##### 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 June 29, 2002

Commission file number 1-11793

THE DIAL CORPORATION(Exact Name of Registrant as Specified in its Charter)

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

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

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

|    |  |       |  |    |  |    
|--- |  | ----- |  | -- |  | ---
|Yes |  | X BOX |  | No |  | BOX

The number of shares of Common Stock, $.01 par value, outstanding as the close
of business on July 27, 2002 was 94,849,979.





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TABLE OF CONTENTS



|                              |                                                                                             |  |  |  |  |  |  | 
|----------------------------- | ------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                               
|                              | ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                  
|                              | Item 4. Submission of Matters to a Vote of Security Holders                                
|                              | Item 6. Exhibits and Reports on Form 8-K                                                   
|EX-99.1                      
|EX-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)    |                                                                                                        | June 29, 2002              |           | December 31, 2001
|                                     |                                                                                                        |                            |           |                  
|ASSETS                               |                                                                                                        |                            |           |                   |         |   |           |         
|                                    
|                                    
|                                    
|                                    
|Current Assets:                      |                                                                                                        |                            |           |                   |         |   |           |         
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                              |                            | $         | 127,054           |         |   | $         | 29,414   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables, less allowance of $2,953 and $5,131                                                       |                            |           | 95,472            |         |   |           | 94,189   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                                                                            |                            |           | 138,279           |         |   |           | 129,977  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income taxes                                                                                  |                            |           | 25,449            |         |   |           | 23,412   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Income tax receivable                                                                                  |                            |           |                  |         |   |           | 12,567   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other current assets                                                                                   |                            |           | 3,635             |         |   |           | 9,492    |        
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        | Total current assets       |           |                   | 389,889 |   |           |          | 299,051 | 
|                                    
|                                    
|                                    
|                                    
|Property and equipment, net          |                                                                                                        |                            | 230,526   |                   |         |   | 252,957   |         
|                                    
|                                    
|                                    
|                                    
|Deferred income taxes                |                                                                                                        |                            | 45,867    |                   |         |   | 49,817    |         
|                                    
|                                    
|                                    
|                                    
|Intangibles, net                     |                                                                                                        |                            | 359,875   |                   |         |   | 403,811   |         
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                                                                                        |                            | 20,092    |                   |         |   | 18,480    |         
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        | $                          | 1,046,249 |                   |         | $ | 1,024,116 |         
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                        |                            |           |                   |         |   |           |         
|                                    
|                                    
|                                    
|                                    
|Current Liabilities:                 |                                                                                                        |                            |           |                   |         |   |           |         
|                                    
|                                    
|                                    
|                                    
|                                     | Trade accounts payable                                                                                 |                            | $         | 106,718           |         |   | $         | 98,952   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Income taxes payable                                                                                   |                            |           | 34,893            |         |   |           |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other current liabilities                                                                              |                            |           | 146,981           |         |   |           | 151,630  |        
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        | Total current liabilities  |           |                   | 288,592 |   |           |          | 250,582 | 
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|Long-term debt                       |                                                                                                        |                            | 454,096   |                   |         |   | 445,341   |         
|                                    
|                                    
|                                    
|                                    
|Pension and other benefits           |                                                                                                        |                            | 224,559   |                   |         |   | 239,286   |         
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |                                                                                                        |                            | 6,502     |                   |         |   | 7,029     |         
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        | Total liabilities          |           |                   | 973,749 |   |           |          | 942,238 | 
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|Stockholders Equity:                |                                                                                                        |                            |           |                   |         |   |           |         
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock, $.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding        |                            |           |                  |         |   |           |         |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.01 par value, 300,000,000 shares
authorized; 105,712,924 and 105,712,924 shares issued |                            |           | 1,057             |         |   |           | 1,057    |        
|                                    
|                                    
|                                    
|                                    
|                                     | Additional capital                                                                                     |                            |           | 425,733           |         |   |           | 420,611  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Retained income                                                                                        |                            |           | 14,308            |         |   |           | 6,736    |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                                                                   |                            |           | (102,943          | )       |   |           | (75,502  | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Employee benefits                                                                                      |                            |           | (49,906           | )       |   |           | (55,542  | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock, 10,862,884 and 10,847,386 shares held                                                  |                            |           | (215,749          | )       |   |           | (215,482 | )      
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        | Total stockholders equity |           |                   | 72,500  |   |           |          | 81,878  | 
|                                     |                                                                                                        |                            |           |                   |         |   |           |         
|                                     |                                                                                                        | $                          | 1,046,249 |                   |         | $ | 1,024,116 |         
|                                     |                                                                                                        |                            |           |                   |         |   |           |         

See Notes to Consolidated Financial Statements.

2



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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)                 |                                                                                                        | June 29, 2002               |         | June 30, 2001
|                                                      |                                                                                                        |                             |         |              
|Net sales                                             |                                                                                                        | $                           | 333,269 |               |         | $ | 315,656 |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Costs and expenses:                                   |                                                                                                        |                             |         |               |         |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Cost of products sold                                                                                  |                             |         | 205,924       |         |   |         | 213,179 |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Asset writedowns and other special items (net gain)                                                    |                             |         | (1,182        | )       |   |         |        |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|                                                      |                                                                                                        | Total cost of products sold |         |               | 204,742 |   |         |         | 213,179 | 
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Selling, general and administrative expenses                                                           |                             |         | 68,162        |         |   |         | 65,771  |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|                                                      |                                                                                                        | Total costs and expenses    |         |               | 272,904 |   |         |         | 278,950 | 
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Operating income                                      |                                                                                                        |                             | 60,365  |               |         |   | 36,706  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Interest and other expenses                           |                                                                                                        |                             | (9,459  | )             |         |   | (12,023 | )      
|                                                     
|                                                     
|                                                     
|                                                     
|Net income of joint ventures                          |                                                                                                        |                             | 1,749   |               |         |   | 4       |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Income from continuing operations before income taxes |                                                                                                        |                             | 52,655  |               |         |   | 24,687  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Income taxes on continuing operations                 |                                                                                                        |                             | 19,222  |               |         |   | 8,728   |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Income from continuing operations                     |                                                                                                        |                             | 33,433  |               |         |   | 15,959  |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Discontinued operation:                               |                                                                                                        |                             |         |               |         |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Loss from operation of discontinued Specialty Personal Care segment,
net of income tax benefit of $327 |                             |         |              |         |   |         | (1,218  | )      
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Total loss from discontinued operation                |                                                                                                        |                             |        |               |         |   | (1,218  | )      
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|NET INCOME                                            |                                                                                                        | $                           | 33,433  |               |         | $ | 14,741  |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Basic net income per common share:                    |                                                                                                        |                             |         |               |         |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|Income from continuing operations                     |                                                                                                        | $                           | 0.36    |               |         | $ | 0.17    |        
|                                                     
|                                                     
|                                                     
|                                                     
|Loss from discontinued operation                      |                                                                                                        |                             |        |               |         |   | (0.01   | )      
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|NET INCOME PER SHARE  BASIC                          |                                                                                                        | $                           | 0.36    |               |         | $ | 0.16    |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Diluted net income per common share:                  |                                                                                                        |                             |         |               |         |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|Income from continuing operations                     |                                                                                                        | $                           | 0.35    |               |         | $ | 0.17    |        
|                                                     
|                                                     
|                                                     
|                                                     
|Loss from discontinued operation                      |                                                                                                        |                             |        |               |         |   | (0.01   | )      
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|NET INCOME PER SHARE  DILUTED                        |                                                                                                        | $                           | 0.35    |               |         | $ | 0.16    |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Weighted average basic shares outstanding             |                                                                                                        |                             | 92,243  |               |         |   | 91,368  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Weighted average equivalent shares                    |                                                                                                        |                             | 2,235   |               |         |   | 442     |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|Weighted average diluted shares outstanding           |                                                                                                        |                             | 94,478  |               |         |   | 91,810  |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|NET INCOME                                            |                                                                                                        | $                           | 33,433  |               |         | $ | 14,741  |        
|                                                     
|                                                     
|                                                     
|                                                     
|Other comprehensive income:                           |                                                                                                        |                             |         |               |         |   |         |        
|                                                     
|                                                     
|                                                     
|                                                     
|Foreign currency translation
adjustment               |                                                                                                        |                             | (7,671  | )             |         |   | 224     |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        
|COMPREHENSIVE INCOME                                  |                                                                                                        | $                           | 25,762  |               |         | $ | 14,965  |        
|                                                      |                                                                                                        |                             |         |               |         |   |         |        

