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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,
2001

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, $.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

As of March 2, 2002, 94,854,558 shares of
Dials common stock were outstanding and the aggregate
market value of the common stock (based on its closing price on
such date) held by nonaffiliates was approximately $1.6 billion.

Documents Incorporated by Reference

Portions of Dials proxy statement relating
to the 2002 annual meeting of stockholders to be held on
June 6, 2002, have been incorporated by reference into
Part III, Items 10, 11 and 12 of this Form 10-K.



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TABLE OF CONTENTS



|           |                                                                                               |  |  |  |  |  |  | 
|---------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|           | Item 1. Business                                                                             
|           | Item 2. Properties                                                                           
|           | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II   
|           | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|           | Item 6. Selected Financial and Other Data                                                    
|           | Item 7. Managements Discussion and Analysis of Results of Operations and Financial Condition
|           | Item 7A. Quantitative and Qualitative Disclosure About Market Risk                           
|           | Item 8. Financial Statements and Supplementary Data                                          
|           | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|           | Item 10. Directors and Executive Officers of the Registrant                                  
|           | Item 11. Executive Compensation                                                              
|           | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|           | Item 13. Certain Relationships and Related Transactions                                      
|PART IV   
|           | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES
|EX-10(i)  
|Ex-10(k)  
|EX-10(l)  
|EX-21     
|EX-23     



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TABLE OF CONTENTS

|         |  |                                                                                        |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                        |  | Page
|         |  |                                                                                        |  |     
|PART I  
|Item 1   |  | Business                                                                               |  |      | 1  | 
|Item 2   |  | Properties                                                                             |  |      | 9  | 
|Item 3   |  | Legal Proceedings                                                                      |  |      | 10 | 
|Item 4   |  | Submission of Matters to a Vote of Security
	Holders                                   |  |      | 11 | 
|PART II 
|Item 5   |  | Market for Registrants Common Equity and
	Related Stockholder Matters                 |  |      | 11 | 
|Item 6   |  | Selected Financial and Other Data                                                      |  |      | 11 | 
|Item 7   |  | Managements Discussion and Analysis of
	Results of Operations and Financial Condition |  |      | 14 | 
|Item 7A  |  | Quantitative and Qualitative Disclosure About
	Market Risk                             |  |      | 30 | 
|Item 8   |  | Financial Statements and Supplementary Data                                            |  |      | 33 | 
|Item 9   |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure  |  |      | 64 | 
|PART III
|Item 10  |  | Directors and Executive Officers of the Registrant                                     |  |      | 64 | 
|Item 11  |  | Executive Compensation                                                                 |  |      | 67 | 
|Item 12  |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |      | 67 | 
|Item 13  |  | Certain Relationships and Related Transactions                                         |  |      | 68 | 
|PART IV 
|Item 14  |  | Exhibits, Financial Statement Schedules and
	Reports on Form 8-K                       |  |      | 68 | 

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PART I

Unless otherwise indicated the industry data
contained herein are derived from publicly available industry
trade journals and reports, including, with respect to market
rank and market share, reports published by AC Nielsen, and
other publicly available sources which we have not independently
verified but which we believe to be reliable. A substantial
portion of our sales is made to Wal-Mart and to club and dollar
stores. However, consumer purchases in these stores are not
included in market share resources such as those provided by
Information Resources, Inc. and AC Nielsen. Unless otherwise
noted, all market share data as of any particular date are as of
the 52 weeks then ended and are based upon sales in the
U.S. market. Soap and detergent products are measured by ounces
sold. Air fresheners and canned meats are measured by units
sold.

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 operating income will be break even in
Argentina in 2002 in light of the recent currency devaluation
and deteriorating economic conditions in Argentina; our belief
that the new licensing arrangement in Mexico will contribute
positively to our operating income; our belief that we have
ample resources for raw materials; 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 the EEOC
litigation will not have a material adverse effect on our
operating results or financial condition; our belief that
liabilities from other legal claims, after taking into account
amounts already accrued and potential insurance recovery, should
not have a material adverse effect on our financial position,
cash flows or operating results; the possibility that we may
become part of a larger company; our belief that we will be
required to record an impairment charge in Argentina in the
first quarter of 2002 as a result of new accounting rules; and
our outlook for 2002 included in Item 7.
Managements Discussion and Analysis of Results of
Operations and Financial Condition  Recent
Developments  2002 Outlook. 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 in this Form 10-K.




Item 1.     Business

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.

For organizational, marketing and financial
reporting purposes, our business is organized into three
segments: Domestic Branded, International and Commercial Markets
and Other. Information concerning the net sales, operating
income and assets of each of our business segments is set forth
in Note 18 to the

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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:


|                             |       |      |    |      |   |      |    |     |   |  |    |     |  
|---------------------------- | ----- | ---- | -- | ---- | - | ---- | -- | --- | - |  | -- | --- | -
|                             |       | 2001 |    | 2000 |   | 1999
|                             |       |      |    |      |   |     
|Domestic Branded             |       |      | 84 | %    |   |      | 84 | %   |   |  | 86 | %  
|International                |       |      | 12 | %    |   |      | 12 | %   |   |  | 10 | %  
|Commercial Markets and Other |       |      | 4  | %    |   |      | 4  | %   |   |  | 4  | %  
|                             |       |      |    |      |   |      |    |     |   |  |    |    
|                             | Total |      |    | 100  | % |      |    | 100 | % |  |    | 100 | %
|                             |       |      |    |      |   |      |    |     |   |  |    |    

We sold our Specialty Personal Care business in
the third quarter of 2001. Accordingly, certain historical
amounts and percentages disclosed in this Form 10-K have
been restated to reflect our reporting of the Specialty Personal
Care business as a discontinued operation in the accompanying
consolidated financial statements. See
Business  Sale of Specialty Personal Care
Business.

Domestic Branded

Our Domestic Branded business segment is
comprised of four franchises:



| |   |                    
| | - | -------------------
| |  | Personal Cleansing,
|
| |  | Laundry Care,      
|
| |  | Air Fresheners, and
|
| |  | Food Products.     

Within our Domestic Branded business segment, we
have chosen to focus our marketing and product development
efforts on the Dial, Purex, Renuzitand Armourbrands. The following table sets forth the percentage of net
sales represented by each franchise within the Domestic Branded
segment:

|                   |       |      |    |      |   |      |    |     |   |  |    |     |  
|------------------ | ----- | ---- | -- | ---- | - | ---- | -- | --- | - |  | -- | --- | -
|                   |       | 2001 |    | 2000 |   | 1999
|                   |       |      |    |      |   |     
|Personal Cleansing |       |      | 30 | %    |   |      | 30 | %   |   |  | 31 | %  
|Laundry Care       |       |      | 39 | %    |   |      | 37 | %   |   |  | 35 | %  
|Air Fresheners     |       |      | 16 | %    |   |      | 17 | %   |   |  | 16 | %  
|Food Products      |       |      | 15 | %    |   |      | 16 | %   |   |  | 18 | %  
|                   |       |      |    |      |   |      |    |     |   |  |    |    
|                   | Total |      |    | 100  | % |      |    | 100 | % |  |    | 100 | %
|                   |       |      |    |      |   |      |    |     |   |  |    |    

Personal
Cleansing

Our Personal Cleansing franchise includes Dialand Liquid Dial® soaps and body washes,
and Coast®, Tone® and
Pure & Natural® soaps. Our subsidiary,
ISC International, Ltd., a manufacturer of translucent soaps, is
also included in the Personal Cleansing franchise. At
December 31, 2001, our Dialand other soap products
had a 20% market share, measured in ounces sold, in the
$2.0 billion U.S. soap category. Based on ounces sold,
Dialwas Americas leading bar soap and
antibacterial bar soap and the second leading liquid soap and
antibacterial liquid soap as of December 31, 2001.

Laundry
Care

Our Laundry Care franchise includes
Purex® detergents, bleach and fabric
softeners, Zout® stain remover,
Trend® detergent,
Borateem® bleach, Vano®
and Sta-Flo® starches,
Boraxo® soap and 20 Mule
Team® borax, and Fels Naptha®
laundry soap. During 2001, we discontinued our La
France® brand laundry brightener. As of
December 31, 2001, Purexheld the number two market
share position with a 10% share, measured in ounces sold, in the
$5.0 billion U.S. laundry detergent market.

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Air
Fresheners

Our Air Fresheners franchise includes a wide
variety of air freshener forms and fragrances marketed under the
Renuzit® brand, includingLongLast
Adjustable® solid air fresheners,RoomMate® air fresheners,AromaSense® candles and aerosols and Fresh
Elements® aerosols. The brand is well positioned in
both the problem-solution and home fragrancing segments of the
U.S. air freshener category. As of December 31, 2001,
Renuzitwas the second leading brand with an 18% market
share, measured in units sold, in the $1.2 billion U.S. air
freshener market.

Food
Products

Our Food Products franchise includes Armourand Armour Star® canned meats, chili,
hashes and meat spreads and Cream®
cornstarch. Our Armourbranded products are concentrated
in the profitable canned meat market segment. At
December 31, 2001, Armourwas the number two
national brand of canned meats with an 18% market share,
measured in units sold, and was the U.S. market leader in
the Vienna sausage, potted meat and sliced dried beef segments,
measured in units sold.

International

We distribute products in more than 50 countries.
We have focused our international efforts in Argentina, Canada,
Puerto Rico and the Caribbean. During 2001, 2000 and 1999
approximately 89%, 86% and 75%, respectively, of our
International sales came from these markets.

In the second quarter of 2000, Dial Argentina
S.A., our wholly owned subsidiary, acquired Plusbelle S.A.,
a manufacturer and marketer of personal care products in
Argentina, from Revlon, Inc. We believe that this acquisition
has further established our position in one of Latin
Americas largest consumer markets in Mercosur, a regional
trading bloc with more than 230 million consumers in
Argentina and neighboring countries, including Brazil, Paraguay,
Uruguay and Chile.

In Argentina, as of December 31, 2001, Dial
Argentinas Plusbelle® brand held the
number one position in hair care products based upon units sold.
Dial Argentina also held the number three position in laundry
detergents with its Zorro®,
Enzimax® and Limzul®
brands, the number two position in laundry bars with its
Gran Federal® and Gran
Llauro® brands, the number three position in dish
detergents with its Cristal® and Zorrobrands and the number three position in bar soaps with its
Limol® and Campos Verdes®
brands.

In 2001, Argentina accounted for approximately
8.4% of our total net sales and incurred a net operating loss of
approximately $4.3 million, excluding special charges of
$2.0 million relating to the consolidation of manufacturing
plants. In light of the devaluation of the Argentine Peso and
the deteriorating economic conditions in Argentina, we believe
that sales and operating results in Argentina will be adversely
impacted. Contingency planning is in place in the form of
reducing manufacturing, marketing, and administrative expenses
to try to limit Argentinas impact on our earnings.
However, the situation in Argentina is changing rapidly, and it
is difficult to predict with certainty the adverse impact that
Argentina will have on our net sales and operating results in
2002.

In Canada, Purexis the number two brand
of liquid laundry detergent, Liquid Dialis the number
three brand of antibacterial liquid soap and we market three of
the top ten items within the growing body wash products
category. In Puerto Rico, Purexliquid holds the number
three market position among liquid laundry detergents.

In Mexico, we closed our manufacturing facility
in the fourth quarter of 2001 and moved to a licensing
arrangement with Consupharma S.A. de C.V., who previously
served as our distributor in Mexico, in the first quarter of
2002. Under this licensing arrangement, we have licensed our
Dial, Breckand Renuzit trademarks to Consupharma
in exchange for a royalty based upon net sales. As a result, we
will not record sales in Mexico in 2002, but instead will record
royalty income. Although this licensing arrangement will reduce
the amount of sales we record as a company, we expect that this
arrangement will contribute positively to our operating income.
Sales in Mexico were $9.5 million, $15.6 million and
$24.4 million in 2001, 2000 and 1999, respectively.

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Commercial Markets and Other

Our Commercial Markets and Other business segment
sells a broad range of branded products through various
channels, including amenity products to hotels, soap and
cleaning products to healthcare and janitorial customers as well
as a full line of Dial Corporation products to government
agencies such as correctional facilities, schools and the
military. We believe that the strong equity in our brands, such
as Dial, Purex, Renuzit, Armour and Boraxo, provides an
advantage and point of difference, as most commercial market
competitors do not have a consumer-recognized brand.

In addition, this business segment includes sales
of soap pellets and chemicals, principally glycerin and fatty
acids, which are by-products of the soap making process.

Sale of Specialty Personal Care
Business

On August 28, 2001, we completed the sale of
our Specialty Personal Care (SPC) business. This
business segment included a variety of skin, hair, bath, body
and foot care products sold under the Freeman, Sarah Michaelsand Natures Accents® brand names.
The sale of SPC was in line with our strategy to fix or jettison
under-performing businesses. 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
losses. Proceeds from the sale were 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 SPC 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. As of 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 will record the $2.0 million
plus interest received as a reduction of the loss recognized on
the sale of the SPC business.

As a result of the loss recognized on the sale,
we recorded a current tax benefit of approximately
$40.0 million. This tax benefit resulted in cash savings in
the third and fourth quarters of 2001 and is expected to result
in continuing cash savings into the first and second quarters of
2002. The loss on the sale of SPC is primarily comprised of the
write-off of goodwill and inventories. In addition, the sale
resulted in approximately $75.9 million in capital losses
for which no tax benefits were provided. We will realize
benefits from this capital loss only to the extent that we
generate capital gains in the future.

Net sales of the discontinued SPC business in
2001 up to the date of the sale were $31.1 million. As of
December 31, 2001, our balance sheet included approximately
$1.2 million in net receivables, $6.8 million in trade
accounts payable and $19.0 million in accrued liabilities,
sales returns, lease obligations and other exit costs related to
the SPC business that were not assumed by the purchaser as a
result of the sale.

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 SPC business as a
discontinued operation.

Discontinuation of Dial/ Henkel Joint
Ventures

In April 1999, we formed Dial/ Henkel LLC, a
joint venture with Henkel KGaA of Düsseldorf, Germany. Dial
and Henkel each own 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 Cleanerhome dry cleaning business
and launched the Purex Advancedlaundry detergent line.

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In March 2000, we formed another joint venture
with Henkel named Dial/ Henkel Mexico S.A. de C.V. Henkel owned
51% and Dial 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 or consumer detergents
and household cleaning products in Mexico.

During the third quarter of 2000, the Dial/
Henkel LLC joint venture decided to discontinue operations of
Purex Advanced. Our portion of the loss on disposal of
Purex Advanced is $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 Cleanerbusiness. Our
$7.5 million share of this charge consisted of recording
inventory at net realizable value and writing down impaired
goodwill and deferred tax assets.

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 as
part of the previously announced special charges. In 2000, the
Dial/ Henkel Mexico joint venture had $32.7 million in
sales and our share of the operating loss was $0.5 million.

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

We account for our investments in the joint
ventures under the equity method of accounting. Our
$3.0 million share of the joint ventures net income
in 2001 resulted primarily from lower than expected exit costs
associated with the discontinued Purex Advancedbusiness,
offset in part by exit costs related to the discontinuation of
the Custom Cleanerbusiness in the third quarter of 2001.
In 2000, the two Dial/ Henkel joint ventures resulted in net
losses to Dial of $7.1 million excluding special charges
and $37.6 million including special charges. A detailed
discussion of the financial impact of these joint ventures and
related special charges to us is included in Note 6 to the
Consolidated Financial Statements included in this
Form 10-K.

Customers

Our products are sold throughout the United
States primarily through supermarkets, mass merchandisers, drug
stores, membership club stores and other outlets. Generally, our
payment terms to customers are 30 days. 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 2001,
2000 or 1999.

|                                                            |  |      |    |      |  |      |    |   |  |  |    |  
|----------------------------------------------------------- |  | ---- | -- | ---- |  | ---- | -- | - |  |  | -- | -
|                                                            |  | 2001 |    | 2000 |  | 1999
|                                                            |  |      |    |      |  |     
|Wal-Mart                                                    |  |      | 24 | %    |  |      | 20 | % |  |  | 20 | %
|Remaining top ten customers                                 |  |      | 26 | %    |  |      | 26 | % |  |  | 29 | %
|                                                            |  |      |    |      |  |      |    |   |  |  |    |  
|Sales to top ten customers as a percent of total
	net sales |  |      | 50 | %    |  |      | 46 | % |  |  | 49 | %
|                                                            |  |      |    |      |  |      |    |   |  |  |    |  

Our products are also sold internationally
through the same outlets, principally in Argentina, Canada,
Puerto Rico and the Caribbean. Payment terms for international
customers range from 30 to 90 days.

Sales

In 2001, 2000 and 1999, 88%, 88% and 90%,
respectively, of our sales were in the United States. Our
customers are served by a national sales organization of
approximately 150 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 broker sales organization that
we changed in

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2001 and represented approximately 22%, 20% and
21% of our U.S. net sales in 2001, 2000 and 1999, respectively.


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

|       |                      |      |      |       |   |      |      |       |   |  |      |       |  
|------ | -------------------- | ---- | ---- | ----- | - | ---- | ---- | ----- | - |  | ---- | ----- | -
|       |                      | 2001 |      | 2000  |   | 1999
|       |                      |      |      |       |   |     
|Food   |                      |      | 42.1 | %     |   |      | 44.3 | %     |   |  | 45.9 | %    
|Mass   |                      |      | 36.9 | %     |   |      | 34.6 | %     |   |  | 35.4 | %    
|Dollar |                      |      | 8.0  | %     |   |      | 7.3  | %     |   |  | 5.9  | %    
|Club   |                      |      | 3.5  | %     |   |      | 3.2  | %     |   |  | 4.5  | %    
|Drug   |                      |      | 3.0  | %     |   |      | 3.2  | %     |   |  | 3.1  | %    
|Other  |                      |      | 6.5  | %     |   |      | 7.4  | %     |   |  | 5.2  | %    
|       |                      |      |      |       |   |      |      |       |   |  |      |      
|       | Total U.S. net sales |      |      | 100.0 | % |      |      | 100.0 | % |  |      | 100.0 | %
|       |                      |      |      |       |   |      |      |       |   |  |      |      

Internationally, our customers are served by
salespeople at two foreign subsidiaries and two foreign sales
offices, consisting of approximately 60 employees. In addition,
independent distributors also serve some regions. Our subsidiary
in Mexico is planning to close its foreign sales office in early
2002 as we move to a licensing agreement. For further discussion
of our licensing arrangement, see Business 
International.

Promotion and Advertising

A significant portion of our revenues are
expended for trade promotion and advertising of our products. We
believe that these expenditures are necessary to maintain and
increase market shares in an industry highly dependent on
quality, consumer trends and product image. The following table
sets forth the amount of these expenses in millions and as a
percent of our total net sales:

|                                         |  |      |       |      |  |      |       |   |  |   |       |  
|---------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                         |  | 2001 |       | 2000 |  | 1999
|                                         |  |      |       |      |  |     
|Trade promotion and advertising expenses |  | $    | 453.3 |      |  | $    | 418.6 |   |  | $ | 411.6 |  
|As a percentage of net sales             |  |      | 27    | %    |  |      | 27    | % |  |   | 26    | %

In 2001 we adjusted our list prices and trade
promotion spending on certain Laundry Care and Personal
Cleansing products. These adjustments decreased list prices and
reduced corresponding trade spending by $28.8 million and
$9.8 million, respectively, in 2001. Because these are
one-for-one price and spending reductions, there was no impact
to our net income. Due to the required adoption of new
accounting guidance, there will be a substantial change in how
we account for trade promotion expenses in 2002. See further
discussion in Item 7. Managements Discussion
and Analysis of Results of Operations and Financial
Condition  Recent Accounting Pronouncements in
this Form 10-K.

Distribution

We ship product from five warehouses located at
or near our domestic manufacturing and assembly facilities and
four domestic regional distribution centers. The regional
warehouses are operated by third parties, except for one
warehouse that we lease and operate. We use outside carriers to
transport our products.

We have a just-in-time inventory management
program of continuous, automatic replenishment of certain of our
trade customers inventories. The primary objective of this
program is to improve service to our customers and reduce costs
by shortening the order-to-delivery pipeline. This occurs by
anticipating customer needs based on historical sales, shipping
the product just before those needs arise and eliminating
redundancy, errors and interruption throughout the replenishment
process. Sales under this program accounted for approximately
18%, 18% and 17% of our net sales in 2001, 2000 and 1999,
respectively.

Suppliers

We rely on a number of third parties for research
and development, manufacturing and packaging. Many of our
arrangements with respect to new products contain limited mutual
exclusivity provisions. This is

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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 sourcing arrangements can be terminated
without material penalties on an average of three months
notice.


Raw Materials

We believe that ample sources of raw materials
are available with respect to all of our major products. Paper,
fats and oils, detergent chemicals 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 Dialbar soaps) has
experienced price fluctuations within the range of $0.09 to
$0.25 per pound from January 1, 1997, to December 31,
2001. Recently, the price of tallow has been trading at the
lower end of this historical range. If prices were to increase,
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 soap products, increases in
tallow prices would adversely impact us more than our
competitors. For the first nine months of 2002, we have entered
into an agreement with our supplier that fixes the price we pay
for tallow.

We attempt to reduce our risk by entering into
contracts to provide up to six- to twelve-month supplies of
tallow, other raw materials and packaging materials. 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 Cleansing The
	Procter & Gamble Company (P&G)
	 Lever Brothers Co., a division of Unilever PLC
	(Lever)
	 Colgate-Palmolive Company (Colgate)Laundry Care P&G
	 Lever
	 Colgate
	 Church & Dwight, Inc.
	 S.C. Johnson & Son, Inc.
	 Reckitt & Benckiser, Inc. |  | Food Products Hormel
	Foods Corp.
	 ConAgraAir Fresheners Reckitt & Benckiser,
	Inc.
	 Church & Dwight, Inc.
	 Global Household Brands
	 S.C. Johnson & Son, 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 innovation for new
and existing products, while providing technical assistance and
support to our manufacturing activities. To increase our
innovative capacity, we also contract for general research and
development activities in areas beyond our core areas of
expertise. Our internal and external research and development
expenditures were approximately $14.3 million,
$12.2 million and $10.1 million in 2001, 2000 and
1999, respectively.

Marketing Research

We rely on industry data, 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

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consumer needs 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,
Plusbelle, Trend, Treet, 20 Mule Teamand Boraxoin addition to related trade names. In the U.S., we license
the Armourand Armour Startrademarks from
ConAgra, Inc., which also sells shelf stable food products under
the Armourtrademark. We license the 20 Mule Teamtrademark from U.S. Borax, Inc.

In 2001, we licensed our Brecktrademarks
in the U.S., Canada, Puerto Rico, Europe and Asia to a third
party in exchange for a royalty based upon gross sales. In the
first quarter of 2002, we licensed our Brecktrademark 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.

United States trademark registrations are for a
term of 10 years, renewable every 10 years so long as
the trademarks are used in the regular course of trade. 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 and
pending foreign trademark applications.

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 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 of the 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
ultimately could 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. We use the antibacterial
ingredient Triclosan in Liquid Dialand Triclocarban in
Dialbar 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 its products, all of which could
materially adversely affect 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,

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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, five of
which are currently active. In addition, in 1999 and in prior
years we have used nonlyphenol ethoxylate as an ingredient in
our liquid and powder detergents. Certain environmental and
regulatory groups have raised concerns regarding toxicity of
compounds produced from nonlyphenol ethoxylate. As of
December 31, 2001, we have accrued in our financial
statements approximately $1.4 million in reserves for
expenses related to Superfund sites and the clean-up of closed
plant sites. We believe our reserves are adequate, but these
costs are difficult to predict with certainty.


We do not currently anticipate that we will incur
significant capital expenditures in connection with matters
relating to environmental control or compliance in 2002. 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. However, 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 3,139 individuals, of
whom approximately 1,059 were covered by collective bargaining
agreements, as of December 31, 2001.

Three of our five plants in the United States are
unionized. In 2001 we agreed to a one-year extension of our
contract with the International Brotherhood of Teamsters for the
St. Louis, Missouri plant and Madison County, Illinois
distribution center covering approximately 369 employees.
This contract expires in July 2002. Additionally, the labor
contract with the United Food and Commercial Workers union,
covering approximately 285 employees at the Aurora,
Illinois plant, expires in August 2002. No assurances can be
given that we will be able to successfully renegotiate both of
these contracts in 2002. In 1999, we successfully renegotiated
our contract with the United Food and Commercial Workers Union
(covering approximately 405 employees at our Fort Madison, Iowa
plant), which now expires September 2003.

In the first quarter of 2002, the International
Association of Machinists filed a petition with the National
Labor Relations Board to hold an election at our Los Angeles,
California plant to determine whether the 31-employee unit
desires union representation. The election currently is
scheduled for April 10, 2002. At this time, we cannot
predict the outcome of this election.

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.




Item 2.     Properties

Our corporate headquarters is located in a leased
130,000-square-foot, single-tenant building in Scottsdale,
Arizona, that is adjacent to the 200,000-square-foot Dial Center
for Innovation (DCI), which we sold in June 2000 but
still occupy under a multi-year lease.

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Our other 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, fabric
	softeners       
|West Hazleton, Pennsylvania |          |             | 214,500 |           |  | Liquid detergents and liquid soaps                         
|Los Angeles, California     |          |             | 47,600  |           |  | Powdered soap, fabric softeners and liquid
	detergents     
|Compton, California(1)(2)   |          |             | 146,400 |           |  | Liquid soaps and body washes                               
|Guatemala City, Guatemala   |          |             | 100,000 |           |  | Bar soaps                                                  
|Mexico City, Mexico(2)      |          |             | 83,800  |           |  | Shampoos, liquid soaps and hair care aerosols              
|Buenos Aires, Argentina     |          |             | 150,000 |           |  | Bar soaps and dry detergents                               
|Buenos Aires, Argentina     |          |             | 15,000  |           |  | Sulfonic acid                                              
|Buenos Aires, Argentina     |          |             | 79,700  |           |  | Shampoos and conditioners                                  
|San Juan, Argentina         |          |             | 70,000  |           |  | Dry detergents and bar soaps                               
|San Juan, Argentina         |          |             | 33,000  |           |  | Liquid detergents, cleaners, air fresheners and
	deodorants
|                            |          |             |         |           |  |                                                            
|                            | Subtotal |             |         | 2,110,400 |  |                                                             | 
|Distribution Centers        |          |             |         |           |  |                                                            
|Allentown, Pennsylvania(1)  |          |             | 800,000 |           |  | Warehousing and distribution of finished goods             
|Corona, California(1)       |          |             | 325,700 |           |  | Warehousing and distribution of finished goods             
|Edwardsville, Illinois(1)   |          |             | 812,000 |           |  | Warehousing and distribution of finished goods             
|Atlanta, Georgia(3)         |          |             | 253,700 |           |  | Warehousing and distribution of finished goods             
|                            |          |             |         |           |  |                                                            
|                            | Subtotal |             |         | 2,191,400 |  |                                                             | 
|                            |          |             |         |           |  |                                                            
|                            | Total    |             |         | 4,301,800 |  |                                                             | 
|                            |          |             |         |           |  |                                                            



---



|    |                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Leased facility.                                                                                                                                                                                                                                                                                                                
|   
|(2) | In December 2001, we closed our liquid soap and
	body wash plant in Compton, California and our shampoo, liquid
	soap, and hair care plant in Mexico City, Mexico. A detailed
	discussion of the financial impact of these closures is included
	in Note 3 to the consolidated financial statements included
	in this Form 10-K.
|   
|(3) | Public warehouse.                                                                                                                                                                                                                                                                                                               

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
continue to seek ways to cut costs and may close facilities as
warranted.

Item 3.     Legal
Proceedings

On May 21, 1999, we were served with a
complaint filed by the U.S. Equal Employment Opportunity
Commission (the EEOC) in the U.S. District
Court for the Northern District of Illinois, Eastern Division.
This action is entitled Equal Opportunity Commission v. The
Dial corporation, Civil Action No. 99 C 3356. The
EEOC alleges that we engaged in a pattern and practice of
discrimination against a class of female employees by subjecting
them to sexual or sex-based harassment and failing to take
prompt remedial action after these employees complained about
the alleged harassment. The EEOC is seeking to enjoin us from
this alleged harassment, to require us to train our managerial
employees regarding the requirements of Title

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VII of the Civil Rights Act of 1964 and to
recover unspecified compensatory and punitive damages. We have
denied the EEOCs allegations. After discovery was
completed, we filed a dispositive motion, which was granted in
part and denied in part by the Court in an opinion issued in the
third quarter of 2001. The Court granted our motion to dismiss
the claims of thirteen individuals and denied its motion with
respect to the remaining individuals. We petitioned the Seventh
Circuit Court of Appeals to review the U.S. District
Courts ruling on our summary judgment motion, but the
Seventh Circuit denied our petition for an interlocutory appeal.
A trial date has not been set. We currently do not believe that
this lawsuit will have a material adverse effect on our
operating results or financial condition. However, assurances
cannot be given regarding the ultimate outcome of this matter.


