##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 28, 2002

Commission file number 1-11793

THE DIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


|                                                                                        |  |                                                
|--------------------------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)                 |  | 51-0374887
(I.R.S. Employer
Identification No.)
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        |  |                                                
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|15501 NORTH DIAL BOULEVARD
SCOTTSDALE, ARIZONA
(Address of Principal Executive Offices) |  | 85260-1619
(Zip Code)                          

Registrants Telephone Number, Including Area Code: (480) 754-3425

Indicate by check mark whether the registrant (1) has filed all Exchange Act
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.

Yes    [X]        No    [ ]

The number of shares of Common Stock, $.01 par value, outstanding as the close
of business on October 25, 2002 was 95,082,229.





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TABLE OF CONTENTS



|                                           |                                                                                             |  |  |  |  |  |  | 
|------------------------------------------ | ------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION             
|                                           | ITEM 1. FINANCIAL STATEMENTS                                                               
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                                           | ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|PART II. OTHER INFORMATION                
|                                           | Item 1. Legal Proceedings                                                                  
|                                           | Item 6. Exhibits and Reports on Form 8-K                                                   
|SIGNATURES                                
|EXHIBIT INDEX                             
|Exhibit 10.1                              
|Exhibit 99.1                              
|Exhibit 99.2                              



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##### Table of Contents









PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEET

|                                     |                                                       |                                                       |                            |                   |             |         |           |          |       |         | 
|------------------------------------ | ----------------------------------------------------- | ----------------------------------------------------- | -------------------------- | ----------------- | ----------- | ------- | --------- | -------- | ----- | ------- | 
|                                     |                                                       |                                                       |                            |                   | (Unaudited) |         |           |          |      
|(in thousands, except share data)    |                                                       | September 28, 2002                                    |                            | December 31, 2001
|                                     |                                                       |                                                       |                            |                  
|ASSETS                               |                                                       |                                                       |                            |                   |             |         |           |         
|                                    
|                                    
|                                    
|                                    
|Current Assets:                      |                                                       |                                                       |                            |                   |             |         |           |         
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                             |                                                       | $                          | 164,308           |             |         | $         | 29,414   |      
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables, less allowance of $3,728 and $5,131      |                                                       |                            | 100,969           |             |         |           | 94,189   |      
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                           |                                                       |                            | 138,832           |             |         |           | 129,977  |      
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income taxes                                 |                                                       |                            | 23,339            |             |         |           | 23,412   |      
|                                    
|                                    
|                                    
|                                    
|                                     | Income tax receivable                                 |                                                       |                            |                  |             |         |           | 12,567   |      
|                                    
|                                    
|                                    
|                                    
|                                     | Other current assets                                  |                                                       |                            | 7,442             |             |         |           | 9,492    |      
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|                                     |                                                       |                                                       | Total current assets       |                   |             | 434,890 |           |          |       | 299,051 | 
|                                    
|                                    
|                                    
|                                    
|Property and equipment, net          |                                                       |                                                       | 228,281                    |                   |             |         | 252,957   |         
|                                    
|                                    
|                                    
|                                    
|Deferred income taxes                |                                                       |                                                       | 46,786                     |                   |             |         | 49,817    |         
|                                    
|                                    
|                                    
|                                    
|Intangibles, net                     |                                                       |                                                       | 359,984                    |                   |             |         | 403,811   |         
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                                       |                                                       | 11,966                     |                   |             |         | 18,480    |         
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|                                     |                                                       | $                                                     | 1,081,907                  |                   |             | $       | 1,024,116 |         
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                       |                                                       |                            |                   |             |         |           |         
|                                    
|                                    
|                                    
|                                    
|Current Liabilities:                 |                                                       |                                                       |                            |                   |             |         |           |         
|                                    
|                                    
|                                    
|                                    
|                                     | Trade accounts payable                                |                                                       | $                          | 104,184           |             |         | $         | 98,952   |      
|                                    
|                                    
|                                    
|                                    
|                                     | Income taxes payable                                  |                                                       |                            | 39,046            |             |         |           |         |      
|                                    
|                                    
|                                    
|                                    
|                                     | Other current liabilities                             |                                                       |                            | 146,694           |             |         |           | 151,630  |      
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                       |                                                       | Total current liabilities  |                   |             | 289,924 |           |          |       | 250,582 | 
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|Long-term debt                       |                                                       |                                                       | 459,013                    |                   |             |         | 445,341   |         
|                                    
|                                    
|                                    
|                                    
|Pension and other benefits           |                                                       |                                                       | 224,535                    |                   |             |         | 239,286   |         
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |                                                       |                                                       | 6,148                      |                   |             |         | 7,029     |         
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                       |                                                       | Total liabilities          |                   |             | 979,620 |           |          |       | 942,238 | 
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|Stockholders Equity:                |                                                       |                                                       |                            |                   |             |         |           |         
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock, $.01 par value, 10,000,000 shares    |                                                       |                            |                   |             |         |           |          |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                       | authorized; no shares issued and outstanding          |                            |                   |            |         |           |          |      |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.01 par value, 300,000,000 shares      |                                                       |                            |                   |             |         |           |          |      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                       | authorized; 105,925,979 and 105,712,924 shares issued |                            |                   | 1,059       |         |           |          | 1,057 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Additional capital                                    |                                                       |                            | 430,862           |             |         |           | 420,611  |      
|                                    
|                                    
|                                    
|                                    
|                                     | Retained income                                       |                                                       |                            | 41,730            |             |         |           | 6,736    |      
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                  |                                                       |                            | (103,426          | )           |         |           | (75,502  | )    
|                                    
|                                    
|                                    
|                                    
|                                     | Employee benefits                                     |                                                       |                            | (51,531           | )           |         |           | (55,542  | )    
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock, 10,895,104 and 10,847,386 shares held |                                                       |                            | (216,407          | )           |         |           | (215,482 | )    
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|                                     |                                                       |                                                       | Total stockholders equity |                   |             | 102,287 |           |          |       | 81,878  | 
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      
|                                     |                                                       | $                                                     | 1,081,907                  |                   |             | $       | 1,024,116 |         
|                                     |                                                       |                                                       |                            |                   |             |         |           |          |      

See Notes to Consolidated Financial Statements.

2



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##### Table of Contents



THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)

|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |     |          |         | 
|----------------------------------------------------- | ------------------------------------------ | --------------------------------------------------------------------- | -------------------------------------------------- | ------------------ | ------------- | ------- | -------- | --- | -------- | ------- | 
|                                                      |                                            |                                                                       |                                                    |                    | Quarter Ended
|                                                      |                                            |                                                                       |                                                    |                    |              
|(in thousands, except per share data)                 |                                            | September 28, 2002                                                    |                                                    | September 29, 2001
|                                                      |                                            |                                                                       |                                                    |                   
|Net sales                                             |                                            | $                                                                     | 347,236                                            |                    |               | $       | 333,647  |    
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Costs and expenses:                                   |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                            | Cost of products sold                                                 |                                                    |                    | 221,189       |         |          |     | 214,236  |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                            | Asset writedowns and other special items                              |                                                    |                    |              |         |          |     | 10,940   |        
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                      |                                            |                                                                       | Total cost of products sold                        |                    |               | 221,189 |          |     |          | 225,176 | 
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                      |                                            | Selling, general and administrative expenses                          |                                                    |                    | 66,777        |         |          |     | 71,060   |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Special charges and other asset writedowns |                                                                       |                                                    |                   |               |         |          | 486 |         
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                      |                                            |                                                                       | Total selling, general and administrative expenses |                    |               | 66,777  |          |     |          | 71,546  | 
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                      |                                            |                                                                       | Total costs and expenses                           |                    |               | 287,966 |          |     |          | 296,722 | 
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Operating income                                      |                                            |                                                                       | 59,270                                             |                    |               |         | 36,925   |    
|                                                     
|                                                     
|                                                     
|                                                     
|Interest and other expenses                           |                                            |                                                                       | (9,741                                             | )                  |               |         | (11,934  | )  
|                                                     
|                                                     
|                                                     
|                                                     
|Net income of joint ventures                          |                                            |                                                                       |                                                   |                    |               |         | 986      |    
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Income from continuing operations before income taxes |                                            |                                                                       | 49,529                                             |                    |               |         | 25,977   |    
|                                                     
|                                                     
|                                                     
|                                                     
|Income taxes on continuing operations                 |                                            |                                                                       | 18,427                                             |                    |               |         | 12,114   |    
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Income from continuing operations                     |                                            |                                                                       | 31,102                                             |                    |               |         | 13,863   |    
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Discontinued operation:                               |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                            | Loss from operation of discontinued Specialty Personal Care segment,  |                                                    |                    |               |         |          |     |          |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                            | net of income tax benefit of $243                                     |                                                    |                    |              |         |          |     | (876     | )      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                            | Loss on disposal of discontinued Specialty Personal Care segment, net |                                                    |                    |               |         |          |     |          |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      |                                            | of income tax of $40,000                                              |                                                    |                    |              |         |          |     | (198,403 | )      
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Total loss from discontinued operation                |                                            |                                                                       |                                                   |                    |               |         | (199,279 | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|NET INCOME (LOSS)                                     |                                            | $                                                                     | 31,102                                             |                    |               | $       | (185,416 | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Basic net income per common share:                    |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                     
|                                                     
|                                                     
|                                                     
|Income from continuing operations                     |                                            | $                                                                     | 0.34                                               |                    |               | $       | 0.15     |    
|                                                     
|                                                     
|                                                     
|                                                     
|Loss from discontinued operation                      |                                            |                                                                       |                                                   |                    |               |         | (2.18    | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|NET INCOME (LOSS) PER SHARE  BASIC                   |                                            | $                                                                     | 0.34                                               |                    |               | $       | (2.03    | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Diluted net income per common share:                  |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                     
|                                                     
|                                                     
|                                                     
|Income from continuing operations                     |                                            | $                                                                     | 0.33                                               |                    |               | $       | 0.15     |    
|                                                     
|                                                     
|                                                     
|                                                     
|Loss from discontinued operation                      |                                            |                                                                       |                                                   |                    |               |         | (2.18    | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|NET INCOME (LOSS) PER SHARE  DILUTED                 |                                            | $                                                                     | 0.33                                               |                    |               | $       | (2.03    | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Weighted average basic shares outstanding             |                                            |                                                                       | 92,539                                             |                    |               |         | 91,494   |    
|                                                     
|                                                     
|                                                     
|                                                     
|Weighted average equivalent shares                    |                                            |                                                                       | 2,112                                              |                    |               |         |         |    
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|Weighted average diluted shares outstanding           |                                            |                                                                       | 94,651                                             |                    |               |         | 91,494   |    
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|NET INCOME (LOSS)                                     |                                            | $                                                                     | 31,102                                             |                    |               | $       | (185,416 | )  
|                                                     
|                                                     
|                                                     
|                                                     
|Other comprehensive income (loss):                    |                                            |                                                                       |                                                    |                    |               |         |          |    
|                                                     
|                                                     
|                                                     
|                                                     
|Foreign currency translation adjustment               |                                            |                                                                       | (483                                               | )                  |               |         | (272     | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    
|COMPREHENSIVE INCOME (LOSS)                           |                                            | $                                                                     | 30,619                                             |                    |               | $       | (185,688 | )  
|                                                      |                                            |                                                                       |                                                    |                    |               |         |          |    

