##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

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

For the Quarterly Period Ended September 27, 2003

Commission file number 1-11793

THE DIAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


|                                         |  |                    
|---------------------------------------- |  | -------------------
|DELAWARE                                 |  | 51-0374887         
|(State or Other Jurisdiction of          |  | (I.R.S. Employer   
|Incorporation or Organization)           |  | Identification No.)
|                                         |  |                    
|15501 NORTH DIAL BOULEVARD               |  |                    
|SCOTTSDALE, ARIZONA                      |  | 85260-1619         
|(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 |  | [ü] |  | No |  | [   ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

|    |  |     |  |    |  |      
|--- |  | --- |  | -- |  | -----
|Yes |  | [ü] |  | No |  | [   ]

The number of shares of Common Stock, $0.01 par value, outstanding as of the
close of business on October 24, 2003 was 96,383,455.





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TABLE OF CONTENTS



|                                                              |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                
|                                                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|CONSOLIDATED BALANCE SHEET                                   
|STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
|STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME
|STATEMENT OF CONSOLIDATED CASH FLOWS                         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                   
|                                                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|                                                              | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION                                   
|                                                              | Item 1. Legal Proceedings                                                                    
|                                                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                                   
|EXHIBIT INDEX                                                
|EX-31                                                        
|EX-32                                                        
|EX-99.1                                                      



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##### Table of Contents









PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS




THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEET

|                                             |                                                                                                         |                                            |              |                   |             |           |         |          |           |           | 
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------ | ----------------- | ----------- | --------- | ------- | -------- | --------- | --------- | 
|                                             |                                                                                                         |                                            |              |                   | (Unaudited) |           |         |          |          
|(In thousands, except share data)            |                                                                                                         | September 27, 2003                         |              | December 31, 2002
|                                             |                                                                                                         |                                            |              |                  
|ASSETS                                       |                                                                                                         |                                            |              |                   |             |           |         |         
|Current Assets:                              |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             | Cash and cash equivalents                                                                               |                                            | $            | 328,498           |             |           | $       | 219,554  |          
|                                             | Receivables, less allowance of $1,557 and $1,256                                                        |                                            |              | 88,818            |             |           |         | 88,466   |          
|                                             | Inventories                                                                                             |                                            |              | 139,587           |             |           |         | 131,508  |          
|                                             | Deferred income taxes                                                                                   |                                            |              | 18,035            |             |           |         | 23,255   |          
|                                             | Income tax receivable                                                                                   |                                            |              |                  |             |           |         | 7,901    |          
|                                             | Current assets of discontinued operation                                                                |                                            |              |                  |             |           |         | 18,547   |          
|                                             | Other current assets                                                                                    |                                            |              | 7,560             |             |           |         | 7,605    |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total current assets                       |              |                   | 582,498     |           |         |          | 496,836   |          
|Property and equipment, net                  |                                                                                                         |                                            | 213,441      |                   |             |           | 220,792 |         
|Deferred income taxes                        |                                                                                                         |                                            | 28,455       |                   |             |           | 57,012  |         
|Goodwill                                     |                                                                                                         |                                            | 313,132      |                   |             |           | 312,678 |         
|Other intangibles, net                       |                                                                                                         |                                            | 51,613       |                   |             |           | 51,070  |         
|Non-current assets of discontinued operation |                                                                                                         |                                            |             |                   |             |           | 2,226   |         
|Other assets                                 |                                                                                                         |                                            | 65,316       |                   |             |           | 9,125   |         
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         |                                            | Total assets |                   | $           | 1,254,455 |         |          | $         | 1,149,739 | 
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY         |                                                                                                         |                                            |              |                   |             |           |         |         
|Current Liabilities:                         |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             | Trade accounts payable                                                                                  |                                            | $            | 97,803            |             |           | $       | 94,187   |          
|                                             | Income taxes payable                                                                                    |                                            |              | 28,022            |             |           |         |         |          
|                                             | Current liabilities of discontinued operation                                                           |                                            |              |                  |             |           |         | 13,512   |          
|                                             | Other current liabilities                                                                               |                                            |              | 143,786           |             |           |         | 161,217  |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total current liabilities                  |              |                   | 269,611     |           |         |          | 268,916   |          
|Long-term debt                               |                                                                                                         |                                            | 459,856      |                   |             |           | 458,393 |         
|Post-retirement and other employee benefits  |                                                                                                         |                                            | 267,266      |                   |             |           | 267,225 |         
|Other liabilities                            |                                                                                                         |                                            | 5,424        |                   |             |           | 6,207   |         
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total liabilities                          |              |                   | 1,002,157   |           |         |          | 1,000,741 |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|Stockholders Equity:                        |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             | Preferred stock, $0.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding        |                                            |              |                  |             |           |         |         |          
|                                             | Common stock, $0.01 par value, 300,000,000 shares
authorized; 107,156,789 and 106,372,531 shares issued |                                            |              | 1,071             |             |           |         | 1,064    |          
|                                             | Additional paid-in capital                                                                              |                                            |              | 448,606           |             |           |         | 436,262  |          
|                                             | Retained income                                                                                         |                                            |              | 93,839            |             |           |         | 8,835    |          
|                                             | Accumulated other comprehensive loss                                                                    |                                            |              | (31,340           | )           |           |         | (32,350  | )        
|                                             | Unearned employee benefits                                                                              |                                            |              | (41,830           | )           |           |         | (48,103  | )        
|                                             | Treasury stock, 10,979,365 and 10,910,433 shares held                                                   |                                            |              | (218,048          | )           |           |         | (216,710 | )        
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total stockholders equity                 |              |                   | 252,298     |           |         |          | 148,998   |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |          |          
|                                             |                                                                                                         | Total liabilities and stockholders equity |              | $                 | 1,254,455   |           |         | $        | 1,149,739 |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         