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 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 2001.




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 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 dividend paid with respect to these
periods. The sale price of the common stock on March 1,
2002, was $17.00 per share.

|               |  |             |       |     |  |           |       |  |  |  |      | 
|-------------- |  | ----------- | ----- | --- |  | --------- | ----- |  |  |  | ---- | 
|               |  |             |       |    
|               |  | Price Range |       |    
|               |  |             |       |    
|               |  | High        |       | Low |  | Dividends
|               |  |             |       |     |  |          
|Fiscal 2001    |  |             |       |     |  |           |       |  |  |  |      | 
|First Quarter  |  |             | 15.75 |     |  |           | 11.19 |  |  |  | 0.04 | 
|Second Quarter |  |             | 15.10 |     |  |           | 11.95 |  |  |  | 0.04 | 
|Third Quarter  |  |             | 18.00 |     |  |           | 12.80 |  |  |  | 0.04 | 
|Fourth Quarter |  |             | 18.78 |     |  |           | 15.80 |  |  |  | 0.04 | 
|Fiscal 2000    |  |             |       |     |  |           |       |  |  |  |      | 
|First Quarter  |  |             | 24.06 |     |  |           | 10.25 |  |  |  | 0.08 | 
|Second Quarter |  |             | 15.13 |     |  |           | 10.00 |  |  |  | 0.08 | 
|Third Quarter  |  |             | 13.38 |     |  |           | 9.88  |  |  |  | 0.08 | 
|Fourth Quarter |  |             | 12.94 |     |  |           | 9.94  |  |  |  | 0.04 | 

We reduced our dividend to $0.04 per share of
common stock during 2000 as part of our efforts to accelerate
repayment of our debt. 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 and other factors deemed relevant at
the time by the Board. As of March 1, 2002, there were
94,854,558 shares of common stock outstanding, which were held
by 30,462 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 SPC business as a
discontinued operation. The selected

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consolidated balance sheet data as of
December 31, 2001, and December 31, 2000, and the
consolidated income statement data for each of the three fiscal
years in the period ended December 31, 2001, have been
derived from our audited consolidated financial statements
included in this Form 10-K. The selected consolidated
balance sheet data as of December 31, 1999,
December 31, 1998 and January 3, 1998, and
consolidated income statement data for the fiscal years ended
December 31, 1998 and January 3, 1998 have been
derived from our audited consolidated financial statements which
are not included in this Form 10-K.


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.

SELECTED FINANCIAL AND OTHER DATA

|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |         | 
|------------------------------------------------------- | ------------ | ------------------------------------- | --------- | ------- |  | ------- | --------- | ------- |  | ------ | --------- | ------- |  | - | --------- | ------- |  | - | --------- | ------- | 
|                                                        |              |                                      
|                                                        |              | Year Ended                           
|                                                        |              |                                      
|                                                        |              | Dec. 31                               |           | Dec. 31 |  | Dec. 31 |           | Dec. 31 |  | Jan. 3
|                                                        |              | 2001(1)                               |           | 2000(2) |  | 1999    |           | 1998    |  | 1998  
|                                                        |              |                                       |           |         |  |         |           |         |  |       
|                                                        |              |                                      
|                                                        |              | (In thousands, except per share data)
|Operations                                              |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|Net sales                                               |              | $                                     | 1,663,328 |         |  | $       | 1,522,274 |         |  | $      | 1,580,702 |         |  | $ | 1,451,161 |         |  | $ | 1,356,021 |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|Cost of products sold                                   |              |                                       | 826,625   |         |  |         | 771,193   |         |  |        | 773,570   |         |  |   | 742,010   |         |  |   | 715,609   |        
|Asset write-downs and discontinued product
	inventories |              |                                       | 10,388    |         |  |         | 10,519    |         |  |        |           |         |  |   |           |         |  |   |           |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|Total cost of products sold                             |              |                                       | 837,013   |         |  |         | 781,712   |         |  |        | 773,570   |         |  |   | 742,010   |         |  |   | 715,609   |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|                                                        | Gross profit |                                       |           | 826,315 |  |         |           | 740,562 |  |        |           | 807,132 |  |   |           | 709,151 |  |   |           | 640,412 | 
|Selling, general and administrative expenses            |              |                                       | 667,452   |         |  |         | 603,527   |         |  |        | 588,438   |         |  |   | 524,961   |         |  |   | 479,923   |        
|Special charges and other asset write-downs             |              |                                       | 330       |         |  |         | 7,417     |         |  |        |           |         |  |   |           |         |  |   |           |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|                                                        |              |                                       | 667,782   |         |  |         | 610,944   |         |  |        | 588,438   |         |  |   | 524,961   |         |  |   | 479,923   |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|Operating income                                        |              |                                       | 158,533   |         |  |         | 129,618   |         |  |        | 218,694   |         |  |   | 184,190   |         |  |   | 160,489   |        
|Interest and other expenses                             |              |                                       | (47,990   | )       |  |         | (50,306   | )       |  |        | (32,712   | )       |  |   | (23,358   | )       |  |   | (28,234   | )      
|Net income (loss) of joint ventures                     |              |                                       | 2,990     |         |  |         | (37,615   | )       |  |        | (1,347    | )       |  |   |           |         |  |   |           |        
|Gain on special items                                   |              |                                       |           |         |  |         | 9,243     |         |  |        |           |         |  |   |           |         |  |   |           |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|Income from continuing operations before income
	taxes  |              |                                       | 113,533   |         |  |         | 50,940    |         |  |        | 184,635   |         |  |   | 160,832   |         |  |   | 132,255   |        
|Income taxes                                            |              |                                       | 43,690    |         |  |         | 16,650    |         |  |        | 64,689    |         |  |   | 57,788    |         |  |   | 49,566    |        
|                                                        |              |                                       |           |         |  |         |           |         |  |        |           |         |  |   |           |         |  |   |           |        
|Income from continuing operations                       |              |                                       | 69,843    |         |  |         | 34,290    |         |  |        | 119,946   |         |  |   | 103,044   |         |  |   | 82,689    |        

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|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |       | 
|------------------------------------------------------------------ | ----------------------------------------- | ------------------------------------- | --------- | ------- | - | ------- | --------- | ------- | - | ------ | --------- | ----- | - | - | --------- | ----- | - | - | ------- | ----- | 
|                                                                   |                                           |                                      
|                                                                   |                                           | Year Ended                           
|                                                                   |                                           |                                      
|                                                                   |                                           | Dec. 31                               |           | Dec. 31 |   | Dec. 31 |           | Dec. 31 |   | Jan. 3
|                                                                   |                                           | 2001(1)                               |           | 2000(2) |   | 1999    |           | 1998    |   | 1998  
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |       
|                                                                   |                                           |                                      
|                                                                   |                                           | (In thousands, except per share data)
|Discontinued operation(3):                                         |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Income (loss) from operations of
	discontinued segment, net of tax |                                           |                                       | (3,691    | )       |   |         | (45,298   | )       |   |        | (3,180    | )     |   |   | (428      | )     |   |   | 1,021   |      
|Loss on disposal of discontinued segment, net of
	tax              |                                           |                                       | (198,403  | )       |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Total income (loss) from discontinued
	operation                   |                                           |                                       | (202,094  | )       |   |         | (45,298   | )       |   |        | (3,180    | )     |   |   | (428      | )     |   |   | 1,021   |      
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Net income (loss)                                                  |                                           | $                                     | (132,251  | )       |   | $       | (11,008   | )       |   | $      | 116,766   |       |   | $ | 102,616   |       |   | $ | 83,710  |      
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Diluted net income (loss) per share:                               |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|                                                                   | Income on continuing operations           |                                       | $         | 0.76    |   |         | $         | 0.37    |   |        | $         | 1.20  |   |   | $         | 1.03  |   |   | $       | 0.88  | 
|                                                                   | Income (loss) from discontinued operation |                                       |           | (2.21   | ) |         |           | (0.49   | ) |        |           | (0.03 | ) |   |           | (0.00 | ) |   |         | 0.01  | 
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Net income (loss) per share-Diluted                                |                                           | $                                     | (1.45     | )       |   | $       | (0.12     | )       |   | $      | 1.17      |       |   | $ | 1.02      |       |   | $ | 0.89    |      
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Basic shares outstanding                                           |                                           |                                       | 91,451    |         |   |         | 92,237    |         |   |        | 98,255    |       |   |   | 98,294    |       |   |   | 91,918  |      
|                                                                   | Equivalent shares                         |                                       |           | 0       |   |         |           | 0       |   |        |           | 1,810 |   |   |           | 2,185 |   |   |         | 2,231 | 
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Diluted shares                                                     |                                           |                                       | 91,451    |         |   |         | 92,237    |         |   |        | 100,065   |       |   |   | 100,479   |       |   |   | 94,149  |      
|                                                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Balance Sheet Data (at year end)                                   |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Total assets                                                       |                                           | $                                     | 1,024,116 |         |   | $       | 1,392,717 |         |   | $      | 1,286,568 |       |   | $ | 1,176,673 |       |   | $ | 881,208 |      
|Working capital (deficit)                                          |                                           |                                       | 48,469    |         |   |         | (17,112   | )       |   |        | 14,490    |       |   |   | (11,553   | )     |   |   | (12,578 | )    
|Total debt                                                         |                                           |                                       | 445,341   |         |   |         | 595,047   |         |   |        | 361,114   |       |   |   | 290,593   |       |   |   | 92,899  |      
|Stockholders equity(4)                                            |                                           |                                       | 81,878    |         |   |         | 293,907   |         |   |        | 411,271   |       |   |   | 390,225   |       |   |   | 320,046 |      
|Other Data                                                         |                                           |                                       |           |         |   |         |           |         |   |        |           |       |   |   |           |       |   |   |         |      
|Depreciation and amortization                                      |                                           |                                       | 50,059    |         |   |         | 48,006    |         |   |        | 37,012    |       |   |   | 34,661    |       |   |   | 31,763  |      
|Capital expenditures                                               |                                           |                                       | 31,340    |         |   |         | 42,088    |         |   |        | 62,495    |       |   |   | 50,330    |       |   |   | 46,715  |      
|Dividends on common shares                                         |                                           |                                       | 14,613    |         |   |         | 25,762    |         |   |        | 31,407    |       |   |   | 31,497    |       |   |   | 29,510  |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes special charges of $11.8 million
	($10.2 million after tax or $0.11 per share), partially
	offset by a reversal of fiscal year 2000 special charges of
	$1.1 million ($0.7 million after tax or $0.01 per
	share) in 2001. See Note 3 to the consolidated financial
	statements included in this Form 10-K.                                                                                   
|   
|(2) | Includes special charges of $48.4 million
	($34.1 million after tax or $0.37 per share), partially
	offset by a gain on special items of $9.2 million
	($7.2 million after tax or $0.08 per share) in 2000. See
	Notes 3 and 7 to the consolidated financial statements
	included in this Form 10-K.                                                                                                   
|   
|(3) | The consolidated financial statements have been
	prepared to reflect our historical financial position and
	results of operations and cash flows as adjusted for the
	reclassification of SPC as a discontinued operation. In
	addition, a one-time charge of $198.4 million related to
	the write off of SPC assets and an accrual for estimated exit
	losses was recorded to discontinued operations.

13



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|    |                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | In 2001, charges to stockholders equity
	include $62.2 million related to the currency devaluation
	in Argentina and $11.9 million of additional minimum
	pension liability.






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

SFX01

In the third quarter of 2000, management outlined
an initiative labeled SFX01. This three-step
initiative can be summarized as follows:

S We intended to Stabilize our strong
businesses.

F We intended to Fix marginal businesses or
jettison them.

X Once stabilized and fixed, we intended to
eXplore our options as a company, which include:



| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | Continuing as an independent company.                                                                                       
|
| |  | Merging with one or more companies to form a
	larger company to more effectively compete in the consumer
	products industry.
|
| |  | Selling our company, either in whole or in part.                                                                            

01 We intended to complete this initiative
during 2001.

On August 3, 2001, we concluded our SFX01
initiative and announced that our Board of Directors had
reviewed our options as a company and decided that our long-term
interests and those of our shareholders would be best served if
we were part of a larger enterprise. In this regard, although we
will continue to focus on improving our operating results as a
standalone company, the Board believes that we should
concurrently explore opportunities to become part of a larger
company, with each pursuit intended to maximize shareholder
value. These opportunities may include exploring transactions
with multiple parties. We have been working with Goldman
Sachs & Co. throughout our SFX01 initiative and expect
that we will continue to do so as we evaluate any opportunities
to be part of a larger company.

No time constraints have been set for any
transaction, and any decision regarding any potential
transactions will be based upon the best interests of our
shareholders. Accordingly, there is no assurance that any sale,
merger or other transactions involving Dial or any of its
businesses will occur in the near future or at all. In addition,
decisions made in the course of continuing to improve our
operating results could result in our recording additional
special or restructuring charges or additional asset writedowns.

Critical Accounting Policies and
Estimates

Managements discussion and analysis of
financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements
requires us to make estimates and judgements that affect the
reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities. On
an on-going basis, we evaluate our estimates, including those
related to sales incentives, long-lived assets, income taxes,
discontinued operations, self-insurance, environmental matters,
pension and other post retirement benefits, contingencies and
litigation, product returns, bad debts, inventories and
restructuring. 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 judgements 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 the companys
financial condition and results, and they require difficult,
subjective, or complex judgments or

14



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##### Table of Contents



estimates. We consider our critical accounting
policies to include our calculation and treatment of the
following expenses:




| |   |                               
| | - | ------------------------------
| |  | sales incentives,             
|
| |  | long-lived assets,            
|
| |  | deferred tax assets,          
|
| |  | other reserves and allowances.



| |                 
| | ----------------
| | Sales incentives

We record sales incentives as selling, general,
and administrative expense in our income statement. Sales
incentives include coupons, rebates, free products,
consideration and allowances given to retailers for space in
their stores (slotting fees), consideration and allowances given
to obtain favorable display positions in the retailers
stores and other promotional activity. We expense these
promotional activities in the period during which the related
product ships. Effective January 1, 2002, certain
promotional activities will be reclassified as a reduction of
sales. Please refer to New Accounting
Pronouncementsof this Management Discussion and
Analysis section for further information on the reclassification.

Estimated sales incentives are calculated and
recorded at the time related sales are made and are based
primarily on standard trade promotion rates and consideration of
recent promotional activities. We review our assumptions and
adjust our reserves quarterly. Our financial statements could be
materially impacted if the standard promotion rates fluctuate
from the actual rate.



| |                  
| | -----------------
| | Long-lived assets

We evaluate the recoverability of property and
equipment and intangibles not held for sale by comparing the
carrying amount of the asset or group of assets against the
estimated undiscounted future net cash flows expected to result
from the use of the asset or group of assets and their eventual
disposition. Goodwill from acquisitions related to a group of
assets being evaluated for impairment is included in the
evaluation. If the undiscounted estimated cash flows are less
than the carrying value of the asset or group of assets being
evaluated, an impairment loss would be recorded. The loss would
be measured based on the estimated fair value of the asset or
group of assets. The estimated fair value would be based on the
best information available under the circumstances, including
prices for similar assets and the results of valuation
techniques, including the present value of expected future cash
flows using a discount rate commensurate with the risks involved.



| |                    
| | -------------------
| | Deferred tax assets

We record a valuation allowance to reduce our
deferred tax assets to the amount that is more likely than not
to be realized. While we have considered future taxable income
and ongoing prudent and feasible tax planning strategies in
assessing the need for the valuation allowance, in the event we
were to determine that it would be able to realize its deferred
tax assets in the future in excess of its net recorded amount,
an adjustment to the deferred tax asset would increase income in
the period such determination was made. Likewise, should we
determine that it would not be able to realize all or part of
our deferred tax asset in the future, an adjustment to the
deferred tax asset would be charged to income in the period such
determination was made.



| |                              
| | -----------------------------
| | Other reserves and allowances

We have several reserves that require significant
judgment and estimates. These areas include our reserves for
discontinued operations, self-insurance (primarily workers
compensation) and environmental matters. We use historical
information, third party experts and outside advisors to review
the facts and assist us in calculating the estimated liability.
These reserves are reviewed quarterly for adjustment.

15



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##### Table of Contents



Sale of Specialty Personal Care
Segment

On August 28, 2001, we completed the sale of
our Specialty Personal Care (SPC) business. The sale
of SPC was in line with our strategy to fix or jettison
under-performing businesses. 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
losses. Proceeds from the sale were 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 SPC 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. As of 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 will record the $2.0 million
plus interest received as a reduction of the loss recognized on
the sale of the SPC business.

As a result of the loss recognized on the sale,
we recorded a current tax benefit of approximately
$40.0 million. This tax benefit resulted in cash savings in
the third and fourth quarters of 2001 and is expected to result
in continuing cash savings into the first and second quarters of
2002. The loss on the sale of SPC is primarily comprised of the
write-off of goodwill and inventories. In addition, the sale
resulted in approximately $75.9 million in capital losses
for which no tax benefits were provided. We will realize
benefits from this capital loss only to the extent that we
generate capital gains in the future.

As of December 31, 2001, our balance sheet
included approximately $1.2 million in net receivables,
$6.8 million in trade accounts payable and
$19.0 million in accrued liabilities, sales returns, lease
obligations and other exit costs related to the SPC business
that were not assumed by the purchaser as a result of the sale.
The following table summarizes the net sales, operating loss and
net loss from discontinued operations of the discontinued SPC
business for the years ending December 31:

|                                      |  |                |          |      |  |      |         |   |  |   |         |  
|------------------------------------- |  | -------------- | -------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                      |  | 2001           |          | 2000 |  | 1999
|                                      |  |                |          |      |  |     
|                                      |  |               
|                                      |  | (In thousands)
|Net sales                             |  | $              | 31,077   |      |  | $    | 116,266 |   |  | $ | 140,864 |  
|Operating loss                        |  |                | (4,811   | )    |  |      | (70,277 | ) |  |   | (3,552  | )
|Net loss from discontinued operations |  |                | (202,094 | )    |  |      | (45,297 | ) |  |   | (3,180  | )

Special Charges

2001 Special
Charges

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 City manufacturing facility. We recorded
$11.8 million ($10.2 million after tax or $0.11 per
share) related to these special charges. The activity in 2001
relating to the 2001 Special Charges is summarized below:

|                                                       |       |                |       |             |  |                |        |             |   |   |        |        |   |   |       |       | 
|------------------------------------------------------ | ----- | -------------- | ----- | ----------- |  | -------------- | ------ | ----------- | - | - | ------ | ------ | - | - | ----- | ----- | 
|                                                       |       | 2001           |       |             |  |                |        | Ending     
|                                                       |       | Total          |       | Cash spent  |  | Amount charged |        | reserves at
|                                                       |       | charges        |       | during 2001 |  | against assets |        | 12/31/01   
|                                                       |       |                |       |             |  |                |        |            
|                                                       |       |               
|                                                       |       | (In thousands)
|Employee separations                                   |       | $              | 2,490 |             |  | $              | (1,667 | )           |   | $ |       |        |   | $ | 823   |      
|Asset writedowns and discontinued product
	inventories |       |                | 4,301 |             |  |                |       |             |   |   | (4,301 | )      |   |   |      |      
|Other exit costs                                       |       |                | 4,996 |             |  |                | (617   | )           |   |   | (2,798 | )      |   |   | 1,581 |      
|                                                       |       |                |       |             |  |                |        |             |   |   |        |        |   |   |       |      
|                                                       | Total |                | $     | 11,787      |  |                | $      | (2,284      | ) |   | $      | (7,099 | ) |   | $     | 2,404 | 
|                                                       |       |                |       |             |  |                |        |             |   |   |        |        |   |   |       |      

16



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##### Table of Contents



See additional discussion of these charges in
Note 3 to the consolidated financial statements included in
this Form 10-K.

For income statement purposes, $11.2 million
of the special charge is included in Asset writedowns and
discontinued product inventories as a result of special chargesand $0.6 million is included in Special charges and
other asset writedowns.

Cash requirements for these plant consolidations
are expected to be funded from normal operations. As a result of
the special charge, we currently expect to realize projected
annual pre-tax operating benefits of approximately
$7 million.

The projected timing and estimated amount of
costs and projected savings related to this 2001 Special Charge
are based on managements judgment in light of the
circumstances and estimates at the time that the judgments were
made. Accordingly, such estimates may change as future events
evolve. Among other matters, unforeseen changes in operating
requirements and other factors referred to in
Managements Discussion and Analysis of Results of
Operations and Financial Condition  Factors that May
Affect Future Results and Financial Conditioncould
cause these actual operating benefits to differ materially from
anticipated results.

2000 Special
Charges

On June 28, 2000 and on October 18,
2000, we announced special charges related to the Specialty
Personal Care business, the Dial/ Henkel joint ventures,
severance costs for prior management and other actions to
improve operational efficiencies. Excluding the Specialty
Personal Care portion of the charge, which has been reclassified
to discontinued operations, we recorded charges of
$48.4 million ($34.1 million after tax or $0.37 per
share) during 2000. We reversed $1.1 million in charges to
net income with respect to these special charges in 2001 related
to reversal of reserves that were no longer necessary. The
activity in 2000 and 2001 relating to the 2000 Special Charges
is summarized below:

|                                                       |       |                |        |             |  |                |        |             |   |   |         |         |   |   |       |       | 
|------------------------------------------------------ | ----- | -------------- | ------ | ----------- |  | -------------- | ------ | ----------- | - | - | ------- | ------- | - | - | ----- | ----- | 
|                                                       |       | 2000           |        |             |  |                |        | Ending     
|                                                       |       | Total          |        | Cash spent  |  | Amount charged |        | reserves at
|                                                       |       | charges        |        | during 2000 |  | against assets |        | 12/31/00   
|                                                       |       |                |        |             |  |                |        |            
|                                                       |       |               
|                                                       |       | (In thousands)
|Employee separations                                   |       | $              | 7,227  |             |  | $              | (4,315 | )           |   | $ |        |         |   | $ | 2,912 |      
|Asset writedowns and discontinued product
	inventories |       |                | 9,615  |             |  |                |       |             |   |   | (9,314  | )       |   |   | 301   |      
|Other exit costs                                       |       |                | 1,093  |             |  |                | (95    | )           |   |   | (342    | )       |   |   | 656   |      
|Joint ventures  special charges                       |       |                | 30,472 |             |  |                |       |             |   |   | (30,472 | )       |   |   |      |      
|                                                       |       |                |        |             |  |                |        |             |   |   |         |         |   |   |       |      
|                                                       | Total |                | $      | 48,407      |  |                | $      | (4,410      | ) |   | $       | (40,128 | ) |   | $     | 3,869 | 
|                                                       |       |                |        |             |  |                |        |             |   |   |         |         |   |   |       |      

|                                                       |       |                |       |            |  |                |        |          |   |             |     |     |  |   |      |        |   |   |     |     | 
|------------------------------------------------------ | ----- | -------------- | ----- | ---------- |  | -------------- | ------ | -------- | - | ----------- | --- | --- |  | - | ---- | ------ | - | - | --- | --- | 
|                                                       |       | Ending         |       | Cash spent |  |                |        |          |   | Ending     
|                                                       |       | reserves at    |       | during     |  | Amount charged |        | Charges  |   | reserves at
|                                                       |       | 12/31/00       |       | 2001       |  | against assets |        | reversed |   | 12/31/01   
|                                                       |       |                |       |            |  |                |        |          |   |            
|                                                       |       |               
|                                                       |       | (In thousands)
|Employee separations                                   |       | $              | 2,912 |            |  | $              | (1,705 | )        |   | $           |    |     |  | $ | (259 | )      |   | $ | 948 |    
|Asset writedowns and discontinued product
	inventories |       |                | 301   |            |  |                | (301   | )        |   |             | 552 |     |  |   | (552 | )      |   |   |    |    
|Other exit costs                                       |       |                | 656   |            |  |                | (398   | )        |   |             |    |     |  |   | (258 | )      |   |   |    |    
|Joint ventures  special charges                       |       |                |      |            |  |                |       |          |   |             |    |     |  |   |     |        |   |   |    |    
|                                                       |       |                |       |            |  |                |        |          |   |             |     |     |  |   |      |        |   |   |     |    
|                                                       | Total |                | $     | 3,869      |  |                | $      | (2,404   | ) |             | $   | 552 |  |   | $    | (1,069 | ) |   | $   | 948 | 
|                                                       |       |                |       |            |  |                |        |          |   |             |     |     |  |   |      |        |   |   |     |    

See additional discussion of these charges in
Note 3 to the consolidated financial statements included in
this Form 10-K.

For income statement purposes, $10.5 million
of the special charge was included in Asset writedowns and
discontinued product inventories as a result of special
charges, $7.4 million was included in Special
charges and other asset writedownsand $30.5 million is
included in Net earnings (loss) of joint venturesduring 2000.

17



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In 2001, $0.8 million of the special charges
reversed are included in Asset writedowns and discontinued
product inventories as a result of special chargesand
$0.3 million are included in Special charges and other
asset writedowns.


The remaining reserve for employee separations
will be paid through 2002. Cash requirements for the special
charges will be funded from normal operations.

Adjustments
to List Prices and Trade Allowances

Beginning in 2001, we adjusted our list prices
and trade promotion spending on selected personal cleansing and
laundry care products to more closely align with our shelf
pricing strategies. Because the reduction in list price is
offset by a reduction in trade promotion spending, there is no
effect on our net earnings. This change, however, does impact
net sales, gross profit, gross profit margin, selling, general
and administrative expense and operating margin. See additional
discussion in Managements Discussion and Analysis
of Results of Operations and Financial Condition  New
Accounting Pronouncementsregarding the treatment of
sales incentives in years following 2001. The effects of these
adjustments for 2001, excluding the impact of special charges,
are set forth below:

|                                                                          |  |                  |           |                  |  |        |           |   |  |   |         |   
|------------------------------------------------------------------------- |  | ---------------- | --------- | ---------------- |  | ------ | --------- | - |  | - | ------- | --
|                                                                          |  | Including List   |           | Excluding List   |  |       
|                                                                          |  | Price Adjustment |           | Price Adjustment |  | Change
|                                                                          |  |                  |           |                  |  |       
|                                                                          |  |                 
|                                                                          |  | (In thousands)  
|Net sales                                                                 |  | $                | 1,663,328 |                  |  | $      | 1,704,281 |   |  | $ | (40,953 | ) 
|Gross profit                                                              |  |                  | 836,703   |                  |  |        | 877,656   |   |  |   | (40,953 | ) 
|Gross profit margin                                                       |  |                  | 50.3      | %                |  |        | 51.5      | % |  |   | (1.2    | )%
|Selling, general and administrative expense as a
	percentage of net sales |  |                  | 40.1      | %                |  |        | 41.6      | % |  |   | (1.5    | )%
|Operating margin                                                          |  |                  | 10.2      | %                |  |        | 9.9       | % |  |   | 0.3     | % 

Recent Developments

Deteriorating
Economic Conditions in Argentina

In the fourth quarter of 2001, we recorded a
currency translation adjustment of $62.2 million on net
assets, reflecting a 37.9% currency devaluation of the Argentine
Peso. This non-cash adjustment did not have a material impact on
net income but did reduce stockholders equity. In 2001,
Argentina accounted for approximately $140.1 million or
8.4% of our total net sales and incurred a net operating loss of
approximately $4.3 million. In light of the devaluation of
the Argentine Peso and the deteriorating economic conditions in
Argentina, we believe that sales and operating results in
Argentina will be adversely impacted in 2002. Contingency
planning is in place in the form of reducing manufacturing,
marketing, and administrative expenses to try to limit
Argentinas impact on our earnings, and we currently expect
that Argentina will be about break even on its earnings in 2002.
However, the situation in Argentina is changing rapidly, and it
is difficult to predict with certainty the adverse impact that
Argentina will have on our net sales and operating results in
2002.