See Notes to Consolidated Financial Statements.

3



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##### Table of Contents



THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)

|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |          |         | 
|----------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------- | ------------------ | ------- | - | -------- | -------- | ------- | 
|                                                                                                                  |                                                                                                          |                                                    |         | Nine Months Ended 
|                                                                                                                  |                                                                                                          |                                                    |         |                   
|(in thousands, except per share data)                                                                             |                                                                                                          | September 28, 2002                                 |         | September 29, 2001
|                                                                                                                  |                                                                                                          |                                                    |         |                   
|Net sales                                                                                                         |                                                                                                          | $                                                  | 987,974 |                    |         | $ | 942,238  |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Costs and expenses:                                                                                               |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Cost of products sold                                                                                    |                                                    |         | 622,763            |         |   |          | 627,404  |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Asset writedowns and other special items, net (gain) charge                                              |                                                    |         | (1,182             | )       |   |          | 10,940   |        
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                  |                                                                                                          | Total cost of products sold                        |         |                    | 621,581 |   |          |          | 638,344 | 
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                  | Selling, general and administrative expenses                                                             |                                                    |         | 198,196            |         |   |          | 195,197  |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Special charges and other asset writedowns                                                               |                                                    |         |                   |         |   |          | 486      |        
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                  |                                                                                                          | Total selling, general and administrative expenses |         |                    | 198,196 |   |          |          | 195,683 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  |                                                                                                          | Total costs and expenses                           |         |                    | 819,777 |   |          |          | 834,027 | 
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Operating income                                                                                                  |                                                                                                          |                                                    | 168,197 |                    |         |   | 108,211  |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Interest and other expenses                                                                                       |                                                                                                          |                                                    | (30,225 | )                  |         |   | (37,829  | )       
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Net income of joint ventures                                                                                      |                                                                                                          |                                                    | 1,749   |                    |         |   | 2,990    |         
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Income
from continuing operations before income taxes and cumulative
effect
of the change in accounting principle |                                                                                                          |                                                    | 139,721 |                    |         |   | 73,372   |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income taxes on continuing operations                                                                             |                                                                                                          |                                                    | 51,614  |                    |         |   | 28,855   |         
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Income from continuing operations before cumulative effect of the change in accounting principle                  |                                                                                                          |                                                    | 88,107  |                    |         |   | 44,517   |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Discontinued operation:                                                                                           |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Loss from operation of discontinued Specialty Personal Care segment, net of income tax benefit of $1,120 |                                                    |         |                   |         |   |          | (3,691   | )      
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Adjustment (loss) on disposal of discontinued Specialty Personal Care segment, net of tax of $40,000     |                                                    |         | 1,260              |         |   |          | (198,403 | )      
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Total adjustment (loss) from discontinued operation                                                               |                                                                                                          |                                                    | 1,260   |                    |         |   | (202,094 | )       
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cumulative effect of change in accounting principle, net of income tax of $661                                    |                                                                                                          |                                                    | (43,308 | )                  |         |   |         |         
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|NET INCOME (LOSS)                                                                                                 |                                                                                                          | $                                                  | 46,059  |                    |         | $ | (157,577 | )       
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Basic net income per common share:                                                                                |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income from continuing operations                                                                                 |                                                                                                          | $                                                  | 0.96    |                    |         | $ | 0.49     |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income (loss) from discontinued operation                                                                         |                                                                                                          |                                                    | 0.01    |                    |         |   | (2.21    | )       
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cumulative effect of the change in accounting principle                                                           |                                                                                                          |                                                    | (0.47   | )                  |         |   | 0.00     |         
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|NET INCOME (LOSS) PER SHARE  BASIC                                                                               |                                                                                                          | $                                                  | 0.50    |                    |         | $ | (1.72    | )       
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Diluted net income per common share:                                                                              |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income from continuing operations                                                                                 |                                                                                                          | $                                                  | 0.94    |                    |         | $ | 0.49     |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income (loss) from discontinued operation                                                                         |                                                                                                          |                                                    | 0.01    |                    |         |   | (2.21    | )       
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cumulative effect of the change in accounting principle                                                           |                                                                                                          |                                                    | (0.46   | )                  |         |   | 0.00     |         
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|NET INCOME (LOSS) PER SHARE  DILUTED                                                                             |                                                                                                          | $                                                  | 0.49    |                    |         | $ | (1.72    | )       
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|Weighted average basic shares outstanding                                                                         |                                                                                                          |                                                    | 92,188  |                    |         |   | 91,385   |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Weighted average equivalent shares                                                                                |                                                                                                          |                                                    | 1,974   |                    |         |   |         |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Weighted average diluted shares outstanding                                                                       |                                                                                                          |                                                    | 94,162  |                    |         |   | 91,385   |         
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|NET INCOME (LOSS)                                                                                                 |                                                                                                          | $                                                  | 46,059  |                    |         | $ | (157,577 | )       
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Other comprehensive income (loss):                                                                                |                                                                                                          |                                                    |         |                    |         |   |          |         
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Foreign currency translation adjustment                                                                           |                                                                                                          |                                                    | (35,179 | )                  |         |   | (504     | )       
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         
|COMPREHENSIVE INCOME (LOSS)                                                                                       |                                                                                                          | $                                                  | 10,880  |                    |         | $ | (158,081 | )       
|                                                                                                                  |                                                                                                          |                                                    |         |                    |         |   |          |         

See Notes to Consolidated Financial Statements.