See Notes to Consolidated Financial Statements.

3



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##### Table of Contents



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

|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |         |         | 
|----------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | ---------------- | ------- | - | ------- | ------- | ------- | 
|                                                                                                                  |                                                                                                                     |                             |         | Six Months Ended
|                                                                                                                  |                                                                                                                     |                             |         |                 
|(in thousands, except per share data)                                                                             |                                                                                                                     | June 29, 2002               |         | June 30, 2001   
|                                                                                                                  |                                                                                                                     |                             |         |                 
|Net sales                                                                                                         |                                                                                                                     | $                           | 640,738 |                  |         | $ | 608,591 |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Costs and expenses:                                                                                               |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Cost of products sold                                                                                               |                             |         | 401,574          |         |   |         | 413,168 |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Asset writedowns and other special items (net gain)                                                                 |                             |         | (1,182           | )       |   |         |        |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                  |                                                                                                                     | Total cost of products sold |         |                  | 400,392 |   |         |         | 413,168 | 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Selling, general and administrative expenses                                                                        |                             |         | 131,420          |         |   |         | 124,137 |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                  |                                                                                                                     | Total costs and expenses    |         |                  | 531,812 |   |         |         | 537,305 | 
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Operating income                                                                                                  |                                                                                                                     |                             | 108,926 |                  |         |   | 71,286  |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Interest and other expenses                                                                                       |                                                                                                                     |                             | (20,483 | )                |         |   | (25,895 | )      
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Net income of joint ventures                                                                                      |                                                                                                                     |                             | 1,749   |                  |         |   | 2,003   |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Income from continuing operations before income taxes and cumulative
effect of the change in accounting principle |                                                                                                                     |                             | 90,192  |                  |         |   | 47,394  |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income taxes on continuing operations                                                                             |                                                                                                                     |                             | 33,187  |                  |         |   | 16,741  |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Income from continuing operations before cumulative effect of the change
in accounting principle                  |                                                                                                                     |                             | 57,005  |                  |         |   | 30,653  |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Discontinued operation:                                                                                           |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Loss from operation of discontinued Specialty Personal
Care segment, net of income tax benefit of $877              |                             |         |                 |         |   |         | (2,815  | )      
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                  | Adjustment of loss on disposal of discontinued Specialty Personal Care
segment, net of income tax provision of $740 |                             |         | 1,260            |         |   |         |        |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Total gain (loss) from discontinued operation                                                                     |                                                                                                                     |                             | 1,260   |                  |         |   | (2,815  | )      
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cumulative effect of the change in accounting principle, net of income
tax of $661                                |                                                                                                                     |                             | (43,308 | )                |         |   |        |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|NET INCOME                                                                                                        |                                                                                                                     | $                           | 14,957  |                  |         | $ | 27,838  |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Basic net income per common share:                                                                                |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income from continuing operations                                                                                 |                                                                                                                     | $                           | 0.62    |                  |         | $ | 0.34    |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income (loss) from discontinued operation                                                                         |                                                                                                                     |                             | 0.01    |                  |         |   | (0.03   | )      
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cumulative effect of the change in accounting principle                                                           |                                                                                                                     |                             | (0.47   | )                |         |   |        |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|NET INCOME PER SHARE  BASIC                                                                                      |                                                                                                                     | $                           | 0.16    |                  |         | $ | 0.30    |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Diluted net income per common share:                                                                              |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income from continuing operations                                                                                 |                                                                                                                     | $                           | 0.61    |                  |         | $ | 0.33    |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Income (loss) from discontinued operation                                                                         |                                                                                                                     |                             | 0.01    |                  |         |   | (0.03   | )      
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Cumulative effect of the change in accounting principle                                                           |                                                                                                                     |                             | (0.46   | )                |         |   |        |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|NET INCOME PER SHARE  DILUTED                                                                                    |                                                                                                                     | $                           | 0.16    |                  |         | $ | 0.30    |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Weighted average basic shares outstanding                                                                         |                                                                                                                     |                             | 92,020  |                  |         |   | 91,326  |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Weighted average equivalent shares                                                                                |                                                                                                                     |                             | 1,840   |                  |         |   | 299     |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|Weighted average diluted shares outstanding                                                                       |                                                                                                                     |                             | 93,860  |                  |         |   | 91,625  |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|NET INCOME                                                                                                        |                                                                                                                     | $                           | 14,957  |                  |         | $ | 27,838  |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Other comprehensive income (loss):                                                                                |                                                                                                                     |                             |         |                  |         |   |         |        
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|Foreign currency translation adjustment                                                                           |                                                                                                                     |                             | (34,695 | )                |         |   | (232    | )      
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        
|COMPREHENSIVE INCOME (LOSS)                                                                                       |                                                                                                                     | $                           | (19,738 | )                |         | $ | 27,606  |        
|                                                                                                                  |                                                                                                                     |                             |         |                  |         |   |         |        

See Notes to Consolidated Financial Statements.

4



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##### Table of Contents



THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS(Unaudited)