See Notes to Consolidated Financial Statements.

2



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##### Table of Contents






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

|                                                      |                                                                                     |                                              |                          |                    |               |         |         |     |         |         | 
|----------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------ | ------------------ | ------------- | ------- | ------- | --- | ------- | ------- | 
|                                                      |                                                                                     |                                              |                          |                    | Quarter Ended
|                                                      |                                                                                     |                                              |                          |                    |              
|(In thousands, except per share data)                 |                                                                                     | September 27, 2003                           |                          | September 28, 2002
|                                                      |                                                                                     |                                              |                          |                   
|Net sales                                             |                                                                                     | $                                            | 353,242                  |                    |               | $       | 334,003 |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Costs and expenses:                                   |                                                                                     |                                              |                          |                    |               |         |         |    
|                                                      |                                                                                     | Cost of products sold                        |                          |                    | 220,571       |         |         |     | 210,412 |        
|                                                      |                                                                                     | Selling, general and administrative expenses |                          |                    | 67,707        |         |         |     | 65,959  |        
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|                                                      |                                                                                     |                                              | Total costs and expenses |                    |               | 288,278 |         |     |         | 276,371 | 
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Operating income                                      |                                                                                     |                                              | 64,964                   |                    |               |         | 57,632  |    
|Interest expense                                      |                                                                                     |                                              | 6,340                    |                    |               |         | 7,109   |    
|Other expenses, net                                   |                                                                                     |                                              | 2,020                    |                    |               |         | 2,632   |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Income from continuing operations before income taxes |                                                                                     |                                              | 56,604                   |                    |               |         | 47,891  |    
|Income taxes                                          |                                                                                     |                                              | 20,801                   |                    |               |         | 17,707  |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Income from continuing operations                     |                                                                                     |                                              | 35,803                   |                    |               |         | 30,184  |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Discontinued operations:                              |                                                                                     |                                              |                          |                    |               |         |         |    
|                                                      | Income from operation of discontinued Argentina
business, net of income tax of $719 |                                              |                          |                   |               |         |         | 918 |        
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Total income from discontinued operations             |                                                                                     |                                              |                         |                    |               |         | 918     |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|NET INCOME                                            |                                                                                     | $                                            | 35,803                   |                    |               | $       | 31,102  |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Basic net income per common share:                    |                                                                                     |                                              |                          |                    |               |         |         |    
|Income from continuing operations                     |                                                                                     | $                                            | 0.38                     |                    |               | $       | 0.33    |    
|Income from discontinued operations                   |                                                                                     |                                              |                         |                    |               |         | 0.01    |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|NET
INCOME PER SHARE  BASIC                          |                                                                                     | $                                            | 0.38                     |                    |               | $       | 0.34    |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Diluted net income per common share:                  |                                                                                     |                                              |                          |                    |               |         |         |    
|Income from continuing operations                     |                                                                                     | $                                            | 0.37                     |                    |               | $       | 0.32    |    
|Income from discontinued operations                   |                                                                                     |                                              |                         |                    |               |         | 0.01    |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|NET INCOME PER SHARE  DILUTED                        |                                                                                     | $                                            | 0.37                     |                    |               | $       | 0.33    |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Weighted average basic shares outstanding             |                                                                                     |                                              | 94,142                   |                    |               |         | 92,539  |    
|Weighted average equivalent shares                    |                                                                                     |                                              | 1,845                    |                    |               |         | 2,112   |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|Weighted average diluted shares outstanding           |                                                                                     |                                              | 95,987                   |                    |               |         | 94,651  |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|NET INCOME                                            |                                                                                     | $                                            | 35,803                   |                    |               | $       | 31,102  |    
|Other comprehensive income (loss):                    |                                                                                     |                                              |                          |                    |               |         |         |    
|Foreign currency translation adjustment               |                                                                                     |                                              | 10                       |                    |               |         | (483    | )  
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    
|COMPREHENSIVE INCOME                                  |                                                                                     | $                                            | 35,813                   |                    |               | $       | 30,619  |    
|                                                      |                                                                                     |                                              |                          |                    |               |         |         |    