4



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##### Table of Contents



THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)

|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |        |          |         |  
|----------------------------------------------------------------- | --------------------------------------------- | ------------------------------------------------ | --------------------------------- | ------------------ | ----------------- | ------- | -------- | ------ | -------- | ------- | -
|                                                                  |                                               |                                                  |                                   |                    | Nine Months Ended
|                                                                  |                                               |                                                  |                                   |                    |                  
|(in thousands)                                                    |                                               | September 28, 2002                               |                                   | September 29, 2001
|                                                                  |                                               |                                                  |                                   |                   
|CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:                      |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Net income (loss)                                                 |                                               | $                                                | 46,059                            |                    |                   | $       | (157,577 | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Adjustments to reconcile net income to net cash provided by       |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|operating activities:                                             |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Loss (adjustment) from discontinued operation                     |                                               |                                                  | (1,260                            | )                  |                   |         | 202,094  |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Effect of change in accounting principle, net of tax              |                                               |                                                  | 43,308                            |                    |                   |         |         |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Depreciation                                  |                                                  |                                   | 27,727             |                   |         |          | 29,196 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Amortization                                  |                                                  |                                   | 93                 |                   |         |          | 7,486  |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Deferred income taxes                         |                                                  |                                   | (404               | )                 |         |          | (595   | )       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Asset writedowns and other special items, net |                                                  |                                   | (1,182             | )                 |         |          | 11,787 |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Change in operating assets and liabilities:   |                                                  |                                   |                    |                   |         |          |        |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                               |                                                  | Receivables                       |                    |                   | (16,946 | )        |        |          | 13,413  |  
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                               |                                                  | Inventories                       |                    |                   | (14,712 | )        |        |          | (3,156  | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                               |                                                  | Trade accounts payable            |                    |                   | 12,088  |          |        |          | (20,961 | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                               |                                                  | Income taxes payable              |                    |                   | 47,539  |          |        |          | (41,856 | )
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                               |                                                  | Other assets and liabilities, net |                    |                   | 409     |          |        |          | 44,124  |  
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                  |                                               | Net cash provided by operating activities        |                                   |                    | 142,719           |         |          |        | 83,955   |        
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:               |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Capital expenditures and purchase price adjustment of acquisition |                                               |                                                  | (21,925                           | )                  |                   |         | (17,631  | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Proceeds from disposition of discontinued operation               |                                               |                                                  | 2,000                             |                    |                   |         | 8,000    |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Investment in and transfers from discontinued operation           |                                               |                                                  |                                  |                    |                   |         | 46,345   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Proceeds from sale of assets                                      |                                               |                                                  | 2,937                             |                    |                   |         | 2,260    |       
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                  |                                               | Net cash (used) provided by investing activities |                                   |                    | (16,988           | )       |          |        | 38,974   |        
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:               |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Net change in debt resulting from interest rate swap termination  |                                               |                                                  | 13,386                            |                    |                   |         |         |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Repayment and amortization of debt                                |                                               |                                                  | 285                               |                    |                   |         | 11,665   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Net change in short-term bank debt                                |                                               |                                                  |                                  |                    |                   |         | (125,776 | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Dividends paid on common stock                                    |                                               |                                                  | (11,074                           | )                  |                   |         | (10,950  | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Cash proceeds from stock options                                  |                                               |                                                  | 8,809                             |                    |                   |         | 1,969    |       
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|                                                                  |                                               | Net cash provided (used) by financing activities |                                   |                    | 11,406            |         |          |        | (123,092 | )      
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|Effects of foreign currency exchange rates on cash balances       |                                               |                                                  | (2,243                            | )                  |                   |         |         |       
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|Net increase (decrease) in cash and cash equivalents              |                                               |                                                  | 134,894                           |                    |                   |         | (163     | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                               | Cash and cash equivalents, beginning of period   |                                   |                    | 29,414            |         |          |        | 6,733    |        
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       
|CASH AND CASH EQUIVALENTS, END OF PERIOD                          |                                               | $                                                | 164,308                           |                    |                   | $       | 6,570    |       
|                                                                  |                                               |                                                  |                                   |                    |                   |         |          |       

See Notes to Consolidated Financial Statements.

5



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##### Table of Contents






THE DIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Basis of Preparation

The accompanying consolidated financial statements include the accounts of The
Dial Corporation and all majority-owned subsidiaries. This information should
be read in conjunction with the financial statements set forth in The Dial
Corporation Annual Report to Stockholders for the year ended December 31, 2001.

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

Accounting policies utilized in the preparation of the financial information
herein presented are the same as set forth in Dials annual financial
statements except as modified for interim accounting policies which are within
the guidelines set forth in Accounting Principles Board Opinion No. 28,
Interim Financial Reporting. The interim consolidated financial statements
are unaudited. All adjustments necessary to present fairly the financial
position as of September 28, 2002 and the results of operations and cash flows
for the three months and nine months ended September 28, 2002 and September 29,
2001, have been included. Interim results of operations are not necessarily
indicative of the results of operations for the full year.

Note 2. Discontinued Operation

On August 28, 2001, we completed the sale of our Specialty Personal Care
(SPC) business. This business segment included a variety of skin, hair,
bath, body and foot care products sold under the Freeman, Sarah Michaels, and
Natures Accentsbrand 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 costs. 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 inventory, fixed assets and intangibles of the SPC
business, but retained the related receivables and liabilities arising on or
prior to the closing.

As consideration for the sale, Dial received aggregate purchase price
consideration of $12.0 million, which consisted of $8.0 million in cash and two
subordinated promissory notes in the amount of $2.0 million each. On December
31, 2001, we had not recorded the $4.0 million in promissory notes because of
uncertainties regarding the realizability of such amounts. In the first
quarter of 2002, we entered into an agreement with the buyer of this business
to resolve disputes that arose in connection with the sale. Under the terms of
that agreement, we received full payment on one of these notes, forgave the
other note and agreed to bear the cost of some disputed expenses. In the first
quarter of 2002, we recorded the $2.0 million ($1.3 million after-tax) received
as a reduction of the loss 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 in the third quarter of 2001. This tax
benefit resulted in cash savings in the third and fourth quarters of 2001 and
the first nine months of 2002. The loss on the sale of SPC is comprised
primarily of the write-off of goodwill and inventories. In addition, the sale
resulted in approximately $52.4 million in

6



---



##### Table of Contents



capital losses which have not been recorded as a tax benefit. We will realize
tax benefits on that capital loss only to the extent that we generate capital
gains in the future.

Net sales of the discontinued SPC business for the third quarter and the first
nine months of 2001 were $5.4 million and $26.2 million, respectively. As of
September 28, 2002, our balance sheet includes approximately $18.9 million in
liabilities and reserves for exit costs which were not assumed by the purchaser
as a result of the sale. The majority of these remaining SPC liabilities are
for lease costs of former SPC facilities. These SPC liabilities will be
adjusted in the future if our estimates of remaining lease and other exit costs
change. The affect of any future adjustments to SPC liabilities would be
presented in the income statement as an adjustment to the previously recorded
loss from discontinued operation.

Note 3. Effect of Change in Accounting Principle

Effective January 1, 2002, we recorded a $43.3 million after-tax impairment
loss ($44.0 million pre-tax) on the goodwill and trademarks of our Argentina
business as a result of adopting Statement of Financial Accounting Standards
(SFAS) 142, Goodwill and Other Intangible Assets. SFAS 142 established a
new method of testing goodwill for impairment. The impairment associated with
the Argentina business was calculated using a discounted cash flow model. The
impairment charge was recorded in our Income Statement as a Cumulative effect
of the change in accounting principleand, therefore, is not included in
operating income. This intangible impairment affected the International and
Otherreporting segment.

Note 4. Special Items

2002 Special Gain

We recorded a net gain of $2.9 million ($2.2 million after-tax or $0.02 per
diluted share) in the second quarter of 2002 associated with the previously
dissolved joint venture with Henkel KGaA of Germany (Henkel) and from the
sale of our Mexico City facility, offset in part by a writedown of fixed assets
in our Guatemala facility. The gain from our Dial/Henkel joint venture of $1.7
million was included in Net income of joint venturesfor income statement
purposes. We sold our Mexico facility for $2.7 million, resulting in a pre-tax
gain of $2.4 million, which was offset in part by a writedown of the carrying
value of our Guatemala facility by approximately $1.2 million, pre-tax. For
income statement purposes, the gain on the sale of our Mexico facility and the
writedown of fixed assets in our Guatemala facility are included in Asset
writedowns and other special items.

2001 Special Charges

In the third quarter of 2001, we recorded an $11.8 million special charge
($10.2 million after-tax) to consolidate manufacturing facilities in the United
States and Argentina, to close our Mexico City manufacturing facility and to
discontinue certain product inventories.

2000 Special Charges

In the second and third quarters of 2000 we recorded special charges related to
the Dial/Henkel joint ventures, severance costs for prior management and other
actions to improve operational efficiencies. We reversed $0.4 million of these
special charges ($0.2 million after-tax) in the third quarter of 2001.

Note 5. Dial/Henkel Joint Venture

7



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In April 1999, we formed Dial/Henkel LLC, a joint venture with Henkel. Dial
and Henkel each owned 50% of this joint venture. The joint venture was formed
to develop and market a range of enhanced laundry products in North America.
In July 1999, the joint venture acquired the Custom Cleaner home dry-cleaning
business. During the third quarter of 2001, the joint venture discontinued the
Custom Cleaner home dry cleaning business.

In the second quarter of 2002, Henkel received certain intellectual property
rights related to the former Custom Cleaner business in exchange for their
interest in Dial/Henkel LLC. As a result, we consolidated Dial/Henkel LLCs
operations in the second quarter of 2002. Prior to our assumption of Henkels
interest in Dial/Henkel LLC, we accounted for this joint venture under the
equity method of accounting. In the second quarter of 2002, we recorded a gain
of $1.7 million ($1.6 million after-tax) related to lower than expected costs
associated with the discontinued Custom Cleaner business. For income statement
purposes, the gain was included in Net income of joint ventures.