|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |        |         |         |  
|--------------------------------------------------------------------------------- | --------------------------------------------- | ------------------------------------------------ | --------------------------------- | ------------- | ---------------- | ------- | ------- | ------ | ------- | ------- | -
|                                                                                  |                                               |                                                  |                                   |               | Six Months Ended
|                                                                                  |                                               |                                                  |                                   |               |                 
|(in thousands)                                                                    |                                               | June 29, 2002                                    |                                   | June 30, 2001
|                                                                                  |                                               |                                                  |                                   |              
|CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:                                      |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net income                                                                        |                                               | $                                                | 14,957                            |               |                  | $       | 27,838  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments to reconcile net income to net cash provided
by operating activities: |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Discontinued operations, net of tax                                               |                                               |                                                  | (1,260                            | )             |                  |         | 2,815   |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Effect of change in accounting principle, net of tax                              |                                               |                                                  | 43,308                            |               |                  |         |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Depreciation                                  |                                                  |                                   | 18,194        |                  |         |         | 19,339 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Amortization                                  |                                                  |                                   | 61            |                  |         |         | 4,916  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Deferred income taxes                         |                                                  |                                   | (1,736        | )                |         |         | 1,594  |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Asset writedowns and other special items, net |                                                  |                                   | (1,182        | )                |         |         |       |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Change in operating assets and liabilities:   |                                                  |                                   |               |                  |         |         |        |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                               |                                                  | Receivables                       |               |                  | (12,107 | )       |        |         | 13,627  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                               |                                                  | Inventories                       |               |                  | (15,013 | )       |        |         | (765    | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                               |                                                  | Trade accounts payable            |               |                  | 14,617  |         |        |         | (18,236 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                               |                                                  | Income taxes payable              |               |                  | 43,433  |         |        |         | (4,706  | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                               |                                                  | Other assets and liabilities, net |               |                  | 4,833   |         |        |         | 5,787   |  
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                  |                                               | Net cash provided by operating activities        |                                   |               | 108,105          |         |         |        | 52,209  |        
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:                               |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Capital expenditures                                                              |                                               |                                                  | (12,741                           | )             |                  |         | (9,655  | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from disposition of discontinued operation                               |                                               |                                                  | 2,000                             |               |                  |         |        |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Investment in and transfers from discontinued operation                           |                                               |                                                  |                                  |               |                  |         | 30,661  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from sale of assets                                                      |                                               |                                                  | 2,993                             |               |                  |         | 2,271   |       
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                  |                                               | Net cash (used) provided by investing activities |                                   |               | (7,748           | )       |         |        | 23,277  |        
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|CASH FLOWS USED BY FINANCING ACTIVITIES:                                          |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net change in long-term debt                                                      |                                               |                                                  | (492                              | )             |                  |         | (20,804 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net change in short-term bank debt                                                |                                               |                                                  |                                  |               |                  |         | (46,777 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Dividends paid on common stock                                                    |                                               |                                                  | (7,339                            | )             |                  |         | (7,288  | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash proceeds from stock options                                                  |                                               |                                                  | 6,549                             |               |                  |         | 627     |       
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|                                                                                  |                                               | Net cash used by financing activities            |                                   |               | (1,282           | )       |         |        | (74,242 | )      
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|Effects of foreign currency exchange rates on cash balances                       |                                               |                                                  | (1,435                            | )             |                  |         |        |       
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|Net increase in cash and cash equivalents                                         |                                               |                                                  | 97,640                            |               |                  |         | 1,244   |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                               | Cash and cash equivalents, beginning of period   |                                   |               | 29,414           |         |         |        | 6,733   |        
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |                                               | $                                                | 127,054                           |               |                  | $       | 7,977   |       
|                                                                                  |                                               |                                                  |                                   |               |                  |         |         |       

See Notes to Consolidated Financial Statements.

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THE DIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Basis of Preparation

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

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

Accounting policies utilized in the preparation of the financial information
herein presented are the same as set forth in Dials annual financial
statements except as modified for interim accounting policies which are within
the guidelines set forth in Accounting Principles Board Opinion No. 28,
Interim Financial Reporting. The interim consolidated financial statements
are unaudited. All adjustments, consisting of normal recurring accruals and
accruals to record certain estimated exit costs and transaction costs necessary
to dispose of the SPC business in 2001 and accruals to record certain special
charges (see notes 2 and 5) necessary to present fairly the financial position
as of June 29, 2002 and the results of operations and cash flows for the three
months and six months ended June 29, 2002 and June 30, 2001, have been
included. Interim results of operations are not necessarily indicative of the
results of operations for the full year.

Note 2. Discontinued Operation

On August 28, 2001, we completed the sale of our Specialty Personal Care
(SPC) 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. 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.

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As a result of the loss recognized on the sale, we recorded a current tax
benefit of approximately $40.0 million. This tax benefit resulted in cash
savings in the third and fourth quarters of 2001 and the first and second
quarters 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 an approximate $54.2
million capital loss for which no tax benefits were provided. We will realize
benefits from this capital loss only to the extent that we generate capital
gains in the future.

Net sales of the discontinued SPC business for the second quarter and the first
six months of 2001 were $10.6 million and $20.8 million, respectively. As of
June 29, 2002, our balance sheet includes approximately $19.5 million in
liabilities and 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 operations.

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 our
operating income. This intangible impairment affected the Otherreporting
segment.

Note 4. Economic Conditions in Argentina

In the first six 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 58% currency
devaluation of the Argentine Peso. This non-cash adjustment did not impact net
income. Our Argentina business accounted for approximately $26.1 million and
$41.2 million of our net sales in the first six 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 in 2002. Through the first six
months ended June 29, 2002, our operating results in Argentina have been better
than we originally anticipated. However, the situation in Argentina is
changing rapidly, and it is difficult to predict with certainty the impact that
Argentina will have on our net sales and operating results in 2002.

We are reviewing strategic alternatives with respect to our Argentina business,
while working aggressively to improve the performance of this business. 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. As of June 29, 2002, our investment in our Argentina business was
approximately $26.0 million. 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.

Note 5. 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

7



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##### Table of Contents



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 (net gain).

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. The activity in the first six months
of 2002 is summarized below:

|                     |       |          |             |             |            |         |             |        |        |   |     |     | 
|-------------------- | ----- | -------- | ----------- | ----------- | ---------- | ------- | ----------- | ------ | ------ | - | --- | --- | 
|                     |       |          | Ending      |             |            |         |             |        | Ending
|                     |       |          | reserves at |             | Cash spent |         | reserves at
|(in thousands)       |       | 12/31/01 |             | during 2002 |            | 6/29/02
|                     |       |          |             |             |            |        
|Employee separations |       | $        | 823         |             |            | $       | (823        | )      |        | $ |    |    
|                    
|                    
|                    
|                    
|Other exit costs     |       |          | 1,581       |             |            |         | (1,094      | )      |        |   | 487 |    
|                     |       |          |             |             |            |         |             |        |        |   |     |    
|                     | Total |          | $           | 2,404       |            |         | $           | (1,917 | )      |   | $   | 487 | 
|                     |       |          |             |             |            |         |             |        |        |   |     |    

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 six 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

At December 31, 2001, a $0.9 million liability remained that related to
severance from special charges taken in 2000. During the first six months of
2002, cash severance payments decreased the liability to $0.6 million.
Remaining cash requirements for these special charges will be funded from
normal operations.

Note 6. Dial/Henkel Joint Venture

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.

8



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##### Table of Contents



Note 7. Inventories

Inventories consisted of the following:

|                           |                   |               |        |                   |  |   |        |         | 
|-------------------------- | ----------------- | ------------- | ------ | ----------------- |  | - | ------ | ------- | 
|(in thousands)             |                   | June 29, 2002 |        | December 31, 2001
|                           |                   |               |        |                  
|Raw materials and supplies |                   | $             | 37,523 |                   |  | $ | 30,891 |        
|                          
|                          
|                          
|                          
|Work in process            |                   |               | 7,471  |                   |  |   | 9,295  |        
|                          
|                          
|                          
|                          
|Finished goods             |                   |               | 93,285 |                   |  |   | 89,791 |        
|                           |                   |               |        |                   |  |   |        |        
|                           | Total inventories |               | $      | 138,279           |  |   | $      | 129,977 | 
|                           |                   |               |        |                   |  |   |        |        