Argentina
Impairment Charge

In 2002, we adopted FASB Statement No. 142
Goodwill and Other Intangible Assets (FAS
No. 142) which establishes a new method of testing goodwill
and other intangible assets with indefinite lives for
impairment. Pursuant to FAS No. 142, we will record a
$43.3 million after-tax impairment charge for Argentina in
the first quarter of 2002. Argentinas long-lived assets,
including goodwill, were not impaired under FAS No. 121 on
December 31, 2001.

Mexico
Licensing Arrangement

In Mexico, we closed our manufacturing facility
in the fourth quarter of 2001 and moved to a licensing
arrangement with Consupharma S.A. de C.V., who previously served
as our distributor in Mexico, in the first quarter of 2002.
Under this licensing arrangement, we have licensed our Dial,
Breckand Renuzit trademarks

18



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to Consupharma in exchange for a royalty based
upon net sales. As a result, we will not record sales in Mexico
in 2002, but instead will record royalty income. Although this
licensing arrangement will reduce the amount of sales we record
as a company, we expect that this arrangement will contribute
positively to our operating income. Sales in Mexico were
$9.5 million, $15.6 million and $24.4 million in
2001, 2000 and 1999, respectively.


Kmart
Bankruptcy

In January 2002, Kmart Corporation filed for
Chapter 11 bankruptcy protection. We sell products to Kmart
primarily through Kmarts distributor, Fleming Companies,
Inc., but also sell products to Kmart directly. As of
January 22, 2001, the date on which Kmart filed for
bankruptcy protection, our exposure for amounts owed to us by
Kmart directly and by Fleming for products sold to Kmart was
approximately $0.5 million. Fleming has been approved as a
critical vendor for Kmart and it is our understanding that
Fleming is receiving timely payment from Kmart for sales made
after the date that Kmart filed for bankruptcy protection. In
addition, we believe that the amounts we owe to Kmart exceed the
balance Kmart owes us.

It is currently expected that Kmart will close
approximately 300 stores in its effort to emerge from
bankruptcy. We currently believe that these store closings could
have an adverse effect on our sales until the inventories from
closed stores are sold or liquidated and trade inventories for
our products return to normal levels. This situation could be
worse than expected if the number of actual store closings
exceeds current estimates. No assurances can be given concerning
the impact Kmarts bankruptcy will have on our future sales
and operating results.

2002
Outlook

Beginning in January 2002, we adopted FASB
Statement No. 142 Goodwill and Other Intangible
Assets. Under this statement, goodwill and indefinite
lived intangible assets will no longer be amortized but will be
subject to annual impairment tests in accordance with the new
standard. We recorded approximately $7.6 million of
after-tax ($0.08 per share) goodwill amortization expense in
2001, which will cease in 2002. On March 19, 2002, we
announced that we expect our earnings for the first quarter of
2002 to exceed Street estimates as reported by First Call and
our earnings for the year to be in the range of $1.01 to $1.05,
before special charges but including the adjustment from the
change in accounting for goodwill. Sales in our Domestic Branded
segment currently are expected to rise in the range of 2 to
3 percent in 2002. This sales increase is expected to be
driven primarily by Laundry Care and Personal Cleansing as we
expect sales of Food Products to be relatively flat and sales of
Air Fresheners to decline in 2002. Consolidated net sales are
expected to decline approximately 1 to 2 percent primarily
due to the currency devaluation and deteriorating economic
conditions in Argentina and the restructuring of our operations
in Mexico to a licensing arrangement. Operating margin is
expected to improve 150 to 200 basis points primarily due
to the previously announced closure of three plants and the
change in accounting for goodwill.

See additional discussion of matters that may
impact our results in  Factors That May
Affect Future Results and Financial Condition.

Fiscal 2001 Compared With Fiscal
2000

Net sales increased 9.3% to $1,663.3 million
in 2001 from $1,522.3 million in 2000 primarily as a result
of a 9.7% increase in our Domestic Branded segment and an
increase in our International segment of 9.7%. Net sales in 2001
included incremental sales of $44.2 million from
acquisitions of the Coast, Plusbelleand Zoutbusinesses.

Net sales in our Domestic Branded segment
increased 9.7% to $1,400.2 million in 2001 from
$1,276.8 million in 2000. Excluding the effect of the list
price adjustment, net sales in our Domestic Branded

19



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segment increased 12.7% to $1,438.8 million.
Net sales information for the businesses included in our
Domestic Branded segment is set forth below:


|                       |  |                    |         |                     |  |        |         |            |  |   |       |  |  |  |      |  
|---------------------- |  | ------------------ | ------- | ------------------- |  | ------ | ------- | ---------- |  | - | ----- |  |  |  | ---- | -
|                       |  |                    |         |                     |  |       
|                       |  | For the year ended |         |                    
|                       |  | December 31        |         | Increase/(Decrease)
|                       |  |                    |         |                    
|                       |  | 2001               |         | 2000                |  | Amount |         | Percentage
|                       |  |                    |         |                     |  |        |         |           
|                       |  |                   
|                       |  | (In millions)     
|Personal Cleansing     |  | $                  | 423.0   |                     |  | $      | 387.7   |            |  | $ | 35.3  |  |  |  | 9.1  | %
|Laundry Care           |  |                    | 537.1   |                     |  |        | 475.6   |            |  |   | 61.5  |  |  |  | 12.9 | %
|Air Fresheners         |  |                    | 228.8   |                     |  |        | 216.5   |            |  |   | 12.3  |  |  |  | 5.7  | %
|Food Products          |  |                    | 211.3   |                     |  |        | 197.0   |            |  |   | 14.3  |  |  |  | 7.2  | %
|                       |  |                    |         |                     |  |        |         |            |  |   |       |  |  |  |      |  
|Total Domestic Branded |  | $                  | 1,400.2 |                     |  | $      | 1,276.8 |            |  | $ | 123.4 |  |  |  | 9.7  | %
|                       |  |                    |         |                     |  |        |         |            |  |   |       |  |  |  |      |  

The increase in Personal Cleansing resulted
primarily from having a full year of sales from the acquisition
of Coast, which was made in the second quarter of 2000,
growth in body wash, the introduction of Dial Complete
and solid performance of the base business. The increase in
Laundry Care is primarily due to an increase in Purex
liquid detergent, the launch of Purex tabs, and the
inclusion of full year results from the Zout acquisition
that was made in the second quarter of 2000. The increase in Air
Fresheners is primarily due to the introduction of One Touch,
Fresh Elements, and Fresh Gels, partially offset by a decline in
sales of candles. The increase in Food Products resulted
primarily from increased sales of private label and Armour
branded Vienna sausage.

Net sales of our International segment, including
the effect of the list price adjustment, increased 9.7% to
$205.8 million from $187.6 million in 2000. This
increase resulted primarily from the inclusion of the Plusbelle
acquisition in Argentina in the second quarter of 2000 as well
as stronger sales in Canada, partially offset by lower sales in
our Mexico business caused by difficulties in outsourcing our
sales administrative function. Excluding the effect of list
price adjustment, net sales in our International segment
increased 10.9% to $208.1 million.

Net sales in our Commercial Markets and Other
segment remained fairly flat with a 0.8% decline to
$57.4 million from $57.9 million primarily as a result
of softness in chemical pricing and the hotel amenities business
due to the events of September 11, 2001.

Excluding special charges and the impact of the
list price adjustment, our gross margin improved by 220 basis
points to 51.5% from 49.3% in 2000. This improvement is
primarily from lower delivered product costs associated with
higher production volume, a more even distribution of sales
within the quarters and lower raw material costs. The effect on
gross margin of the list price adjustment and the restructuring
charge in 2001 is set forth below:

|                                                                       |  |      |      |      |  |        |      |   |  |  |      |  
|---------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ------ | ---- | - |  |  | ---- | -
|                                                                       |  | 2001 |      | 2000 |  | Change
|                                                                       |  |      |      |      |  |       
|Gross margin excluding list price adjustment and
	restructuring charge |  |      | 51.5 | %    |  |        | 49.3 | % |  |  | 2.2  | %
|List price adjustment                                                  |  |      | (1.2 | )    |  |        |     |   |  |  | (1.2 | )
|Special charge                                                         |  |      | (0.6 | )    |  |        | (0.7 | ) |  |  | 0.1  |  
|                                                                       |  |      |      |      |  |        |      |   |  |  |      |  
|Gross margin as reported                                               |  |      | 49.7 | %    |  |        | 48.6 | % |  |  | 1.1  | %
|                                                                       |  |      |      |      |  |        |      |   |  |  |      |  

Selling, general and administrative expenses
increased 9.3% to $667.8 million from $610.9 million in
2000. Excluding the special charges and other asset writedowns
in 2000 and 2001 and the impact of the list price adjustment,
selling, general and administrative expenses increased as a
percent of sales to 41.6% from 39.6% in 2000. This increase
primarily resulted from an increase in marketing expenses to
support our new product launches and core domestic brands and
increases in employee performance-based compensation due to
strong 2001 performance.

Interest and other expense decreased 4.6% to
$48.0 million from $50.3 million in 2000. The decrease was
primarily due to declining debt balance and interest rates
during 2001.

20



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Our share of the income in the Dial/ Henkel joint
venture was $3.0 million in 2001 resulting primarily from
lower than expected exit costs associated with the discontinued
Purex Advanced business, offset in part by exit costs
related to the discontinuation of the Custom Cleaner
business in 2001.

Our consolidated effective income tax rate for
2001 was 38.5% up from 32.7% for 2000. The higher effective tax
rate is primarily due to a valuation allowance provided on
foreign operations and lower tax benefits from foreign
operations.

Net income from continuing operations was
$69.8 million or $0.76 per diluted share, versus
$34.3 million, or $0.37 per diluted share in 2000. As
discussed above, this increase in net income is primarily
attributable to higher sales, improved gross margin, more
efficient marketing spending and lower restructuring and special
charges, offset in part by higher employee performance-based
compensation. For comparative purposes, the effect on earnings
per share of the discontinued operations, restructuring charges,
and one-time gains recorded in 2001 and 2000 are set forth
below, all net of tax:

|                                                                                    |  |      |       |      |  |   |       |  
|----------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                                                                    |  | 2001 |       | 2000
|                                                                                    |  |      |       |     
|Diluted net income per share from continuing
	operations                            |  | $    | 0.76  |      |  | $ | 0.37  |  
|Discontinued operation                                                              |  |      | (2.21 | )    |  |   | (0.49 | )
|                                                                                    |  |      |       |      |  |   |       |  
|Net loss per diluted share                                                          |  | $    | (1.45 | )    |  | $ | (0.12 | )
|                                                                                    |  |      |       |      |  |   |       |  
|Diluted net income per share from continuing
	operations                            |  | $    | 0.76  |      |  | $ | 0.37  |  
|Special charges                                                                     |  |      | 0.10  |      |  |   | 0.37  |  
|Special gain                                                                        |  |      |      |      |  |   | (0.08 | )
|                                                                                    |  |      |       |      |  |   |       |  
|Earnings per share from continuing operations
	excluding one-time charges and gains |  | $    | 0.86  |      |  | $ | 0.66  |  
|                                                                                    |  |      |       |      |  |   |       |  

Fiscal 2000 Compared With Fiscal
1999

Net sales decreased 3.7% to $1,522.3 million
in 2000 from $1,580.7 million in 1999 primarily as a result
of a 5.5% decrease in our Domestic Branded segment and a 11.2%
decrease in our Commercial Markets and Other segment, offset in
part by an increase in our International segment of 14.0%. Net
sales in 2000 included $67.2 million from acquisitions of
the Coast, Plusbelle and Zout businesses.

Net sales in our Domestic Branded segment
decreased 5.5% to $1,276.8 million in 2000 from
$1,351.0 million in 1999. Net sales information for the
businesses included in our Domestic Branded segment is set forth
below:

|                       |  |                    |         |                     |  |        |         |            |  |   |       |   |  |  |       |   
|---------------------- |  | ------------------ | ------- | ------------------- |  | ------ | ------- | ---------- |  | - | ----- | - |  |  | ----- | --
|                       |  |                    |         |                     |  |       
|                       |  | For the year ended |         |                    
|                       |  | December 31        |         | Increase/(Decrease)
|                       |  |                    |         |                    
|                       |  | 2000               |         | 1999                |  | Amount |         | Percentage
|                       |  |                    |         |                     |  |        |         |           
|                       |  |                   
|                       |  | (In millions)     
|Personal Cleansing     |  | $                  | 387.7   |                     |  | $      | 412.8   |            |  | $ | (25.1 | ) |  |  | (6.1  | %)
|Laundry Care           |  |                    | 475.6   |                     |  |        | 475.9   |            |  |   | (0.3  | ) |  |  | (0.1  | %)
|Air Fresheners         |  |                    | 216.5   |                     |  |        | 214.4   |            |  |   | 2.1   |   |  |  | 1.0   | % 
|Food Products          |  |                    | 197.0   |                     |  |        | 247.9   |            |  |   | (50.9 | ) |  |  | (20.5 | %)
|                       |  |                    |         |                     |  |        |         |            |  |   |       |   |  |  |       |   
|Total Domestic Branded |  | $                  | 1,276.8 |                     |  | $      | 1,351.0 |            |  | $ | (74.2 | ) |  |  | (5.5  | %)
|                       |  |                    |         |                     |  |        |         |            |  |   |       |   |  |  |       |   

The decline in Personal Cleansing resulted
primarily from our efforts to reduce end-of-quarter promotions
and shipments, the loss of sales in club stores, tough
comparisons to 1999 due to new product introductions, and the
previously disclosed Dial bar restage in 2000, offset in
part by the inclusion of the Coast acquisition. The
decline in Food Products resulted primarily from the previously
disclosed Y2K trade inventory build-up in 1999, our efforts to
reduce end-of-quarter promotions and shipments, increased
competition and tough comparisons to 1999 due to the heavy 1999
hurricane season. There was also a slight year-over-year decline
in Laundry Care due to softness in our non-Purex branded
laundry business, offset in

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part by an increase in the Purex branded
laundry business and the inclusion of the Zout
acquisition. The increase in Air Fresheners resulted primarily
from new product introductions.


Net sales of our International segment increased
14.0% to $187.6 million from $164.5 million in 1999.
This was primarily a result of the inclusion of the
Plusbelle acquisition in Argentina, partially offset by
lower sales due to increased competition in Argentina and lower
sales in our Mexico business caused by difficulties encountered
in transferring our sales administrative functions to the Dial/
Henkel Mexico joint venture.

Net sales in our Commercial Markets and Other
segment declined 11.2% to $57.9 million from
$65.2 million in 1999 primarily as a result of the
discontinuation of our merchant surfactant business at the end
of 1999 and a decline in soap pellet sales, partially offset by
an increase in glycerin sales.

Gross margin decreased 180 basis points to 49.3%
from 51.1% in 1999, excluding the effect of the restructuring
and special charges. The restructuring and special charges
decreased the gross margin by an additional 70 basis points to
48.6%. Gross margin was negatively impacted primarily by lower
overhead absorption in the Companys manufacturing
facilities associated with lower sales, and higher energy costs.

Selling, general and administrative expenses are
up 3.8% to $610.9 million from $588.4 million in 1999.
Excluding the special charges and other asset writedowns in
2000, selling, general and administrative expenses increased
2.6% to $603.5 in 2000. This increase resulted primarily from
continued marketing and promotional spending in 2000 compared to
lower than expected sales.

Interest and other expense increased 53.8% to
$50.3 million from $32.7 million in 1999. The increase was
primarily due to increased debt to fund the Coast,
Plusbelle, and Zout acquisitions, our investment in
the Dial/ Henkel joint ventures and our stock repurchase program.

Our share of the loss in the Dial/ Henkel joint
ventures was $7.1 million in 2000, excluding the effect of
the special charge relating to the Dial/ Henkel LLC and Dial/
Henkel Mexico joint ventures. The special charge of
$30.5 million was to record the discontinuation of Purex
Advanced, asset impairment for Custom Cleaner, and
loss on sale of our interest in the Dial/ Henkel Mexico joint
venture. The special charge for the joint venture is more fully
discussed in Note 3 and Note 6 to the Consolidated Financial
Statements.

Our gain on special items consists of a pre-tax
gain on sale of facility of $4.7 million resulting from the
sale of land in a transaction where we sold our DCI building and
accompanying 23-acre parcel in Scottsdale, Arizona to an
unrelated third party. In addition, we recorded a
$4.6 million curtailment gain resulting from changes to
retiree medical plan benefits. The anticipated annual savings of
$1.0 million resulting from our curtailment of these
benefits are expected to be invested in enhancements to other
Dial employee benefit plans.

Our consolidated effective income tax rate on
continuing operations for 2000 was 32.7%, down from 35.0% for
1999. The lower effective tax rate in 2000 was primarily due to
higher permanent items for tax purposes over a lower pre-tax
income.

Net income from continuing operations was
$34.3 million or $0.37 per diluted share, versus
$119.9 million, or $1.20 per diluted share in 1999. As
discussed above, this decrease in net income is primarily
attributable to lower sales, restructuring and special charges
and higher energy costs. For comparative

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purposes, the effect on earnings per share of the
discontinued operations, restructuring charges and one-time
gains recorded in 2000 and 1999 are set forth below, all net of
tax:


|                                                                                    |  |      |       |      |  |   |       |  
|----------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|                                                                                    |  | 2000 |       | 1999
|                                                                                    |  |      |       |     
|Diluted net income per share from continuing
	operations                            |  | $    | 0.37  |      |  | $ | 1.20  |  
|Discontinued operation                                                              |  |      | (0.49 | )    |  |   | (0.03 | )
|                                                                                    |  |      |       |      |  |   |       |  
|Net Loss per diluted share                                                          |  | $    | (0.12 | )    |  | $ | 1.17  |  
|                                                                                    |  |      |       |      |  |   |       |  
|Diluted net income per share from continuing
	operations                            |  | $    | 0.37  |      |  | $ | 1.20  |  
|Special charges                                                                     |  |      | 0.37  |      |  |   |      |  
|Special gain                                                                        |  |      | (0.08 | )    |  |   |      |  
|                                                                                    |  |      |       |      |  |   |       |  
|Earnings per share from continuous operations
	excluding one-time charges and gains |  | $    | 0.66  |      |  | $ | 1.20  |  
|                                                                                    |  |      |       |      |  |   |       |  

Liquidity and Capital Resources

Total debt decreased $149.7 million to
$445.3 million from $595.0 million at
December 31, 2000. We were able to reduce debt as a result
of cash flow from operations, control on new investments, a
lower dividend rate and proceeds from the sale of our Specialty
Personal Care business.

We generated cash from operations of
$159.4 million during 2001 compared to cash generated of
$125.6 million during the same period in 2000. The increase
in cash provided from operations was primarily attributable to
an improvement in working capital, favorable tax benefits from
losses incurred in 2000 and an increase in net income from
continuing operations.

Capital expenditures for 2001 were
$31.3 million versus $42.1 million for the comparable
period in 2000. Capital spending in 2002 is expected to increase
to approximately $39 million. These expenditures will be
concentrated primarily on equipment and information systems that
provide opportunities to reduce manufacturing, logistic and
administrative costs. However, our plans are dependent on the
availability of funds, as well as identification of projects
with sufficient returns. As a result, there can be no assurance
as to the quantity and the type of capital spending we may incur
in the future.

The following table outlines our future
contractual financial obligations, in thousands as of
December 31, 2001, due by period:

|                                      |  |       |         |           |  |       |        |       |  |         |        |  |  |   |         |  |  |   |         | 
|------------------------------------- |  | ----- | ------- | --------- |  | ----- | ------ | ----- |  | ------- | ------ |  |  | - | ------- |  |  | - | ------- | 
|                                      |  |       |         | Less than |  | 1-3   |        | 4-5   |  | After  
|                                      |  | Total |         | 1 year    |  | years |        | years |  | 5 years
|                                      |  |       |         |           |  |       |        |       |  |        
|Long-term debt                        |  | $     | 445,341 |           |  | $     |       |       |  | $       |       |  |  | $ | 246,768 |  |  | $ | 198,573 | 
|Operating leases(1)                   |  |       | 64,413  |           |  |       | 12,110 |       |  |         | 18,325 |  |  |   | 16,397  |  |  |   | 17,581  | 
|Unconditional purchase obligations(2) |  |       | 20,028  |           |  |       | 20,028 |       |  |         |       |  |  |   |        |  |  |   |        | 
|                                      |  |       |         |           |  |       |        |       |  |         |        |  |  |   |         |  |  |   |         | 
|Total contractual cash obligations    |  | $     | 529,782 |           |  | $     | 32,138 |       |  | $       | 18,325 |  |  | $ | 263,165 |  |  | $ | 216,154 | 
|                                      |  |       |         |           |  |       |        |       |  |         |        |  |  |   |         |  |  |   |         | 



---



|    |                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | See Note 16 to the consolidated financial
	statements included in this Form 10-K for additional
	information concerning our operating leases.      
|   
|(2) | Consists of obligations to purchase certain raw
	materials which are expected to be used in less than one year in
	the ordinary course of business.

The following table outlines our other future
commercial commitments, in thousands as of December 31,
2001, by the amount of commitment that expires per period:

|                             |  |       |     |           |  |       |     |       |  |         |   |  |  |   |   |  |  |   |   | 
|---------------------------- |  | ----- | --- | --------- |  | ----- | --- | ----- |  | ------- | - |  |  | - | - |  |  | - | - | 
|                             |  |       |     | Less than |  | 1-3   |     | 4-5   |  | After  
|                             |  | Total |     | 1 year    |  | years |     | years |  | 5 years
|                             |  |       |     |           |  |       |     |       |  |        
|Standby letters of credit    |  | $     | 300 |           |  | $     | 300 |       |  | $       |  |  |  | $ |  |  |  | $ |  | 
|Other commercial commitments |  |       | 250 |           |  |       | 250 |       |  |         |  |  |  |   |  |  |  |   |  | 
|                             |  |       |     |           |  |       |     |       |  |         |   |  |  |   |   |  |  |   |   | 
|Total commercial commitments |  | $     | 550 |           |  | $     | 550 |       |  | $       |  |  |  | $ |  |  |  | $ |  | 
|                             |  |       |     |           |  |       |     |       |  |         |   |  |  |   |   |  |  |   |   | 

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In the third quarter of 2001, we issued
$250 million of 7.0% Senior Notes due 2006. The net
proceeds from this offering were used to repay indebtedness
under our credit facility. The Indenture governing these Senior
Notes imposes restrictions on us 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 shall be 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.

In connection with the $250 million debt
offering we have entered into two separate interest rate swap
agreements. Collectively, they have a notional value of
$250 million. We receive fixed interest payments of 7.0% of
the notional amount and make payments equal to 6 month
LIBOR plus 182 basis points. Payments are exchanged each
February and August 15, at which time the floating interest
rate resets using the 6 month LIBOR rate in effect on that
day. The terms of the interest rate swaps are for five years.

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

The events of default under the Indentures
governing both the $250 million of 7.0% Senior Notes due
2006 and the $200 million of 6.5% Senior Notes due 2008
include the following:



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due
	under the notes                                                                                                                                                                             
|
| |  | failure to comply with our covenants under the
	Indentures                                                                                                                                                                                 
|
| |  | commencing any proceeding for bankruptcy,
	insolvency or reorganization, and                                                                                                                                                               
|
| |  | 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.

In the first quarter of 2002, we terminated our
existing credit facility and replaced it with a new
$150 million revolving credit facility. At
December 31, 2001, there were no amounts borrowed under the
then existing credit facility and we were in compliance with all
covenants.

The new facility is comprised of two commitments:
$75 million under commitments available until March of 2005
and $75 million under commitments available until March
2003. 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. The credit spread and the commitment fees paid for the
facility are subject to adjustment should our debt ratings
change.

Under the new 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 Argentinean
operations and/or our Armour food business and the previously
discussed $43.3 million 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. This new
facility also limits our ability, above certain amounts, to
incur additional unsecured indebtedness, sell, lease or transfer
assets, enter into sale and lease back transactions, place liens
on properties and complete certain acquisitions without our
lenders consent.

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The events of default under this new
$150 million credit facility include the following:



| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due                                                                                                                   
|
| |  | failure to comply with our covenants,
	representations and warranties under the credit agreement                                                                
|
| |  | default in the payment of, or failure to comply
	with our 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, and                                                                                        
|
| |  | a change in control of Dial.                                                                                                                                    

During the second quarter of 2000, we sold the
Dial Center for Innovation (DCI), formerly known as
the Dial Technical and Administration Center, and accompanying
23 acre parcel in Scottsdale, Arizona to an unrelated third
party developer for a purchase price of $15.3 million. At
that time, we entered into an operating lease with this third
party for the existing DCI building pending construction of a
new DCI building. We also entered into an operating lease with
an initial term of 15 years for a new DCI building that may
be constructed on an 11 acre portion of the 23 acre parcel. We
have accounted for the land portion of this transaction as a
sale and leaseback transaction in accordance with Statement of
Accounting Standards No. 98, Accounting for Leases.
The land and building have been removed from our consolidated
balance sheet and a gain of $6.7 million related to the
sale of land was recognized in the second quarter of 2000. In
the fourth quarter of 2000, we amended our agreements with the
developer and opted not to commit to constructing a new DCI
building. We paid the third party $4.2 million and, in
return, our obligation to construct a new building was replaced
with an exclusive option to construct a new DCI building. This
option expires on June 30, 2003. If we elect to construct a
new DCI building before this option expires, a portion of the
$4.2 million paid to the developer will be credited to the
construction costs of the new DCI building. In addition, the
lease on our existing DCI building was extended to August 2007
and the annual rent was increased to approximate a fair value
rent. As a result of these lease modifications, a
$2.0 million charge was recognized in the fourth quarter of
2000.

During the second quarter of 2000, we acquired
three businesses for $120.4 million in cash and assumed
liabilities of $1.3 million. The acquisitions included the
Coastbar soap business in the United States, the
Plusbellehair care business in Argentina and the Zoutstain remover business in the United States. During 2001, we
made an additional $894,000 earnout payment for the Zout
business due to the achievement of a specified level of gross
sales of Zout product. The purchase price for Zout
may increase if a specified level of gross sales of Zout
products is achieved in each of the three years following the
acquisition date.

At December 31, 2001, we had
$17.4 million invested in a money market account. 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 our senior notes was
$440.3 million at December 31, 2001.

At December 31, 2001, and December 31,
2000, a total of 10,847,386 and 10,772,046 shares, respectively,
were held in treasury.

New
Accounting Pronouncements

In August 2001, the Financial Accounting
Standards Board (FASB) issued Statement
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. This Statement supersedes Statement
No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of, and
the accounting and reporting provisions of APB Opinion
No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the
disposal of a segment of a business (as previously defined in
that Opinion). There was no effect from adopting Statement
No. 144 effective January 1, 2002, as required.

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In June 2001, the FASB issued Statement
No. 142, Goodwill and Other Intangible Assets.
Under the provisions of Statement No. 142, goodwill and
intangible assets with indefinite lives will no longer be
amortized but will be subject to a new method of testing for
impairment on an annual basis. We adopted Statement No. 142
effective January 1, 2002, as required and expect that its
adoption will reduce annual amortization expense by
approximately $7.6 million after tax. Pursuant to
FAS No. 142, we also will record a $43.3 million
after-tax impairment charge for Argentina in the first quarter
of 2002. Argentinas long-lived assets, including goodwill,
were not impaired under FAS No. 121 on December 31,
2001.

In May 2000, the Financial Accounting Standards
Boards Emerging Issues Task Force (EITF)
released Issue No. 00-14, Accounting for Certain
Sales Incentives. This issue addresses the recognition,
measurement, and income statement classification for certain
sales incentives, including coupons, rebates and free products.
We adopted EITF 00-14 effective January 1, 2002. The
implementation of this consensus requires us to change the way
we classify certain sales incentives that were recorded as
selling, general and administrative expenses. The cost of
coupons and rebates, which was approximately $10.9 million
in 2001, will be recorded as a reduction of net sales. The cost
of free products, which was approximately $10.2 million in
2001, will be recorded as cost of products sold.

In April 2001, the EITF reached a consensus on
Issue No. 00-25, Vendor Income Statement
Characterization of Consideration Paid to a Reseller of the
Vendors Products. The Issue addresses the accounting
and income statement classification of costs, other than those
directly addressed in Issue 00-14, which are incurred by a
vendor (typically a manufacturer or distributor) to or on behalf
of a customer (typically a retailer) in connection with the
customers purchase or promotion of the vendors
products. This Issue addresses the recognition and measurement
of such costs and whether a vendor should classify such costs in
its income statement when incurred as a reduction of revenues or
as an expense item.