See Notes to Consolidated Financial Statements.

3



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##### Table of Contents






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

|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |       |         |         | 
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | --------------------------- | ------------------ | ----------------- | ------- | ------- | ----- | ------- | ------- | 
|                                                                                               |                                                                                       |                                                                                                           |                             |                    | Nine Months Ended
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                  
|(In thousands, except per share data)                                                          |                                                                                       | September 27, 2003                                                                                        |                             | September 28, 2002
|                                                                                               |                                                                                       |                                                                                                           |                             |                   
|Net sales                                                                                      |                                                                                       | $                                                                                                         | 998,134                     |                    |                   | $       | 948,597 |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Costs and expenses:                                                                            |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|                                                                                               |                                                                                       | Cost of products sold                                                                                     |                             |                    | 622,343           |         |         |       | 594,601 |        
|                                                                                               |                                                                                       | Asset writedowns and other special items (net gain)                                                       |                             |                    |                  |         |         |       | (1,182  | )      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|                                                                                               |                                                                                       |                                                                                                           | Total cost of products sold |                    |                   | 622,343 |         |       |         | 593,419 | 
|                                                                                               |                                                                                       | Selling, general and administrative expenses                                                              |                             |                    | 191,987           |         |         |       | 192,360 |        
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|                                                                                               |                                                                                       |                                                                                                           | Total costs and expenses    |                    |                   | 814,330 |         |       |         | 785,779 | 
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Operating income                                                                               |                                                                                       |                                                                                                           | 183,804                     |                    |                   |         | 162,818 |      
|Interest expense                                                                               |                                                                                       |                                                                                                           | 19,460                      |                    |                   |         | 22,108  |      
|Other expenses, net                                                                            |                                                                                       |                                                                                                           | 7,377                       |                    |                   |         | 8,116   |      
|Income from joint ventures                                                                     |                                                                                       |                                                                                                           |                            |                    |                   |         | 1,749   |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Income from continuing operations before income taxes                                          |                                                                                       |                                                                                                           | 156,967                     |                    |                   |         | 134,343 |      
|Income taxes                                                                                   |                                                                                       |                                                                                                           | 58,135                      |                    |                   |         | 49,284  |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Income from continuing operations                                                              |                                                                                       |                                                                                                           | 98,832                      |                    |                   |         | 85,059  |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Discontinued operations:                                                                       |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|                                                                                               |                                                                                       | Adjustment to loss on disposal of discontinued
Specialty Personal Care segment, net of income tax
of $740 |                             |                    |                  |         |         |       | 1,260   |        
|Adjustment to loss on disposal of discontinued
Argentina business, net of income tax of $1,263 |                                                                                       |                                                                                                           | 2,150                       |                    |                   |         |        |      
|                                                                                               | Income from operation of discontinued Argentina
business, net of income tax of $2,330 |                                                                                                           |                             |                   |                   |         |         | 3,048 |        
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Total income from discontinued operations                                                      |                                                                                       |                                                                                                           | 2,150                       |                    |                   |         | 4,308   |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Cumulative effect of the change in accounting
principle, net of income
tax of $661             |                                                                                       |                                                                                                           |                            |                    |                   |         | (43,308 | )    
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|NET INCOME                                                                                     |                                                                                       | $                                                                                                         | 100,982                     |                    |                   | $       | 46,059  |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Basic net income per common share:                                                             |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Income from continuing operations                                                              |                                                                                       | $                                                                                                         | 1.06                        |                    |                   | $       | 0.92    |      
|Income from discontinued operations                                                            |                                                                                       |                                                                                                           | 0.02                        |                    |                   |         | 0.05    |      
|Effect of change in accounting principle                                                       |                                                                                       |                                                                                                           |                            |                    |                   |         | (0.47   | )    
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|NET INCOME PER SHARE  BASIC                                                                   |                                                                                       | $                                                                                                         | 1.08                        |                    |                   | $       | 0.50    |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Diluted net income per common share:                                                           |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Income from continuing operations                                                              |                                                                                       | $                                                                                                         | 1.03                        |                    |                   | $       | 0.90    |      
|Income from discontinued operations                                                            |                                                                                       |                                                                                                           | 0.02                        |                    |                   |         | 0.05    |      
|Effect of change in accounting principle                                                       |                                                                                       |                                                                                                           |                            |                    |                   |         | (0.46   | )    
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|NET
INCOME PER SHARE  DILUTED                                                                 |                                                                                       | $                                                                                                         | 1.06                        |                    |                   | $       | 0.49    |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Weighted average basic shares outstanding                                                      |                                                                                       |                                                                                                           | 93,669                      |                    |                   |         | 92,188  |      
|Weighted average equivalent shares                                                             |                                                                                       |                                                                                                           | 1,879                       |                    |                   |         | 1,974   |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Weighted average diluted shares outstanding                                                    |                                                                                       |                                                                                                           | 95,548                      |                    |                   |         | 94,162  |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|NET INCOME                                                                                     |                                                                                       | $                                                                                                         | 100,982                     |                    |                   | $       | 46,059  |      
|Other comprehensive income (loss):                                                             |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|Foreign currency translation adjustment                                                        |                                                                                       |                                                                                                           | 1,009                       |                    |                   |         | (35,179 | )    
|Minimum pension liability adjustment, net of tax                                               |                                                                                       |                                                                                                           |                            |                    |                   |         | 7,255   |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      
|COMPREHENSIVE INCOME                                                                           |                                                                                       | $                                                                                                         | 101,991                     |                    |                   | $       | 18,135  |      
|                                                                                               |                                                                                       |                                                                                                           |                             |                    |                   |         |         |      