Note 8. Intangible Assets

Intangible amortizable assets consisted of the following:

|                  |  |               |       |                   |  |          |      |          |  |              |       |          |  |   |       |     |  |   |      |   |  |   |       | 
|----------------- |  | ------------- | ----- | ----------------- |  | -------- | ---- | -------- |  | ------------ | ----- | -------- |  | - | ----- | --- |  | - | ---- | - |  | - | ----- | 
|(in thousands)    |  | June 29, 2002 |       | December 31, 2001
|                  |  |               |       |                  
|                  |  | Gross         |       |                   |  |          |      | Net      |  | Gross        |       |          |  |   |       | Net
|                  |  | Carrying      |       | Accumulated       |  | Carrying |      | Carrying |  | Accumulated  |       | Carrying
|                  |  | Value         |       | Amortization      |  | Value    |      | Value    |  | Amortization |       | Value   
|                  |  |               |       |                   |  |          |      |          |  |              |       |         
|Patents           |  | $             | 1,320 |                   |  | $        | (112 | )        |  | $            | 1,208 |          |  | $ | 1,002 |     |  | $ | (82  | ) |  | $ | 920   | 
|                 
|                 
|                 
|                 
|Other intangibles |  |               | 900   |                   |  |          | (547 | )        |  |              | 353   |          |  |   | 900   |     |  |   | (516 | ) |  |   | 384   | 
|                  |  |               |       |                   |  |          |      |          |  |              |       |          |  |   |       |     |  |   |      |   |  |   |       | 
|Total             |  | $             | 2,220 |                   |  | $        | (659 | )        |  | $            | 1,561 |          |  | $ | 1,902 |     |  | $ | (598 | ) |  | $ | 1,304 | 
|                  |  |               |       |                   |  |          |      |          |  |              |       |          |  |   |       |     |  |   |      |   |  |   |       | 

Intangibles not subject to amortization consist of the following:

|                  |  |               |         |                   |  |   |         | 
|----------------- |  | ------------- | ------- | ----------------- |  | - | ------- | 
|(in thousands)    |  | June 29, 2002 |         | December 31, 2001
|                  |  |               |         |                  
|Goodwill          |  | $             | 311,902 |                   |  | $ | 353,002 | 
|                 
|                 
|                 
|                 
|Trademarks        |  |               | 39,709  |                   |  |   | 41,645  | 
|                 
|                 
|                 
|                 
|Other intangibles |  |               | 6,703   |                   |  |   | 7,860   | 
|                  |  |               |         |                   |  |   |         | 
|Total             |  | $             | 358,314 |                   |  | $ | 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 second quarter increased $1.9 million after-tax ($2.5
million pre-tax) or $0.02 per diluted share and for the first six months of
2002 increased $3.7 million after-tax ($4.9 million pre-tax) or $0.04 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.

9



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##### Table of Contents



Note 9. Debt

Long-term debt consisted of the following:

|                                                               |  |               |         |                   |  |   |         | 
|-------------------------------------------------------------- |  | ------------- | ------- | ----------------- |  | - | ------- | 
|(in thousands)                                                 |  | June 29, 2002 |         | December 31, 2001
|                                                               |  |               |         |                  
|$250 million 7.0% Senior Notes due
2006, net of issue discount |  | $             | 247,113 |                   |  | $ | 246,768 | 
|                                                              
|                                                              
|                                                              
|                                                              
|$200 million 6.5% Senior Notes due
2008, net of issue discount |  |               | 199,078 |                   |  |   | 198,573 | 
|                                                               |  |               |         |                   |  |   |         | 
|Total Long-term debt                                           |  |               | 446,191 |                   |  |   | 445,341 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Fair market gain of interest rate swap                         |  |               | 7,905   |                   |  |   |        | 
|                                                               |  |               |         |                   |  |   |         | 
|Reported Long-term debt                                        |  | $             | 454,096 |                   |  | $ | 445,341 | 
|                                                               |  |               |         |                   |  |   |         | 

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

In connection with the $250 million debt offering, we have entered into two
separate interest rate swap agreements. Collectively, they have a notional
value of $250 million. We receive fixed interest payments of 7.0% of the
notional amount and make payments equal to 6 month LIBOR-plus 182 basis points.
Payments are exchanged each February and August 15, at which time the floating
interest rate resets using the 6 month LIBOR rate in effect on that day. The
terms of the interest rate swaps are for five years. The interest rate swaps
subject us to the risk of changes in LIBOR-based interest rates. At June 29,
2002, the interest rate swaps had a fair market gain associated with them of
$7.9 million. At June 29, 2002, the gain is included in Other assetswith an
offsetting increase to Long-term debt. There is no income statement effect.

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

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



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

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##### Table of Contents





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

In the first quarter of 2002, we terminated our existing credit facility and
replaced it with a new $150 million revolving credit facility. The new facility
was 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 the facility at June 29, 2002.

Under the new facility, we are required to maintain minimum net worth of $100
million plus 50% of net income (if positive) earned from the date of the
facility. For purposes of calculating our minimum net worth, we exclude
foreign currency translation gains or losses, gains or losses relating to any
sale or other disposition of our Argentinean operations and/or the Armour food
business and the previously discussed $43.3 million 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. This new facility
also limits our ability, above certain amounts, to incur additional unsecured
indebtedness, sell, lease or transfer assets, enter into sale and lease back
transactions, place liens on properties and complete certain acquisitions
without our lenders consent.

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



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

At June 29, 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.

Note 10. Segments of an Enterprise

For organizational, marketing and financial reporting purposes, we are
organized into two business segments: (i) Domestic Branded and (ii) Other.
The segments were identified based on the economic characteristics, types of
products sold, the customer base and method of distribution. On August 28,
2001, we disposed of our Specialty Personal Care segment. The segment
information has been restated to reflect historical segment information as
adjusted for the reclassification of Specialty Personal Care as a discontinued
operation. Prior to the fourth quarter of 2001, we included sales of

11



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discontinued products in the Other business segment. In the fourth quarter of
2001, we began to include sales of discontinued products in the business
segment that launched the product. Effective January 1, 2002, we began to
include the International operating segment in the Other business segment due
to its immaterial size. Historical segment information has been restated to
reflect the new segment structure.

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

Our Other business segment includes sales of our products, both branded and
nonbranded, through the commercial channel to hotels, hospitals, schools and
other institutional customers. It also includes the sale of consumer products
outside of the United States, principally in Argentina and Canada.

Information as to our operations in different business segments is set forth
below. The calculation of operating income for each segment includes an
allocation of 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.