We recorded all of the consideration we provide
to our customers to promote our products as trade promotion
expense. Such costs include consideration and allowances given
to customers for space in their stores (slotting fees),
consideration and allowances given to obtain favorable display
positions in the retailers stores and other promotional
activity. For income statement purposes, we recorded all trade
promotion expense as selling, general and administrative
expense. We adopted EITF 00-25 effective January 1,
2002. The implementation of this consensus requires that most or
all of the these types of trade promotion costs be recorded as a
reduction of sales rather than as selling, general and
administrative expenses. We expense these promotional activities
in the period during which the related product ships. We
incurred approximately $382.2 million of trade promotion
expense in 2001. The following table reflects historical net
sales of continuing operations by segment as adjusted for the
reclassification of these marketing expenses as a reduction of
sales:

|                             |       |      |           |           |  |      |         |           |  |   |           |           | 
|---------------------------- | ----- | ---- | --------- | --------- |  | ---- | ------- | --------- |  | - | --------- | --------- | 
|                             |       | 2001 |           | 2000      |  | 1999
|                             |       |      |           |           |  |     
|Domestic Branded             |       | $    | 1,079,025 |           |  | $    | 965,086 |           |  | $ | 1,025,799 |          
|International                |       |      | 135,228   |           |  |      | 128,799 |           |  |   | 125,208   |          
|Commercial Markets and Other |       |      | 55,921    |           |  |      | 57,510  |           |  |   | 64,186    |          
|                             |       |      |           |           |  |      |         |           |  |   |           |          
|                             | Total |      | $         | 1,270,174 |  |      | $       | 1,151,395 |  |   | $         | 1,215,193 | 
|                             |       |      |           |           |  |      |         |           |  |   |           |          

On February 19, 2002, we filed a Current
Report on Form 8-K disclosing 2001 and 2000 quarterly
historical net sales of continuing operations by segment as
adjusted for the reclassification of these marketing expenses as
a reduction of sales.

Factors That May Affect Future Results and
Financial Condition

Our future results and financial condition are
dependent upon our ability to successfully develop, manufacture
and market consumer products. Inherent in this process are a
number of factors that we must successfully manage to achieve
favorable future operating results and financial condition.
Potential risks and

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uncertainties that could affect our future
operating results and financial condition include, but are not
limited to, the factors discussed below.




| |   |                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We are taking a number of steps designed to
	improve our operations and financial results, including the
	special charges taken in the third quarter of 2001 and the
	second and third quarters of 2000. We may not achieve the
	benefits that we expect from these measures, which could harm
	our cash flow from operations.

We are taking a number of steps designed to
improve our operations and financial results. For example, in
the third quarter of 2001, we announced special charges totaling
$11.8 million. These charges and changes to our business
operations are expected to produce cost savings going forward.
However, we cannot make any assurance that these charges or any
of the changes made to our business operations will achieve the
benefits that we expect. The expected timing, estimated costs of
restructuring and special charges and the projected savings that
will result from these charges are based upon managements
judgment in light of the circumstances and estimates at the time
the judgments were made. Accordingly, the expected timing,
estimated costs and projected savings for these charges may
change as future events evolve, and the changes may be material.



| |   |                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We are considering selling substantial assets
	or the entire company. There can be no assurance that we will
	sell substantial assets or the entire company in the near future
	or at all. The uncertainty caused by our consideration of these
	alternatives could harm employee recruiting and retention and
	impair our relationships with our customers, suppliers and
	lenders.

We are considering selling substantial assets,
such as our Argentina operations or selected plants, or the
entire company. In this regard, in August 2001, we announced
that our Board believes that we may be best served by becoming a
part of a larger enterprise. We cannot assure you that any
transactions will occur or, if transactions do occur, that they
will improve our operating results or financial condition or be
on terms favorable to us. Moreover, the uncertainty created by
this environment may adversely impact our ability to retain
employees and our relationships with customers, suppliers and
lenders.



| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We have recently 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
involves substantial research, development and marketing
expenditures, which we may be unable to recoup if our new
products do not gain widespread market acceptance or we do not
execute a product roll out 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.



| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | As the result of a recent accounting
	pronouncement, our reported sales volumes will be lower than
	they otherwise would have been, which could potentially harm our
	credit rating and our ability to attract future
	financing.

Beginning in the first quarter of 2002, the
accounting rules regulating how we record net sales changed. We
will be required to record most of our trade promotion, coupon
and rebate costs as a reduction in our level of sales. We
currently record most of our trade promotion, coupon and rebate
costs as a selling, general and administrative expense. For
2001, we incurred approximately $393.1 million of trade
promotion, coupon and rebate costs. Although all companies in
our industry will face similar issues in modifying their
accounting

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practices, and investors are on notice of these
changes, decreased levels of our reported sales may cause
investors, financial analysts and rating services to view us,
and our industry as a whole, less favorably.




| |   |                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 poorer
	operating results.

Currently, 88% 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, particularly the
detergent, personal care and air freshener categories, 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. 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 or 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
retailers, including the ongoing bankruptcy proceedings
involving Kmart.



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

Our top ten customers accounted for 50%, 46% and
49% of net sales in 2001, 2000 and 1999 respectively. Wal-Mart,
including its affiliate Sams Club, was our largest
customer, accounting for 24% of net sales in 2001, 20% of net
sales in 2000, and 20% of net sales in 1999. 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.

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| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | 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, detergent chemicals and
meat have the most significant impact on our costs. Tallow (a
key ingredient in Dialbar soaps) has experienced price
fluctuations within the range of $0.09 and $0.25 per pound from
January 1, 1997, to December 31, 2001. Recently, the
price of tallow has been trading at the lower end of this
historical range. If prices were to increase, 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 soap products, increases in tallow prices would
adversely impact us more than our competitors. For the first
nine months of 2002, we have entered into an agreement with our
supplier that fixes the price we pay for tallow.



| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | We have made, and may continue to make,
	acquisitions that prove unsuccessful or strain or divert our
	resources.

We have made several acquisitions and may make
additional acquisitions or substantial investments in
complementary businesses or products in the future. All of the
acquisitions and investments described above entailed, and any
future acquisitions or investments would entail, various risks,
including the difficulty of assimilating the operations and
personnel of the acquired businesses or products, the potential
disruption of our ongoing business and, generally, our potential
inability to obtain the desired financial and strategic benefits
from the acquisition or investment. These factors could harm our
financial results. Any future acquisitions or investments could
result in substantial cash expenditures, and the incurrence of
additional debt and contingent liabilities. In addition, any
potential acquisitions or investments, whether or not they are
ultimately completed, could divert the attention of our
management and our other resources from other issues that are
more critical to our operations.



| |   |                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 antibacterial ingredients or making
antibacterial claims for some product forms, such as bar soap.
We use the antibacterial ingredient Triclosan in Liquid Dialand Triclocarban in Dialbar 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 its products, all of
which could make our products less attractive to customers and
could seriously harm our business.



| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our international business exposes us to
	currency fluctuations, limitations on foreign investment,
	import/ export controls, and unstable governments and legal
	systems, which could harm our sales, cash flows and
	stockholders equity.

In 2001, 12% of our sales were generated outside
U.S. markets. To date, our international acquisitions and joint
ventures have not yielded the benefits we had anticipated.
Further, these operations involve exposure to currency
fluctuations, limitations on foreign investment, import/export
controls, unstable governments and legal systems, and the
additional expense and risks inherent in operating in
geographically and culturally diverse locations, which could
harm our sales, cash flows and stockholders equity. For
example, we expect that our sales, financial results and
stockholders equity in 2002 will be adversely impacted by
the recent currency devaluation and economic deterioration in
Argentina.

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| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | 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 none of the
broadcasts disputed that Triclosan kills germs on the skin, some
third party experts did 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 to adverse publicity in the
future.

From time to time, consumer product companies,
including Dial, have had to recall certain 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.



| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | 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, five of which are currently active. In addition, in 1999
and in prior years we used nonlyphenol ethoxylate as an
ingredient in our liquid and powder detergent products. Certain
environmental and regulatory groups have raised concerns
regarding the toxicity of compounds produced from nonlyphenol
ethoxylate. As of December 31, 2001, we have accrued in our
financial statements approximately $1.4 million in reserves
for expenses related to environmental matters. We believe our
reserves are adequate, but these costs are difficult to predict
with certainty.



| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | 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 has
an employment contract with us. We cannot assure you 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 rate and commodity expense. We may use financial
instruments for the management of interest rate, foreign
currency or other risks in the future.

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Interest Rate Risk

At December 31, 2001, we had
$445.3 million in long-term debt outstanding, comprised of
$200 million ($198.5 million net of issue discount) in
6.5% bonds due 2008, and $250 million ($246.8 million
net of issue discount) in 7.0% bonds due 2006. Both bonds have
fixed interest rates to maturity.

We entered into two interest rate swaps which
together are designated as fair market value hedges of the
$250 million 7.0% bonds. The interest rate swaps have a
total notional amount of $250 million. Under the terms of
the swaps, we receive fixed payments equal to 7% of the notional
amount, paid semi-annually. We make floating payments equal to
6 month LIBOR plus 182 basis points on the notional
amount, paid semi-annually. The floating rate resets each
February 15 and August 15, using the 6-month LIBOR
rate on the day of the reset. At December 31, 2001, the
floating rate for the interest rate swaps was approximately
5.36%. On February 15, 2002, the floating interest rate
reset to 3.85%.

The interest rate swaps do subject us to the risk
of changes in LIBOR based interest rates. Each 50 basis point
change in the interest rate swaps floating rate changes our
pre-tax interest expense by $1.3 million. At
December 31, 2001, the interest rate swaps had a fair
market gain associated with them of $1.3 million.

Foreign Currency

We are subject to exposure from fluctuations in
foreign currency exchange rates, primarily U.S. Dollar/
Canadian Dollar, U.S. Dollar/ Mexican Peso and
U.S. Dollar/ Argentine Peso.

Historically, the Argentinean Pesos value
has been pegged by the Argentinean government as
equal to the U.S. Dollar. However, in late December 2001,
the Argentine government declared strict limitations on bank
withdrawals, effectively blocking all convertibility of
Argentine Pesos to US Dollars at December 31, 2001. On
January 11, 2002, trading resumed under the new Argentine
government policy of a dual exchange rate: 1.4 Argentine
Pesos/US Dollar for large commercial import and export
transactions and a free floating rate for all other
transactions. The average of the high and the low of the
free-floating rate on January 11, 2002 was 1.61 Argentine
Pesos/ U.S. Dollar. This rate was used to translate our
investment in Argentina at December 31, 2001, resulting in
a $62.2 million reduction in equity from the cumulative
currency translation adjustment.

On February 12, 2002, the Argentine
government abandoned the dual exchange rate and allowed the
Argentine Peso to float freely against other currencies. Each
10% change in the Argentine Peso/ U.S. Dollar exchange rate
from the 1.61 Argentine Peso/ U.S. Dollar rate used at
December 31, 2001, would result in a foreign currency
translation gain or loss of approximately $100,000 before tax. A
10% change in the exchange rate would also reduce our investment
in Argentina by $9.2 million, which would be reflected as a
currency translation adjustment in our stockholders equity.

At December 31, 2001, one U.S. Dollar
was worth 1.593 Canadian Dollars. For the year ended
December 31, 2001, the U.S. Dollar/ Canadian Dollar
exchange rate fluctuated between a high of $1.00/ C$1.604 to
$1.00/ C$1.493. If there were a 10% change in the exchange rates
for the U.S. Dollar to the Canadian Dollar from those at
December 31, 2001 we would have a foreign currency
translation gain or loss of approximately $650,000 before tax.

Commodity Price Risk

In the manufacture of our products we utilize a
number of commodities, such as tallow, coconut oil and meat. In
addition, we use a variety of products that are priced based on
underlying commodities, such as plastic bottles (resin). In the
normal course of business, we attempt to enter into supply
agreements that generally fix or set a range of prices of goods
to be purchased. These supply agreements can cover up to
12 months of supply for goods. Financial derivatives to
hedge or lock in the prices of these commodities over the long
term (greater than one year) generally are not available.

We do utilize financial derivatives to fix the
price of a portion of the raw material component of the
cardboard boxes and plastic bottles we use in our business. At
December 31, 2001, we had contracts in place to fix the
price of 1,666 tons monthly of cardboard and 1.25 million
tons monthly of high-density polyethylene

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for all of 2002. However, at December 31,
2001, the counter party of these contracts was in default under
the agreements and we subsequently terminated them. At
December 31, 2001, the contracts had an aggregate fair
market loss associated with them of approximately $250,000.


Employee Benefit Plan Expense

We offer our directors and management deferred
compensation plans. Under these plans, beginning in 1999,
participants can defer a portion of their compensation into Dial
stock units. For deferrals made in 1999, 2000 and 2001, deferred
compensation due to participants is included on the balance
sheet in stockholders equity under the caption
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 Employee Benefits.

For deferrals made in 1998, deferred compensation
due to participants and any accumulated investment gains or
losses is included on the balance sheet as a liability under the
captions Pension and other benefitsand
Other liabilities. We place the deferred
funds in a Rabbi Trust, which purchases life insurance policies
on the participants lives, with us as the beneficiary. The
policies have cash surrender value that accrue 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 Other assets.  To the extent
that the return on Dial shares is different from that of the
S&P 500, income or expense is generated by the 1998 plan.

32



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##### Table of Contents






Item 8.     Financial
Statements and Supplementary Data

Our consolidated financial statements as of
December 31, 2001, and for each of the fiscal years in the
three-year period ended December 31, 2001, together with
related notes and the report of Deloitte & Touche LLP
are set forth on the following pages.

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
consistently applied. The financial statements reflect, where
applicable, managements best estimates and judgments and
include disclosures and explanations that are relevant to an
understanding of 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 extensive and comprehensive internal
auditing program.

The Board of Directors, acting through its Audit
Committee, oversees the adequacy of the Companys 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.

|                                              |  |                                                    
|--------------------------------------------- |  | ---------------------------------------------------
|                                              |  |                                                    
|Herbert M. Baum                               |  | Conrad A. Conrad                                   
|Chairman, President & Chief Executive Officer |  | Executive Vice President & Chief Financial
	Officer

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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 as of December 31,
2001, and 2000, and the related consolidated statements of
operations and comprehensive income (loss), cash flows and
stockholders equity for each of the three fiscal years in
the period ended December 31, 2001. 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 as of
December 31, 2001, and 2000, and the results of its
operations and its cash flows for each of the three years in the
period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of
America.



---

Deloitte & Touche LLP


Phoenix, Arizona


January 24, 2002, except for Note 12, as


to which the date
is March 27, 2002


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##### Table of Contents



THE DIAL CORPORATION

CONSOLIDATED BALANCE SHEET

|                                                |                                                                                                         |                            |           |          |         |   |           |          |           | 
|----------------------------------------------- | ------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | -------- | ------- | - | --------- | -------- | --------- | 
|                                                |                                                                                                         |                           
|                                                |                                                                                                         | As of December 31         
|                                                |                                                                                                         |                           
|                                                |                                                                                                         | 2001                       |           | 2000    
|                                                |                                                                                                         |                            |           |         
|                                                |                                                                                                         |                           
|                                                |                                                                                                         | (In thousands, except     
|                                                |                                                                                                         | share data)               
|ASSETS                                         
|Current Assets:                                 |                                                                                                         |                            |           |          |         |   |           |         
|                                                | Cash and cash equivalents                                                                               |                            | $         | 29,414   |         |   | $         | 6,733    |          
|                                                | Receivables, less allowance of $5,131 and $5,574                                                        |                            |           | 94,189   |         |   |           | 136,041  |          
|                                                | Inventories                                                                                             |                            |           | 129,977  |         |   |           | 144,806  |          
|                                                | Deferred income taxes                                                                                   |                            |           | 23,412   |         |   |           | 16,573   |          
|                                                | Income tax receivable                                                                                   |                            |           | 12,567   |         |   |           |         |          
|                                                | Current assets of discontinued operation                                                                |                            |           |         |         |   |           | 80,932   |          
|                                                | Other current assets                                                                                    |                            |           | 9,492    |         |   |           | 3,403    |          
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|                                                |                                                                                                         | Total current assets       |           |          | 299,051 |   |           |          | 388,488   | 
|Property and equipment, net                     |                                                                                                         |                            | 252,957   |          |         |   | 294,924   |         
|Deferred income taxes                           |                                                                                                         |                            | 49,817    |          |         |   | 48,623    |         
|Intangibles, net                                |                                                                                                         |                            | 403,811   |          |         |   | 421,744   |         
|Non-current assets of discontinued operation    |                                                                                                         |                            |          |          |         |   | 205,620   |         
|Other assets                                    |                                                                                                         |                            | 18,480    |          |         |   | 33,318    |         
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|                                                |                                                                                                         | $                          | 1,024,116 |          |         | $ | 1,392,717 |         
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|LIABILITIES AND STOCKHOLDERS
	EQUITY          
|Current Liabilities:                            |                                                                                                         |                            |           |          |         |   |           |         
|                                                | Trade accounts payable                                                                                  |                            | $         | 98,952   |         |   | $         | 128,093  |          
|                                                | Short-term borrowings                                                                                   |                            |           |         |         |   |           | 125,776  |          
|                                                | Income taxes payable                                                                                    |                            |           |         |         |   |           | 10,746   |          
|                                                | Current liabilities of discontinued operation                                                           |                            |           |         |         |   |           | 30,399   |          
|                                                | Other current liabilities                                                                               |                            |           | 151,630  |         |   |           | 110,587  |          
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|                                                |                                                                                                         | Total current liabilities  |           |          | 250,582 |   |           |          | 405,601   | 
|Long-term debt                                  |                                                                                                         |                            | 445,341   |          |         |   | 469,271   |         
|Pension and other benefits                      |                                                                                                         |                            | 239,286   |          |         |   | 217,035   |         
|Other liabilities                               |                                                                                                         |                            | 7,029     |          |         |   | 6,903     |         
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|                                                |                                                                                                         | Total liabilities          |           |          | 942,238 |   |           |          | 1,098,810 | 
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|Commitments and contingencies (Notes 16 and 20) |                                                                                                         |                            |          |          |         |   |          |         
|Stockholders Equity:                           |                                                                                                         |                            |           |          |         |   |           |         
|                                                | Preferred stock, $.01 par value, 10,000,000
	shares authorized; no shares issued and outstanding        |                            |           |         |         |   |           |         |          
|                                                | Common stock, $.01 par value, 300,000,000 shares
	authorized; 105,712,924 and 105,679,849 shares issued |                            |           | 1,057    |         |   |           | 1,057    |          
|                                                | Additional capital                                                                                      |                            |           | 420,611  |         |   |           | 402,024  |          
|                                                | Retained income                                                                                         |                            |           | 6,736    |         |   |           | 153,600  |          
|                                                | Accumulated other comprehensive loss                                                                    |                            |           | (75,502  | )       |   |           | (3,465   | )        
|                                                | Employee benefits                                                                                       |                            |           | (55,542  | )       |   |           | (45,128  | )        
|                                                | Treasury stock, 10,847,386 and 10,772,046 shares
	held                                                  |                            |           | (215,482 | )       |   |           | (214,181 | )        
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|                                                |                                                                                                         | Total stockholders equity |           |          | 81,878  |   |           |          | 293,907   | 
|                                                |                                                                                                         |                            |           |          |         |   |           |         
|                                                |                                                                                                         | $                          | 1,024,116 |          |         | $ | 1,392,717 |         
|                                                |                                                                                                         |                            |           |          |         |   |           |         

See Notes to Consolidated Financial Statements.

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THE DIAL CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)

|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |           |  
|----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------- | --------- | --------- | - | ---- | --------- | --------- | - | - | --------- | --------- | -
|                                                                                    |                                                                                         |                                      
|                                                                                    |                                                                                         | Year Ended December 31               
|                                                                                    |                                                                                         |                                      
|                                                                                    |                                                                                         | 2001                                  |           | 2000      |   | 1999
|                                                                                    |                                                                                         |                                       |           |           |   |     
|                                                                                    |                                                                                         |                                      
|                                                                                    |                                                                                         | (In thousands, except per share data)
|Net sales                                                                           |                                                                                         | $                                     | 1,663,328 |           |   | $    | 1,522,274 |           |   | $ | 1,580,702 |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Costs and expenses:                                                                 |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Cost of products sold                                                                   |                                       |           | 826,625   |   |      |           | 771,193   |   |   |           | 773,570   |  
|                                                                                    | Asset writedowns and discontinued product
	inventories as a result of special charges   |                                       |           | 10,388    |   |      |           | 10,519    |   |   |           |          |  
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Total cost of products sold                                                             |                                       |           | 837,013   |   |      |           | 781,712   |   |   |           | 773,570   |  
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Selling, general and administrative expenses                                            |                                       |           | 667,452   |   |      |           | 603,527   |   |   |           | 588,438   |  
|                                                                                    | Special charges and other asset writedowns                                              |                                       |           | 330       |   |      |           | 7,417     |   |   |           |          |  
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    |                                                                                         |                                       | 667,782   |           |   |      | 610,944   |           |   |   | 588,438   |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Total costs and expenses                                                                |                                       |           | 1,504,795 |   |      |           | 1,392,656 |   |   |           | 1,362,008 |  
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Operating income                                                                    |                                                                                         |                                       | 158,533   |           |   |      | 129,618   |           |   |   | 218,694   |          
|Interest and other expenses                                                         |                                                                                         |                                       | (47,990   | )         |   |      | (50,306   | )         |   |   | (32,712   | )        
|Net income (loss) of joint ventures
	(including special charges of $30,471 in 2000) |                                                                                         |                                       | 2,990     |           |   |      | (37,615   | )         |   |   | (1,347    | )        
|Other income  gain on special items                                                |                                                                                         |                                       |          |           |   |      | 9,243     |           |   |   |          |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Income from continuing operations before income
	taxes                              |                                                                                         |                                       | 113,533   |           |   |      | 50,940    |           |   |   | 184,635   |          
|Income taxes                                                                        |                                                                                         |                                       | 43,690    |           |   |      | 16,650    |           |   |   | 64,689    |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Income from continuing operations                                                   |                                                                                         |                                       | 69,843    |           |   |      | 34,290    |           |   |   | 119,946   |          
|Discontinued operation:                                                             |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Loss from operation of discontinued Specialty
	Personal Care segment, net of income tax |                                       |           | (3,691    | ) |      |           | (45,298   | ) |   |           | (3,180    | )
|                                                                                    | Loss on disposal of discontinued Specialty
	Personal Care segment, net of income tax    |                                       |           | (198,403  | ) |      |           |          |   |   |           |          |  
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Total loss from discontinued operation                                              |                                                                                         |                                       | (202,094  | )         |   |      | (45,298   | )         |   |   | (3,180    | )        
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|NET INCOME (LOSS)                                                                   |                                                                                         | $                                     | (132,251  | )         |   | $    | (11,008   | )         |   | $ | 116,766   |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Basic net income (loss) per common share:                                           |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Income from continuing operations                                                       |                                       | $         | 0.76      |   |      | $         | 0.37      |   |   | $         | 1.22      |  
|                                                                                    | Loss from discontinued operation                                                        |                                       |           | (2.21     | ) |      |           | (0.49     | ) |   |           | (0.03     | )
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|NET INCOME (LOSS) PER SHARE 
	BASIC                                                |                                                                                         | $                                     | (1.45     | )         |   | $    | (0.12     | )         |   | $ | 1.19      |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Diluted net income (loss) per common share:                                         |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Income from continuing operations                                                       |                                       | $         | 0.76      |   |      | $         | 0.37      |   |   | $         | 1.20      |  
|                                                                                    | Loss from discontinued operation                                                        |                                       |           | (2.21     | ) |      |           | (0.49     | ) |   |           | (0.03     | )
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|NET INCOME (LOSS) PER SHARE 
	DILUTED                                              |                                                                                         | $                                     | (1.45     | )         |   | $    | (0.12     | )         |   | $ | 1.17      |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Weighted average basic shares outstanding                                           |                                                                                         |                                       | 91,451    |           |   |      | 92,237    |           |   |   | 98,255    |          
|Weighted average equivalent shares                                                  |                                                                                         |                                       |          |           |   |      |          |           |   |   | 1,810     |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Weighted average diluted shares outstanding                                         |                                                                                         |                                       | 91,451    |           |   |      | 92,237    |           |   |   | 100,065   |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|NET INCOME (LOSS)                                                                   |                                                                                         | $                                     | (132,251  | )         |   | $    | (11,008   | )         |   | $ | 116,766   |          
|Other comprehensive income (loss):                                                  |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|                                                                                    | Foreign currency translation adjustment                                                 |                                       |           | (60,146   | ) |      |           | (370      | ) |   |           | 295       |  
|                                                                                    | Minimum pension liability adjustment, net of tax                                        |                                       |           | (11,891   | ) |      |           | (244      | ) |   |           | 5,803     |  
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|Other comprehensive income (loss)                                                   |                                                                                         |                                       | (72,037   | )         |   |      | (614      | )         |   |   | 6,098     |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          
|COMPREHENSIVE INCOME (LOSS)                                                         |                                                                                         | $                                     | (204,288  | )         |   | $    | (11,622   | )         |   | $ | 122,864   |          
|                                                                                    |                                                                                         |                                       |           |           |   |      |           |           |   |   |           |          

See Notes to Consolidated Financial Statements.

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THE DIAL CORPORATION

STATEMENT OF CONSOLIDATED CASH FLOWS

|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |        |         |  
|----------------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------- | -------- | ------- | ------- | ---- | -------- | ------ | ------- | - | -------- | ------ | ------- | -
|                                                                                          |                                             |                                  
|                                                                                          |                                             | Year Ended December 31           
|                                                                                          |                                             |                                  
|                                                                                          |                                             | 2001                              |          | 2000    |         | 1999
|                                                                                          |                                             |                                   |          |         |         |     
|                                                                                          |                                             |                                  
|                                                                                          |                                             | (In thousands)                   
|CASH FLOWS PROVIDED (USED) BY OPERATING
	ACTIVITIES:                                      |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Net income (loss)                                                                         |                                             | $                                 | (132,251 | )       |         | $    | (11,008  | )      |         | $ | 116,766  |       
|Adjustments to reconcile net income to net cash
	provided (used) by operating activities: |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|                                                                                          | Discontinued operation, net of tax          |                                   |          | 202,094 |         |      |          | 45,298 |         |   |          | 3,180  |        
|                                                                                          | Depreciation                                |                                   |          | 40,089  |         |      |          | 39,708 |         |   |          | 30,631 |        
|                                                                                          | Amortization                                |                                   |          | 9,970   |         |      |          | 8,298  |         |   |          | 6,381  |        
|                                                                                          | Deferred income taxes                       |                                   |          | (2,607  | )       |      |          | 1,876  |         |   |          | 4,084  |        
|Special charges and asset writedowns                                                      |                                             |                                   | 11,787   |         |         |      | 48,407   |        |         |   |         |       
|                                                                                          | Gain on special items                       |                                   |          |        |         |      |          | (9,243 | )       |   |          |       |        
|                                                                                          | Change in operating assets and liabilities: |                                   |          |         |         |      |          |        |         |   |          |        |        
|                                                                                          |                                             | Receivables                       |          |         | 28,945  |      |          |        | 16,978  |   |          |        | (16,044 | )
|                                                                                          |                                             | Inventories                       |          |         | 9,466   |      |          |        | 824     |   |          |        | (23,618 | )
|                                                                                          |                                             | Trade accounts payable            |          |         | (23,668 | )    |          |        | 6,559   |   |          |        | 4,157   |  
|                                                                                          |                                             | Income taxes payable              |          |         | (25,950 | )    |          |        | (33,579 | ) |          |        | 33,946  |  
|                                                                                          |                                             | Other assets and liabilities, net |          |         | 41,552  |      |          |        | 11,452  |   |          |        | (12,274 | )
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Net cash provided by operating activities                                                 |                                             |                                   | 159,427  |         |         |      | 125,570  |        |         |   | 147,209  |       
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|CASH FLOWS PROVIDED (USED) BY INVESTING
	ACTIVITIES:                                      |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Capital expenditures                                                                      |                                             |                                   | (31,340  | )       |         |      | (42,088  | )      |         |   | (62,495  | )     
|Investment in and loans to joint ventures                                                 |                                             |                                   |         |         |         |      | (13,490  | )      |         |   | (11,811  | )     
|Acquisition of businesses, net of cash acquired                                           |                                             |                                   | (881     | )       |         |      | (119,152 | )      |         |   |         |       
|Proceeds from disposition of discontinued
	operation                                      |                                             |                                   | 8,000    |         |         |      |         |        |         |   |         |       
|Investment in and transfers from discontinued
	operation                                  |                                             |                                   | 46,345   |         |         |      | (13,728  | )      |         |   | (17,902  | )     
|Proceeds from sale of assets                                                              |                                             |                                   | 2,305    |         |         |      | 10,958   |        |         |   |         |       
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Net cash provided (used) by investing
	activities                                         |                                             |                                   | 24,429   |         |         |      | (177,500 | )      |         |   | (92,208  | )     
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|CASH FLOWS PROVIDED (USED) BY FINANCING
	ACTIVITIES:                                      |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Net change in long-term debt                                                              |                                             |                                   | (23,930  | )       |         |      | 168,320  |        |         |   | 20,648   |       
|Common stock purchased for treasury                                                       |                                             |                                   |         |         |         |      | (83,144  | )      |         |   | (100,216 | )     
|Net change in short-term bank loans                                                       |                                             |                                   | (125,776 | )       |         |      | 65,613   |        |         |   | 49,874   |       
|Dividends paid on common stock                                                            |                                             |                                   | (14,613  | )       |         |      | (25,762  | )      |         |   | (31,407  | )     
|Cash proceeds from stock options                                                          |                                             |                                   | 3,370    |         |         |      | 874      |        |         |   | 18,158   |       
|Net change in receivables sold                                                            |                                             |                                   |         |         |         |      | (73,177  | )      |         |   | (16,823  | )     
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Net cash provided (used) by financing
	activities                                         |                                             |                                   | (160,949 | )       |         |      | 52,724   |        |         |   | (59,766  | )     
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Effects of foreign exchange rate changes on cash                                          |                                             |                                   | (226     | )       |         |      |         |        |         |   |         |       
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|Net increase (decrease) in cash and cash
	equivalents                                     |                                             |                                   | 22,681   |         |         |      | 794      |        |         |   | (4,765   | )     
|Cash and cash equivalents, beginning of year                                              |                                             |                                   | 6,733    |         |         |      | 5,939    |        |         |   | 10,704   |       
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       
|CASH AND CASH EQUIVALENTS, END OF
	YEAR                                                   |                                             | $                                 | 29,414   |         |         | $    | 6,733    |        |         | $ | 5,939    |       
|                                                                                          |                                             |                                   |          |         |         |      |          |        |         |   |          |       

See Notes to Consolidated Financial Statements.