See Notes to Consolidated Financial Statements.

4



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##### Table of Contents






THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)

|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |         |        |        |         |  
|---------------------------------------------------------------- | ---------------------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------- | --------------------------------- | ------ | ----------------- | ------- | ------- | ------ | ------ | ------- | -
|                                                                 |                                          |                                                                                              |                                                   |                                   |        | Nine Months Ended
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                  
|(In thousands)                                                   |                                          | September 27, 2003                                                                           |                                                   | September 28, 2002               
|                                                                 |                                          |                                                                                              |                                                   |                                  
|CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:                     |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Net income                                                       |                                          | $                                                                                            | 100,982                                           |                                   |        | $                 | 46,059  |        
|                                                                 |                                          | Adjustments to reconcile net income to net cash provided by
operating activities:            |                                                   |                                   |        |                   |         |         |        |       
|                                                                 |                                          | Adjustment to loss on disposal of discontinued Specialty
Personal Care operation, net of tax |                                                   |                                   |       |                   |         |         | (1,260 | )     
|                                                                 |                                          | Adjustment to loss on disposal of discontinued Argentina
business, net of tax                |                                                   |                                   | (2,150 | )                 |         |         |       |       
|                                                                 |                                          | Argentina business discontinued operation, net of tax                                        |                                                   |                                   |       |                   |         |         | (3,048 | )     
|                                                                 |                                          | Effect of change in accounting principle, net of tax                                         |                                                   |                                   |       |                   |         |         | 43,308 |       
|                                                                 |                                          |                                                                                              | Depreciation                                      |                                   |        | 28,030            |         |         |        | 26,718 |        
|                                                                 |                                          |                                                                                              | Amortization                                      |                                   |        | 138               |         |         |        | 93     |        
|                                                                 |                                          |                                                                                              | Deferred income taxes                             |                                   |        | 33,777            |         |         |        | (1,471 | )      
|                                                                 |                                          |                                                                                              | Asset writedowns and other special items, net     |                                   |        |                  |         |         |        | (1,182 | )      
|                                                                 |                                          |                                                                                              | Tax benefits from employee stock option exercises |                                   |        | 1,743             |         |         |        |       |        
|                                                                 |                                          |                                                                                              | Change in operating assets and liabilities:       |                                   |        |                   |         |         |        |        |        
|                                                                 |                                          |                                                                                              |                                                   | Receivables                       |        |                   | (352    | )       |        |        | (15,300 | )
|                                                                 |                                          |                                                                                              |                                                   | Inventories                       |        |                   | (8,079  | )       |        |        | (7,763  | )
|                                                                 |                                          |                                                                                              |                                                   | Trade accounts payable            |        |                   | 3,490   |         |        |        | 6,889   |  
|                                                                 |                                          |                                                                                              |                                                   | Income taxes payable/receivable   |        |                   | 35,923  |         |        |        | 53,381  |  
|                                                                 |                                          |                                                                                              |                                                   | Pension contributions             |        |                   | (57,000 | )       |        |        | (13,144 | )
|                                                                 |                                          |                                                                                              |                                                   | Other assets and liabilities, net |        |                   | (11,890 | )       |        |        | 15,093  |  
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Net cash provided by operating activities                        |                                          |                                                                                              | 124,612                                           |                                   |        |                   | 148,373 |        
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|CASH FLOWS USED BY INVESTING ACTIVITIES:                         |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Capital expenditures                                             |                                          |                                                                                              | (21,136                                           | )                                 |        |                   | (20,048 | )      
|Investment in discontinued operation                             |                                          |                                                                                              |                                                  |                                   |        |                   | (6,219  | )      
|Acquisition of business and purchase price adjustment            |                                          |                                                                                              |                                                  |                                   |        |                   | (1,096  | )      
|Proceeds from disposition of discontinued operation              |                                          |                                                                                              | 8,880                                             |                                   |        |                   | 2,000   |        
|Proceeds from sale of assets                                     |                                          |                                                                                              | 802                                               |                                   |        |                   | 2,998   |        
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Net cash used by investing activities                            |                                          |                                                                                              | (11,454                                           | )                                 |        |                   | (22,365 | )      
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:              |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Repayment and amortization of debt                               |                                          |                                                                                              | (1,866                                            | )                                 |        |                   | 285     |        
|Net change in debt resulting from interest rate swap termination |                                          |                                                                                              |                                                  |                                   |        |                   | 13,386  |        
|Common stock purchased for treasury                              |                                          |                                                                                              | (616                                              | )                                 |        |                   |        |        
|Dividends paid on common stock                                   |                                          |                                                                                              | (15,979                                           | )                                 |        |                   | (11,074 | )      
|Cash proceeds from employee stock option exercises               |                                          |                                                                                              | 14,247                                            |                                   |        |                   | 8,809   |        
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Net cash provided (used) by financing activities                 |                                          |                                                                                              | (4,214                                            | )                                 |        |                   | 11,406  |        
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Effects of foreign currency exchange rates on cash balances      |                                          |                                                                                              |                                                  |                                   |        |                   | (2,245  | )      
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|Net increase in cash and cash equivalents                        |                                          |                                                                                              | 108,944                                           |                                   |        |                   | 135,169 |        
|Cash and cash equivalents, beginning of period                   |                                          |                                                                                              | 219,554                                           |                                   |        |                   | 28,310  |        
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        
|                                                                 | CASH AND CASH EQUIVALENTS, END OF PERIOD |                                                                                              | $                                                 | 328,498                           |        |                   | $       | 163,479 |       
|                                                                 |                                          |                                                                                              |                                                   |                                   |        |                   |         |        