|                         |                   |                   |  |          |         |       |  |   |         |   |  |   |           | 
|------------------------ | ----------------- | ----------------- |  | -------- | ------- | ----- |  | - | ------- | - |  | - | --------- | 
|                         |                   |                   |  | Domestic |         |       |  |   |         |   |  |  
|(in thousands)           |                   | Branded           |  | Other    |         | Total
|                         |                   |                   |  |          |         |      
|Net Sales:               |                   |                   |  |          |         |       |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         | Quarter ended:    |                   |  |          |         |       |  |   |         |   |  |   |          
|                        
|                        
|                        
|                        
|                         |                   | June 29, 2002     |  | $        | 295,466 |       |  | $ | 37,803  |   |  | $ | 333,269   | 
|                        
|                        
|                        
|                        
|                         |                   | June 30, 2001     |  |          | 271,358 |       |  |   | 44,298  |   |  |   | 315,656   | 
|                        
|                        
|                        
|                        
|                         | Six months ended: |                   |  |          |         |       |  |   |         |   |  |   |          
|                        
|                        
|                        
|                        
|                         |                   | June 29, 2002     |  |          | 568,091 |       |  |   | 72,647  |   |  |   | 640,738   | 
|                        
|                        
|                        
|                        
|                         |                   | June 30, 2001     |  |          | 521,529 |       |  |   | 87,062  |   |  |   | 608,591   | 
|                        
|                        
|                        
|                        
|Operating Income (Loss): |                   |                   |  |          |         |       |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         | Quarter ended:    |                   |  |          |         |       |  |   |         |   |  |   |          
|                        
|                        
|                        
|                        
|                         |                   | June 29, 2002 (1) |  |          | 52,933  |       |  |   | 7,432   |   |  |   | 60,365    | 
|                        
|                        
|                        
|                        
|                         |                   | June 30, 2001     |  |          | 39,286  |       |  |   | (2,580  | ) |  |   | 36,706    | 
|                        
|                        
|                        
|                        
|                         | Six months ended: |                   |  |          |         |       |  |   |         |   |  |   |          
|                        
|                        
|                        
|                        
|                         |                   | June 29, 2002 (1) |  |          | 100,046 |       |  |   | 8,880   |   |  |   | 108,926   | 
|                        
|                        
|                        
|                        
|                         |                   | June 30, 2001     |  |          | 72,637  |       |  |   | (1,351  | ) |  |   | 71,286    | 
|                        
|                        
|                        
|                        
|Goodwill at:             |                   |                   |  |          |         |       |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         |                   | June 29, 2002     |  |          | 311,902 |       |  |   |        |   |  |   | 311,902   | 
|                        
|                        
|                        
|                        
|                         |                   | December 31, 2001 |  |          | 310,839 |       |  |   | 42,163  |   |  |   | 353,002   | 
|                        
|                        
|                        
|                        
|Assets at:               |                   |                   |  |          |         |       |  |   |         |   |  |  
|                        
|                        
|                        
|                        
|                         |                   | June 29, 2002     |  |          | 993,816 |       |  |   | 52,433  |   |  |   | 1,046,249 | 
|                        
|                        
|                        
|                        
|                         |                   | December 31, 2001 |  |          | 907,479 |       |  |   | 116,637 |   |  |   | 1,024,116 | 



---

|(1) |  | Includes special items that net to a $1.2 million gain ($2.4 million gain
in Other offset in part by a $1.2 million charge in Domestic Branded) in
the second quarter of 2002.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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 second half of 2002 versus the same period last year     
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our expectation that net sales, including Argentina, will rise 2% in
the second half of 2002 versus the same period last year           
|
| |  |  | our expectation that operating margin will improve approximately 150
basis points                                                       
|
| |  |  | our expectation that earnings from continuing operations, before
special items, will be approximately $1.19 per share for full year 2002
|
| |  |  | our expected capital expenditures in 2002 of approximately $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.

Critical Accounting Policies and Estimates

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

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



| |  | Sales incentives              
|- |  | ------------------------------
| 
| |  | Long-lived assets             
| 
| |  | Deferred tax assets           
| 
| |  | Other reserves and allowances.

Sales incentives

Sales incentives include coupons, rebates, free products, consideration and
allowances given to retailers for space in their stores (slotting fees),
consideration and allowances given to obtain favorable display positions in the
retailers stores and other promotional activity. We record these promotional
activities as a reduction of sales in the period during which the related
product ships.

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

Long-lived assets

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

Deferred tax assets

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

Other reserves and allowances

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

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Potential Sale of Dial

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

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. This tax benefit resulted in cash
savings in the third and fourth quarters of 2001 and the first and second
quarters 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 an
approximate $54.2 million capital loss for which no tax benefits were provided.
We will realize benefits from this capital loss only to the extent that we
generate capital gains in the future.

Net sales of the discontinued SPC business for the second quarter and the first
six months of 2001 were $10.6 million and $20.8 million, respectively. As of
June 29, 2002, our balance sheet includes approximately $19.5 million in
liabilities and 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

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##### Table of Contents



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 operations.

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 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 (net gain).

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 six months of 2002 is summarized below:

|                     |       |          |             |             |            |         |             |        |        |   |     |     | 
|-------------------- | ----- | -------- | ----------- | ----------- | ---------- | ------- | ----------- | ------ | ------ | - | --- | --- | 
|                     |       |          | Ending      |             |            |         |             |        | Ending
|                     |       |          | reserves at |             | Cash spent |         | reserves at
|(in thousands)       |       | 12/31/01 |             | during 2002 |            | 6/29/02
|                     |       |          |             |             |            |        
|Employee separations |       | $        | 823         |             |            | $       | (823        | )      |        | $ |    |    
|                    
|                    
|                    
|                    
|Other exit costs     |       |          | 1,581       |             |            |         | (1,094      | )      |        |   | 487 |    
|                     |       |          |             |             |            |         |             |        |        |   |     |    
|                     | Total |          | $           | 2,404       |            |         | $           | (1,917 | )      |   | $   | 487 | 
|                     |       |          |             |             |            |         |             |        |        |   |     |    

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 six 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

At December 31, 2001, a $0.9 million liability remained which related to
severance from special charges taken in 2000. During the first six months of
2002, cash severance payments decreased the liability to $0.6 million.
Remaining cash requirements for these special charges will be funded from
normal operations.

Recent Developments

Deteriorating Economic Conditions in Argentina

In the first six 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 58% currency
devaluation of the Argentine Peso. This non-cash adjustment did not impact net

16



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##### Table of Contents



income. Our Argentina business accounted for approximately $26.1 million and
$41.2 million of our net sales in the first six 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 in 2002. Through the first six
months ended June 29, 2002, our operating results in Argentina have been better
than we originally anticipated. However, the situation in Argentina is
changing rapidly, and it is difficult to predict with certainty the impact that
Argentina will have on our net sales and operating results in 2002.

We are reviewing strategic alternatives with respect to our Argentina business,
while working aggressively to improve the performance of this business. 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. As of June 29, 2002, our investment in our Argentina business was
approximately $26.0 million. 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. Fleming has been approved as a critical vendor for Kmart and
currently is receiving timely payment from Kmart for sales made after the date
that Kmart filed for bankruptcy protection.

Kmart previously announced that it planned to close approximately 300 stores in
its effort to emerge from bankruptcy. We believe that these store closings
have been substantially completed and that the inventories from the closed
stores have been liquidated. Our sales to Kmart have decreased as a result of
these store closings as well as a decline in consumers visiting open stores.
However, Kmarts bankruptcy has not had a material adverse effect on our
operating results to date. Future actions that Kmart may take as part of its
reorganization efforts are not yet known, and no assurances can be given
concerning the impact any future actions could have on our sales and operating
results.

2002 Outlook

As we have previously disclosed, our net sales, excluding Argentina, are
expected to rise 3% to 4% in the second half of 2002 versus the same period
last year. Net sales, including Argentina, are expected to rise 2% in the
second half of 2002 versus the same period last year. Operating margin is
expected to improve approximately 150 basis points. As a result, we currently
expect our earnings from continuing operations, before special items, to be
approximately $1.19 per share for the full year.

Comparison of the Second Quarter of 2002 with the Second Quarter of 2001

Net sales for the quarter increased 5.6% to $333.3 million from $315.7 million
in the same period in 2001 primarily as a result of an 8.9% increase in our
Domestic Branded segment offset in part by a 14.7% decrease in our Other
segment.