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##### Table of Contents



THE DIAL CORPORATION

STATEMENT OF CONSOLIDATED STOCKHOLDERS
EQUITY

|                           |                                                                |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          |          |   |   |         |         |   |   |         |          |  
|-------------------------- | -------------------------------------------------------------- | -------------- | ------- | ---------- |  | -------- | ----- | -------- |  | -------- | ------- | ------------- | - | ------------- | ------- | -------- | - | - | -------- | ------- | - | - | -------- | -------- | - | - | ------- | ------- | - | - | ------- | -------- | -
|                           |                                                                |                |         |            |  |          |       |          |  |          |         | Accumulated   |   |              
|                           |                                                                | Common Stock   |         |            |  |          |       |          |  | Common   |         | Other         |   |              
|                           |                                                                |                |         | Additional |  | Retained |       | Employee |  | Stock in |         | Comprehensive |   |              
|                           |                                                                | Shares         |         | Amount     |  | Capital  |       | Income   |  | Benefits |         | Treasury      |   | Income (loss) |         | Total   
|                           |                                                                |                |         |            |  |          |       |          |  |          |         |               |   |               |         |         
|                           |                                                                |               
|                           |                                                                | (In thousands)
|Balance, December 31, 1998 |                                                                |                | 104,355 |            |  | $        | 1,044 |          |  | $        | 450,767 |               |   | $             | 105,011 |          |   | $ | (129,111 | )       |   | $ | (28,537  | )        |   | $ | (8,949  | )       |   | $ | 390,225 |         
|                           | Exercise of stock options                                      |                |         | 1,007      |  |          |       | 10       |  |          |         | 13,269        |   |               |         |          |   |   |          | 15,662  |   |   |          | (1,469   | ) |   |         |         |   |   |         | 27,472   |  
|                           | Common stock purchased for treasury                            |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          | (100,216 | ) |   |         |         |   |   |         | (100,216 | )
|                           | Dividends on common stock                                      |                |         |            |  |          |       |          |  |          |         |               |   |               |         | (31,407  | ) |   |          |         |   |   |          |          |   |   |         |         |   |   |         | (31,407  | )
|                           | Change in employee benefits                                    |                |         | 119        |  |          |       | 1        |  |          |         | (15,059       | ) |               |         |          |   |   |          | 17,647  |   |   |          | (256     | ) |   |         |         |   |   |         | 2,333    |  
|                           | Net income                                                     |                |         |            |  |          |       |          |  |          |         |               |   |               |         | 116,766  |   |   |          |         |   |   |          |          |   |   |         |         |   |   |         | 116,766  |  
|                           | Other comprehensive income                                     |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          |          |   |   |         | 6,098   |   |   |         | 6,098    |  
|                           |                                                                |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          |          |   |   |         |         |   |   |         |         
|Balance, December 31, 1999 |                                                                |                | 105,481 |            |  |          | 1,055 |          |  |          | 448,977 |               |   |               | 190,370 |          |   |   | (95,802  | )       |   |   | (130,478 | )        |   |   | (2,851  | )       |   |   | 411,271 |         
|                           | Exercise of stock options                                      |                |         | 57         |  |          |       | 1        |  |          |         | 359           |   |               |         |          |   |   |          | 630     |   |   |          | (116     | ) |   |         |         |   |   |         | 874      |  
|                           | Common stock purchased for treasury                            |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          | (83,144  | ) |   |         |         |   |   |         | (83,144  | )
|                           | Dividends on common stock                                      |                |         |            |  |          |       |          |  |          |         |               |   |               |         | (25,762  | ) |   |          |         |   |   |          |          |   |   |         |         |   |   |         | (25,762  | )
|                           | Change in employee benefits                                    |                |         | 142        |  |          |       | 1        |  |          |         | (47,312       | ) |               |         |          |   |   |          | 50,044  |   |   |          | (443     | ) |   |         |         |   |   |         | 2,290    |  
|                           | Net loss                                                       |                |         |            |  |          |       |          |  |          |         |               |   |               |         | (11,008  | ) |   |          |         |   |   |          |          |   |   |         |         |   |   |         | (11,008  | )
|                           | Other comprehensive loss                                       |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          |          |   |   |         | (614    | ) |   |         | (614     | )
|                           |                                                                |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          |          |   |   |         |         |   |   |         |         
|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    |  
|                           | Common stock purchased for treasury 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  |         
|                           |                                                                |                |         |            |  |          |       |          |  |          |         |               |   |               |         |          |   |   |          |         |   |   |          |          |   |   |         |         |   |   |         |         

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. We do
approximately 88% of our business in the United States.

On August 28, 2001, we completed the sale of
our Specialty Personal Care (SPC) business. The
financial statements have been prepared to reflect our
historical financial position and results of operations and cash
flows as adjusted for the reclassification of the SPC business
as a discontinued operation. The historical results of
operations of the SPC business up to its date of disposition and
the estimated loss on the sale of SPC are reported as a
discontinued operation in the accompanying consolidated
financial statements.

On August 3, 2001, we announced that our
Board of Directors had reviewed our options as a company and
decided that our long-term interests and those of our
shareholders would be best served if we were part of a larger
enterprise. In this regard, although we will continue to focus
on improving our operating results as a standalone company, the
Board believes that we should concurrently explore opportunities
to become part of a larger company. No time constraints have
been set for any transaction, and any decision regarding any
potential transactions will be based upon the best interests of
our shareholders. Accordingly, there is no assurance that any
sale, merger or other transactions involving Dial or any of its
businesses will occur in the near future or at all.

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. We account
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 consolidated financial statements
are prepared in accordance with accounting principles generally
accepted in the United States of America, which require
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant
estimates include assumptions used to determine reserves for
sales incentives, assumptions used in measuring long-lived
assets for impairment, assumptions used to value deferred tax
assets and assumptions used to determine other reserves and
allowances, which consist primarily of reserves for discontinued
operations, self insurance and environmental.

Revenue Recognition.Sales are recorded at the time
products are shipped to customers and title passes. Sales
discounts are recorded at the time of shipment.

Major Customers.Wal-Mart, including its affiliate
Sams Club, was our largest customer, accounting for 24%,
20%, and 20% of net sales in 2001, 2000 and 1999, 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.

In January 2002, Kmart Corporation filed for
Chapter 11 bankruptcy protection. We sell products to Kmart
primarily through Kmarts distributor, Fleming Companies,
Inc., but also sell products to Kmart directly. As of
January 22, 2001, the date on which Kmart filed for
bankruptcy protection, our exposure for amounts owed to us by
Kmart directly and by Fleming for products sold to Kmart was
approximately $0.5 million. Fleming has been approved as a
critical vendor for Kmart and it is our understanding that
Fleming is receiving timely payment from Kmart for sales made
after the date that Kmart filed for bankruptcy protection. In
addition, we believe that the amounts we owe to Kmart exceed the
balance Kmart owes us.

39



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


It is currently expected that Kmart will close
approximately 300 stores in its effort to emerge from
bankruptcy. We currently believe that these store closings could
have an adverse effect on our sales until the inventories from
closed stores are sold or liquidated and trade inventories for
our products return to normal levels. The situation could be
worse than expected if the number of actual store closings
exceeds current estimates. No assurances can be given concerning
the impact Kmarts bankruptcy will have on our future sales
and operating results.

Net domestic sales to the food and mass channels
represent 79.0%, 78.9%, and 81.3% of our domestic sales in 2001,
2000, and 1999.

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 internal and external
research and development expenditures totaled approximately
$14.3 million, $12.2 million and $10.1 million in
2001, 2000, and 1999. 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.

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

Long-Lived Assets.In accordance with Financial
Accounting Standards Board (FASB) Statement
No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, we
evaluate the recoverability of property and equipment and
intangibles not held for sale by comparing the carrying amount
of the asset or group of assets against the estimated
undiscounted future net cash flows expected to result from the
use of the asset or group of assets and their eventual
disposition. Goodwill from acquisitions related to a group of
assets being evaluated for impairment is included in the
evaluation. If the undiscounted estimated cash flows are less
than the carrying value of the asset or group of assets being
reviewed, an impairment loss would be recorded. The loss would
be measured based on the estimated fair value of the asset or
group of assets. The estimated fair value would be based on the
best information available under the circumstances, including
prices for similar assets and the results of valuation
techniques, including the present value of expected future cash
flows using a discount rate commensurate with the risks
involved. For assets to be disposed of, we report long-lived
assets at the lower of the carrying amount or fair value less
cost to sell. Please refer to New Accounting Pronouncements of
this footnote for further detail.

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

Intangibles.Intangibles are carried at cost less
accumulated amortization. Intangibles that arose prior to
November 1, 1970, have not been amortized. Goodwill arising
on or after November 1, 1970, was amortized on the
straight-line method over the periods of expected benefit but
not in excess of 40 years. Other intangible assets,
including trademarks, patents and customer lists, are amortized
over useful lives ranging from 10 to 40 years.

Effective January 1, 2002, goodwill and
other intangibles with indefinite lives will cease to be
amortized. Goodwill and intangible assets with definite lives,
primarily consisting of patents, will continue to be amortized
on the straight-line method over the periods of expected
benefit. Intangible assets with indefinite lives will be
analyzed for impairment on an annual basis. Please refer to
New Accounting Pronouncementsof this footnote for
further detail.

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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, primarily in the event of stock option exercise.

At December 31, 2001, there were 105,712,924
shares of common stock issued and 94,865,538 shares outstanding.
At December 31, 2001, and December 31, 2000, a total
of 3,175,315 and 3,654,344, respectively, of the issued shares
were held by the Employee Equity Trust. At December 31,
2001, and December 31, 2000, a total of 10,847,386 and
10,772,046 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 $.01
per share, none of which has been issued.

New Accounting Pronouncements.In August 2001, the FASB issued
Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This Statement supersedes
Statement No. 121. There was no effect from adopting
Statement No. 144 effective January 1, 2002, as
required. Statement No. 144 retains the requirements of
Statement No. 121 to evaluate the recoverability of
property and equipment and intangibles with definite lives not
held for sale by comparing the carrying amount of the asset or
group of assets against the undiscounted future net cash flows
expected to result from the use of the asset or group of assets
and their eventual disposition. If the undiscounted estimated
cash flows are less than the carrying value of the asset or
group of assets being reviewed, an impairment loss would be
recorded. Assets to be disposed of would be reported at the
lower of the carrying amount or fair value, less cost to sell.

In June 2001, the FASB issued Statement
No. 142, Goodwill and Other Intangible Assets.
Under the provisions of Statement No. 142, goodwill and
intangible assets with indefinite lives will no longer be
amortized but will be subject to a new method of testing
goodwill for impairment on an annual basis. We adopted Statement
No. 142 effective January 1, 2002, as required and
expect that its adoption will reduce annual amortization expense
by approximately $7.6 million after tax. Pursuant to FAS
No. 142, we also will record a $43.3 million after-tax
impairment charge for Argentina in the first quarter of 2002.
Argentinas long-lived assets, including goodwill, were not
impaired under FAS No. 121 on December 31, 2001.

In May 2000, the Financial Accounting Standards
Boards Emerging Issues Task Force (EITF)
released Issue No. 00-14, Accounting for Certain
Sales Incentives. This issue addresses the recognition,
measurement, and income statement classification for certain
sales incentives, including coupons, rebates and free products.
We adopted EITF 00-14 effective January 1, 2002. The
implementation of this consensus requires us to change the way
we classify certain sales incentives that were recorded as
selling, general and administrative expenses. The cost of
coupons and rebates, which was approximately $10.9 million
in 2001, will be recorded as a reduction of net sales. The cost
of free products, which was approximately $10.2 million in
2001, will be recorded as cost of products sold.

In April 2001, the EITF reached a consensus on
Issue No. 00-25, Vendor Income Statement
Characterization of Consideration Paid to a Reseller of the
Vendors Products. The Issue addresses the accounting
and income statement classification of costs, other than those
directly addressed in Issue 00-14, which are incurred by a
vendor (typically a manufacturer or distributor) to or on behalf
of a customer (typically a retailer) in connection with the
customers purchase or promotion of the vendors
products. This Issue addresses the recognition and measurement
of such costs and whether a vendor should classify such costs in
its income statement when incurred as a reduction of revenues or
as an expense item.

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


We recorded all of the consideration we provide
to our customers to promote our products as trade promotion
expense. Such costs include consideration and allowances given
to customers for space in their stores (slotting fees),
consideration and allowances given to obtain favorable display
positions in the retailers stores and other promotional
activity. For income statement purposes, we recorded all trade
promotion expense as selling, general and administrative
expense. We adopted EITF 00-25 effective January 1,
2002. The implementation of this consensus requires that most or
all of the these types of trade promotion costs be recorded as a
reduction of sales rather than as selling, general and
administrative expenses. We expense these promotional activities
in the period during which the related product ships. We
incurred approximately $382.2 million of trade promotion
expense in 2001. The following table reflects historical net
sales of continuing operations by segment as adjusted for the
reclassification of these marketing expenses as a reduction of
sales:

|                             |       |      |           |           |  |      |         |           |  |   |           |           | 
|---------------------------- | ----- | ---- | --------- | --------- |  | ---- | ------- | --------- |  | - | --------- | --------- | 
|                             |       | 2001 |           | 2000      |  | 1999
|                             |       |      |           |           |  |     
|Domestic Branded             |       | $    | 1,079,025 |           |  | $    | 965,086 |           |  | $ | 1,025,799 |          
|International                |       |      | 135,228   |           |  |      | 128,799 |           |  |   | 125,208   |          
|Commercial Markets and Other |       |      | 55,921    |           |  |      | 57,510  |           |  |   | 64,186    |          
|                             |       |      |           |           |  |      |         |           |  |   |           |          
|                             | Total |      | $         | 1,270,174 |  |      | $       | 1,151,395 |  |   | $         | 1,215,193 | 
|                             |       |      |           |           |  |      |         |           |  |   |           |          

Derivative Financial Instruments.Effective January 1, 2001, we
adopted FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities
(FAS 133). FAS 133 requires that all derivative
financial instruments that qualify for hedge accounting, such as
interest rate swap contracts and forward purchase contracts, be
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 periodically in income or
shareholders equity (as a component of comprehensive
income), depending on whether the derivative is being used to
hedge changes in fair value or cash flows. The adoption of
FAS 133 did not have a material effect on our operating
results or financial condition. Our use of financial instruments
is limited to purposes other than trading and includes the
management of interest rate risk, employee benefits and
commodity expense. 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 or
other risks in the future.

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

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Note 3.     Special
Charges

2001 Special
Charges

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 City manufacturing facility. We recorded
$11.8 million ($10.2 million after tax or $0.11 per
share) related to these special charges. The activity relating
to the 2001 Special Charges is summarized below:

|                                                       |       |                |       |             |  |         |        |             |   |   |        |        |   |   |       |       | 
|------------------------------------------------------ | ----- | -------------- | ----- | ----------- |  | ------- | ------ | ----------- | - | - | ------ | ------ | - | - | ----- | ----- | 
|                                                       |       |                |       |             |  | Amount  |        |            
|                                                       |       | 2001           |       |             |  | Charged |        | Ending     
|                                                       |       | Total          |       | Cash Spent  |  | Against |        | Reserves at
|                                                       |       | Charges        |       | During 2001 |  | Assets  |        | 12/31/01   
|                                                       |       |                |       |             |  |         |        |            
|                                                       |       |               
|                                                       |       | (In thousands)
|Employee separations                                   |       | $              | 2,490 |             |  | $       | (1,667 | )           |   | $ |       |        |   | $ | 823   |      
|Asset writedowns and discontinued product
	inventories |       |                | 4,301 |             |  |         |       |             |   |   | (4,301 | )      |   |   |      |      
|Other exit costs                                       |       |                | 4,996 |             |  |         | (617   | )           |   |   | (2,798 | )      |   |   | 1,581 |      
|                                                       |       |                |       |             |  |         |        |             |   |   |        |        |   |   |       |      
|                                                       | Total |                | $     | 11,787      |  |         | $      | (2,284      | ) |   | $      | (7,099 | ) |   | $     | 2,404 | 
|                                                       |       |                |       |             |  |         |        |             |   |   |        |        |   |   |       |      

For income statement purposes, $11.2 million
of the special charge is included in Asset writedowns and
discontinued product inventories as a result of special chargesand $0.6 million is included in Special charges and other
asset writedowns.

The employee separation charges relate to
severance packages for 64 manufacturing employees in the
United States, 7 manufacturing employees in Argentina 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,
Argentina, and Mexico manufacturing plants by approximately
$3.6 million. As a result of the closure of our Mexico
facility, some inventory, primarily raw material, became
unusable. Accordingly, a charge was recorded for the difference
between cost and net realizable value. We plan to dispose of
these assets by the end of the third quarter of 2002.

We expensed the $2.8 million cumulative
currency translation adjustment previously recorded to other
comprehensive income in the stockholders equity that
related to our Mexico operations.

2000 Special
Charges

On June 28, 2000 and on October 18,
2000, we announced special charges related to the Specialty
Personal Care business, the Dial/ Henkel joint ventures,
severance costs for prior management and other actions to
improve operational efficiencies. Excluding the Specialty
Personal Care portion of the charge, which has been reclassified
to discontinued operations, we recorded charges of
$48.4 million ($34.1 million after tax or
$0.37 per share) during 2000. We reversed $1.1 million
in charges to net income with respect to these special charges
in 2001.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                       |       |                |        |             |  |         |        |             |   |   |         |         |   |   |       |       | 
|------------------------------------------------------ | ----- | -------------- | ------ | ----------- |  | ------- | ------ | ----------- | - | - | ------- | ------- | - | - | ----- | ----- | 
|                                                       |       |                |        |             |  | Amount  |        |            
|                                                       |       | 2000           |        |             |  | Charged |        | Ending     
|                                                       |       | Total          |        | Cash Spent  |  | Against |        | Reserves at
|                                                       |       | Charges        |        | During 2000 |  | Assets  |        | 12/31/00   
|                                                       |       |                |        |             |  |         |        |            
|                                                       |       |               
|                                                       |       | (In thousands)
|Employee separations                                   |       | $              | 7,227  |             |  | $       | (4,315 | )           |   | $ |        |         |   | $ | 2,912 |      
|Asset writedowns and discontinued product
	inventories |       |                | 9,615  |             |  |         |       |             |   |   | (9,314  | )       |   |   | 301   |      
|Other exit costs                                       |       |                | 1,093  |             |  |         | (95    | )           |   |   | (342    | )       |   |   | 656   |      
|Joint ventures  special charges                       |       |                | 30,472 |             |  |         |       |             |   |   | (30,472 | )       |   |   |      |      
|                                                       |       |                |        |             |  |         |        |             |   |   |         |         |   |   |       |      
|                                                       | Total |                | $      | 48,407      |  |         | $      | (4,410      | ) |   | $       | (40,128 | ) |   | $     | 3,869 | 
|                                                       |       |                |        |             |  |         |        |             |   |   |         |         |   |   |       |      

|                                                       |       |                |       |             |  |         |        |          |   |             |     |     |  |   |      |        |   |   |     |     | 
|------------------------------------------------------ | ----- | -------------- | ----- | ----------- |  | ------- | ------ | -------- | - | ----------- | --- | --- |  | - | ---- | ------ | - | - | --- | --- | 
|                                                       |       |                |       |             |  | Amount  |        |          |   |            
|                                                       |       | Ending         |       |             |  | Charged |        |          |   | Ending     
|                                                       |       | Reserves at    |       | Cash Spent  |  | Against |        | Charges  |   | Reserves at
|                                                       |       | 12/31/00       |       | During 2001 |  | Assets  |        | Reversed |   | 12/31/01   
|                                                       |       |                |       |             |  |         |        |          |   |            
|                                                       |       |               
|                                                       |       | (In thousands)
|Employee separations                                   |       | $              | 2,912 |             |  | $       | (1,705 | )        |   | $           |    |     |  | $ | (259 | )      |   | $ | 948 |    
|Asset writedowns and discontinued product
	inventories |       |                | 301   |             |  |         | (301   | )        |   |             | 552 |     |  |   | (552 | )      |   |   |    |    
|Other exit costs                                       |       |                | 656   |             |  |         | (398   | )        |   |             |    |     |  |   | (258 | )      |   |   |    |    
|Joint ventures  special charges                       |       |                |      |             |  |         |       |          |   |             |    |     |  |   |     |        |   |   |    |    
|                                                       |       |                |       |             |  |         |        |          |   |             |     |     |  |   |      |        |   |   |     |    
|                                                       | Total |                | $     | 3,869       |  |         | $      | (2,404   | ) |             | $   | 552 |  |   | $    | (1,069 | ) |   | $   | 948 | 
|                                                       |       |                |       |             |  |         |        |          |   |             |     |     |  |   |      |        |   |   |     |    

For income statement purposes, $10.5 million
of the special charge was included in Asset writedowns and
discontinued product inventories as a result of special
charges, $7.4 million is included in Special charges
and other asset writedownsand $30.5 million is
included in Net earnings (loss) of joint venturesduring 2000. In 2001, $0.8 million of the special
charges reversed were included in Asset writedowns and
discontinued product inventories as a result of special chargesand $0.3 million is included in Special charges and
other asset writedowns.

We recorded employee separation charges related
to severance packages for three prior executive officers who
left Dial, 80 manufacturing employees in the United States,
5 sales employees located in Argentina and 118 others,
primarily selling and administrative employees in the United
States, Mexico and Argentina. The executive severance charges
were recorded based either on contractual agreements or in
accordance with Dial policies. The remaining severance charges
were predominately involuntary packages and are based on salary
levels and past service and were recorded upon acceptance of the
package.

We recorded accelerated depreciation on the
Bristol, Pennsylvania plant during 2000 for assets that were
taken out of service prior to the end of their normal service
life. Accordingly, we changed the estimated useful lives of such
assets, resulting in accelerated depreciation. We also wrote
down the carrying value of this plant and certain other assets
by approximately $5.4 million.

The remaining reserve for employee separations
will be paid through 2002. Cash requirements for the special
charges will be funded from normal operations.

Note
4.     Acquisition of
Businesses

During the second quarter of 2000, we acquired
three businesses for $120.4 million in cash and assumed
liabilities of $1.3 million. The acquisitions included the
Coast® bar soap business in the United States, the
Plusbelle® hair care business in Argentina and the
Zout® stain remover business in the United States.
During 2001 we made an additional $894,000 earnout payment for
the Zoutbusiness due to the achievement of a

44



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


specified level of gross sales of Zoutproduct. The purchase price for Zoutmay increase
again if a specified level of gross sales of Zout product
is achieved in each of the next two years.

The Coast, Plusbelleand Zoutacquisitions were accounted for using the purchase method of
accounting. A portion of the purchase prices have been allocated
to assets acquired of $13.1 million and liabilities assumed
of $1.3 million based on estimated fair values at the date
of acquisition while the balance of $107.3 million was
recorded as goodwill amortizable over 40 years. This
amortization will cease beginning in 2002 upon the adoption of
FAS No. 142.

The results of operations of the acquired
businesses were included in our consolidated results of
operations from their respective acquisition dates. The total
combined net sales of these acquisitions, from their respective
acquisition dates through the end of 2000, was
$67.2 million.

Note
5.     Discontinued Operation

On August 28, 2001, we completed the sale of
our Specialty Personal Care (SPC) business. This
business segment included a variety of skin, hair, bath, body
and foot care products sold under the Freeman, Sarah Michaelsand Natures Accents® brand names.
The sale of SPC was in line with our strategy to fix or jettison
under-performing businesses. 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
losses. Proceeds from the sale were 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 SPC 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. As of 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 will record the $2.0 million
plus interest received as a reduction of the loss recognized on
the sale of the SPC business.

As a result of the loss recognized on the sale,
we recorded a current tax benefit of approximately
$40.0 million. This tax benefit resulted in cash savings in
the third and fourth quarters of 2001 and is expected to result
in continuing cash savings into the first and second quarters of
2002. The income tax receivable at December 31, 2001
primarily relates to the tax benefit from the loss on the sale
of SPC. The loss on the sale of SPC is primarily comprised of
the write-off of goodwill and inventories. In addition, the sale
resulted in approximately $75.9 million in capital losses
for which no tax benefits were provided. We will realize
benefits from this capital loss only to the extent that we
generate capital gains in the future.

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

|               |  |      |          |      |  |      |         |   |  |   |         |  
|-------------- |  | ---- | -------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|               |  | 2001 |          | 2000 |  | 1999
|               |  |      |          |      |  |     
|Net Sales      |  | $    | 31,077   |      |  | $    | 116,266 |   |  | $ | 140,864 |  
|Operating loss |  |      | (4,811   | )    |  |      | (70,277 | ) |  |   | (3,552  | )
|Net loss       |  |      | (202,094 | )    |  |      | (45,298 | ) |  |   | (3,180  | )

45



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Assets and liabilities of the discontinued SPC
business consisted of the following at December 31, in
thousands:

|                                              |                                              |      |         |         | 
|--------------------------------------------- | -------------------------------------------- | ---- | ------- | ------- | 
|                                              |                                              | 2000
|                                              |                                              |     
|Cash and cash equivalents                     |                                              | $    | 111     |        
|Receivables                                   |                                              |      | 32,128  |        
|Inventories                                   |                                              |      | 17,978  |        
|Deferred income taxes                         |                                              |      | 2,337   |        
|Income taxes receivable                       |                                              |      | 28,045  |        
|Other current assets                          |                                              |      | 333     |        
|                                              |                                              |      |         |        
|                                              | Current assets of discontinued operation     |      | $       | 80,932  | 
|                                              |                                              |      |         |        
|Property and equipment, net                   |                                              | $    | 6,103   |        
|Deferred income taxes                         |                                              |      | 6,802   |        
|Intangibles, net                              |                                              |      | 192,715 |        
|Other non-current assets                      |                                              |      |        |        
|                                              |                                              |      |         |        
|                                              | Non-current assets of discontinued operation |      | $       | 205,620 | 
|                                              |                                              |      |         |        
|Trade accounts payable                        |                                              | $    | 11,608  |        
|Other current liabilities                     |                                              |      | 18,791  |        
|                                              |                                              |      |         |        
|Current liabilities of discontinued operation |                                              | $    | 30,399  |        
|                                              |                                              |      |         |        

As of December 31, 2001, our balance sheet
included approximately $1.2 million in net receivables,
$6.8 million in trade accounts payable and
$19.0 million in accrued liabilities, sales returns, lease
obligations and other exit costs related to the SPC business
that were not assumed by the purchaser as a result of the sale.