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, 2002.

On December 23, 2002, we announced the pending sale of our Argentina business.
As a result of this pending sale, Argentinas financial position and historical
earnings were reclassified as a discontinued operation in the accompanying
financial statements. At the beginning of the third quarter of 2003, we
completed the sale of our discontinued Argentina business. See Note 2 to these
consolidated financial statements.

Accounting policies utilized in the preparation of the financial information
presented herein 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 (APB) No. 28,
Interim Financial Reporting. The interim consolidated financial statements
are unaudited. All adjustments necessary to present fairly the financial
position as of September 27, 2003, and the results of operations and cash flows
for the quarters and nine months ended September 27, 2003 and September 28,
2002, respectively, have been included. Interim results of operations are not
necessarily indicative of the results of operations for the full year.

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

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No. 133 on
Derivative Instruments and Hedging Activities. This Statement amended and
refined certain characteristics of derivative instruments and hedges. We do
not anticipate a financial impact as a result of this Statement.

In January 2003, the FASB issued Interpretation (FIN) No. 46, Consolidation
of Variable Interest Entities  An Interpretation of Accounting Research
Bulletin (ARB) No. 51. This Interpretation states that consolidation of
variable interest entities will be required by the primary beneficiary if the
entities do not effectively disperse risks among the parties involved. The
requirements are effective for fiscal years beginning after December 15, 2003
for variable interest entities acquired before February 1, 2003 and effective
immediately for variable interest entities created after January 31, 2003. We
do not believe that FIN No. 46 will impact our future financial results.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure. This Statement amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the fair
value method of accounting for stock-based employee compensation. SFAS No. 148
also amends the disclosure requirements relating to stock options under SFAS
No. 123 and APB Opinion No. 28, Interim Financial Reporting. We have adopted
the new annual and interim disclosure requirements.