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|                               |  |                |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|------------------------------ |  | -------------- | ----- | ------------------- |  | ------ | ----- | ---------- |  | - | ---- | - |  |  | ----- | --
|                               |  | Second Quarter |       | Increase (Decrease)
|                               |  |                |       |                    
|(in millions)                  |  | 2002           |       | 2001                |  | Amount |       | Percentage
|                               |  |                |       |                     |  |        |       |           
|Personal Cleansing             |  | $              | 90.5  |                     |  | $      | 92.2  |            |  | $ | (1.7 | ) |  |  | (1.8  | )%
|                              
|                              
|                              
|                              
|Laundry Care                   |  |                | 121.1 |                     |  |        | 100.1 |            |  |   | 21.0 |   |  |  | 21.0  | % 
|                              
|                              
|                              
|                              
|Air Fresheners                 |  |                | 39.3  |                     |  |        | 32.2  |            |  |   | 7.1  |   |  |  | 22.0  | % 
|                              
|                              
|                              
|                              
|Food Products                  |  |                | 44.6  |                     |  |        | 46.9  |            |  |   | (2.3 | ) |  |  | (4.8  | )%
|                               |  |                |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|Total Domestic Branded segment |  |                | 295.5 |                     |  |        | 271.4 |            |  |   | 24.1 |   |  |  | 8.9   | % 
|                              
|                              
|                              
|                              
|Total Other segment            |  |                | 37.8  |                     |  |        | 44.3  |            |  |   | (6.5 | ) |  |  | (14.7 | )%
|                               |  |                |       |                     |  |        |       |            |  |   |      |   |  |  |       |   
|Total Company                  |  | $              | 333.3 |                     |  | $      | 315.7 |            |  | $ | 17.6 |   |  |  | 5.6   | % 
|                               |  |                |       |                     |  |        |       |            |  |   |      |   |  |  |       |   

Net sales in our Domestic Branded segment increased 8.9% to $295.5 million from
$271.4 million in the same period last year. The decrease in Personal
Cleansing sales resulted from lower bar soap sales, discontinuation of our Dial
shower cream product and a decrease in industrial chemical sales. The lower
bar soap sales are primarily due to higher promotional spending for new
products and to defend against a new competitive entry in the deodorant bar
soap category. 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 an increase in Purex
liquid detergent and the introduction of Purex liquid detergent After The
Rain fragrance. 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 the strong
performance of Adjustables and decreased promotional spending on One Touch
electric scented oil products offset in part by weakness in candle sales and
the discontinuation of Fresh Gels.

The decrease in Food Products resulted primarily from lower sales of private
label products as a result of a shift in timing of a promotional event by a
major customer.

Net sales in our Other segment decreased 14.7% to $37.8 million from $44.3
million primarily due to lower net sales in Argentina resulting from the peso
devaluation offset in part by increased unit sales of 10.2%. Excluding
Argentina, net sales in our Other segment decreased 0.8%.

Our gross margin, before special items, improved by 570 basis points to 38.2%
from 32.5% in the same period in 2001. This improvement primarily resulted
from higher volumes, manufacturing efficiencies, lower raw material costs and a
more favorable sales mix.

Selling, general and administrative expenses increased 3.6% to $68.2 from $65.8
million in the second quarter 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
devaluation and lower intangible amortization expense due to the implementation
of SFAS 142.

Interest and other expenses decreased 21.3% to $9.5 million from $12.0 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 $1.8 million gain from the Dial/Henkel joint venture in the
second quarter of 2002 primarily as a result of lower than expected costs
associated with the discontinued Custom Cleaner

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business. Our Dial/Henkel joint
venture earnings in the second quarter of 2001 were not significant.

Our reported effective tax rate increased to 36.5% from 35.3% in the same
period in 2001. This increase is primarily attributable to less income in
foreign jurisdictions that have lower tax rates and lower benefits relating to
foreign sales. These increases were offset in part by a decrease from the
cessation of amortization of nondeductible goodwill as a result of implementing
SFAS 142. The income tax rate on continuing operations, excluding special
items, is 37.2%.

Income from continuing operations before cumulative effect of change in
accounting principle was $33.4 million, versus $16.0 million in the second quarter of 2001. As
discussed above, this increase in income resulted from higher sales, improved
gross margin, the gain from our joint venture and lower interest costs offset
in part by an increase in selling,
general and administrative expenses.

The loss from our discontinued Specialty Personal Care operation was $1.2
million in the second quarter of 2001.

Total net income increased to $33.4 million or
$0.36 per diluted share, versus
$14.7 million or $0.16 per diluted share in the second quarter of 2001. The
increase resulted primarily from the increased income from continuing
operations as discussed above.

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

Net sales for the first six months of 2002 increased 5.3% to $640.7 million
from $608.6 million in the same period in 2001 primarily as a result of an 8.9%
increase in our Domestic Branded segment offset in part by a 16.6% decrease in
our Other segment.

|                               |  |                  |       |                     |  |        |       |            |  |   |       |   |  |  |       |   
|------------------------------ |  | ---------------- | ----- | ------------------- |  | ------ | ----- | ---------- |  | - | ----- | - |  |  | ----- | --
|                               |  | Six Months Ended |       | Increase/(Decrease)
|                               |  |                  |       |                    
|(in millions)                  |  | 2002             |       | 2001                |  | Amount |       | Percentage
|                               |  |                  |       |                     |  |        |       |           
|Personal Cleansing             |  | $                | 176.8 |                     |  | $      | 174.7 |            |  | $ | 2.1   |   |  |  | 1.2   | % 
|                              
|                              
|                              
|                              
|Laundry Care                   |  |                  | 228.4 |                     |  |        | 191.7 |            |  |   | 36.7  |   |  |  | 19.1  | % 
|                              
|                              
|                              
|                              
|Air Fresheners                 |  |                  | 76.5  |                     |  |        | 71.8  |            |  |   | 4.7   |   |  |  | 6.6   | % 
|                              
|                              
|                              
|                              
|Food Products                  |  |                  | 86.4  |                     |  |        | 83.3  |            |  |   | 3.1   |   |  |  | 3.7   | % 
|                               |  |                  |       |                     |  |        |       |            |  |   |       |   |  |  |       |   
|Total Domestic Branded segment |  |                  | 568.1 |                     |  |        | 521.5 |            |  |   | 46.6  |   |  |  | 8.9   | % 
|                              
|                              
|                              
|                              
|Total Other segment            |  |                  | 72.6  |                     |  |        | 87.1  |            |  |   | (14.5 | ) |  |  | (16.6 | )%
|                               |  |                  |       |                     |  |        |       |            |  |   |       |   |  |  |       |   
|Total Company                  |  | $                | 640.7 |                     |  | $      | 608.6 |            |  | $ | 32.1  |   |  |  | 5.3   | % 
|                               |  |                  |       |                     |  |        |       |            |  |   |       |   |  |  |       |   

Net sales in our Domestic Branded segment increased 8.9% to $568.1 million from
$521.5 million in the same period last year. The increase in Personal
Cleansing sales resulted from strong growth in body wash products offset in
part by lower bar soap sales, discontinuation of our Dial shower cream product,
and a decrease in industrial chemical sales. The lower bar soap sales are
primarily due to higher promotional spending for new products and to defend
against a new competitive entry in the deodorant bar soap category. 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.

19



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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 and decreased promotional spending on One Touch electric oil
products offset in part by the discontinuation of Fresh Gels and declines in
candle products.

The increase in Food Products resulted primarily from increased sales of Armour
branded Vienna sausage and private label products.