Note 6. Inventories

Inventories consisted of the following:

|                           |                   |                    |        |                   |  |   |        |         | 
|-------------------------- | ----------------- | ------------------ | ------ | ----------------- |  | - | ------ | ------- | 
|(in thousands)             |                   | September 28, 2002 |        | December 31, 2001
|                           |                   |                    |        |                  
|Raw materials and supplies |                   | $                  | 38,885 |                   |  | $ | 30,891 |        
|                          
|                          
|                          
|                          
|Work in process            |                   |                    | 9,164  |                   |  |   | 9,295  |        
|                          
|                          
|                          
|                          
|Finished goods             |                   |                    | 90,783 |                   |  |   | 89,791 |        
|                           |                   |                    |        |                   |  |   |        |        
|                           | Total inventories |                    | $      | 138,832           |  |   | $      | 129,977 | 
|                           |                   |                    |        |                   |  |   |        |        

Note 7. Intangible Assets

Intangible assets subject to
amortization consisted of the following:

|                  |       |                    |                      |                   |              |   |                    |      |                      |   |              |       |                    |   |       |       |             |   |      |      |   |   |     |       | 
|----------------- | ----- | ------------------ | -------------------- | ----------------- | ------------ | - | ------------------ | ---- | -------------------- | - | ------------ | ----- | ------------------ | - | ----- | ----- | ----------- | - | ---- | ---- | - | - | --- | ----- | 
|(in thousands)    |       | September 28, 2002 |                      | December 31, 2001
|                  |       |                    |                      |                  
|                  |       |                    |                      |                   |              |   | Accumulated        |      |                      |   |              |       |                    |   |       |       | Accumulated |   |      |      |  
|                  |       |                    | Gross Carrying Value |                   | Amortization |   | Net Carrying Value |      | Gross Carrying Value |   | Amortization |       | Net Carrying Value
|                  |       |                    |                      |                   |              |   |                    |      |                      |   |              |       |                   
|Patents           |       | $                  | 1,371                |                   |              | $ | (130               | )    |                      | $ | 1,241        |       |                    | $ | 1,002 |       |             | $ | (82  | )    |   | $ | 920 |      
|                 
|                 
|                 
|                 
|Other intangibles |       |                    | 900                  |                   |              |   | (562               | )    |                      |   | 338          |       |                    |   | 900   |       |             |   | (516 | )    |   |   | 384 |      
|                  |       |                    |                      |                   |              |   |                    |      |                      |   |              |       |                    |   |       |       |             |   |      |      |   |   |     |      
|                  | Total |                    | $                    | 2,271             |              |   | $                  | (692 | )                    |   | $            | 1,579 |                    |   | $     | 1,902 |             |   | $    | (598 | ) |   | $   | 1,304 | 
|                  |       |                    |                      |                   |              |   |                    |      |                      |   |              |       |                    |   |       |       |             |   |      |      |   |   |     |      

Intangibles not subject to
amortization consisted of the following:

|                            |  |                    |         |                   |  |   |         | 
|--------------------------- |  | ------------------ | ------- | ----------------- |  | - | ------- | 
|(in thousands)              |  | September 28, 2002 |         | December 31, 2001
|                            |  |                    |         |                  
|Goodwill                    |  | $                  | 311,935 |                   |  | $ | 353,002 | 
|                           
|                           
|                           
|                           
|Trademarks                  |  |                    | 39,767  |                   |  |   | 41,645  | 
|                           
|                           
|                           
|                           
|Pension Related intangibles |  |                    | 6,703   |                   |  |   | 7,860   | 
|                            |  |                    |         |                   |  |   |         | 
|Total                       |  | $                  | 358,405 |                   |  | $ | 402,507 | 
|                            |  |                    |         |                   |  |   |         | 

In connection with the implementation of SFAS 142, effective January 1, 2002,
we ceased amortizing our intangible assets with indefinite lives. As a result,
income from continuing operations for the third quarter of 2002 increased $1.9
million after-tax ($2.5 million pre-tax) or $0.02 per diluted share and for the
nine months of 2002 increased $5.7 million after-tax ($7.4 million pre-tax) or
$0.06 per diluted share.

Effective January 1, 2002, we recorded a $43.3 million after-tax impairment
($44.0 million pre-tax) to intangibles as a result of implementing SFAS 142.
See Note 3 for further discussion of this impairment charge.

8



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##### Table of Contents



Note 8. Long Term Debt

Long-term debt consisted of the following:

|                                                      |      |                    |         |                   |  |   |         |   | 
|----------------------------------------------------- | ---- | ------------------ | ------- | ----------------- |  | - | ------- | - | 
|(in thousands)                                        |      | September 28, 2002 |         | December 31, 2001
|                                                      |      |                    |         |                  
|$250 million 7.0% Senior Notes due 2006, net of issue |      |                    |         |                   |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|discount                                              |      | $                  | 247,286 |                   |  | $ | 246,768 |  
|                                                     
|                                                     
|                                                     
|                                                     
|$200 million 6.5% Senior Notes due 2008, net of issue |      |                    |         |                   |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|discount                                              |      |                    | 198,731 |                   |  |   | 198,573 |  
|                                                      |      |                    |         |                   |  |   |         |  
|Total long-term debt                                  |      |                    | 446,017 |                   |  |   | 445,341 |  
|                                                     
|                                                     
|                                                     
|                                                     
|Fair market gain on termination of interest rate      |      |                    |         |                   |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | swap |                    |         | 12,996            |  |   |         |  | 
|                                                      |      |                    |         |                   |  |   |         |  
|Reported long-term debt                               |      | $                  | 459,013 |                   |  | $ | 445,341 |  
|                                                      |      |                    |         |                   |  |   |         |  

In the third quarter of 2001, we entered into two interest rate swap contracts
which effectively converted our $250 million 7% Senior Notes due in 2006, to
floating rate debt based upon a 180 day LIBOR plus 182 basis points. We
designated the swaps as fair value hedges. Accordingly, the fair value of the
swaps was recorded as an asset and the carrying value of the underlying debt
was increased by an equal amount in accordance with SFAS 133. During the third
quarter of 2002, the swaps were terminated resulting in a net gain of $13.4
million. The gain is recorded with total debt and will be amortized as a
reduction of interest expense over the remaining term of the $250 million 7%
Senior Notes due 2006.

Note 9. Segments of an Enterprise

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

Information related to our operations in different business segments is set
forth below. The calculation of operating income for each segment includes an
allocation of indirect general and administrative expenses based on each
segments share of our consolidated net sales. The accounting policies of the
business segments are the same as those described in the summary of significant
accounting policies in Note 2 to the Consolidated Financial Statements included
in our Annual Report on Form 10-K for the year ended December 31, 2001.

9



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##### Table of Contents



|                         |                    |                        |  |           |         |               |  |   |         |   |  |   |         | 
|------------------------ | ------------------ | ---------------------- |  | --------- | ------- | ------------- |  | - | ------- | - |  | - | ------- | 
|                         |                    |                        |  | Domestic  |         | International |  |   |         |  
|(in thousands)           |                    | Branded                |  | and Other |         | Total        
|                         |                    |                        |  |           |         |              
|Net Sales:               |                    |                        |  |           |         |               |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         | Quarter ended:     |                        |  |           |         |               |  |   |         |   |  |   |        
|                        
|                        
|                        
|                        
|                         |                    | September 28, 2002     |  | $         | 307,802 |               |  | $ | 39,434  |   |  | $ | 347,236 | 
|                        
|                        
|                        
|                        
|                         |                    | September 29, 2001     |  |           | 287,039 |               |  |   | 46,608  |   |  |   | 333,647 | 
|                        
|                        
|                        
|                        
|                         | Nine months ended: |                        |  |           |         |               |  |   |         |   |  |   |        
|                        
|                        
|                        
|                        
|                         |                    | September 28, 2002     |  | $         | 875,893 |               |  | $ | 112,081 |   |  | $ | 987,974 | 
|                        
|                        
|                        
|                        
|                         |                    | September 29, 2001     |  |           | 808,568 |               |  |   | 133,670 |   |  |   | 942,238 | 
|                        
|                        
|                        
|                        
|Operating Income (Loss): |                    |                        |  |           |         |               |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         | Quarter ended:     |                        |  |           |         |               |  |   |         |   |  |   |        
|                        
|                        
|                        
|                        
|                         |                    | September 28, 2002     |  | $         | 55,097  |               |  | $ | 4,173   |   |  | $ | 59,270  | 
|                        
|                        
|                        
|                        
|                         |                    | September 29, 2001(2)  |  |           | 47,101  |               |  |   | (10,176 | ) |  |   | 36,925  | 
|                        
|                        
|                        
|                        
|                         | Nine months ended: |                        |  |           |         |               |  |   |         |   |  |   |        
|                        
|                        
|                        
|                        
|                         |                    | September 28, 2002 (1) |  | $         | 155,143 |               |  | $ | 13,054  |   |  | $ | 168,197 | 
|                        
|                        
|                        
|                        
|                         |                    | September 29, 2001(2)  |  |           | 119,739 |               |  |   | (11,528 | ) |  |   | 108,211 | 
|                        
|                        
|                        
|                        
|Goodwill at:             |                    |                        |  |           |         |               |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         |                    | September 28, 2002     |  | $         | 311,935 |               |  | $ |        |   |  | $ | 311,935 | 
|                        
|                        
|                        
|                        
|                         |                    | December 31, 2001      |  |           | 310,839 |               |  |   | 42,163  |   |  |   | 353,002 | 



---

|(1) |  | Includes special items that net to a $1.2 million gain ($2.4 million gain
in International and Other offset in part by a $1.2 million charge in
Domestic Branded) in the second quarter of 2002.                                           
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Includes special charges of $11.8 million ($4.1 million in Domestic
Branded and $7.7 million in International and Other segments)
in the third quarter of 2001 offset by $0.4 million of reversed 2000
special charges in Domestic Branded.