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In November 2002, the FASB issued FIN No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. This Interpretation clarifies that a guarantor is
required to recognize a liability for the fair value of the obligation
undertaken in issuing a guarantee and requires certain related disclosures.
Currently under such guarantees, we could be liable for lease payments
extending through 2006.

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

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

Note 2. Discontinued Operations

Argentina- In December 2002, we announced that we had reached an agreement to
sell our Argentina business to an entity designated by Southern Cross Group, a
private equity investor in Argentina. The transaction was structured as the
sale of assets of Dial Argentina, S.A., which included the stock of its two
subsidiaries, Sulfargen, S.A. and The Dial Corporation San Juan, S.A. In
December 2002, we recorded an after-tax loss of $62.4 million on the pending
sale and reclassified our Argentina business as a discontinued operation. This
primarily non-cash loss includes the reversal of $92.8 million in currency
translation adjustments, which had previously been recorded as a reduction of
equity and an accrual for estimated exit and closing costs. This transaction
also resulted in current tax benefits of approximately $61 million.

At the beginning of the third quarter of 2003, we completed the sale of our
discontinued Argentina business, based on negotiations concluded prior to June
28, 2003. The sale resulted in higher cash proceeds and lower projected exit
and closing costs than originally anticipated. Accordingly, in the second
quarter of 2003, we recognized a $2.1 million after-tax ($3.4 million pre-tax)
reduction in the previously recorded loss on the disposal of our discontinued
Argentina business.

The tax benefits from the sale of Argentina were utilized by the end of the
second quarter of 2003.

In the third quarter of 2003, there was no impact on net income associated with
the disposal of our discontinued Argentina business.

Our Argentina business was classified as a discontinued operation in our
financial statements at December 31, 2002. Accordingly, we have not recognized
any income from operation of this business during 2003. During the first nine
months of 2002, we recorded $3.0 million in net income ($5.4 million pre-tax)
from our discontinued Argentina business.

Our discontinued Argentina business was classified as held for sale on our
balance sheet in December 2002. At the beginning of the third quarter of
2003, we completed the sale of our discontinued Argentina business.
Accordingly, the related assets and liabilities that were sold were removed
from our balance sheet. Assets and liabilities of the discontinued Argentina
operation included in our consolidated financial statements as of December 31,
2002 were as follows:

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|                          |                                               |      |              |        | 
|------------------------- | --------------------------------------------- | ---- | ------------ | ------ | 
|                          |                                               |      | December 31,
|(In thousands)            |                                               | 2002
|                          |                                               |     
|Cash and cash equivalents |                                               | $    | 1,657        |       
|Receivables               |                                               |      | 3,988        |       
|Inventories               |                                               |      | 10,483       |       
|Other current assets      |                                               |      | 2,419        |       
|                          |                                               |      |              |       
|                          | Current assets of discontinued operation      |      | $            | 18,547 | 
|                          |                                               |      |              |       
|Other non-current assets  |                                               |      | 2,226        |       
|                          |                                               |      |              |       
|                          | Non-current assets of discontinued operation  |      | $            | 2,226  | 
|                          |                                               |      |              |       
|Other current liabilities |                                               |      | 13,512       |       
|                          |                                               |      |              |       
|                          | Current liabilities of discontinued operation |      | $            | 13,512 | 
|                          |                                               |      |              |       

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

Specialty Personal Care- 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
and Sarah Michaelsbrand names. The sale of SPC was in line with our strategy
to fix or divest 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 the inventories, fixed
assets and intangibles of the SPC business, but retained the related
receivables and liabilities that arose on or prior to the closing.

As consideration for the sale, we received aggregate purchase price
consideration of $12.0 million, which consisted of $8.0 million in cash and two
subordinated promissory notes in the amount of $2.0 million each. As of
December 31, 2001, 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 throughout 2002. The loss
on the sale of SPC is comprised primarily of the write-off of goodwill and
inventories. In addition, the sale resulted in approximately $52.3 million in
capital losses for which no tax benefits were provided. In the second quarter
of 2003, we utilized $0.7 million of these capital losses. We will realize
additional tax benefits on these capital losses only to the extent that we
generate capital gains before August 2006.

As of September 27, 2003, our balance sheet included $13.1 million in
liabilities related to the discontinued SPC business, primarily for future
operating lease payments. These liabilities will be

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adjusted in the future if
our estimate of remaining lease and other exit costs change. The effect of any
future adjustments to SPC liabilities would be presented in the income
statement as an adjustment to the previously recorded loss on disposal of
discontinued operation.