The financial statements have been prepared to
reflect our historical financial position and results of
operations and cash flows as adjusted for the reclassification
of the SPC business as a discontinued operation.

Note 6.     Dial/
Henkel Joint Venture

In April 1999, we formed Dial/ Henkel LLC, a
joint venture with Henkel KGaA of Düsseldorf, Germany. Dial
and Henkel each own 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 Cleanerhome dry cleaning business
and launched the Purex Advancedlaundry detergent line.

In March 2000, we formed another joint venture
with Henkel named Dial/ Henkel Mexico S.A. de C.V. Henkel owned
51% and Dial 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 or consumer detergents
and household cleaning products in Mexico.

During the third quarter of 2000, the Dial/
Henkel LLC joint venture decided to discontinue operations of
Purex Advanced. As a result, Purex Advancedhas
been reflected as a discontinued operation within the joint
venture financial statements with all current year operating
losses prior to the measurement date, which was
September 29, 2000, reflected as Loss from operations of
Purex Advancedand additional disposal costs included in
Earnings (loss) on disposal of Purex Advanced. Our
portion of the loss on disposal of Purex Advanced is
$12.6 million and is included in the special charge portion
of the Net loss of joint ventureson our books. 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.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


During the fourth quarter of 2000, the Dial/
Henkel LLC joint venture recorded a $15 million special
charge relating to the Custom Cleanerbusiness. 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 and is included on
our books in the special charge portion of the Net loss of
joint ventures.

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 as
part of the previously announced special charges. In 2000, the
Dial/ Henkel Mexico joint venture had $32.7 million in
sales and our share of the operating loss was $0.5 million.

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

We account for our investments in the joint
ventures under the equity method of accounting. Our
$3.0 million share of the joint ventures net income
in 2001 resulted primarily from lower than expected exit costs
associated with the discontinued Purex Advancedbusiness,
offset in part by exit costs related to the discontinuation of
the Custom Cleanerbusiness in the third quarter of 2001.
In 2000, the two Dial/ Henkel joint ventures resulted in net
losses to us of $7.1 million excluding special charges and
$37.6 million including special charges. These results are
detailed below, in thousands for the years ending
December 31:

|                                                                                               |  |      |        |      |  |      |         |   |  |   |        |  
|---------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                                                               |  | 2001 |        | 2000 |  | 1999
|                                                                                               |  |      |        |      |  |     
|Joint Ventures                                                                                 |  |      |        |      |  |      |         |   |  |   |        |  
|Loss from operations from Dial/ Henkel Mexico
	joint venture                                   |  | $    |       |      |  | $    | (1,714  | ) |  | $ |       |  
|Loss from operations of Purex Advanced                                                         |  |      | (197   | )    |  |      | (27,258 | ) |  |   | (3,187 | )
|Income (loss) on disposal of Purex Advanced                                                    |  |      | 2,391  |      |  |      | (12,566 | ) |  |   |       |  
|Income (loss) from operations of Custom
	Cleaner                                               |  |      | 1,138  |      |  |      | (22,428 | ) |  |   | (1,462 | )
|Loss on disposal of Custom Cleaner                                                             |  |      | (9,899 | )    |  |      |        |   |  |   |       |  
|                                                                                               |  |      |        |      |  |      |         |   |  |   |        |  
|Net loss of Joint Ventures                                                                     |  | $    | (6,567 | )    |  | $    | (63,966 | ) |  | $ | (4,649 | )
|                                                                                               |  |      |        |      |  |      |         |   |  |   |        |  
|Dial                                                                                           |  |      |        |      |  |      |         |   |  |   |        |  
|Loss on dissolution of Dial/ Henkel Mexico joint
	venture                                      |  | $    |       |      |  | $    | (4,989  | ) |  | $ |       |  
|Loss from operations from Dial/ Henkel Mexico
	joint venture                                   |  |      |       |      |  |      | (519    | ) |  |   |       |  
|Earnings (loss) from operations of Purex
	Advanced                                             |  |      | 400    |      |  |      | (2,386  | ) |  |   | (616   | )
|Special charge from Purex Advanced                                                             |  |      | 1,116  |      |  |      | (12,566 | ) |  |   |       |  
|Write-down of fixed assets                                                                     |  |      |       |      |  |      | (5,415  | ) |  |   |       |  
|Earnings (loss) on operations of Custom
	Cleaner                                               |  |      | 734    |      |  |      | (4,239  | ) |  |   | (731   | )
|Special charge from Custom Cleaner                                                             |  |      |       |      |  |      | (7,501  | ) |  |   |       |  
|Gain on write-off of investment in joint venture                                               |  |      | 740    |      |  |      |        |   |  |   |       |  
|                                                                                               |  |      |        |      |  |      |         |   |  |   |        |  
|Net earnings (loss) of joint ventures
	(including special charges of $30,471 recorded in 2000) |  | $    | 2,990  |      |  | $    | (37,615 | ) |  | $ | (1,347 | )
|                                                                                               |  |      |        |      |  |      |         |   |  |   |        |  

The joint venture agreement provided for a
monthly marketing, sales and administrative fee, a trademark fee
and a tolling fee to be paid to us. A monthly technology fee was
paid to Henkel. In addition, Henkel paid a disproportionate
share of the marketing expenses of Purex Advancedincurred by the joint venture.



|        |                                      
|------- | -------------------------------------
|Note 7. | Other Income  Gain on Special
	Items

During the second quarter of 2000, we sold the
Dial Center for Innovation (DCI), formerly known as
the Dial Technical and Administration Center, and accompanying
23-acre parcel in Scottsdale, Arizona to an unrelated third
party developer for a purchase price of $15.3 million. At
that time, we entered into an operating lease with this third
party for the existing DCI building pending construction of a
new DCI building.

47



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


We also entered into an operating lease with an
initial term of 15 years for a new DCI building that may be
constructed on an 11-acre portion of the 23-acre parcel. We have
accounted for the land portion of this transaction as a sale and
leaseback transaction in accordance with Statement of Accounting
Standards No. 98, Accounting for Leases. The land
and building have been removed from our consolidated balance
sheet and a gain of $6.7 million related to the sale of
land was recognized in the second quarter of 2000. In the fourth
quarter of 2000, we amended our agreements with the developer
and opted not to commit to constructing a new DCI building. We
paid the third party $4.2 million and, in return, our
obligation to construct a new building was replaced with an
exclusive option to construct a new DCI building. This option
expires on June 30, 2003. If we elect to construct a new
DCI building before this option expires, a portion of the
$4.2 million paid to the developer will be credited to the
construction costs of the new DCI building. In addition, the
lease on our existing DCI building was extended to August 2007
and the annual rent was increased to approximate a fair value
rent. As a result of these lease modifications, a
$2.0 million charge was recognized in the fourth quarter of
2000.

During 2000, we recorded a $4.6 million
curtailment gain resulting from changes to retiree medical plan
benefits.



|        |            
|------- | -----------
|Note 8. | Inventories

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

|                           |  |      |         |      |  |   |         | 
|-------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                           |  | 2001 |         | 2000
|                           |  |      |         |     
|Raw materials and supplies |  | $    | 30,891  |      |  | $ | 37,460  | 
|Work in process            |  |      | 9,295   |      |  |   | 8,388   | 
|Finished goods             |  |      | 89,791  |      |  |   | 98,958  | 
|                           |  |      |         |      |  |   |         | 
|                           |  | $    | 129,977 |      |  | $ | 144,806 | 
|                           |  |      |         |      |  |   |         | 



|        |                       
|------- | ----------------------
|Note 9. | Property and Equipment

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

|                                     |  |      |          |      |  |   |          |  
|------------------------------------ |  | ---- | -------- | ---- |  | - | -------- | -
|                                     |  | 2001 |          | 2000
|                                     |  |      |          |     
|Land                                 |  | $    | 7,862    |      |  | $ | 11,038   |  
|Buildings and leasehold improvements |  |      | 86,644   |      |  |   | 106,765  |  
|Machinery and other equipment        |  |      | 443,385  |      |  |   | 446,920  |  
|Construction in progress             |  |      | 19,000   |      |  |   | 38,420   |  
|                                     |  |      |          |      |  |   |          |  
|                                     |  |      | 556,891  |      |  |   | 603,143  |  
|Less accumulated depreciation        |  |      | (303,934 | )    |  |   | (308,219 | )
|                                     |  |      |          |      |  |   |          |  
|                                     |  | $    | 252,957  |      |  | $ | 294,924  |  
|                                     |  |      |          |      |  |   |          |  

48



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |            
|-------- | -----------
|Note 10. | Intangibles

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

|                              |  |      |         |      |  |   |         |  
|----------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                              |  | 2001 |         | 2000
|                              |  |      |         |     
|Goodwill                      |  | $    | 432,847 |      |  | $ | 448,736 |  
|Trademarks and patents        |  |      | 55,624  |      |  |   | 58,824  |  
|Other intangibles             |  |      | 8,760   |      |  |   | 972     |  
|                              |  |      |         |      |  |   |         |  
|                              |  |      | 497,231 |      |  |   | 508,532 |  
|Less accumulated amortization |  |      | (93,420 | )    |  |   | (86,788 | )
|                              |  |      |         |      |  |   |         |  
|                              |  | $    | 403,811 |      |  | $ | 421,744 |  
|                              |  |      |         |      |  |   |         |  

FAS No. 142 establishes a new method of
testing goodwill and other intangible assets with indefinite
lives for impairment. We adopted Statement No. 142
effective January 1, 2002, as required and expect that its
adoption will result in an impairment charge for Argentina from
the change in accounting principle of $43.3 million after
tax in the first quarter of 2002.



|         |                          
|-------- | -------------------------
|Note 11. | Other Current Liabilities

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

|                             |  |      |         |      |  |   |         | 
|---------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                             |  | 2001 |         | 2000
|                             |  |      |         |     
|Accrued compensation         |  | $    | 40,509  |      |  | $ | 19,288  | 
|Accrued trade promotions     |  |      | 34,438  |      |  |   | 22,887  | 
|Employee benefit liabilities |  |      | 25,224  |      |  |   | 26,233  | 
|Dividends payable            |  |      | 3,443   |      |  |   | 3,396   | 
|Other                        |  |      | 48,016  |      |  |   | 38,783  | 
|                             |  |      |         |      |  |   |         | 
|                             |  | $    | 151,630 |      |  | $ | 110,587 | 
|                             |  |      |         |      |  |   |         | 



|         |     
|-------- | ----
|Note 12. | Debt

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

|                                                                                                                                                                                                                                             |                       |      |   |      |  |   |         |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---- | - | ---- |  | - | ------- | ------- | 
|                                                                                                                                                                                                                                             |                       | 2001 |   | 2000
|                                                                                                                                                                                                                                             |                       |      |   |     
|Bank loans to our Argentinean subsidiary, Nuevo
	Federal. The loan is denominated in Argentinean Pesos, bears
	interest at the banks short-term rate and reprices monthly
	The loan is subject to call by the bank at the end of each month |                       | $    |  |      |  | $ | 14,009  |        
|Current portion of State of Arizona Economic
	Development Loan, due beginning July of 2000 over 10 years                                                                                                                                     |                       |      |  |      |  |   | 70      |        
|Commercial paper issuances supported by the
	short-term revolving Credit Agreement                                                                                                                                                           |                       |      |  |      |  |   | 111,697 |        
|                                                                                                                                                                                                                                             |                       |      |   |      |  |   |         |        
|                                                                                                                                                                                                                                             | Total short-term debt |      | $ |     |  |   | $       | 125,776 | 
|                                                                                                                                                                                                                                             |                       |      |   |      |  |   |         |        

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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

|                                                                                                            |  |      |         |      |  |   |         | 
|----------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                                                                                            |  | 2001 |         | 2000
|                                                                                                            |  |      |         |     
|State of Arizona Economic Development Loan, due
	beginning July of 2000 in equal installments over 10 years |  | $    |        |      |  | $ | 910     | 
|$250 million 7.0% Senior notes due 2006, net
	of issue discount                                             |  |      | 246,768 |      |  |   |        | 
|$200 million 6.5% Senior Notes due 2008, net
	of issue discount                                             |  |      | 198,573 |      |  |   | 198,361 | 
|Commercial paper issuances, supported by the
	long-term revolving Credit Agreement                          |  |      |        |      |  |   | 270,000 | 
|                                                                                                            |  |      |         |      |  |   |         | 
|Total long-term debt                                                                                        |  | $    | 445,341 |      |  | $ | 469,271 | 
|                                                                                                            |  |      |         |      |  |   |         | 

In the third quarter of 2001, we issued
$250 million of 7.0% Senior Notes due 2006. The net
proceeds from this offering were used to repay indebtedness
under our credit facility. The Indenture governing these Senior
Notes imposes restrictions on us 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 shall be 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.

In connection with the $250 million debt
offering we have entered into two separate interest rate swap
agreements. Collectively, they have a notional value of
$250 million. We receive fixed interest payments of 7.0% of
the notional amount and make payments equal to 6 month
LIBOR plus 182 basis points. Payments are exchanged each
February and August 15, at which time the floating interest
rate resets using the 6 month LIBOR rate in effect on that
day. The terms of the interest rate swaps are for five years.

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

The events of default under the Indentures
governing both the $250 million of 7.0% Senior Notes
due 2006 and the $200 million of 6.5% Senior Notes due
2008 include the following:



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due
	under the notes                                                                                                                                                                             
|
| |  | failure to comply with our covenants under the
	Indentures                                                                                                                                                                                 
|
| |  | commencing any proceeding for bankruptcy,
	insolvency or reorganization, and                                                                                                                                                               
|
| |  | 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.

In the first quarter of 2002, we terminated our
existing credit facility and replaced it with a new
$150 million revolving credit facility. At
December 31, 2001, there were no amounts borrowed under the
then existing credit facility and we were in compliance with all
covenants.

The new facility is comprised of two commitments:
$75 million under commitments available until March of 2005
and $75 million under commitments available until March
2003. The credit facility requires us to pay commitment fees to
the lenders. Borrowings under the facility bear interest at our
option, at the banks

50



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


prime rate or LIBOR plus a credit spread. The
credit spread and the commitment fees paid for the facility are
subject to adjustment should our debt ratings change.

Under the new 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 Argentinean
operations and/or the Armour food business and the previously
discussed $43.3 million 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. This new
facility also limits our ability, above certain amounts, to
incur additional unsecured indebtedness, sell, lease or transfer
assets, enter into sale and lease back transactions, place liens
on properties and complete certain acquisitions without our
lenders consent.

The events of default under this new
$150 million credit facility include the following:



| |   |                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | failure to pay principal or interest when due                                                                                                                   
|
| |  | failure to comply with our covenants,
	representations and warranties under the credit agreement                                                                
|
| |  | default in the payment of, or failure to comply
	with our 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, and                                                                                        
|
| |  | a change in control of Dial.                                                                                                                                    

In 1998, we issued $200 million of 6.5%
Senior Notes due 2008. The Indenture governing these Senior
Notes imposes restrictions on us with respect to, among other
things, our ability to redeem the Senior Notes, place liens on
certain properties and enter into certain sale and leaseback
transactions.

Interest expense incurred in 2001, 2000 and 1999
was, in thousands, $36,797, $42,387 and $22,053, respectively.
Interest paid to lenders in 2001, 2000 and 1999 was, in
thousands, $32,148, $41,058 and $21,079, respectively.

The fair value of our senior notes was, in
thousands, $440,310 and $190,960 at December 31, 2001 and
2000, respectively.



|         |             
|-------- | ------------
|Note 13. | Income Taxes

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

|                                                       |  |      |         |      |  |      |        |   |  |   |         | 
|------------------------------------------------------ |  | ---- | ------- | ---- |  | ---- | ------ | - |  | - | ------- | 
|                                                       |  | 2001 |         | 2000 |  | 1999
|                                                       |  |      |         |      |  |     
|United States                                          |  | $    | 128,153 |      |  | $    | 52,565 |   |  | $ | 173,947 | 
|International                                          |  |      | (14,620 | )    |  |      | (1,625 | ) |  |   | 10,688  | 
|                                                       |  |      |         |      |  |      |        |   |  |   |         | 
|Income from continuing operations before income
	taxes |  | $    | 113,533 |      |  | $    | 50,940 |   |  | $ | 184,635 | 
|                                                       |  |      |         |      |  |      |        |   |  |   |         | 

51



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


The following table presents the components of
the provision (benefit) for income taxes from continuing
operations, for years ended December 31:

|                           |                    |          |        |        |        |      |        |        |        |   |        |        |        | 
|-------------------------- | ------------------ | -------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                           |                    | 2001     |        | 2000   |        | 1999
|                           |                    |          |        |        |        |     
|Current Tax Expense:       |                    |          |        |        |        |      |        |        |        |   |        |       
|                           | U.S. federal       |          | $      | 37,898 |        |      | $      | 17,898 |        |   | $      | 58,424 |       
|                           | U.S. state & local |          |        | 6,426  |        |      |        | (2,240 | )      |   |        | 5,641  |       
|                           | International      |          |        | 1,686  |        |      |        | (1,674 | )      |   |        | 165    |       
|                           |                    |          |        |        |        |      |        |        |        |   |        |       
|                           |                    | Subtotal |        |        | 46,010 |      |        |        | 13,984 |   |        |        | 64,230 | 
|                           |                    |          |        |        |        |      |        |        |        |   |        |       
|Deferred Tax Expense:      |                    |          |        |        |        |      |        |        |        |   |        |       
|                           | U.S. Federal       |          |        | 61     |        |      |        | 650    |        |   |        | (2,317 | )     
|                           | U.S. state & local |          |        | (2,395 | )      |      |        | 2,016  |        |   |        | 2,776  |       
|                           | International      |          |        | 14     |        |      |        |       |        |   |        |       |       
|                           |                    |          |        |        |        |      |        |        |        |   |        |       
|                           |                    | Subtotal |        |        | (2,320 | )    |        |        | 2,666  |   |        |        | 459    | 
|                           |                    |          |        |        |        |      |        |        |        |   |        |       
|Provision for income taxes |                    | $        | 43,690 |        |        | $    | 16,650 |        |        | $ | 64,689 |       
|                           |                    |          |        |        |        |      |        |        |        |   |        |       

Income taxes paid (refunds received) in 2001,
2000 and 1999 amounted to, in thousands, ($6,466, $27,419 and
$18,706 respectively.

The following table presents a reconciliation of
the statutory U.S. federal income tax rate to our global
effective tax rate on continuing operations:

|                                 |  |      |      |      |  |      |      |   |  |  |      |  
|-------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                 |  | 2001 |      | 2000 |  | 1999
|                                 |  |      |      |      |  |     
|Federal statutory rate           |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|Goodwill amortization            |  |      | 1.0  |      |  |      | 1.7  |   |  |  | 0.4  |  
|Foreign Sales Corp.              |  |      | (0.6 | )    |  |      | (5.5 | ) |  |  | (0.5 | )
|State income taxes               |  |      | 2.3  |      |  |      | (0.3 | ) |  |  | 3.0  |  
|Impact of lower foreign tax rate |  |      | (1.8 | )    |  |      | (4.0 | ) |  |  | (1.9 | )
|Joint venture losses             |  |      | 0.3  |      |  |      | 8.1  |   |  |  | 0.3  |  
|Other, net                       |  |      | (0.9 | )    |  |      | (2.3 | ) |  |  | (1.3 | )
|Valuation allowance              |  |      | 3.2  |      |  |      |     |   |  |  |     |  
|                                 |  |      |      |      |  |      |      |   |  |  |      |  
|Effective income tax rate        |  |      | 38.5 | %    |  |      | 32.7 | % |  |  | 35.0 | %
|                                 |  |      |      |      |  |      |      |   |  |  |      |  

The following table presents the components of
deferred tax assets (liabilities) at December 31:

|                                             |                           |      |         |         |  |   |         |        | 
|-------------------------------------------- | ------------------------- | ---- | ------- | ------- |  | - | ------- | ------ | 
|                                             |                           | 2001 |         | 2000   
|                                             |                           |      |         |        
|Property, plant and equipment                |                           | $    | (42,801 | )       |  | $ | (41,404 | )     
|Pension and other employee benefits          |                           |      | 80,492  |         |  |   | 77,259  |       
|Reserves, accruals and other                 |                           |      | 29,108  |         |  |   | 26,264  |       
|Deferred state income taxes                  |                           |      | 5,030   |         |  |   | 3,077   |       
|Capital and net operating loss carryforwards |                           |      | 33,480  |         |  |   |        |       
|                                             |                           |      |         |         |  |   |         |       
|                                             | Total deferred tax assets |      |         | 105,309 |  |   |         | 65,196 | 
|Less: Valuation allowance                    |                           |      | (32,080 | )       |  |   |        |       
|                                             |                           |      |         |         |  |   |         |       
|Net deferred tax assets                      |                           | $    | 73,229  |         |  | $ | 65,196  |       
|                                             |                           |      |         |         |  |   |         |       

As of December 31, 2001, we had capital loss
carryforwards of $75,931, and non-U.S. net operating loss
carryforwards of $8,674. The capital loss expires in 2006, and
the net operating losses expire primarily in 2006.

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


As of December 31, 2001 we had recorded
valuation allowances totaling $32,080 against these
carryforwards since we concluded that it is more likely than not
that these carryforwards would not be realized. We have a tax
holiday at one of our foreign locations which expires in 2008.

Note 14.     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 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.

We used a September 30 measurement date to
determine our pension obligations. The following table provides
information on the status of the plans at December 31, in
thousands:

|                                                  |  |      |         |      |  |   |         |  
|------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                  |  | 2001 |         | 2000
|                                                  |  |      |         |     
|Change in Projected Benefit
	Obligation:          |  |      |         |      |  |   |         |  
|Projected benefit obligation at beginning of year |  | $    | 192,996 |      |  | $ | 176,671 |  
|Service cost                                      |  |      | 4,746   |      |  |   | 4,567   |  
|Interest cost                                     |  |      | 15,352  |      |  |   | 14,766  |  
|Plan amendments                                   |  |      | (4,097  | )    |  |   | 5,739   |  
|Actuarial loss                                    |  |      | 18,768  |      |  |   | 2,164   |  
|Benefits paid                                     |  |      | (11,416 | )    |  |   | (10,912 | )
|                                                  |  |      |         |      |  |   |         |  
|Projected benefit obligation at end of year       |  | $    | 216,349 |      |  | $ | 192,995 |  
|                                                  |  |      |         |      |  |   |         |  
|Change in Plan Assets:                            |  |      |         |      |  |   |         |  
|Fair value of plan assets at beginning of year    |  | $    | 199,106 |      |  | $ | 176,165 |  
|Actual return on plan assets                      |  |      | (38,979 | )    |  |   | 30,372  |  
|Company contributions                             |  |      | 5,948   |      |  |   | 3,481   |  
|Benefits paid                                     |  |      | (11,416 | )    |  |   | (10,912 | )
|                                                  |  |      |         |      |  |   |         |  
|Fair value of plan assets                         |  | $    | 154,659 |      |  | $ | 199,106 |  
|                                                  |  |      |         |      |  |   |         |  
|Reconciliation of Funded Status:                  |  |      |         |      |  |   |         |  
|Funded status                                     |  | $    | (61,690 | )    |  | $ | 6,111   |  
|Unrecognized transition obligation                |  |      | (35     | )    |  |   | (53     | )
|Unrecognized prior service cost                   |  |      | 4,295   |      |  |   | 9,015   |  
|Unrecognized actuarial loss (gain)                |  |      | 35,706  |      |  |   | (41,437 | )
|Contribution deposited on October 15              |  |      | 981     |      |  |   | 787     |  
|                                                  |  |      |         |      |  |   |         |  
|Accrued pension cost                              |  | $    | (20,743 | )    |  | $ | (25,577 | )
|                                                  |  |      |         |      |  |   |         |  

53



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                       |  |      |         |      |  |   |         |  
|------------------------------------------------------ |  | ---- | ------- | ---- |  | - | ------- | -
|                                                       |  | 2001 |         | 2000
|                                                       |  |      |         |     
|Amounts Recognized in the Consolidated Balance
	Sheet: |  |      |         |      |  |   |         |  
|Prepaid pension cost                                   |  | $    | 9,109   |      |  | $ | 6,000   |  
|Accrued benefit liability                              |  |      | (29,852 | )    |  |   | (31,577 | )
|Additional minimum liability                           |  |      | (27,888 | )    |  |   |        |  
|Intangible asset                                       |  |      | 7,860   |      |  |   |        |  
|Accumulated other comprehensive income, before tax     |  |      | 20,028  |      |  |   |        |  
|                                                       |  |      |         |      |  |   |         |  
|Net amount recognized                                  |  | $    | (20,743 | )    |  | $ | (25,577 | )
|                                                       |  |      |         |      |  |   |         |  

At December 31, 2001 and 2000, the plans
held 84,367 shares of our common stock.

The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for the pension
plans with accumulated benefit obligations in excess of plan
assets were, in thousands, $215,457, $199,328 and $151,902, as
of December 31, 2001, and $9,832, $8,853 and $0, as of
December 31, 2000.

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

|                                           |                                |      |         |        |   |      |         |       |   |   |         |     | 
|------------------------------------------ | ------------------------------ | ---- | ------- | ------ | - | ---- | ------- | ----- | - | - | ------- | --- | 
|                                           |                                | 2001 |         | 2000   |   | 1999
|                                           |                                |      |         |        |   |     
|Calculation of Net Periodic Pension
	Cost: |                                |      |         |        |   |      |         |       |   |   |         |    
|                                           |                                |      |         |        |   |      |         |       |   |   |         |    
|Service cost                               |                                | $    | 4,746   |        |   | $    | 4,567   |       |   | $ | 5,306   |    
|Interest cost                              |                                |      | 15,352  |        |   |      | 14,766  |       |   |   | 12,964  |    
|Expected return on plan assets             |                                |      | (17,601 | )      |   |      | (15,683 | )     |   |   | (14,623 | )  
|Amortization of:                           |                                |      |         |        |   |      |         |       |   |   |         |    
|                                           | Net transition obligation      |      |         | (18    | ) |      |         | 327   |   |   |         | 327 | 
|                                           | Unrecognized past service cost |      |         | 622    |   |      |         | 1,094 |   |   |         | 515 | 
|                                           | Actuarial (gain) loss          |      |         | (1,006 | ) |      |         | (471  | ) |   |         | 434 | 
|                                           |                                |      |         |        |   |      |         |       |   |   |         |    
|Net periodic pension cost                  |                                | $    | 2,095   |        |   | $    | 4,600   |       |   | $ | 4,923   |    
|                                           |                                |      |         |        |   |      |         |       |   |   |         |    
|Other comprehensive (income)/ loss         |                                | $    | 20,028  |        |   | $    | 375     |       |   | $ | (8,981  | )  
|                                           |                                |      |         |        |   |      |         |       |   |   |         |    
|Assumptions:                               |                                |      |         |        |   |      |         |       |   |   |         |    
|Discount rate for obligation               |                                |      | 7.25    | %      |   |      | 8.00    | %     |   |   | 8.00    | %  
|Long-term rate of investment return        |                                |      | 10.00   | %      |   |      | 10.00   | %     |   |   | 10.00   | %  
|Salary increase rate                       |                                |      | 4.00    | %      |   |      | 4.00    | %     |   |   | 4.00    | %  

Defined Contribution Plans.We maintain various 401(K) defined
contribution plans whereby employees can contribute up to 12% of
their total pay. We contribute to these plans throughout the
year. For the years ended December 31, 2001, 2000, and
1999, defined contribution plan expense was, in thousands,
$5,613, $2,645 and $2,321, respectively.

Multi-Employer Pension Plans.We participate in one multi-employer
pension plan. For the years ended December 31, 2001, 2000,
and 1999, our costs were, in thousands, $1,713, $1,704 and
$1,519, 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).