10



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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Forward looking statements

Some statements contained in this Quarterly Report on Form 10-Q may constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Words such as believe, expect, intend,
anticipate, estimate, project and similar expressions identify
forward-looking statements, which speak only as of the date the statement was
made. These forward looking statements include, but are not limited to:



| |  |  | our expectation that net sales, excluding Argentina, will rise 3% to
4% in the fourth quarter of 2002 versus the same period last year          
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our expectation that operating margin will improve approximately 150
basis points in the fourth quarter of 2002 versus the same period last
year
|
| |  |  | our expectation that earnings from continuing operations, before
special items, will be approximately $1.22 per share for the full year
2002    
|
| |  |  | our expectation that capital expenditures in 2002 will approximate
$40 million, and                                                             
|
| |  |  | our belief that the EEOC litigation will not have a material adverse
effect on our operating results or financial condition                     

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 that 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.

Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward-looking statements. Statements in this Quarterly Report
on Form 10-Q, including the Notes to the Consolidated Financial Statements and
Managements Discussion and Analysis of Results of Operations and Financial
Condition, describe factors, among others, that could contribute to or cause
such differences. Additional risk factors that could cause actual results to
differ materially from those expressed in such forward-looking statements are
set forth in Exhibit 99 which is attached as an exhibit and incorporated by
reference into this Quarterly Report on Form 10-Q.

Potential Sale of Dial And Future Capital Allocation Strategy

We believe that our long-term interests and those of our shareholders would be
best served if we were part of a larger enterprise. We will continue to
explore opportunities to become part of a larger company, which could include
transactions with multiple parties. We have been working with Goldman Sachs &
Co. and may continue to do so as we evaluate any opportunities for Dial 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.

Due to Dials strong operating performance over the past two years, our Board
recently extended the employment agreement of Herbert M. Baum, Dials Chairman,
President and CEO until January 2006.

We will continue to focus on growing our core businesses and will evaluate
capital allocation options in light of the significant amount of cash we are
accumulating. The capital allocation alternatives we are reviewing include:

11



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| |  |  | Acquisitions                   
| | - |  | -------------------------------
|
| |  |  | Debt reduction                 
|
| |  |  | Share repurchases, and         
|
| |  |  | Investment in our base business

We currently believe that acquisitions should be our first priority. If
suitable acquisition options do not emerge over the next year, then we
currently expect to use excess cash to change our capital structure through a
mix of debt reduction and share repurchases. We also would consider additional
investment in our base business.

Sale of Specialty Personal Care Segment

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 Michaels, and
Natures Accentsbrand 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 costs. Proceeds from the sale were primarily used to repay
debt. As a result of this transaction, we sold the stock of our wholly-owned
subsidiary, Sarah Michaels Inc., and inventory, fixed assets and intangibles of
the SPC business, but retained the related receivables and liabilities arising
on or prior to the closing.

As consideration for the sale, Dial 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, we had not recorded the $4.0 million in promissory notes
because of uncertainties regarding the realizability of such amounts. In the
first quarter of 2002, we entered into an agreement with the buyer of this
business to resolve disputes that arose in connection with the sale. Under the
terms of that agreement, we received full payment on one of these notes,
forgave the other note and agreed to bear the cost of some disputed expenses.
In the first quarter of 2002, we recorded the $2.0 million ($1.3 million
after-tax) received as a reduction of the loss 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 in the third quarter of 2001. This tax
benefit resulted in cash savings in the third and fourth quarters of 2001 and
the first nine months of 2002. The loss on the sale of SPC is comprised
primarily of the write-off of goodwill and inventories. In addition, the sale
resulted in approximately $52.4 million in capital losses for which there were
no tax benefits were provided. We will realize tax benefits on that capital
loss only to the extent that we generate capital gains in the future.

Net sales of the discontinued SPC business for the third quarter and the first
nine months of 2001 were $5.4 million and $26.2 million, respectively. As of
September 28, 2002, our balance sheet includes approximately $18.9 million in
liabilities and reserves for exit costs which were not assumed by the purchaser
as a result of the sale. The majority of these remaining SPC liabilities are
for lease costs of former SPC facilities. These SPC liabilities will be
adjusted in the future if our estimates of remaining lease and other exit costs
change. The affect of any future adjustments to SPC liabilities would be
presented in the income statement as an adjustment to the previously recorded
loss from discontinued operation.

Special Items

2002 Special Gain

We recorded a net gain of $2.9 million ($2.2 million after-tax) in the second
quarter of 2002 associated with the previously dissolved joint venture with
Henkel and from the sale of our Mexico City facility, offset

12



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in part by a writedown of fixed assets in our Guatemala facility. The gain from
our Dial/Henkel joint venture of $1.7 million ($1.6 million after-tax) was
included in Net income of joint venturesfor income statement purposes. We
sold our Mexico facility for $2.7 million, resulting in a pre-tax gain of $2.4
million, which was offset in part by a writedown of the carrying value of our
Guatemala soap pouring facility by approximately $1.2 million, pre-tax. For
income statement purposes, the gain on the sale of our Mexico facility and the
writedown of fixed assets in our Guatemala facility are included in Asset
writedowns and other special items.

2001 Special Charges

In the third quarter of 2001, we recorded an $11.8 million special charge
($10.2 million after-tax) to consolidate manufacturing facilities in the United
States and Argentina and for the closure of our Mexico City manufacturing
facility and discontinuation of certain product inventories. The activity in
the first nine months of 2002 is summarized below:

|                     |  |             |       |             |  |             |        |        |  |   |     | 
|-------------------- |  | ----------- | ----- | ----------- |  | ----------- | ------ | ------ |  | - | --- | 
|                     |  | Ending      |       |             |  |             |        | Ending
|                     |  | reserves at |       | Cash spent  |  | reserves at
|(in thousands)       |  | 12/31/01    |       | during 2002 |  | 9/28/02    
|                     |  |             |       |             |  |            
|Employee separations |  | $           | 823   |             |  | $           | (823   | )      |  | $ | 0   | 
|                    
|                    
|                    
|                    
|Other exit costs     |  |             | 1,581 |             |  |             | (1,337 | )      |  |   | 244 | 
|                     |  |             |       |             |  |             |        |        |  |   |     | 
|Total                |  | $           | 2,404 |             |  | $           | (2,160 | )      |  | $ | 244 | 
|                     |  |             |       |             |  |             |        |        |  |   |     | 

The income statement classification of amounts recorded with respect to the
2001 Special Charges have been previously disclosed and no additional amounts
were charged to net income in the first nine months of 2002. Remaining cash
requirements for the special charges will be funded from normal operations.

The projected timing, estimated cost and projected savings related to this 2001
Special Charge are based on managements judgement in light of the
circumstances and estimates at the time the judgements were made. Accordingly,
such estimates may change as future events evolve.

2000 Special Charges

In the second and third quarters of 2000 we recorded special charges related to
the Dial/Henkel joint ventures, severance costs for prior management and other
actions to improve operational efficiencies. We reversed $0.4 million of these
special charges ($0.2 million after-tax) in the third quarter of 2001.

Recent Developments

Deteriorating Economic Conditions in Argentina

In the first nine months of 2002, we recorded a currency translation adjustment
of $35.5 million as a direct charge to our stockholders equity, reflecting the
devaluation of our net assets in Argentina as a result of a 57% currency
devaluation of the Argentine Peso. This non-cash adjustment did not impact net
income. Our Argentina operation accounted for approximately $39.4 million and
$63.0 million of our net sales in the first nine months of 2002 and 2001,
respectively. In light of the devaluation of the Argentine peso and the
deteriorating economic conditions in Argentina, our sales in Argentina have
been, and may continue to be, adversely impacted. Through the nine months
ended September 28, 2002, our operating results in Argentina have been better
than we originally anticipated partially as a result of higher sales volume,
improved margins and favorable currency transaction adjustments. However, the situation
in Argentina is changing rapidly, and it is difficult to predict with certainty
the impact that Argentina will have on our future net sales and operating
results. We currently expect Argentina to reach highly inflationary economic
conditions during 2003. This may have an adverse impact on our Argentine
operations.

13



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We are reviewing strategic alternatives with respect to our Argentina business,
while working aggressively to improve the performance of this
business. As of September 28, 2002, our investment in our Argentina business
was approximately $27.7 million. At
this time, we believe that if a decision is made in the future to divest this
business, a writedown of assets to their estimated market value would be
required. We would also be required to reverse the
$97.6 million currency translation adjustment related to our Argentina business
that is currently recorded in stockholders equity and take that charge to the
income statement.

