10.                                                                               
|        | 4(b) |                                                                                                                  | First Amendment to Rights Agreement between The
    Dial Corporation and the Rights Agent                                                       |                                                                                                                                         | Incorporated by reference to Exhibit 4.1 of
    the December 15, 2003 8-K.                                                               
|        | 4(c) |                                                                                                                  | Indenture, dated September 23, 1996, between
    The Dial Corporation and Norwest Bank Arizona, N.A.                                            |                                                                                                                                         | Incorporated by reference to Exhibit 4(b) of
    Dials Form 10-K for the fiscal year ended
    December 31, 1998 (the 1998 Form 10-K).
|        | 4(d) |                                                                                                                  | First Supplemental Indenture, dated
    September 23, 1996, between The Dial Corporation and
    Norwest Bank Arizona, N.A.                     |                                                                                                                                         | Incorporated by reference to Exhibit 4(c) of
    the 1998 Form 10-K.                                                                     
|        | 4(e) |                                                                                                                  | Second Supplemental Indenture, dated
    August 17, 2001 between The Dial Corporation and Wells
    Fargo Bank Arizona, N.A.                    |                                                                                                                                         | Incorporated by reference to Exhibit 4.1 of
    the Form 8-K dated August 17, 2001.                                                      
|10(a)   |      | Directors Indemnification
    Agreement+                                                                        |                                                                                                                                                 | Incorporated by reference to Exhibit 10(a)
    of the Form 10-Q for the quarter ended September 28, 1996
    (the Q3 1996 Form 10-Q).
|10(b)   |      | Officers Indemnification
    Agreement+                                                                         |                                                                                                                                                 | Incorporated by reference to Exhibit 10(b)
    of the Q3 1996 Form 10-Q.                                                               
|10(c)   |      | The Dial Corporation Future Investment
    Restoration Plan+                                                     |                                                                                                                                                 | Incorporated by reference to Exhibit 10(d)
    of the Form 10-K for the fiscal year ended December 31,
    2001 (the 2001 Form 10-K).
|10(d)   |      | The Dial Corporation Future Security Restoration
    Plan+                                                       |                                                                                                                                                 | Incorporated by reference to Exhibit 10(e)
    of the 2001 Form 10-K.                                                                  
|10(e)   |      | The Dial Corp 1992 Stock Incentive Plan+*                                                                        |                                                                                                                                                 |                                                                                                                                        
|10(f)   |      | Amendment to the Dial Corp 1992 Stock Incentive
    Plan+*                                                       |                                                                                                                                                 |                                                                                                                                        
|10(g)   |      | The Dial Corporation Amended & Restated 1996
    Stock Incentive Plan+                                           |                                                                                                                                                 | Incorporated by reference to Exhibit 10(e)
    of the Form 10-K for the fiscal year ended
    December 31, 2002 (the 2002 Form 10-K).
|10(h)   |      | Amendment to The Dial Corporation
    Amended & Restated 1996 Stock Incentive Plan dated
    December 14, 2003+* |                                                                                                                                                 |                                                                                                                                        
|10(i)   |      | Annual Incentive Plan Agreement+                                                                                 |                                                                                                                                                 | Incorporated by reference to Exhibit 10(f)
    of the Form 10-K for the fiscal year ended December 28,
    1996.                       
|10(j)   |      | Form of The Dial Corporation Directors
    Charitable Award Program+                                            |                                                                                                                                                 | Incorporated by reference to Exhibit 10(f)
    of the Form 10.                                                                         

91



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##### Table of Contents



|                    |  |                                                                                                                                            |  |                                                                                                      
|------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------
|Exhibit             |  |                                                                                                                                            |  |                                                                                                      
|Number              |  | Description                                                                                                                                |  | Method of Filing                                                                                     
|                    |  |                                                                                                                                            |  |                                                                                                      
|10(k)               |  | Form of Change of Control Agreements with certain
    Executive Officers of The Dial Corporation+                                          |  | Incorporated by reference to Exhibit 10(h)
    of the 1998 Form 10-K.                                
|10(l)               |  | Form of Amendment to Change of Control Agreements
    with certain Executive Officers of The Dial
    Corporation+                         |  | Incorporated by reference to Exhibit 10.1 of
    the December 15, 2003 8-K.                          
|10(m)               |  | Form of Employment Agreement with certain
    Executive Officers of The Dial Corporation+                                                  |  | Incorporated by reference to Exhibit 10.2 of
    the December 15, 2003 8-K.                          
|10(n)               |  | The Dial Corporation Benefits Protection Trust
    for Change-In-Control Arrangements +                                                    |  | Incorporated by reference to Exhibit 10(a)
    of the Form 10-Q for the quarter ended March 30, 2002.
|10(o)               |  | Credit Agreement                                                                                                                           |  | Incorporated by reference to Exhibit 10(j)
    of the 2002 Form 10-K.                                
|10(p)               |  | Temporary Waiver Agreement for Credit Agreement
    dated December 23, 2003*                                                               |  |                                                                                                      
|10(q)               |  | Form of The Dial Corporation Employee Equity Trust                                                                                         |  | Incorporated by reference to Exhibit 10(k)
    of the Form 10.                                       
|10(r)               |  | The Dial Corporation Amended and Restated
    Directors Deferred Compensation Plan+                                                        |  | Incorporated by reference to Exhibit 10(k)
    of the 2001 Form 10-K.                                
|10(s)               |  | Amendment to The Dial Corporation Amended &
    Restated Directors Deferred Compensation Plan+*                                            |  |                                                                                                      
|10(t)               |  | The Dial Corporation Amended and Restated
    Management Deferred Compensation Plan+                                                       |  | Incorporated by reference to Exhibit 10(l)
    of the 2001 Form 10-K.                                
|10(u)               |  | Amended and Restated Employment Agreement, dated
    as of December 14, 2003, by and between The Dial
    Corporation and Herbert M. Baum+ |  | Incorporated by reference to Exhibit 10.3 of
    the December 15, 2003 8-K.                          
|10(v)               |  | Letter Agreement among Henkel KGaA, The Dial
    Corporation and Herbert M. Baum, dated as of December 14,
    2003+                       |  | Incorporated by reference to Exhibit 10.4 of
    the December 15, 2003 8-K.                          
|10(x)               |  | Employment Agreement with Richard F. Theiler
    dated March 22, 2003.                                                                     |  | Incorporated by reference to Exhibit 10.2 of
    the 10-Q/A for the quarter ended March 29, 2003.    
|21                  |  | List of Significant Subsidiaries*                                                                                                          |  |                                                                                                      
|23                  |  | Consent of Deloitte & Touche LLP*                                                                                                          |  |                                                                                                      
|24                  |  | Power of Attorney                                                                                                                          |  | See Signature Page.                                                                                  
|31(a) and
    31(b) |  | Certifications pursuant to Section 302 of
    the Sarbanes-Oxley Act of 2002+#                                                             |  |                                                                                                      
|32(a) and
    32(b) |  | Certifications pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002+#                                                             |  |                                                                                                      
|99(a)               |  | Code of Ethics & Business
    Responsibilities                                                                                             |  | Incorporated by reference to Exhibit 99(c)
    of the 2002 Form 10-K.                                
|99(b)               |  | Corporate Governance Guidelines                                                                                                            |  | Incorporated by reference to Exhibit 99(d)
    of the 2002 Form 10-K.                                



---

+Management
contract or compensatory plan or arrangement.



|  |                
|- | ---------------
|* | Filed herewith.

#Furnished
herewith.

92