54



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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

|                                                      |  |      |          |      |  |   |          |  
|----------------------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|                                                      |  | 2001 |          | 2000
|                                                      |  |      |          |     
|Change in Benefit Obligation:                         |  |      |          |      |  |   |          |  
|Benefit obligation at beginning of year               |  | $    | 162,012  |      |  | $ | 162,143  |  
|Service cost                                          |  |      | 1,295    |      |  |   | 1,332    |  
|Interest cost                                         |  |      | 14,458   |      |  |   | 13,110   |  
|Plan participants contributions                      |  |      | 957      |      |  |   | 968      |  
|Amendments                                            |  |      | (2,377   | )    |  |   | (4,868   | )
|Actuarial loss                                        |  |      | 43,405   |      |  |   | 9,885    |  
|Benefits paid                                         |  |      | (18,848  | )    |  |   | (20,558  | )
|                                                      |  |      |          |      |  |   |          |  
|Benefit obligation at end of year                     |  | $    | 200,902  |      |  | $ | 162,012  |  
|                                                      |  |      |          |      |  |   |          |  
|Change in Plan Assets:                                |  |      |          |      |  |   |          |  
|Fair value of plan assets at beginning of year        |  | $    |         |      |  | $ |         |  
|Employer contribution                                 |  |      | 17,891   |      |  |   | 19,590   |  
|Plan participants contribution                       |  |      | 957      |      |  |   | 968      |  
|Benefits paid                                         |  |      | (18,848  | )    |  |   | (20,558  | )
|                                                      |  |      |          |      |  |   |          |  
|Fair value of plan assets at end of year              |  | $    |         |      |  | $ |         |  
|                                                      |  |      |          |      |  |   |          |  
|Funded status                                         |  | $    | (200,902 | )    |  | $ | (162,012 | )
|Unrecognized net gain                                 |  |      | 18,987   |      |  |   | (24,221  | )
|Unrecognized prior service cost                       |  |      | (18,528  | )    |  |   | (18,685  | )
|                                                      |  |      |          |      |  |   |          |  
|Accrued benefit cost                                  |  | $    | (200,443 | )    |  | $ | (204,918 | )
|                                                      |  |      |          |      |  |   |          |  
|Amounts Recognized in the Consolidated Balance
	Sheet |  | $    | (200,443 | )    |  | $ | (204,918 | )
|                                                      |  |      |          |      |  |   |          |  

|              |  |                          |      |      |  |      |      |   |  |  |      |  
|------------- |  | ------------------------ | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|              |  |                         
|              |  | Years Ended December 31,
|              |  |                         
|              |  | 2001                     |      | 2000 |  | 1999
|              |  |                          |      |      |  |     
|Assumptions:  |  |                          |      |      |  |      |      |   |  |  |      |  
|Discount rate |  |                          | 7.25 | %    |  |      | 8.00 | % |  |  | 8.00 | %

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 2001 is 6.5%,
gradually declining to an ultimate rate of 5% in 2005.

|                          |                                 |                          |        |        |   |      |        |        |   |   |        |        |  
|------------------------- | ------------------------------- | ------------------------ | ------ | ------ | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|                          |                                 |                         
|                          |                                 | Years Ended December 31,
|                          |                                 |                         
|                          |                                 | 2001                     |        | 2000   |   | 1999
|                          |                                 |                          |        |        |   |     
|                          |                                 |                         
|                          |                                 | (In thousands)          
|Service cost              |                                 | $                        | 1,295  |        |   | $    | 1,332  |        |   | $ | 1,835  |       
|Interest cost             |                                 |                          | 14,458 |        |   |      | 13,110 |        |   |   | 12,506 |       
|Amortization of:          |                                 |                          |        |        |   |      |        |        |   |   |        |       
|                          | Unrecognized prior service cost |                          |        | (2,534 | ) |      |        | (2,442 | ) |   |        | (1,727 | )
|                          | Actuarial gain                  |                          |        | 196    |   |      |        | (316   | ) |   |        | (1,751 | )
|                          |                                 |                          |        |        |   |      |        |        |   |   |        |       
|Net periodic benefit cost |                                 | $                        | 13,415 |        |   | $    | 11,684 |        |   | $ | 10,863 |       
|                          |                                 |                          |        |        |   |      |        |        |   |   |        |       
|Curtailment Gain          |                                 | $                        |       |        |   | $    | (4,583 | )      |   | $ |       |       
|                          |                                 |                          |        |        |   |      |        |        |   |   |        |       

55



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


The 2001, 2000 and 1999 components of net
periodic post retirement benefit cost reflect expense of
approximately $10.8 million, $8.6 million and
$5.7 million, respectively, incurred on the Armour employee
benefit liabilities, which are included in Interest and
other expenses in the Statement of Consolidated Operations.

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

|                                                             |  |          |        |            |  |   |         |  
|------------------------------------------------------------ |  | -------- | ------ | ---------- |  | - | ------- | -
|                                                             |  | Increase |        | (Decrease)
|                                                             |  |          |        |           
|Effect on the total of service and interest cost
	components |  | $        | 1,328  |            |  | $ | (1,167  | )
|Effect on accumulated post-retirement benefit
	obligation    |  | $        | 15,581 |            |  | $ | (13,707 | )

Note 15.     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 the 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. The term of the
options is 10 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. No grants have been made
at less than market price. The 1996 Plan also authorizes the
issuance of stock appreciation rights and restricted stock.
During the year ended December 31, 2001, no restricted
stock was awarded. There were 150,986 shares of restricted stock
awarded during the year ended December 31, 2000. The
vesting period for these restricted stock awards ranges from 2
to 5 years.

Under the 1996 Plan, options to purchase
4,496,566 shares were granted at the market price on the dates
of grant during 2001. 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 2001, options to purchase 2,000 shares
were granted at prices, which were either equal to or above the
market price on the dates of grant. After one year, one-third of
the options become exercisable when the average closing market
price over 20 consecutive days equals or exceeds 120% of the
option price. After two years, two-thirds of the options become
exercisable when such price equals or exceeds 140% of the option
price. The options become 100% exercisable after three years and
when such price equals or exceeds 160% of the option price. All
such options become exercisable, in any event, after 5 years
from the date of grant.

Additionally during 2001, options to purchase
50,000 shares were granted at the market price on the date of
grant. These options are 100% exercisable 6 months after the
date of grant. The options expire after 2.5 years.

During 2001, options to purchase 98,800 shares
were also granted to non-employee members of the Board of
Directors at the market price on the date of grant. Of these
options issued, 68,200 are exercisable 50% after one year and
100% after two years, while the balance of 30,600 shares, which
were issued in exchange for Director fees, are 100% exercisable
on the date of grant. The options expire after 10 years.

56



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


A summary of the status of our stock option plans
as of December 31, 2001, and changes during the fiscal
years 1999, 2000 and 2001, are presented below:

|                                   |           |        |            |                  |   |  |       |       | 
|---------------------------------- | --------- | ------ | ---------- | ---------------- | - |  | ----- | ----- | 
|                                   |           |        |            | Weighted Average
|                                   |           | Shares |            | Exercise Price  
|                                   |           |        |            |                 
|Outstanding at December 31,
	1998  |           |        | 6,353,746  |                  |   |  | 13.34 |      
|                                   | Granted   |        |            | 1,834,782        |   |  |       | 29.19 | 
|                                   | Exercised |        |            | (1,591,332       | ) |  |       | 12.39 | 
|                                   | Canceled  |        |            | (90,142          | ) |  |       | 21.83 | 
|                                   |           |        |            |                  |   |  |       |      
|Outstanding at December 31,
	1999  |           |        | 6,507,054  |                  |   |  | 17.90 |      
|                                   | Granted   |        |            | 3,104,015        |   |  |       | 19.85 | 
|                                   | Exercised |        |            | (100,620         | ) |  |       | 7.90  | 
|                                   | Canceled  |        |            | (1,263,061       | ) |  |       | 19.92 | 
|                                   |           |        |            |                  |   |  |       |      
|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 |      
|                                   |           |        |            |                  |   |  |       |      
|Options exercisable at end of year |           |        | 4,683,675  |                  |   |  | 13.38 |      
|                                   |           |        |            |                  |   |  |       |      

The following table summarizes stock options
outstanding and exercisable at December 31, 2001:

|                |  |             |            |             |  |          |     |             |  |          |       |  |  |  |           |  |  |   |       | 
|--------------- |  | ----------- | ---------- | ----------- |  | -------- | --- | ----------- |  | -------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                |  |             |            | Weighted    |  |          |     |             |  |         
|                |  |             |            | Average     |  |          |     |             |  |         
|                |  |             |            | Remaining   |  | Weighted |     |             |  | Weighted
|                |  |             |            | Contractual |  | Average  |     |             |  | Average 
|Range of        |  | Options     |            | Life        |  | Exercise |     | Options     |  | Exercise
|Exercise Prices |  | Outstanding |            | (in years)  |  | Price    |     | Exercisable |  | Price   
|                |  |             |            |             |  |          |     |             |  |         
|$ 7.31 - $10.96 |  |             | 679,980    |             |  |          | 4.1 |             |  | $        | 9.99  |  |  |  | 513,147   |  |  | $ | 9.71  | 
|$10.97 - $14.61 |  |             | 7,643,495  |             |  |          | 7.0 |             |  |          | 13.23 |  |  |  | 3,201,143 |  |  |   | 12.99 | 
|$14.62 - $18.26 |  |             | 2,206,152  |             |  |          | 7.6 |             |  |          | 15.31 |  |  |  | 820,198   |  |  |   | 15.38 | 
|$18.27 - $21.92 |  |             | 129,573    |             |  |          | 6.5 |             |  |          | 21.33 |  |  |  | 56,312    |  |  |   | 21.08 | 
|$21.93 - $25.57 |  |             | 194,616    |             |  |          | 7.3 |             |  |          | 23.53 |  |  |  | 50,750    |  |  |   | 23.33 | 
|$25.58 - $29.22 |  |             | 150,138    |             |  |          | 7.0 |             |  |          | 27.40 |  |  |  | 35,625    |  |  |   | 26.71 | 
|$29.23 - $32.88 |  |             | 1,141,000  |             |  |          | 7.0 |             |  |          | 29.73 |  |  |  | 6,500     |  |  |   | 29.72 | 
|$32.89 - $36.53 |  |             | 5,500      |             |  |          | 7.3 |             |  |          | 35.05 |  |  |  |          |  |  |   |      | 
|                |  |             |            |             |  |          |     |             |  |          |       |  |  |  |           |  |  |   |       | 
|                |  |             | 12,150,454 |             |  |          | 6.7 |             |  | $        | 15.41 |  |  |  | 4,683,675 |  |  | $ | 13.38 | 
|                |  |             |            |             |  |          |     |             |  |          |       |  |  |  |           |  |  |   |       | 

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 Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based
Compensation. 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 Statement
No. 123, our net income (loss) and net income
(loss) per share would have been reduced to the pro forma
amounts indicated below.

57



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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:

|                                           |  |      |      |      |  |      |      |   |  |   |       |  
|------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ----- | -
|                                           |  | 2001 |      | 2000 |  | 1999
|                                           |  |      |      |      |  |     
|Estimated fair value of options, per share |  | $    | 3.99 |      |  | $    | 4.16 |   |  | $ | 10.27 |  
|Expected average risk-free interest rate   |  |      | 4.8  | %    |  |      | 6.4  | % |  |   | 5.8   | %
|Expected life in years                     |  |      | 3.0  |      |  |      | 3.1  |   |  |   | 5.0   |  
|Expected volatility                        |  |      | 35.6 | %    |  |      | 35.0 | % |  |   | 30.0  | %
|Expected dividend rate                     |  |      | .3   | %    |  |      | 1.2  | % |  |   | 1.1   | %

|                                                 |  |               |          |      |  |      |         |   |  |   |         | 
|------------------------------------------------ |  | ------------- | -------- | ---- |  | ---- | ------- | - |  | - | ------- | 
|                                                 |  | 2001          |          |      |  |     
|                                                 |  |               |          |      |  |     
|                                                 |  |               |          | 2000 |  |     
|                                                 |  |               |          |      |  |     
|                                                 |  |               |          |      |  | 1999
|                                                 |  |               |          |      |  |     
|                                                 |  | )            
|                                                 |  |              
|                                                 |  | (in thousands
|Net income (loss) as reported                    |  | $             | (132,251 | )    |  | $    | (11,008 | ) |  | $ | 116,766 | 
|                                                 |  |               |          |      |  |      |         |   |  |   |         | 
|Pro forma net income (loss)                      |  | $             | (138,541 | )    |  | $    | (12,938 | ) |  | $ | 115,073 | 
|                                                 |  |               |          |      |  |      |         |   |  |   |         | 
|Net income (loss) per share-basic-as reported    |  | $             | (1.45    | )    |  | $    | (.12    | ) |  | $ | 1.19    | 
|                                                 |  |               |          |      |  |      |         |   |  |   |         | 
|Pro forma net income (loss) per share-basic      |  | $             | (1.51    | )    |  | $    | (.14    | ) |  | $ | 1.17    | 
|                                                 |  |               |          |      |  |      |         |   |  |   |         | 
|Net income (loss) per share-diluted-as
	reported |  | $             | (1.43    | )    |  | $    | (.12    | ) |  | $ | 1.17    | 
|                                                 |  |               |          |      |  |      |         |   |  |   |         | 
|Pro forma net income (loss) per
	share  diluted |  | $             | (1.50    | )    |  | $    | (.14    | ) |  | $ | 1.15    | 
|                                                 |  |               |          |      |  |      |         |   |  |   |         | 

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 the 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 2001, employees purchased
approximately 65,759 shares under the ESPP Plan.

Note 16.     Leases

Certain sales, warehouse and administration
offices and equipment are leased. The 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 2001,
2000, and 1999 totaled, in thousands, $13,032, $13,589 and
$12,058, respectively.

At December 31, 2001, our future minimum
rental payments and anticipated rental income with respect to
noncancelable operating subleases with terms in excess of one
year were as follows, in thousands:

|                                 |  |      |        |      |  |      |        |      |  |      |        |            |  |   |        |  |  |   |       |  |  |   |        | 
|-------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---------- |  | - | ------ |  |  | - | ----- |  |  | - | ------ | 
|                                 |  | 2002 |        | 2003 |  | 2004 |        | 2005 |  | 2006 |        | Thereafter
|                                 |  |      |        |      |  |      |        |      |  |      |        |           
|Future minimum rental payments   |  | $    | 14,381 |      |  | $    | 11,123 |      |  | $    | 10,802 |            |  | $ | 10,080 |  |  | $ | 9,211 |  |  | $ | 17,581 | 
|Future anticipated rental income |  |      | 2,271  |      |  |      | 1,800  |      |  |      | 1,800  |            |  |   | 1,800  |  |  |   | 1,095 |  |  |   |       | 
|                                 |  |      |        |      |  |      |        |      |  |      |        |            |  |   |        |  |  |   |       |  |  |   |        | 
|Net future rental commitments    |  | $    | 12,110 |      |  | $    | 9,323  |      |  | $    | 9,002  |            |  | $ | 8,280  |  |  | $ | 8,116 |  |  | $ | 17,581 | 
|                                 |  |      |        |      |  |      |        |      |  |      |        |            |  |   |        |  |  |   |       |  |  |   |        | 



|         |                                                                                           
|-------- | ------------------------------------------------------------------------------------------
|Note 17. | 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 rate and commodity expense. We may use financial
instruments for the management of interest rate risk or other
risks in the future.

58



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Interest
Rate Risk Management

We currently use interest rate swap contracts to
adjust the proportion of total debt that is subject to fixed
interest rates. At December 31, 2001, we had
$445.3 million in long-term debt outstanding, comprised of
$200 million ($198.5 million net of issue discount) in
6.5% bonds due 2008, and $250 million ($246.8 million
net of issue discount) in 7.0% bonds due in 2006. Both bonds
have fixed interest rates to maturity.

We entered into two interest rate swaps which
together are designated as fair market value hedges of the
$250 million 7.0% bonds. The interest rate swaps have a
total notional amount of $250 million. Under the terms of
the swaps, we receive fixed payments equal to 7% of the notional
amount, paid semi-annually. We make floating payments equal to
6 month LIBOR plus 182 basis points on the notional amount,
paid semi-annually. The floating rate resets each
February 15 and August 15, using the 6 month
LIBOR rate on the day of the reset. At December 31, 2001,
the floating rate for the interest rate swaps was approximately
5.36%. The net effect of this accounting treatment on our
operating results is that the interest expense on the portion of
fixed-rate debt being hedged is generally recorded based on
variable interest rates. At December 31, 2001, the interest
rate swaps had a fair market gain associated with them of
$1.3 million.

Foreign
Currency

Historically, the Argentinean Pesos value
has been pegged by the Argentinean government as
equal to the U.S. Dollar. However, in late December 2001,
the Argentine government declared strict limitations on bank
withdrawals, effectively blocking all convertibility of
Argentine Pesos to US Dollars at December 31, 2001. On
January 11, 2002, trading resumed under the new Argentine
government policy of a dual exchange rate: 1.4 Argentine
Pesos/ US Dollar for large commercial import and export
transactions and a free floating rate for all other
transactions. The average of the high and the low of the
free-floating rate on January 11, 2002 was 1.61 Argentine
Pesos/ U.S. Dollar. This rate was used to translate our
investment in Argentina at December 31, 2001, resulting in
a $62.2 million reduction in equity from the cumulative
currency translation adjustment.

Sale
of Receivables

At December 31, 1999, we had an agreement to
sell undivided participating interests in a defined pool of
trade accounts receivable in an amount not to exceed
$115 million as a means of accelerating cash flow. From
time to time, as collections reduce accounts receivable in the
pool, we sold participating interests in new receivables. During
2000, we discontinued this program. Our expense of selling
receivables amounted to approximately, $5.0 million in 1999
and is included in the Statement of Consolidated Operations
under the caption Interest and Other Expenses. Under
the terms of the agreement, we retained substantially the same
risk of credit loss as if the receivables had not been sold, as
we were obligated to replace uncollectible receivables with new
accounts receivable. Our accounts receivable sold totaled
$73.2 million at December 31, 1999. Our average
accounts receivable sold approximated $90.3 million during 1999.

Commodity
Price Management

In the manufacture of our products we utilize a
number of commodities, such as tallow, coconut oil and meat. In
addition, we use a variety of products that are priced based on
underlying commodities, such as plastic bottles (resin). In the
normal course of business, we attempt to enter into supply
agreements that generally fix or set a range of prices of goods
to be purchased. These supply agreements can cover up to
12 months of supply for goods. Financial derivatives to
hedge or lock in the prices of these commodities over the long
term (greater than one year) generally are not available.

We do utilize financial derivatives to fix the
price of a portion of the raw material component of the
cardboard boxes and plastic bottles we use in our business. At
December 31, 2001, we had contracts in place to fix the
price of 1,666 tons monthly of cardboard and 1.25 million
tons monthly of high-density polyethylene for all of 2002.
However, at December 31, 2001, the counterparty of these
contracts was in default under the

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


agreements and was subsequently terminated by us.
At December 31, 2001, the contracts had an aggregate fair
market loss associated with them of approximately $250,000.

Employee
Benefit Plan Expense

We offer our directors and management deferred
compensation plans. Under these plans, beginning in 1999,
participants can defer a portion of their compensation into Dial
stock units. For deferrals made in 1999, 2000 and 2001 deferred
compensation due to participants is included on the balance
sheet in Stockholders Equity under the caption
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 Employee Benefits.

For deferrals made in 1998, deferred compensation
due to participants and any accumulated investment gains or
losses is included on the balance sheet as a liability under the
captions Pension and other 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 cash surrender value that accrue 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 is included on the balance sheet as an asset
under the caption Other assets. To the extent
that the return on Dial shares is different from that of the
S&P 500, income or expense is generated by the 1998 plan.

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 $440.3 million at December 31, 2001.

Note
18.Segments of an
Enterprise

For organizational, marketing and financial
reporting purposes, we are organized into three business
segments: (i) Domestic Branded, (ii) International,
and (iii) Commercial Markets and Other. The segments were
identified based on the economic characteristics, types of
products sold, the customer base and method of distribution. On
August 28, 2001 we disposed of our Specialty Personal Care
segment. The segment information has been restated to reflect
historical segment information as adjusted for the
reclassification of Specialty Personal Care as a discontinued
operation. Prior to the fourth quarter of 2001, we included
sales of discontinued products in the Commercial Market and
Other business segment. In the fourth quarter of 2001, we began
to include sales of discontinued products in the business
segment that launched the product. The segment information has
been restated to reflect historical segment information
consistently with the new internal analysis used by management.

The Domestic Branded business segment consists of
four aggregated operating segments that manufacture and market
nondurable consumer packaged goods through grocery store, drug
store and mass merchandiser retail outlets. It is comprised of
the Personal Cleansing, Laundry Care, Air Fresheners and Food
Products operating segments. Our subsidiary, ISC International,
Ltd., a manufacturer of translucent soaps, is

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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


included in the Personal Cleansing operating
segment. The following table sets forth the percentage of net
sales represented by each franchise within the Domestic Branded
segment:

|                   |       |      |    |      |   |      |    |     |   |  |    |     |  
|------------------ | ----- | ---- | -- | ---- | - | ---- | -- | --- | - |  | -- | --- | -
|                   |       | 2001 |    | 2000 |   | 1999
|                   |       |      |    |      |   |     
|Personal Cleansing |       |      | 30 | %    |   |      | 30 | %   |   |  | 31 | %  
|Laundry Care       |       |      | 39 | %    |   |      | 37 | %   |   |  | 35 | %  
|Air Fresheners     |       |      | 16 | %    |   |      | 17 | %   |   |  | 16 | %  
|Food Products      |       |      | 15 | %    |   |      | 16 | %   |   |  | 18 | %  
|                   |       |      |    |      |   |      |    |     |   |  |    |    
|                   | Total |      |    | 100  | % |      |    | 100 | % |  |    | 100 | %
|                   |       |      |    |      |   |      |    |     |   |  |    |    

The International business segment consists of
our sale of consumer products outside of the United States,
principally in Argentina, Canada, Mexico, Puerto Rico and the
Caribbean.

Our Commercial Markets and Other businesses sell
our products, both branded and nonbranded, through the
commercial channel to hotels, hospitals, schools and other
institutional customers. In addition, this business segment
includes sales of soap pellets and chemicals, principally
glycerin and fatty acids, that are by-products of the soap
making process.

Information as to our operations in different
business segments is set forth below. The calculation of
Operating Income 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       |   | Commercial      |  |               |   |       
|(2000 and 1999 restated)   |         | Branded        |   | Markets & Other |  | International |   | Total 
|                           |         |                |   |                 |  |               |   |       
|                           |         |               
|                           |         | (In thousands)
|Net Sales:                 |         |                |   |                 |  |               |   |        |  |  |   |         |   |  |   |          
|                           | 2001    |                | $ | 1,400,190       |  |               | $ | 57,413 |  |  | $ | 205,725 |   |  | $ | 1,663,328 | 
|                           | 2000    |                |   | 1,276,807       |  |               |   | 57,781 |  |  |   | 187,686 |   |  |   | 1,522,274 | 
|                           | 1999    |                |   | 1,350,985       |  |               |   | 64,990 |  |  |   | 164,727 |   |  |   | 1,580,702 | 
|Operating Income:          |         |                |   |                 |  |               |   |        |  |  |   |         |   |  |   |          
|                           | 2001(1) |                |   | 169,746         |  |               |   | 641    |  |  |   | (11,854 | ) |  |   | 158,533   | 
|                           | 2000(2) |                |   | 118,406         |  |               |   | 10,313 |  |  |   | 899     |   |  |   | 129,618   | 
|                           | 1999    |                |   | 201,278         |  |               |   | 12,591 |  |  |   | 4,825   |   |  |   | 218,694   | 
|Capital Expenditures:      |         |                |   |                 |  |               |   |        |  |  |   |         |   |  |   |          
|                           | 2001    |                |   | 26,772          |  |               |   | 495    |  |  |   | 4,073   |   |  |   | 31,340    | 
|                           | 2000    |                |   | 33,749          |  |               |   | 880    |  |  |   | 7,459   |   |  |   | 42,088    | 
|                           | 1999    |                |   | 55,383          |  |               |   | 63     |  |  |   | 7,049   |   |  |   | 62,495    | 
|Acquisition of Businesses: |         |                |   |                 |  |               |   |        |  |  |   |         |   |  |   |          
|                           | 2001    |                |   | 881             |  |               |   |       |  |  |   |        |   |  |   | 881       | 
|                           | 2000    |                |   | 72,223          |  |               |   |       |  |  |   | 46,929  |   |  |   | 119,152   | 
|                           | 1999    |                |   |                |  |               |   |       |  |  |   |        |   |  |   |          | 
|Assets at year end:        |         |                |   |                 |  |               |   |        |  |  |   |         |   |  |   |          
|                           | 2001    |                |   | 906,609         |  |               |   | 10,803 |  |  |   | 106,704 |   |  |   | 1,024,116 | 
|                           | 2000    |                |   | 895,413         |  |               |   | 12,237 |  |  |   | 198,515 |   |  |   | 1,106,165 | 
|                           | 1999    |                |   | 791,555         |  |               |   | 10,058 |  |  |   | 179,906 |   |  |   | 981,519   | 



---



|    |                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes special charges of $11.8 million
	($4.1 million in Domestic Branded and $7.7 in International
	segments) offset by $1.1 million of reversed 2000 special
	charges in Domestic Branded.

61



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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes special charges of $17.9 million
	($15.5 million in Domestic Branded, $2.3 in International
	and $0.1 in Commercial Markets & Other segments).

Wal-Mart, including its affiliate Sams
Club, was our largest customer in 2001, 2000, and 1999,
accounting for approximately 24%, 20%, and 20%, respectively, of
net sales. No other customer accounted for more than 10% of net
sales in 2001, 2000 or 1999. Net sales in Argentina were $140.1
million, $119.6 million, and $87.0 million in 2001,
2000 and 1999, respectively.