Note 3. Special Gains

In the second quarter of 2002, we recorded a net gain of $2.9 million ($2.2
million after-tax or $0.02 per diluted share) associated with the previously
dissolved joint venture with Henkel KGaA of Germany (Henkel) and from the
sale of our Mexico City facility, offset in part by a writedown of fixed assets
in our Guatemala facility. The gain from our Dial/Henkel joint venture of $1.7
million was included in Income from 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).

Note 4. 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 Income from joint ventures.

Note 5. Inventories

Inventories consisted of the following:

|                           |                   |                    |        |                   |  |   |        |         | 
|-------------------------- | ----------------- | ------------------ | ------ | ----------------- |  | - | ------ | ------- | 
|(In thousands)             |                   | September 27, 2003 |        | December 31, 2002
|                           |                   |                    |        |                  
|Raw materials and supplies |                   | $                  | 37,077 |                   |  | $ | 34,575 |        
|Work in process            |                   |                    | 6,957  |                   |  |   | 8,515  |        
|Finished goods             |                   |                    | 95,553 |                   |  |   | 88,418 |        
|                           |                   |                    |        |                   |  |   |        |        
|                           | Total inventories |                    | $      | 139,587           |  |   | $      | 131,508 | 
|                           |                   |                    |        |                   |  |   |        |        

Note 6. Intangible Assets

Intangible assets subject to amortization consisted of the following:

|                  |       |                    |          |                   |              |   |          |      |          |   |              |       |          |   |       |       |     |   |      |      |   |   |       |       | 
|----------------- | ----- | ------------------ | -------- | ----------------- | ------------ | - | -------- | ---- | -------- | - | ------------ | ----- | -------- | - | ----- | ----- | --- | - | ---- | ---- | - | - | ----- | ----- | 
|(In thousands)    |       | September 27, 2003 |          | December 31, 2002
|                  |       |                    |          |                  
|                  |       |                    | Gross    |                   |              |   |          |      | Net      |   | Gross        |       |          |   |       |       | Net
|                  |       |                    | Carrying |                   | Accumulated  |   | Carrying |      | Carrying |   | Accumulated  |       | Carrying
|                  |       |                    | Value    |                   | Amortization |   | Value    |      | Value    |   | Amortization |       | Value   
|                  |       |                    |          |                   |              |   |          |      |          |   |              |       |         
|Patents           |       | $                  | 2,597    |                   |              | $ | (242     | )    |          | $ | 2,355        |       |          | $ | 2,171 |       |     | $ | (149 | )    |   | $ | 2,022 |      
|Other intangibles |       |                    | 900      |                   |              |   | (623     | )    |          |   | 277          |       |          |   | 900   |       |     |   | (578 | )    |   |   | 322   |      
|                  |       |                    |          |                   |              |   |          |      |          |   |              |       |          |   |       |       |     |   |      |      |   |   |       |      
|                  | Total |                    | $        | 3,497             |              |   | $        | (865 | )        |   | $            | 2,632 |          |   | $     | 3,071 |     |   | $    | (727 | ) |   | $     | 2,344 | 
|                  |       |                    |          |                   |              |   |          |      |          |   |              |       |          |   |       |       |     |   |      |      |   |   |       |      

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Intangible assets not subject to amortization consisted of the following:

|                            |       |                    |         |                   |  |   |         |         | 
|--------------------------- | ----- | ------------------ | ------- | ----------------- |  | - | ------- | ------- | 
|(In thousands)              |       | September 27, 2003 |         | December 31, 2002
|                            |       |                    |         |                  
|Goodwill (1)                |       | $                  | 313,132 |                   |  | $ | 312,678 |        
|Trademarks                  |       |                    | 39,681  |                   |  |   | 39,426  |        
|Pension Related intangibles |       |                    | 9,300   |                   |  |   | 9,300   |        
|                            |       |                    |         |                   |  |   |         |        
|                            | Total |                    | $       | 362,113           |  |   | $       | 361,404 | 
|                            |       |                    |         |                   |  |   |         |        

(1)  Additions to goodwill are the result of the Zout acquisition
earnout.