Kmart Bankruptcy

In January 2002, Kmart Corporation
filed for Chapter 11 bankruptcy protection. Kmart is one of our
top ten customers. We sell products to Kmart primarily through
Kmarts distributor, Fleming Companies, Inc., but also sell
products to Kmart directly.

Kmart recently closed approximately
300 stores in its effort to emerge from bankruptcy. Our sales to
Kmart have decreased as a result of these store closings and from a
decline in consumers visiting Kmarts open stores. To date,
Kmarts bankruptcy has not had a material adverse effect on our
sales or operating results. Although future actions that Kmart may
take as part of its continuing reorganization efforts are not yet
known, recent press reports indicate that Kmart is considering
closing up to an additional 500 stores after the holidays. If
Kmart ultimately decides to close a significant number of additional
stores, these additional store closings could have an adverse impact
on our sales and operating results in 2003.

2002 Outlook

As we have previously disclosed, our net sales, excluding Argentina, are
expected to rise 3% to 4% in the fourth quarter of 2002 versus the same period
last year. Operating margin is expected to improve approximately 150 basis
points in the fourth quarter of 2002 versus the same period last year. As a
result, we currently expect our earnings from continuing operations, before
special items, to be approximately $1.22 per share for the full year.

Comparison of the Third Quarter of 2002 with the Third Quarter of 2001

Net sales for the quarter increased 4.1% to $347.2 million from $333.6 million
in the same period in 2001 primarily as a result of a 7.2% increase in our
Domestic Branded segment offset in part by a 15.4% decrease in our
International and Other segment.

|                               |  |               |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|------------------------------ |  | ------------- | ----- | ------------------- |  | ------ | ----- | ---------- |  | - | ---- | - |  |  | ----- | --
|                               |  | Third Quarter |       | Increase (Decrease)
|                               |  |               |       |                    
|(in millions)                  |  | 2002          |       | 2001                |  | Amount |       | Percentage
|                               |  |               |       |                     |  |        |       |           
|Personal Cleansing             |  | $             | 99.7  |                     |  | $      | 92.0  |            |  | $ | 7.7  |   |  |  | 8.4   | % 
|                              
|                              
|                              
|                              
|Laundry Care                   |  |               | 116.2 |                     |  |        | 102.0 |            |  |   | 14.2 |   |  |  | 13.9  | % 
|                              
|                              
|                              
|                              
|Air Fresheners                 |  |               | 42.2  |                     |  |        | 44.5  |            |  |   | (2.3 | ) |  |  | (5.2  | )%
|                              
|                              
|                              
|                              
|Food Products                  |  |               | 49.7  |                     |  |        | 48.5  |            |  |   | 1.2  |   |  |  | 2.5   | % 
|                               |  |               |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|Total Domestic Branded segment |  |               | 307.8 |                     |  |        | 287.0 |            |  |   | 20.8 |   |  |  | 7.2   | % 
|                              
|                              
|                              
|                              
|Total International and Other  |  |               |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|                              
|                              
|                              
|                              
|segment                        |  |               | 39.4  |                     |  |        | 46.6  |            |  |   | (7.2 | ) |  |  | (15.4 | )%
|                               |  |               |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|Total Company Net Sales        |  | $             | 347.2 |                     |  | $      | 333.6 |            |  | $ | 13.6 |   |  |  | 4.1   | % 
|                               |  |               |       |                     |  |        |       |            |  |   |      |   |  |  |       |   

Net sales in our Domestic Branded segment increased 7.2% to $307.8 million from
$287.0 million in the same period last year. The increase in Personal
Cleansing sales resulted primarily from strength in body wash and liquid soap
products offset in part by a decrease in industrial chemical sales. Category
bar soap sales continue to be hurt by a consumer preference for body wash
products over bar soap products. We expect this consumer preference trend to
continue. Lower industrial chemical sales are primarily due to depressed
glycerin prices, which we expect will continue.

The increase in Laundry Care sales is primarily due to increased sales of
Purexliquid detergent. Part of this increase in Purex liquid detergent is due
to a consumer preference for liquid detergent products versus powder detergent
products. We currently expect that this consumer preference trend will
continue.

The decrease in Air Freshener sales resulted primarily from overall weakness in
most of our air freshener products combined with the discontinuation of One
Touchelectric scented oil products and Fresh Gelsoffset in part by the strong
performance of Adjustables. Two new product introductions were made in the
third quarter, Renuzit Super Odor Neutralizerand Renuzit High Impact Scented
Oil. New product introductions did not have a significant impact on sales due
to promotional costs.

The increase in Food Products sales resulted primarily from higher sales of
Armour branded chili and private label products.

Net sales in our International and Other segment decreased 15.4% to $39.4
million from $46.6 million primarily due to lower net sales in Argentina
resulting from the peso devaluation and closure of our

14



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##### Table of Contents



Mexico operation offset in part higher Canadian sales of Purexliquid laundry
detergent. Excluding Argentina, net sales in our International and Other
segment increased 5.2%.

Our gross margin, before special items, improved 50 basis points to 36.3% from
35.8% in the same period in 2001. This improvement primarily resulted from
higher volumes, manufacturing efficiencies and lower raw material costs offset
in part by higher promotional spending. In the third quarter of 2001, special
charges reduced our gross margin by 330 basis points to 32.5%.

Selling, general and administrative expenses, before special charges, decreased
6.0% to $66.8 from $71.1 million in the same period in 2001. This decrease
primarily resulted from the effect of Argentina peso devaluation and lower
intangible amortization expense due to the implementation of SFAS 142 and the
closure of our Mexico facility. This is offset in part by higher employee
performance-based compensation and higher pension cost due to our decision to
decrease the expected rate of return on pension assets to 9% from 10%. In the
third quarter of 2001, selling, general and administrative expenses included
$0.5 million in special charges.

Interest and other expenses decreased 18.4% to $9.7 million from $11.9 million
in the same period in 2001. The decrease was primarily due to lower debt
levels offset in part by higher post-retirement benefit expenses.

We recognized a $1.0 million gain from the Dial/Henkel joint venture in the
third quarter of 2001 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.

Our effective tax rate on continuing operations for the third quarter of 2002
decreased to 37.2% from 46.6% in the same period in 2001. This decrease is
primarily attributable to non-deductible foreign restructure charges in 2001
and the cessation of amortization of nondeductible goodwill as a result of
implementing SFAS 142 in 2002. These decreases were offset in part by higher
tax expense relating to foreign operations.

Income from continuing operations was $31.1 million, versus $13.9 million in
the third quarter of 2001. As discussed above, this increase in income
resulted from higher sales, improved gross margin, lower interest costs and a
decrease in selling, general and administrative expenses.

The total loss from our discontinued Specialty Personal Care operation was
$199.3 million in the third quarter of 2001. This loss primarily related to
the loss from disposal of the Specialty Personal Care business.

Total net income increased to $31.1 million ($0.33 per diluted share) versus a
loss of $185.4 million ($2.03 per diluted share) in the third quarter of 2001.
The increase resulted primarily from the higher income from continuing
operations and a decrease in the loss from our discontinued Specialty Personal
Care operation, as discussed above.

Comparison of the First Nine Months of 2002 with the First Nine Months of 2001

Net sales for the first nine months increased 4.9% to $988.0 million from
$942.2 million in the same period in 2001 primarily as a result of an 8.3%
increase in our Domestic Branded segment offset in part by a 16.1% decrease in
our International and Other segment.

|                   |  |                   |       |                     |  |        |       |            |  |   |      |  |  |  |      |  
|------------------ |  | ----------------- | ----- | ------------------- |  | ------ | ----- | ---------- |  | - | ---- |  |  |  | ---- | -
|                   |  | Nine Months Ended |       | Increase/(Decrease)
|                   |  |                   |       |                    
|(in millions)      |  | 2002              |       | 2001                |  | Amount |       | Percentage
|                   |  |                   |       |                     |  |        |       |           
|Personal Cleansing |  | $                 | 276.5 |                     |  | $      | 266.8 |            |  | $ | 9.7  |  |  |  | 3.6  | %
|                  
|                  
|                  
|                  
|Laundry Care       |  |                   | 344.6 |                     |  |        | 293.7 |            |  |   | 50.9 |  |  |  | 17.3 | %
|                  
|                  
|                  
|                  
|Air Fresheners     |  |                   | 118.7 |                     |  |        | 116.3 |            |  |   | 2.4  |  |  |  | 2.1  | %