Note
19.     Condensed Consolidated
Quarterly Results (Unaudited)

|                                      |           |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |         |       |   |          |   |       |   |         |   |       |   |         |   |      |   |         |   |       |  
|------------------------------------- | --------- | ---------------------------------------- | ------- | -------------- | ----- | ------------- | ------- | -------------- | ----- | ------- | ------- | ------- | ----- | ------- | ------- | ------- | ----- | - | -------- | - | ----- | - | ------- | - | ----- | - | ------- | - | ---- | - | ------- | - | ----- | -
|                                      |           |                                          |         |                |       |               |         |               
|                                      |           | First Quarter                            |         | Second Quarter |       | Third Quarter |         | Fourth Quarter
|                                      |           |                                          |         |                |       |               |         |               
|                                      |           | 2001                                     |         | 2000           |       | 2001          |         | 2000(2)        |       | 2001(1) |         | 2000(2) |       | 2001(1) |         | 2000(2)
|                                      |           |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |        
|                                      |           |                                         
|                                      |           | (000 omitted, except for per share data)
|Net sales                             |           | $                                        | 389,672 |                |       | $             | 346,282 |                |       | $       | 416,602 |         |       | $       | 388,570 |         |       | $ | 430,487  |   |       | $ | 385,624 |   |       | $ | 426,567 |   |      | $ | 401,798 |  
|Gross profit                          |           | $                                        | 191,208 |                |       | $             | 173,140 |                |       | $       | 206,787 |         |       | $       | 188,331 |         |       | $ | 207,934  |   |       | $ | 185,123 |   |       | $ | 220,386 |   |      | $ | 193,968 |  
|Operating income (loss)               |           | $                                        | 34,580  |                |       | $             | 44,638  |                |       | $       | 36,706  |         |       | $       | 30,793  |         |       | $ | 36,925   |   |       | $ | 23,399  |   |       | $ | 50,322  |   |      | $ | 30,788  |  
|Net income from continuing operations |           | $                                        | 14,695  |                |       | $             | 22,671  |                |       | $       | 15,959  |         |       | $       | 14,843  |         |       | $ | 13,863   |   |       | $ | (446    | ) |       | $ | 25,326  |   |      | $ | (2,778  | )
|Discontinued operations               |           | $                                        | (1,597  | )              |       | $             | (1,173  | )              |       | $       | (1,218  | )       |       | $       | (13,714 | )       |       | $ | (199,279 | ) |       | $ | (25,720 | ) |       | $ |        |   |      | $ | (4,690  | )
|Net income (loss)                     |           | $                                        | 13,098  |                |       | $             | 21,498  |                |       | $       | 14,741  |         |       | $       | 1,129   |         |       | $ | (185,416 | ) |       | $ | (26,166 | ) |       | $ | 25,326  |   |      | $ | (7,469  | )
|Net income (loss) per share           |           |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |         |       |   |          |   |       |   |         |   |       |   |         |   |      |   |         |  
|                                      |  Basic   |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |         |       |   |          |   |       |   |         |   |       |   |         |   |      |   |         |   |      
|                                      |           | Continuing operations                    |         | $              | 0.16  |               |         | $              | 0.24  |         |         | $       | 0.17  |         |         | $       | 0.16  |   |          | $ | 0.15  |   |         | $ | 0.00  |   |         | $ | 0.28 |   |         | $ | (0.03 | )
|                                      |           | Discontinued operations                  |         | $              | (0.02 | )             |         | $              | (0.01 | )       |         | $       | (0.01 | )       |         | $       | (0.15 | ) |          | $ | (2.18 | ) |         | $ | (0.28 | ) |         | $ |     |   |         | $ | (0.05 | )
|                                      |           |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |         |       |   |          |   |       |   |         |   |       |   |         |   |      |   |         |  
|                                      |           | Net income (loss)                        |         | $              | 0.14  |               |         | $              | 0.23  |         |         | $       | 0.16  |         |         | $       | 0.01  |   |          | $ | (2.03 | ) |         | $ | (0.29 | ) |         | $ | 0.28 |   |         | $ | (0.08 | )
|                                      |  Diluted |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |         |       |   |          |   |       |   |         |   |       |   |         |   |      |   |         |   |      
|                                      |           | Continuing operations                    |         | $              | 0.16  |               |         | $              | 0.24  |         |         | $       | 0.17  |         |         | $       | 0.16  |   |          | $ | 0.15  |   |         | $ | 0.00  |   |         | $ | 0.27 |   |         | $ | (0.03 | )
|                                      |           | Discontinued operations                  |         | $              | (0.02 | )             |         | $              | (0.01 | )       |         | $       | (0.01 | )       |         | $       | (0.15 | ) |          | $ | (2.18 | ) |         | $ | (0.28 | ) |         | $ |     |   |         | $ | (0.05 | )
|                                      |           |                                          |         |                |       |               |         |                |       |         |         |         |       |         |         |         |       |   |          |   |       |   |         |   |       |   |         |   |      |   |         |  
|                                      |           | Net income (loss)                        |         | $              | 0.14  |               |         | $              | 0.23  |         |         | $       | 0.16  |         |         | $       | 0.01  |   |          | $ | (2.03 | ) |         | $ | (0.29 | ) |         | $ | 0.27 |   |         | $ | (0.08 | )



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes special charges of $10.2 million,
	net of tax, in the third quarter. This charge is partially
	offset by a reversal of fiscal year 2000 special charges of
	$0.2 million and $0.5 million, net of tax, in the
	third and fourth quarters respectively. See Note 3 of the
	Consolidated Financial Statements.                                                                                                             
|   
|(2) | Includes special charges of $7.1 million,
	$12.7 million and $14.3 million, all net of tax, in
	the second, third and fourth quarters respectively. These
	charges are partially offset by special gains (net of tax) of
	$5.4 million in the second quarter and $ 3.0 million
	in the third quarter. The fourth quarter also includes a charge
	of $1.2 million net of tax recognized as a result of our
	DCI lease modification.

Note
20.     Litigation and Claims

On May 21, 1999, we were served with a
complaint filed by the U.S. Equal Employment Opportunity
Commission (the EEOC) in the U.S. District Court for
the Northern District of Illinois, Eastern Division. This action
is entitled Equal Opportunity Commission v. The Dial
corporation, Civil Action No. 99 C 3356. The EEOC
alleges that we engaged in a pattern and practice of
discrimination against a class of female employees by subjecting
them to sexual or sex-based harassment and failing to take
prompt remedial action after these employees complained about
the alleged harassment. The EEOC is seeking to enjoin us from
this alleged harassment, to require us to train our managerial
employees regarding the requirements of Title VII of the Civil
Rights Act of 1964 and to recover unspecified compensatory and
punitive damages. We have denied the EEOCs allegations.
After discovery was completed, we filed a dispositive motion,
which was granted in part and denied in part by the Court in an
opinion issued in the third quarter of 2001. The Court granted
our motion to dismiss the claims of thirteen individuals and
denied our motion with respect to the remaining

62



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


individuals. We petitioned the Seventh Circuit
Court of Appeals to review the U.S. District Courts ruling
on our summary judgment motion but the Seventh Circuit denied
our petition for an interlocutory appeal. A trial date has not
been set. We currently do not believe that this lawsuit will
have a material adverse effect on our operating results or
financial condition. However, assurances cannot be given
regarding the ultimate outcome of this matter.

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 potential insurance
recovery, should not have a material adverse effect on our
financial position, cash flows or operating results.

63



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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







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 accountants.




Item 10.     Directors
and Executive Officers of the Registrant

Information concerning our Directors and
Executive Officers is set forth below and under the caption
Section 16(a) Beneficial Ownership Reporting
Compliance in our Proxy Statement relating to the 2002
Annual Meeting of Stockholders to be held on June 6, 2002
(the Proxy Statement), which is incorporated by
reference into this Form 10-K. With the exception of this
foregoing information and other information specifically
incorporated by reference into this Form 10-K, the Proxy
Statement is not being filed as a part hereof.

|                                |  |     |    |          |  |                                                                 
|------------------------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------
|Name                            |  | Age |    | Position
|                                |  |     |    |         
|Herbert M. Baum(1)              |  |     | 65 |          |  | Chairman of the Board, President and Chief
	Executive Officer   
|Conrad A. Conrad                |  |     | 56 |          |  | Executive Vice President and Chief Financial
	Officer           
|Mark R. Shook                   |  |     | 47 |          |  | Executive Vice President-International and
	Business Development
|Bernhard J. Welle               |  |     | 53 |          |  | Executive Vice President-Shared Services                        
|Stephen D. Blum                 |  |     | 58 |          |  | Senior Vice President-Investor Relations                        
|Arthur E. Hanke                 |  |     | 54 |          |  | Senior Vice President-Sales                                     
|Evon L. Jones                   |  |     | 37 |          |  | Senior Vice President and Chief Information
	Officer            
|Christopher J. Littlefield      |  |     | 35 |          |  | Senior Vice President, General Counsel and
	Secretary           
|John F. Tierney                 |  |     | 49 |          |  | Senior Vice President and Controller                            
|Greg A. Tipsord                 |  |     | 36 |          |  | Senior Vice President and General
	Manager-Personal Cleansing   
|Stephen L. Tooker               |  |     | 42 |          |  | Senior Vice President and General Manager-Laundry
	Care         
|Mark L. Whitehouse              |  |     | 45 |          |  | Senior Vice President-Innovation and Air
	Fresheners            
|Brian T. Shook                  |  |     | 39 |          |  | Vice President and General Manager-Food Products                
|Joy A. Amundson(4)(5)           |  |     | 47 |          |  | Director                                                        
|Joe T. Ford(1)(3)(4)            |  |     | 64 |          |  | Director                                                        
|Thomas L. Gossage(1)(2)(5)      |  |     | 67 |          |  | Director                                                        
|Donald E. Guinn(1)(2)(4)        |  |     | 69 |          |  | Director                                                        
|James E. Oesterreicher(1)(2)(3) |  |     | 60 |          |  | Director                                                        
|Michael T. Riordan(4)(5)        |  |     | 51 |          |  | Director                                                        
|Barbara S. Thomas(3)(5)         |  |     | 52 |          |  | Director                                                        
|Salvador M. Villar(2)(3)        |  |     | 51 |          |  | Director                                                        



---



|    |                                               
|--- | ----------------------------------------------
|(1) | Member of the Executive Committee             
|   
|(2) | Member of the Audit Committee                 
|   
|(3) | Member of the Executive Compensation Committee
|   
|(4) | Member of the Finance Committee               
|   
|(5) | Member of the Governance Committee            

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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. From 1978 to 1992, Mr. Baum
was employed by Campbell Soup Company and, in 1992, was named
President of Campbell  North and South America.
Mr. Baum also is a director of Action Performance
Companies, Inc.; the Cosmetic, Toiletry and Fragrance
Association; Fleming Companies, Inc.; Grocery Manufacturers of
America; Meredith Corporation; Midas, Inc. 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 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.

Mark R. Shook.Mr. Shook has served as Executive Vice
President  International and Business Development
since August 2000. From January 1998 to August 2000,
Mr. Shook served as Senior Vice President 
International and Commercial Markets. From September 1996 to
January 1998, Mr. Shook served as Senior Vice
President  International of the Company. From the
1996 Spin-off of the Consumer Products business of The Dial Corp
(the Spin-off), the predecessor company to Dial (the
Predecessor Company), until September 1996, he was
an Executive Vice President and General Manager, Personal Care,
of the Company. From September 1990 to the Spin-off,
Mr. Shook was an Executive Vice President of the
Predecessor Company, serving as General Manager 
Food, from September 1990 to September 1993; General
Manager  Food and International, from September 1993
to April 1994; General Manager  Laundry and
International, from April to September 1994; General
Manager  Soaps and Detergents, from September 1994 to
July 1995; and General Manager  Personal Care, from
July 1995 to the Spin-off.

Bernhard J. Welle.Mr. Welle has served as Executive
Vice President  Shared Services of the Company since
August 2000. From August 1996 to August 2000, he served as
Senior Vice President  Human Resources of the
Company. 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 the Company since March 2002. From
September 2000 to March 2002, Mr. Blum served as Vice
President  Investor Relations of the Company. 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  Sales of the Company since January
1999. From September 1998 to January 1999, he served as Vice
President  Corporate Sales of the Company, and from
the Spin-off to September 1998, he served as Vice
President  Customer Management of the Company. From
1991 to the Spin-off, Mr. Hanke served in various
capacities for the Consumer Products Business of the Predecessor
Company, including Vice President  Western Division
Grocery Sales, from 1991 to 1993; Vice President 
Broker Sales, from 1993 to 1994; Vice President 
Marketing, Detergents, from 1994 to 1995; and Senior Vice
President  Sales, Household Products Division, from
1995 to the Spin-off.

Evon L. Jones.Mr. Jones has served as Senior
Vice President and Chief Information Officer since May 2001.
From 1998 to 2001, Mr. Jones served as Senior Vice
President and Chief Information Officer for America West
Holdings Corporation. From 1995 to 1998, Mr. Jones served
as Vice President and Technology Leader  Global
Financial Technology for the American Express Company.

Christopher J. Littlefield.Mr. Littlefield has served as
Senior Vice President, General Counsel and Secretary of the
Company since September 2000. From August 1998 to September
2000, Mr. Littlefield served as Vice President and
Associate General Counsel of the Company. From January 1998 to
August 1998,

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##### Table of Contents



he served as Corporate Counsel of the Company.
From 1992 to 1998, Mr. Littlefield served as corporate and
securities attorney for the law firm of Snell & Wilmer,
L.L.P.


John F. Tierney.Mr. Tierney has served as Senior
Vice President and Controller of the Company since September
2000. From February 1999 to August 2000, Mr. Tierney served
as Vice President and Controller of the Company. From 1997 to
1999, Mr. Tierney served as Senior Vice President and Chief
Financial Officer of Global Passenger Services, LLC, a provider
and consolidator of entertainment and student transportation
services. From 1996 to 1997, he served as Senior Vice President
and Chief Financial Officer of Brother International, Inc., a
manufacturer of business and consumer electronics. From 1993 to
1996, Mr. Tierney served as Corporate Controller of Perdue
Farms, Inc., a poultry producer.

Greg A. Tipsord.Mr. Tipsord has served as Senior
Vice President and General Manager  Personal
Cleansing since March 2002. 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.
From October 1996 to April 2000, he served as Marketing
Director-Dial and from July 1995 to February 1996,
Mr. Tipsord served as Senior Brand Manager  Dial
of the Predecessor Company.

Stephen L. Tooker.Mr. Tooker has served as Senior
Vice President and General Manager-Laundry Care since March
2002. From August 2000 to March 2002, he served as Vice
President and General Manager-Laundry Care. Mr. Tooker has
also served as President-Dial/ Henkel LLC since September 2000.
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 Director-Purex Laundry
Detergent. From the Spin-off until December 1998,
Mr. Tooker served as Assistant Controller-Planning and
Development. From January 1994 to the Spin-off, Mr. Tooker
served as Director-Planning and Control of the Predecessor
Company.

Mark L. Whitehouse.Mr. Whitehouse has served as
Senior Vice President-Innovation and Air Fresheners since
October 2001. From August 2000 to October 2001,
Mr. Whitehouse served as Senior Vice President and General
Manager-Specialty Personal Care of the Company. From July 1997
to August 2000, Mr. Whitehouse served as Vice
President-Marketing and from May 1999 to September 2000, he
served as President-Dial/ Henkel LLC, the joint venture between
the Company and Henkel KGaA. From March 1995 to September 1997,
Mr. Whitehouse served as a Marketing Manager of both the
Consumer Products business of the Predecessor Company as well as
the Company, serving as Marketing Manager-Cleaning Products,
Household Division, from March 1995 to February 1996; and as
Marketing Manager-Renuzit, Household Division, from February
1996, through the Spin-off, to July 1997.

Brian T. Shook.Mr. Shook has served as Vice
President and General Manager-Food Products since August 2000.
From 1999 to 2000, he served as Vice President-Fabric Care
Marketing. From 1998 to 1999, Mr. Shook served as
Director-Marketing, Armour. From 1996 to 1998, Mr. Shook
served as Region Business Manager (Sales) and from 1994 to the
Spin-off, Mr. Shook served as Senior Account Business
Manager (Sales) of the Predecessor Company.

Joy A. Amundson.Ms. Amundson has been a Director
of Dial since 1997. She was most recently Senior Vice President
of Abbott Laboratories, a diversified health care products and
services company until her resignation in 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 a director of Lutheran General
Hospital.

Joe T. Ford.Mr. Ford was a Director of The
Dial Corp, the Predecessor Company, from 1991 through 1996, and
has continued as a Director of Dial since the Spin-off.
Mr. Ford is Chairman and Chief Executive Officer of ALLTEL
Corporation (ALLTEL), a telecommunications and
information services company, a position he has held since 1991.
Mr. Ford will retire as Chief Executive Officer of ALLTEL
on July 1, 2002, but will retain his position as Chairman.
Mr. Ford became Chief Executive Officer of ALLTEL in 1987
and Chairman of the Board in 1991.

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. Mr. Gossage recently
retired as the Interim Chief Executive Officer of Hercules
Incorporated (Hercules), a worldwide producer of
chemicals and related

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products. Mr. Gossage had originally retired
from Hercules in January 1997. Mr. Gossage also is a
director of Alliant Techsystems Inc. and 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. 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.

James E. Oesterreicher.Mr. Oesterreicher has been a
Director of Dial since 2000. 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. 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, 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. and
Wallace Computer Services, Inc.

Barbara S. Thomas.Ms. Thomas has been a Director of
Dial since 1997. She was most recently President of
Warner-Lambert Consumer Healthcare, the over-the-counter
pharmaceuticals business of the Warner-Lambert Company, 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
Ocean Spray Company.

Salvador M. Villar.Mr. Villar has been a Director of
Dial since 1998, and 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.




Item 11.     Executive
Compensation

Information concerning executive compensation
matters is incorporated herein by reference to Executive
Compensation, Option Grants in Last Fiscal
Year, Aggregated Stock Option Exercises in Last
Fiscal Year and Fiscal Year-End Options Values,
Pension Plans and Employment and Change in
Control Arrangements in the Proxy Statement; provided,
however, that the Executive Compensation Committee Report
on Executive Compensation and the Stock Price
Performance Graph contained in the Proxy Statement are not
incorporated by reference herein.




Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

Information concerning the Common Stock
beneficially owned by each Director of the Company, by all
Executive Officers and Directors of the Company as a group and
by each stockholder known by the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock is
incorporated herein by reference to Common Stock Ownership
of Directors and Executive Officers and Common Stock
Ownership of Certain Beneficial Owners in the Proxy
Statement.

67



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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.




PART IV




Item 14.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K

(a) Financial Statements and Schedules

|     |  |                                                                                                                                                                                                                                                                         |  |                                                                                                                                                 |  |      |    | 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|     |  |                                                                                                                                                                                                                                                                         |  |                                                                                                                                                 |  | Page
|     |  |                                                                                                                                                                                                                                                                         |  |                                                                                                                                                 |  |     
|(i)  |  | Financial Statements                                                                                                                                                                                                                                                    |  |                                                                                                                                                 |  |     
|     |  | (1)                                                                                                                                                                                                                                                                     |  | Managements Report on Responsibility for
	Financial Reporting                                                                                  |  |      | 20 | 
|     |  | (2)                                                                                                                                                                                                                                                                     |  | Independent Auditors Report                                                                                                                    |  |      | 21 | 
|     |  | (3)                                                                                                                                                                                                                                                                     |  | Consolidated Financial Statements:                                                                                                              |  |      |    | 
|     |  |                                                                                                                                                                                                                                                                         |  | Consolidated Balance Sheet at December 31,
	2001, and December 31, 2000                                                                         |  |      | 22 | 
|     |  |                                                                                                                                                                                                                                                                         |  | Statement of Consolidated Operations and
	Comprehensive Income for the years ended December 31, 2001,
	December 31, 2000, and December 31, 1999 |  |      | 23 | 
|     |  |                                                                                                                                                                                                                                                                         |  | Statement of Consolidated Cash Flows for the
	years ended December 31, 2001, December 31, 2000, and
	December 31, 1999                          |  |      | 24 | 
|     |  |                                                                                                                                                                                                                                                                         |  | Statement of Consolidated Stockholders
	Equity for the years ended December 31, 2001,
	December 31, 2000, and December 31, 1999                |  |      | 25 | 
|     |  |                                                                                                                                                                                                                                                                         |  | Notes to Consolidated Financial Statements                                                                                                      |  |      | 26 | 
|(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 the
	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 10, 2001, reporting that, on August 28, 2001,
Dial sold all of the stock of its wholly-owned subsidiary, Sarah
Michaels Inc., and inventory, other operating, intellectual
property and other intangible assets associated with its
Specialty Personal Care business and issued a press release
relating to its better than expected results from continuing
operations in the third quarter and special charges it took in
the third quarter, a copy of which was filed as Exhibit 99.

We also filed a Current Report on Form 8-K,
dated December 3, 2001, reporting that, on August 28,
2001, Dial sold all of the stock of its wholly-owned subsidiary,
Sarah Michaels Inc., and inventory, other operating,
intellectual property and other intangible assets associated
with its Specialty Personal Care business.

We also filed a Current Report on Form 8-K,
dated January 7, 2002, reporting that Dial issued a press
release relating to the earnings release conference call held on
Thursday, January 24, 2002, a copy of which was filed as
Exhibit 99.

We also filed a Current Report on Form 8-K,
dated January 24, 2002, reporting that Dial issued a press
release relating to its fourth quarter and full year 2001
earnings and outlook for 2002, a copy of which was filed as
Exhibit 99.

We also filed a Current Report on Form 8-K,
dated February 13, 2002, reporting that Dial issued a press
release relating to its analyst and investor conference to be
held on Tuesday, February 19, 2002, a copy of which was
filed as Exhibit 99.

We also filed a Current Report on Form 8-K,
dated February 19, 2002, reporting that, in response to
analyst requests, Dial supplied information concerning net sales
for each of the quarters in 2000 and 2001 after

68



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##### Table of Contents



giving effect to the Financial Accounting
Standards Boards Emerging Issues Task Force
(EITF) Issue No. 00-14, Accounting for
Certain Sales Incentives and EITF Issue No. 00-25,
Vendor Income Statement Characterization of Consideration
Paid to a Reseller of the Vendors Products. Dial
also reported that it would be hosting an analyst and investor
conference at its headquarters building in Scottsdale, Arizona,
a copy of such presentation was filed as Exhibit 99.


We also filed a Current Report on Form 8-K,
dated March 12, 2002, reporting that Dial issued a press
release announcing that Chairman, President & CEO,
Herbert M. Baum, and Executive Vice President & CFO,
Conrad A. Conrad, would present to investors at the Merrill
Lynch 15th Annual Global Branded Consumer Products
Conference on Tuesday, March 19, 2002, a copy of which was
filed as Exhibit 99.

We also filed a Current Report on Form 8-K,
dated March 19, 2002, reporting that Dial issued a press
release announcing that Chairman, President & CEO,
Herbert M. Baum, and Executive Vice President & CFO,
Conrad A. Conrad, would present to investors at the Merrill
Lynch 15th Annual Global Branded Consumer Product
Conference. The release also announced that Dial believed that
its first quarter 2002 earnings would exceed Street estimates as
reported by First Call, excluding the effect of the change in
accounting principle that would result in an approximate
$43 million impairment charge for Argentina in the first
quarter. A copy of the press release was filed as
Exhibit 99.

We also filed a Current Report on Form 8-K,
dated March 25, 2002, reporting that, on March 21,
2002, Dial issued a press release announcing that The Dial
Corporation conference call to review first quarter 2002 results
will be held on Thursday, April 18, 2002 at 9:00 a.m.
EDT, a copy of which was filed as Exhibit 99.

(c) Exhibits

EXHIBIT INDEX

|        |       |             |  |                                                                                                                        |  |                                                                                                                                     
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |             |  |                                                                                                                       
|Number  |       | Description |  | Method of Filing                                                                                                      
|        |       |             |  |                                                                                                                       
|        | 3(a)  |             |  | Restated Certificate of Incorporation of the
	Company                                                                  |  | 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 Company                                                                                                  |  | 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 Company and
	the Rights Agent                                                     |  | Incorporated by reference to Exhibit 4 of the
	Form 10.                                                                             
|        | 4(b)  |             |  | 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(c)  |             |  | 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(d)  |             |  | 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
	Form 8-K dated August 17, 2001.                                                        
|        | 10(a) |             |  | Directors Indemnification Agreement+                                                                                  |  | Incorporated by reference to Exhibit 10(a) of
	Dials Form 10-Q, dated November 11, 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
	Dials Form 10-K for the fiscal year ended
	December 31, 2000 (the 2000 Form 10-K).

69



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|        |       |             |  |                                                                                       |  |                                                                                                              
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------
|Exhibit |       |             |  |                                                                                      
|Number  |       | Description |  | Method of Filing                                                                     
|        |       |             |  |                                                                                      
|        | 10(d) |             |  | The Dial Corporation Future Security Restoration
	Plan+                               |  | Incorporated by reference to Exhibit 10(e) of the
	2000 Form 10-K.                                           
|        | 10(e) |             |  | The Dial Corporation Amended & Restated 1996
	Stock Incentive Plan+                   |  | Incorporated by reference to Exhibit 10(f) of the
	2000 Form 10-K.                                           
|        | 10(f) |             |  | Annual Incentive Plan Agreement+                                                      |  | Incorporated by reference to Exhibit 10(f) of
	Dials Form 10-K for the fiscal year ended December 28,
	1996.
|        | 10(g) |             |  | Form of The Dial Corporation Directors
	Charitable Award Program+                    |  | Incorporated by reference to Exhibit 10(f) of the
	Form 10.                                                  
|        | 10(h) |             |  | Form of Change of Control Agreements with certain
	Executive Officers of the Company+ |  | Incorporated by reference to Exhibit 10(h) of the
	1998 Form 10-K.                                           
|        | 10(i) |             |  | Credit Agreement*                                                                     |  |                                                                                                              
|        | 10(j) |             |  | Form of The Dial Corporation Employee Equity Trust                                    |  | Incorporated by reference to Exhibit 10(k) of the
	Form 10.                                                  
|        | 10(k) |             |  | The Dial Corporation Amended and Restated
	Directors Deferred Compensation Plan+*     |  |                                                                                                              
|        | 10(l) |             |  | The Dial Corporation Amended and Restated
	Management Deferred Compensation Plan+*    |  |                                                                                                              
|        | 10(m) |             |  | Employment Agreement with Herbert M. Baum, dated
	January 26, 2001+                   |  | Incorporated by reference to Exhibit 10(o) of the
	2000 Form 10-K.                                           
|        | 21    |             |  | List of Significant Subsidiaries*                                                     |  |                                                                                                              
|        | 23    |             |  | Consent of Deloitte & Touche LLP*                                                     |  |                                                                                                              
|        | 24    |             |  | Power of Attorney                                                                     |  | See Signature Page.                                                                                          



---

|  |                                                         
|- | --------------------------------------------------------
|+ | Management contract or compensatory plan or
	arrangement



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

70



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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 28, 2002.



| |                     
| | --------------------
| | 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, 2001, 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.

71



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##### Table of Contents



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 28, 2002.

|                                                 |  |                                                                                             |  | 
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------- |  | 
|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                                                                                    |  | 
|                                                
|/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                                                                                    |  | 

72



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##### Table of Contents



EXHIBIT INDEX

|        |       |             |  |                                                                                                                        |  |                                                                                                                                      
|------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |             |  |                                                                                                                       
|Number  |       | Description |  | Method of Filing                                                                                                      
|        |       |             |  |                                                                                                                       
|        | 3(a)  |             |  | Restated Certificate of Incorporation of the
	Company                                                                  |  | 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 Company                                                                                                  |  | 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 Company and
	the Rights Agent                                                     |  | Incorporated by reference to Exhibit 4 of the
	Form 10.                                                                              
|        | 4(b)  |             |  | 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(c)  |             |  | 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(d)  |             |  | 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
	Form 8-K dated August 17, 2001.                                                         
|        | 10(a) |             |  | Directors Indemnification Agreement+                                                                                  |  | Incorporated by reference to Exhibit 10(a) of
	Dials Form 10-Q, dated November 11, 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
	Dials Form 10-K for the fiscal year ended
	December 31, 2000 (the, 2000 Form 10-K).
|        | 10(d) |             |  | The Dial Corporation Future Security Restoration
	Plan+                                                                |  | Incorporated by reference to Exhibit 10(e) of the
	2000 Form 10-K.                                                                   
|        | 10(e) |             |  | The Dial Corporation Amended & Restated 1996
	Stock Incentive Plan+                                                    |  | Incorporated by reference to Exhibit 10(f) of the
	2000 Form 10-K.                                                                   
|        | 10(f) |             |  | Annual Incentive Plan Agreement+                                                                                       |  | Incorporated by reference to Exhibit 10(f) of
	Dials Form 10-K for the fiscal year ended December 28,
	1996.                        
|        | 10(g) |             |  | Form of The Dial Corporation Directors
	Charitable Award Program+                                                     |  | Incorporated by reference to Exhibit 10(f) of the
	Form 10.                                                                          
|        | 10(h) |             |  | Form of Change of Control Agreements with certain
	Executive Officers of the Company+                                  |  | Incorporated by reference to Exhibit 10(h) of the
	1998 Form 10-K.                                                                   
|        | 10(i) |             |  | Credit Agreement*                                                                                                      |  |                                                                                                                                      
|        | 10(j) |             |  | Form of The Dial Corporation Employee Equity Trust                                                                     |  | Incorporated by reference to Exhibit 10(k) of the
	Form 10.                                                                          
|        | 10(k) |             |  | The Dial Corporation Amended and Restated
	Directors Deferred Compensation Plan+*                                      |  |                                                                                                                                      
|        | 10(l) |             |  | The Dial Corporation Amended and Restated
	Management Deferred Compensation Plan+*                                     |  |                                                                                                                                      
|        | 10(m) |             |  | Employment Agreement with Herbert M. Baum, dated
	January 26, 2001+                                                    |  | Incorporated by reference to Exhibit 10(o) of the
	2000 Form 10-K.                                                                   



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##### Table of Contents



|        |    |             |  |                                   |  |                    
|------- | -- | ----------- |  | --------------------------------- |  | -------------------
|Exhibit |    |             |  |                                  
|Number  |    | Description |  | Method of Filing                 
|        |    |             |  |                                  
|        | 21 |             |  | List of Significant Subsidiaries* |  |                    
|        | 23 |             |  | Consent of Deloitte & Touche LLP* |  |                    
|        | 24 |             |  | Power of Attorney                 |  | See Signature Page.



---

|  |                                                         
|- | --------------------------------------------------------
|+ | Management contract or compensatory plan or
	arrangement



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