Net sales in our Other segment decreased 16.6% to $72.6 million from $87.1
million. The decrease is primarily the net result of a decrease in Argentine
sales resulting from the peso devaluation offset in part by increased sales in
Canada and in our hotel amenities business. Excluding Argentina, net sales in
our Other segment increased 0.7%.

Our gross margin, before special items, improved by 520 basis points to 37.3%
from 32.1% in the same period in 2001. This improvement primarily resulted
from higher volumes, manufacturing efficiencies,
lower raw material costs and a more favorable product mix.

Selling, general and administrative expenses increased 5.9% to $131.4 million
from $124.1 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 lower intangible
amortization expense due to the implementation of SFAS 142.

Interest and other expenses decreased 20.9% to $20.5 million from $25.9 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 debt
issuance costs related to the old credit agreement we terminated during the
first quarter of 2002.

Income from the Dial/Henkel joint venture for the six months ended June 29,
2002 decreased to a $1.8 million gain compared to a $2.0 million gain in the
same period last year. All joint venture operations ceased during the third
quarter of 2001. We do not expect a material impact on our income statement in
the future from the discontinued joint venture.

Our reported effective tax rate, excluding special items, increased to 36.8%
from 35.3% in the same period in 2001. This increase is primarily attributable
to less income in foreign jurisdictions that have lower tax rates and lower
benefits relating to foreign sales. These increases were offset in part by a
decrease from cessation of amortization of nondeductible goodwill as a result
of implementing SFAS 142. The income tax rate on continuing operations,
excluding special items, is 37.2%.

Income from continuing operations before cumulative effect of change in
accounting principle was $57.0 million, versus $30.7 million in the first six months of 2001. As
discussed above, this increase in income resulted from higher sales, higher
gross margin, and lower interest costs offset in part by higher selling,
general and administrative expenses.

Our discontinued operations reflects a gain of $1.3 million for the first six months of 2002 compared to a loss of $2.8
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 loss from this segment
in the first six months 2001.

20



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##### Table of Contents



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 decreased to $15.0 million or $0.16 per diluted share versus
$27.8 million or $0.30 per diluted share in the first six months of 2001. The
decrease is primarily due to the charge that resulted from adopting SFAS 142,
offset in part by the increased income from continuing operations as described
above.

Liquidity and Capital Resources

Cash and cash equivalents increased $97.5 million during the first six months
to $127.0 million from $29.5 million. The increase in cash and cash equivalents
primarily resulted from cash from operations in the first six months of 2002.

Total debt at June 29, 2002 is $454.1 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 interest rate swaps in accordance with SFAS 133 Accounting for
Derivative Instruments and Hedging Activities".

Cash flow from operations in the first six months of 2002 was $108.1 million
compared to $52.2 million in the same period in 2001 as a result of an increase
in income from continuing operation, income tax
benefits generated from the sale of our SPC business and lower working capital.

Capital expenditures for the first six months of 2002 were $12.7 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.

The following table outlines our future contractual financial obligations, in
thousands as of June 29,
2002, due by period:

|                                   |  |       |         |        |  |           |        |       |  |       |        |         |  |   |         |  |  |   |         | 
|---------------------------------- |  | ----- | ------- | ------ |  | --------- | ------ | ----- |  | ----- | ------ | ------- |  | - | ------- |  |  | - | ------- | 
|                                   |  |       |         |        |  | Less than |        | 1-3   |  | 4-5   |        | After 5
|(in thousands)                     |  | Total |         | 1 year |  | years     |        | years |  | years
|                                   |  |       |         |        |  |           |        |       |  |      
|Long-term debt                     |  | $     | 454,096 |        |  | $         |       |       |  | $     |       |         |  | $ | 255,018 |  |  | $ | 199,078 | 
|                                  
|                                  
|                                  
|                                  
|Operating leases (1)               |  |       | 60,053  |        |  |           | 11,314 |       |  |       | 26,905 |         |  |   | 15,224  |  |  |   | 6,610   | 
|                                  
|                                  
|                                  
|                                  
|Unconditional purchase obligations |  |       | 24,750  |        |  |           | 24,750 |       |  |       |       |         |  |   |        |  |  |   |        | 
|                                   |  |       |         |        |  |           |        |       |  |       |        |         |  |   |         |  |  |   |         | 
|Total contractual cash obligations |  | $     | 538,899 |        |  | $         | 36,064 |       |  | $     | 26,905 |         |  | $ | 261,666 |  |  | $ | 205,688 | 
|                                   |  |       |         |        |  |           |        |       |  |       |        |         |  |   |         |  |  |   |         | 



---

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

The following table outlines our other future commercial commitments, in
thousands as of June 29, 2002, by the amount of commitment that expires per
period:

|                             |  |       |     |        |  |           |     |       |  |       |     |         |  |   |   |  |  |   |   | 
|---------------------------- |  | ----- | --- | ------ |  | --------- | --- | ----- |  | ----- | --- | ------- |  | - | - |  |  | - | - | 
|                             |  |       |     |        |  | Less than |     | 1-3   |  | 4-5   |     | After 5
|(in thousands)               |  | Total |     | 1 year |  | years     |     | years |  | years
|                             |  |       |     |        |  |           |     |       |  |      
|Standby letters of credit    |  | $     | 200 |        |  | $         | 100 |       |  | $     | 100 |         |  | $ |  |  |  | $ |  | 
|                            
|                            
|                            
|                            
|Other commercial commitments |  |       | 250 |        |  |           | 250 |       |  |       |    |         |  |   |  |  |  |   |  | 
|                             |  |       |     |        |  |           |     |       |  |       |     |         |  |   |   |  |  |   |   | 
|Total commercial commitments |  | $     | 450 |        |  | $         | 350 |       |  | $     | 100 |         |  | $ |  |  |  | $ |  | 
|                             |  |       |     |        |  |           |     |       |  |       |     |         |  |   |   |  |  |   |   | 

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

21



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

In connection with the $250 million debt offering, we have entered into two
separate interest rate swap agreements. Collectively, they have a notional
value of $250 million. We receive fixed interest payments of 7.0% of the
notional amount and make payments equal to 6 month LIBOR-plus 182 basis points.
Payments are exchanged each February and August 15, at which time the floating
interest rate resets using the 6 month LIBOR rate in effect on that day. The
terms of the interest rate swaps are for five years. The interest rate swaps do
subject us to the risk of changes in LIBOR-based interest rates. At June 29,
2002, the interest rate swaps had a fair market gain associated with them of
$7.9 million. At June 29, 2002, the gain is included in Other assetswith an
offsetting increase to Long-term debt. There is no income statement effect.

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

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



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

In the first quarter of 2002, we terminated our existing credit facility and
replaced it with a new $150 million revolving credit facility. 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 June 29, 2002.

Under the new facility, we are required to maintain minimum net worth of $100
million plus 50% of net income (if positive) earned from the date of the
facility. For purposes of calculating our minimum net worth, we exclude
foreign currency translation gains or losses, gains or losses relating to any
sale or other disposition of our Argentinean operations and/or the Armour food
business and the previously

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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. This new facility
also limits our ability, above certain amounts, to incur additional unsecured
indebtedness, sell, lease or transfer assets, enter into sale and lease back
transactions, place liens on properties and complete certain acquisitions
without our lenders consent.

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



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

At June 29, 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.

Recent Accounting Pronouncements

In April 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (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. As of June 29, 2002, no
financial statement impact is expected upon adoption.