15



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##### Table of Contents



|                                      |  |                   |       |                     |  |        |       |            |  |   |       |   |  |  |       |   
|------------------------------------- |  | ----------------- | ----- | ------------------- |  | ------ | ----- | ---------- |  | - | ----- | - |  |  | ----- | --
|                                      |  | Nine Months Ended |       | Increase/(Decrease)
|                                      |  |                   |       |                    
|(in millions)                         |  | 2002              |       | 2001                |  | Amount |       | Percentage
|                                      |  |                   |       |                     |  |        |       |           
|                                     
|                                     
|                                     
|                                     
|Food Products                         |  |                   | 136.1 |                     |  |        | 131.8 |            |  |   | 4.3   |   |  |  | 3.3   | % 
|                                      |  |                   |       |                     |  |        |       |            |  |   |       |   |  |  |       |   
|Total Domestic Branded segment        |  |                   | 875.9 |                     |  |        | 808.6 |            |  |   | 67.3  |   |  |  | 8.3   | % 
|                                     
|                                     
|                                     
|                                     
|Total International and Other
segment |  |                   | 112.1 |                     |  |        | 133.6 |            |  |   | (21.5 | ) |  |  | (16.1 | )%
|                                      |  |                   |       |                     |  |        |       |            |  |   |       |   |  |  |       |   
|Total Company Net Sales               |  | $                 | 988.0 |                     |  | $      | 942.2 |            |  | $ | 45.8  |   |  |  | 4.9   | % 
|                                      |  |                   |       |                     |  |        |       |            |  |   |       |   |  |  |       |   

Net sales in our Domestic Branded segment increased 8.3% to $875.9 million from
$808.6 million in the same period last year. The increase in Personal
Cleansing sales resulted primarily from strong growth in body wash products
offset in part by a decrease in industrial chemical sales, lower bar soap sales
and spending to defend against a new competitive entry. Category bar soap
sales continue to be hurt by a consumer preference for body wash products over
bar soap products. We expect that this consumer preference trend will
continue. Lower industrial chemical sales are primarily due to depressed
glycerin prices, which we expect will continue.

The increase in Laundry Care sales is primarily due to an increase in Purex
liquid detergent. Part of this increase in Purex liquid detergent is due to a
consumer preference for liquid detergent products versus powder detergent
products. We currently expect that this consumer preference trend will
continue.

The increase in Air Freshener sales resulted primarily from strong performance
of Adjustables offset in part by overall weakness in our other air freshener
products combined with the discontinuation of One Touch electric scented oil
products and Fresh Gels. Two new product introductions were made in the third
quarter, Renuzit Super Odor Neutralizerand Renuzit High Impact Scented Oil.
New product introductions did not have a significant impact on sales due to
promotional costs.

The increase in Food Products sales resulted primarily from increased sales of
Armour branded Vienna sausage, private label products and Armour branded chili
offset in part by higher promotional spending.

Net sales in our International and Other segment decreased 16.1% to $112.1
million from $133.6 million. The decrease is primarily the net result of
decreased Argentina sales resulting from the peso devaluation and closure of
our Mexico operation offset in part by increased Canadian sales of Purexliquid
laundry detergent and increased sales in our hotel amenities business.
Excluding Argentina, net sales in our International and Other segment decreased
1.8%.

Our gross margin, before special items, improved by 360 basis points to 37.0%
from 33.4% in the same period in 2001. This improvement primarily resulted
from higher volumes, manufacturing efficiencies and lower raw material costs
offset in part by higher promotional expenses. Our gross margin, after special
items, increased 480 basis points to 37.1% from 32.3% in the same period last
year.

Selling, general and administrative expenses increased 1.3% to $198.2 million
from $195.7 million in the same period of 2001. This increase primarily
resulted from higher employee performance-based compensation and higher pension
cost due to our decision to decrease the expected rate of return on pension
assets to 9% from 10%. This increase was offset in part by the effect of the
Argentina peso devaluation, lower intangible amortization expense due to the
implementation of SFAS 142 and the closure of our Mexico facility. Excluding
special items, selling, general and administrative expenses as a percentage of
sales was 20.1% versus 20.7% for the first nine months of 2002 and 2001,
respectively.

Interest and other expenses decreased 20.1% to $30.2 million from $37.8 million
in the same period in 2001. The decrease in interest was primarily due to
lower debt levels offset in part by a charge to write-off deferred issuance
costs related to the old credit agreement that we terminated during the first
quarter of 2002.

Income from the Dial/Henkel joint venture for the nine months ended September
28, 2002 decreased to a $1.7 million gain compared to a $3.0 million gain in
the same period last year. All joint venture

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##### Table of Contents



operations ceased during the third quarter of 2001.

Our effective tax rate on continuing operations for the first nine months of
2002 decreased to 36.9% from 39.3% in the same period in 2001. The decrease is
primarily attributable to non-deductible foreign restructure charges in 2001
and the cessation of amortization of nondeductible goodwill as a result of
implementing SFAS 142 in 2002. These decreases were offset in part by higher
taxes relating to foreign operations. The income tax rate for 2002 on
continuing operations, excluding special items, is 37.2%

Income from continuing operations before cumulative effect of change in
accounting principle was $88.1 million versus $44.5 million in the first nine
months of 2001. As discussed above, the increase in income resulted from
higher sales, improved gross margin, lower interest costs and lower charges
from special items offset in part by higher selling, general and administrative
expenses.

Our discontinued operation reflects a gain of $1.3 million for the first nine
months of 2002 compared to a loss of $202.1 million in the same period of 2001.
The gain was due to an adjustment of the loss on disposal of our discontinued
Specialty Personal Care segment in 2002 compared to the operating and disposal
loss from this segment in the first nine months 2001.

Effective January 1, 2002, we recorded a $43.3 million after-tax charge for the
cumulative effect of accounting change resulting from implementation of SFAS
142, Goodwill and Other Intangible Assets.

Total net income increased to $46.1 million ($0.49 per diluted share) versus a
net loss of $157.6 million ($1.72 per diluted share) in the first nine months
of 2001. The increase is primarily due to a decrease in the loss from our
discontinued Specialty Personal Care operation and increased income from
continuing operations, as described above, offset in part by the charge that
resulted from adopting SFAS 142.

Liquidity and Capital Resources

Cash and cash equivalents increased $134.9 million during the first nine months
to $164.3 million from $29.4 million. The increase in cash and cash equivalents
was due to strong cash from operations in the first nine months of 2002.

Total debt at September 28, 2002 is $459.0 million as compared to $445.3 at
December 31, 2001. The increase in total debt is primarily due to the fair
market gain associated with the termination of the interest rate swaps in
accordance with SFAS 133 Accounting for Derivative Instruments and Hedging
Activities".

Cash flow from operations in the first nine months of 2002 was $142.7 million
compared to $84.0 million in the same period in 2001 as a result of an increase
in income from continuing operations and income tax benefits generated from the
sale of our SPC business.

Capital expenditures for the first nine months of 2002 were $20.8 million.
Capital spending in 2002 is currently expected to approximate $40 million.
These expenditures will be concentrated on equipment and information systems
that reduce costs, support new product initiatives and maintain our corporate
infrastructure.

In the third quarter of 2001, we entered into two interest rate swap contracts
which effectively converted our $250 million 7% Senior Notes due in 2006, to
floating rate debt based upon a 180 day LIBOR plus 182 basis points. We
designated the swaps as fair value hedges. Accordingly, the fair value of the
swaps was recorded as an asset and the carrying value of the underlying debt
was increased by an equal amount in accordance with SFAS 133. During the third
quarter of 2002, the swaps were terminated resulting in a net gain of $13.4
million. The gain is recorded with total reported debt and will be amortized
as a reduction of interest expense over the remaining term of the $250 million
7% Senior Notes due 2006.

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##### Table of Contents



The Indentures governing our $250 million 7% Senior Notes due 2006 and $200
million 6.5% Senior Notes due 2008 impose 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 the $250 million 7% 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.

The events of default under the Indentures governing both the $250 million 7.0%
Senior Notes due 2006 and the $200 million 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 credit facility and replaced it
with a new $150 million revolving credit facility. 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. In
May of 2002, this new credit facility was increased to $200 million, with $100
million available until March 2005 and $100 million 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.
There were no amounts borrowed under this facility at September 28, 2002.

Our credit facility requires us to maintain a 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 after-tax impairment charge ($44.0
million pre-tax) 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.

The events of default under our 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.                                                                                                                                  

At September 28, 2002, we were in compliance with all covenants under our
credit facility, our $250 million of 7.0% Senior Notes due 2006 and our $200
million of 6.5% Senior Notes due 2008.

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##### Table of Contents



Recent Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS 146 supersedes guidance
established in the Financial Accounting Standards Boards Emerging Issues Task
Force (EITF) Issue No. 94-3 regarding certain exit and disposal costs. The
provisions of this Statement are effective for exit or disposal activities that
are initiated after December 31, 2002. We currently do not expect any
financial impact upon adoption of this statement.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
This Statement rescinds Statement 4 that required all gains and losses from
extinguishment of debt to be aggregated and, if material, classified as an
extraordinary item. Gains and losses from the extinguishment of debt will no
longer be considered extraordinary. Statement 145 is effective for fiscal
years beginning after May 15, 2002. We currently do not expect any financial
impact upon adoption of this statement.

In June 2001, the FASB issued SFAS 142, Goodwill and Other Intangible Assets.
Under the provisions of SFAS 142, goodwill and intangibles assets with
indefinite lives are no longer amortized but are subject to annual impairment
tests. SFAS 142 also established a new method of testing goodwill for
impairment. We adopted SFAS 142 effective January 1, 2002, and expect that as
a result our annual amortization expense will be reduced by approximately $9.9
million ($7.6 million annually after-tax or $0.08 per share). We recorded an
impairment charge on our Argentina intangible assets from the change in
accounting principle in the first quarter of 2002. The amount of the charge is
$43.3 million after-tax ($44.0 million pre-tax) and was recorded in our income
statement as a Cumulative effect of the change in accounting principle.

In the FASB EITF release Issue No. 01-09, Accounting for Consideration Given
by a Vendor to a Customer or a Reseller of the Vendors Products. EITF 01-09
consolidates the previously discussed Issue No. 00-14 Accounting for Certain
Sales Incentives and Issue No. 00-25 Vendor Income Statement Characterization
of Consideration Paid to a Reseller of the Vendors Products. EITF 01-09 does
not change the accounting treatment set forth by EITF 00-14 and EITF 00-25. We
adopted EITF 01-09 effective January 1, 2002.

The implementation of EITF 01-09 requires a change to the way we previously
classified certain sales incentives that were previously recorded as selling,
general and administrative expenses. We have restated our historical net
sales, cost of sales, and selling, general and administrative expense for 2001
as a result of the implementation of the consensus of Issue 01-09.

|                    |  |                    |       |                    |  |                   |       |                    |  |                                |  |                                            
|------------------- |  | ------------------ | ----- | ------------------ |  | ----------------- | ----- | ------------------ |  | ------------------------------ |  | -------------------------------------------
|                    |  | Quarter Ended      |       | Nine Months Ended  |  |                   |       | Treatment prior to
|(in millions)       |  | September 29, 2001 |       | September 29, 2001 |  | Current Treatment |       | January 1, 2002   
|                    |  |                    |       |                    |  |                   |       |                   
|Trade promotions    |  |                    | $94.5 |                    |  | $                 | 284.2 |                    |  | Reduction of net sales         |  | Selling, general
and administrative
expense
|                   
|                   
|                   
|                   
|Coupons and rebates |  |                    | $2.3  |                    |  | $                 | 10.3  |                    |  | Reduction of net sales         |  | Selling, general
and administrative
expense
|                   
|                   
|                   
|                   
|Free product        |  |                    | $2.6  |                    |  | $                 | 7.5   |                    |  | Increase to cost of
goods sold |  | Selling, general
and administrative
expense

Item 4. Controls and Procedures.

Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial

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Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that Dials disclosure controls and procedures are effective in timely alerting
them to material information relating to the company (including its
consolidated subsidiaries) required to be included in our periodic SEC filings.
There were no significant changes in our internal controls or other factors
that could significantly affect these controls subsequent to the date of their
evaluation and there were no corrective actions with regard to significant
deficiencies and material weaknesses.

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##### Table of Contents









PART II. OTHER INFORMATION

Item 1. 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 Employment Opportunity Commission v. The Dial Corporation, Civil Action
No. 99 C 3356. The EEOC alleges that Dial has 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 this alleged harassment. The
EEOC is seeking to enjoin Dial 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. The trial is
scheduled
to begin in late April 2003. We currently do not believe that this lawsuit
will have a material adverse effect on our operating results or financial
condition. However, no assurances can be given regarding the ultimate outcome
of this matter.




Item 6. Exhibits and Reports on Form 8-K



|(A) |  | Exhibits
|--- |  | --------



|10.1 |  | Employment Agreement with Herbert M. Baum dated August 15, 2002.                                                 
|---- |  | -----------------------------------------------------------------------------------------------------------------
|    
|99.1 |  | Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for Forward-Looking Statements.
|    
|99.2 |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                         



|(B) |  | Reports on Form 8-K                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | We filed a Current Report on Form 8-K, dated July 18, 2002, reporting that
Dial issued a press release relating to its second quarter financial
results and outlook for the second half of 2002, a copy of which was filed
as Exhibit 99.                                                                                                                                                                                                                                                                    
|   
|    |  | We filed a Current Report on Form 8-K, dated August 9, 2002, reporting
that each of the Principal Executive Officer, Herbert M. Baum, and
Principal Financial Officer, Conrad A. Conrad, submitted to the SEC sworn
statements pursuant to Securities and Exchange Commission Order No. 4-460.
Copies of the statements were attached as Exhibits 99.1 and 99.2,
respectively. A copy of the related press release was attached as Exhibit
99.3.                                                             
|   
|    |  | We filed a Current Report on Form 8-K, dated August 23, 2002, reporting
that Dial issued a press release declaring a quarterly dividend on Dial
Common Stock, a copy of which was filed as Exhibit 99.1. Dial issued a
second press release announcing that Dials Board of Directors approved
the Companys business strategy and extended the CEOs employment
contract, a copy of which was filed as Exhibit 99.2.                                                                                        
|   
|    |  | We filed a Current Report on Form 8-K, dated August 30, 2002, reporting
that Dial issued a press release announcing that The Dial Corporations
CEO and CFO would present at the Prudential Securities Back to School
Consumer Conference. The release also announced that Dial expects that
its full year 2002 earnings per share from continuing operations and
before special items would be consistent with current guidance of
approximately $1.19. A copy of the press release was filed as Exhibit 99.
|   
|    |  | We filed a Current Report on Form 8-K, dated September 4, 2002, reporting
that the union at Dials Aurora, Illinois plant voted down a four-year
contract that had been unanimously                                                                                                                                                                                                                                                                                                                          

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##### Table of Contents





| |  | recommended by the union negotiating committee. As previously announced
in Dials press release dated August 29, 2002, Dial also stated that a
presentation to investors addressing the state of Dials business and
Dials strategy going forward would take place on September 5, 2002. A
copy of the presentation was filed as Exhibit 99.                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We filed a Current Report on Form 8-K, dated September 16, 2002, reporting
that, on Sunday, September 15, 2002, the union at Dials Aurora, Illinois
manufacturing facility ratified a new four-year labor agreement.                                                                                                                                                                                                                                                                                                       
|
| |  | We filed a Current Report on Form 8-K, dated September 18, 2002, reporting
that Dial issued a press release announcing that The Dial Corporations
CEO and CFO would present at the Banc of America Securities 32nd Annual
Investment Conference. The release also announced that Dial was confident
that full-year 2002 earnings per share before special items would be
consistent with current guidance of approximately $1.19. A copy of the
press release was filed as Exhibit 99.                                     
|
| |  | We filed a Current Report on Form 8-K, dated September 18, 2002, reporting
that, as previously announced in Dials press release dated September 17,
2002, a presentation to investors addressing the state of Dials business
and Dials strategy going forward would take place on September 23, 2002.
A copy of the presentation was filed as Exhibit 99.                                                                                                                                                                
|
| |  | We filed a Current Report on Form 8-K, dated September 30, 2002, reporting
that Dial issued a press release announcing that The Dial Corporations
Senior Vice President would present at the Merrill Lynch Global Branded
Consumer Products Conference, a copy of which was filed as Exhibit 99.1.
As previously announced in Dials press release dated September 26, 2002,
Dial also reported that a presentation to investors would take place on
October 1, 2002. A copy of the presentation was filed as Exhibit 99.2.
|
| |  | We filed a Current Report on Form 8-K, dated September 30, 2002, reporting
that Dial issued a press release relating to the conference call to
announce its third quarter 2002 results to be held on Thursday, October
17, 2002, a copy of which was filed as Exhibit 99.                                                                                                                                                                                                                                                   

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SIGNATURES

Pursuant to the requirements 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.

The Dial Corporation
(Registrant)



November 8, 2002

|                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------
|/s/ Herbert M. Baum
Herbert M. Baum
Chairman, President and
Chief Executive Officer
(Principal Executive Officer and Authorized Officer)       
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|/s/ Conrad A. Conrad
Conrad A. Conrad
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Authorized Officer)
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|                                                                                                                                               
|/s/ John F. Tierney
John F. Tierney
Senior Vice President and Controller
(Principal Accounting Officer and Authorized Officer)                 

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##### Table of Contents



Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Herbert M. Baum, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of The Dial
Corporation;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|      |  |                  |  |                                                                                                                                          
|----- |  | ---------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|Date: |  | November 8, 2002 |  | /s/ Herbert M. Baum

Herbert M. Baum
Chairman, President and
Chief Executive Officer
(Principal Executive Officer and Authorized Officer)

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##### Table of Contents



Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Conrad A. Conrad, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of The Dial
Corporation;

2.     Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|      |  |                  |  |                                                                                                                                                 
|----- |  | ---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Date: |  | November 8, 2002 |  | /s/ Conrad A. Conrad

Conrad A. Conrad
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and
Authorized Officer)

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##### Table of Contents






EXHIBIT INDEX

|                                                                                                                         
|-------------------------------------------------------------------------------------------------------------------------
|10.1    Employment Agreement with Herbert M. Baum dated August 15, 2002.                                                 
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|99.1    Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for Forward-Looking Statements.
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|99.2    Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                         

26