In August 2001, the FASB issued Statement of Financial Accounting Standards
(SFAS) 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
This standard supersedes SFAS 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the
accounting and reporting provisions of APB Opinion No. 30 for the disposal of a
segment of a business (as previously defined in that Opinion). There was no
effect from adopting SFAS 144 effective January 1, 2002, as required.

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.

23



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##### Table of Contents



The Financial Accounting Standards Boards Emerging Issues Task Force (EITF)
released Issue No. 01-09, Accounting for Consideration Given by a Vendor to a
Customer or a Reseller of the Vendors Products. 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 classify
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 |       | Six Months Ended |  |                   |       | Treatment prior to
|(in millions)       |  | June 30, 2001 |       | June 30, 2001    |  | Current Treatment |       | January 1, 2002   
|                    |  |               |       |                  |  |                   |       |                   
|Trade promotions    |  |               | $95.6 |                  |  | $                 | 189.7 |                    |  | Reduction of net sales         |  | Selling, general
and administrative
expense
|                   
|                   
|                   
|                   
|                    |  |               |       |                  |  |                   |       |                    |  |                                |  |                                            
|                   
|                   
|                   
|                   
|Coupons and rebates |  |               | 5.4   |                  |  |                   | 8.0   |                    |  | Reduction of net sales         |  | Selling, general
and administrative
expense
|                   
|                   
|                   
|                   
|                    |  |               |       |                  |  |                   |       |                    |  |                                |  |                                            
|                   
|                   
|                   
|                   
|Free product        |  |               | 3.4   |                  |  |                   | 4.9   |                    |  | Increase to cost of
goods sold |  | Selling, general
and administrative
expense

24



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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. After discovery was
completed, Dial filed a dispositive motion, which was granted in part and
denied in part by the Court in the third quarter of 2001. The Court granted
Dials motion to dismiss the claims of thirteen individuals and denied its
motion with respect to the remaining individuals. We petitioned the Seventh
Circuit Court of Appeals to review the U.S. District Courts ruling on our
summary judgment motion, but the Seventh Circuit Court denied our petition for
an interlocutory appeal. A trial date has not been set, although we currently
anticipate that trial will be scheduled to begin in late 2002 or early 2003.
We currently do not believe that this lawsuit will have a material adverse
effect on our operating results or financial condition. However, assurances
cannot be given regarding the ultimate outcome of this matter.




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

Our annual meeting of stockholders was held on June 6, 2002. The stockholders
elected the following persons to serve three-year terms as directors: Herbert
M. Baum, Donald E. Guinn and James E. Oesterreicher. The votes for and against
(withheld) each nominee were as follows:

|                       |  |           |            |                |  |  |           | 
|---------------------- |  | --------- | ---------- | -------------- |  |  | --------- | 
|Nominee                |  | Votes For |            | Votes Withheld
|                       |  |           |            |               
|Herbert M. Baum        |  |           | 83,531,260 |                |  |  | 1,563,572 | 
|                      
|                      
|                      
|                      
|Donald E. Guinn        |  |           | 82,780,636 |                |  |  | 2,314,196 | 
|                      
|                      
|                      
|                      
|James E. Oesterreicher |  |           | 82,833,656 |                |  |  | 2,261,176 | 

Joy A. Amundson, Joe T. Ford, Thomas L. Gossage, Michael T. Riordan, Barbara S.
Thomas and Salvador M. Villar also continued as directors following the
meeting.

Other matters voted upon at Dials 2002 annual meeting of stockholders included
the approval of the performance goals and other terms under The Dial
Corporation Annual Incentive Plan for purposes of Internal Revenue Code
Section 162(m). The votes for and against, as well as the number of
abstentions and broker non-votes, were as follows:

|           |  |               |           |                  |  |                  |         |  |  |  |   | 
|---------- |  | ------------- | --------- | ---------------- |  | ---------------- | ------- |  |  |  | - | 
|Votes For  |  | Votes Against |           | Votes Abstaining |  | Broker Non-Votes
|           |  |               |           |                  |  |                 
|80,272,030 |  |               | 4,404,644 |                  |  |                  | 418,230 |  |  |  | 0 | 




Item 6. Exhibits and Reports on Form 8-K

(A)  Exhibits

|     |  |                                                                                                                  
|---- |  | -----------------------------------------------------------------------------------------------------------------
|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 Sarbanes-Oxley Act of 2002.                                            

25



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##### Table of Contents



(B)  Reports on Form 8-K



| |  | We filed a Current Report on Form 8-K, dated April 4, 2002, reporting that
Dial issued a press release announcing that Chairman, President and CEO,
Herbert M. Baum, and Executive Vice President and CFO, Conrad A. Conrad will
present to investors at the Banc of America Securities Consumer Conference,
a copy of which was filed as Exhibit 99.                                                       
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We filed a Current Report on Form 8-K, dated April 9, 2002, reporting that
Dial issued a press release announcing that The Dial Corporations CEO and
CFO will present to investors at the Banc of America Securities Consumer
Conference. This release also announced that Dial expected to exceed its
first quarter and full year earnings estimates. A copy of the press release
was filed as Exhibit 99.
|
| |  | We filed a Current Report on Form 8-K, dated April 18, 2002, reporting that
Dial issued a press release relating to its financial results for the first
quarter ended March 31, 2002, and its outlook for second quarter and full
year 2002, a copy of which was filed as Exhibit 99.                                                                                                                       
|
| |  | We filed a Current Report on Form 8-K, dated May 7, 2002, reporting that
Dial issued a press release announcing that Chairman, President and CEO,
Herbert M. Baum, and Executive Vice President and CFO, Conrad A. Conrad,
would present to investors at the Goldman Sachs Global Consumer Products
Conference, a copy of which was filed as Exhibit 99.                                                    
|
| |  | We filed a Current Report on Form 8-K, dated June 4, 2002, reporting that
Dial issued a press release relating to the webcast of its 2002 annual
stockholder meeting to be held on Thursday, June 6, 2002, a copy of which
was filed as Exhibit 99.                                                                                                                                                         
|
| |  | We filed a Current Report on Form 8-K, dated June 7, 2002, reporting that
Dial issued a press release announcing the re-election of three directors to
the Board of Directors, a copy of which was filed as Exhibit 99.1. Dial
issued a second press release declaring a quarterly dividend on Dial Common
Stock, a copy of which was filed as Exhibit 99.2.                                                
|
| |  | We filed a Current Report on Form 8-K, dated June 25, 2002, reporting that
Dial issued a press release announcing that its second quarter results would
exceed expectations, 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.

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|--------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | 
|The Dial Corporation
(Registrant) |  |                                                                                                                            | 
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|August 9, 2002                    |  |                                                                                                                            | 
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|                                  |  | /s/ Conrad A. Conrad                                                                                                       |  | 
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|                                  |  | Conrad A. Conrad
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Authorized Officer) |  | 
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|                                  |  |                                                                                                                            |  | 
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|                                  |  | /s/ John F. Tierney                                                                                                        |  | 
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|                                  |  | John F. Tierney
Senior Vice President and Controller
(Principal Accounting Officer and Authorized Officer)                 |  | 
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EXHIBIT INDEX

|        |  |                                                                                                                  
|------- |  | -----------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                  
|Number  |  | Description                                                                                                      
|        |  |                                                                                                                  
|99.1    |  | Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for Forward-Looking Statements.
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|       
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|        |  |                                                                                                                  
|       
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|99.2    |  | Certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002.