Note 7. Long-Term Debt

Long-term debt consisted of the following:

|                                                                      |                         |                    |         |                   |  |   |         |         | 
|--------------------------------------------------------------------- | ----------------------- | ------------------ | ------- | ----------------- |  | - | ------- | ------- | 
|(In thousands)                                                        |                         | September 27, 2003 |         | December 31, 2002
|                                                                      |                         |                    |         |                  
|$250 million 7.0% Senior Notes
due 2006, net of issue
discount        |                         | $                  | 247,979 |                   |  | $ | 247,460 |        
|$200 million 6.5% Senior Notes
due 2008, net of issue
discount        |                         |                    | 198,942 |                   |  |   | 198,785 |        
|                                                                      |                         |                    |         |                   |  |   |         |        
|                                                                      | Total long-term debt    |                    |         | 446,921           |  |   |         | 446,245 | 
|Deferred gain on interest rate
swaps terminated in August
2002        |                         |                    | 9,606   |                   |  |   | 12,148  |        
|Fair market value of interest
rate swaps entered into in
January 2003 |                         |                    | 3,329   |                   |  |   |        |        
|                                                                      |                         |                    |         |                   |  |   |         |        
|                                                                      | Reported long-term debt |                    | $       | 459,856           |  |   | $       | 458,393 | 
|                                                                      |                         |                    |         |                   |  |   |         |        

In January 2003, we entered into two interest rate swap contracts that
effectively change the interest rate on our 6.5% Senior Notes from fixed to
variable. The $200 million notional value of the interest rate swaps, which
expire in September 2008, effectively converts approximately 45% of our total
debt to variable interest rate debt. Under the interest rate swaps, we pay a
variable rate of interest based on the 6-month LIBOR plus 278 basis points and
receive a fixed interest rate of 6.5%. Variable interest rates are paid and
reset semi-annually.

During the first quarter of 2003, we renewed the $100 million short-term
commitment portion of our $200 million revolving credit facility until March
2004. The remaining $100 million long-term portion of our credit facility, due
in March 2005, has remained unchanged. Terms and conditions under the credit
facility have remained the same and are described within our Annual Report on
Form 10-K for the year ended December 31, 2002. As of September 27, 2003,
there were no amounts outstanding under our credit facility.

At September 27, 2003, we were in compliance with all covenants under our $200
million credit facility, our $250 million of 7.0% Senior Notes due 2006 and our
$200 million of 6.5% Senior Notes due 2008.

Note 8. Stock Options

We account for our stock-based compensation plans under the recognition and
measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. We have adopted the disclosure-only
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, as
amended by SFAS No. 148, Accounting for Stock-Based
Compensation - Transition
and Disclosure. Accordingly, no compensation cost has been recognized, as all
options under the stock-based compensation plans had an exercise price equal to
or greater than the fair market value of the underlying common stock at the
date of grant. The following table illustrates the effect on net income

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and
earnings per share if the fair value
based method had been applied to all outstanding and unvested awards using the
Black-Scholes valuation model for the periods ended:

|                       |                                                                                                                                       |          |               |          |                   |          |           |          |           |   |         |        |   |   |        |        |  
|---------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | -------- | ------------- | -------- | ----------------- | -------- | --------- | -------- | --------- | - | ------- | ------ | - | - | ------ | ------ | -
|                       |                                                                                                                                       |          | Quarter Ended |          | Nine Months Ended
|                       |                                                                                                                                       |          |               |          |                  
|                       |                                                                                                                                       |          | September     |          | September         |          | September |          | September
|(In thousands)         |                                                                                                                                       | 27, 2003 |               | 28, 2002 |                   | 27, 2003 |           | 28, 2002
|                       |                                                                                                                                       |          |               |          |                   |          |           |         
|Net income as reported |                                                                                                                                       | $        | 35,803        |          |                   | $        | 31,102    |          |           | $ | 100,982 |        |   | $ | 46,059 |       
|                       | Deduct: Total
stock-based employee
compensation expense
determined under fair
value method for all
awards, net of related
tax effects |          |               | (2,253   | )                 |          |           | (1,743   | )         |   |         | (6,291 | ) |   |        | (4,629 | )
|                       |                                                                                                                                       |          |               |          |                   |          |           |          |           |   |         |        |   |   |        |       
|Pro forma net income   |                                                                                                                                       | $        | 33,550        |          |                   | $        | 29,359    |          |           | $ | 94,691  |        |   | $ | 41,430 |       
|                       |                                                                                                                                       |          |               |          |                   |          |           |          |           |   |         |        |   |   |        |       
|Earnings per share:    |                                                                                                                                       |          |               |          |                   |          |           |          |           |   |         |        |   |   |        |       
|                       | Basic  as reported                                                                                                                   |          | $             | 0.38     |                   |          | $         | 0.34     |           |   | $       | 1.08   |   |   | $      | 0.50   |  
|                       | Basic  pro forma                                                                                                                     |          | $             | 0.36     |                   |          | $         | 0.32     |           |   | $       | 1.01   |   |   | $      | 0.45   |  
|                       | Diluted  as reported                                                                                                                 |          | $             | 0.37     |                   |          | $         | 0.33     |           |   | $       | 1.06   |   |   | $      | 0.49   |  
|                       | Diluted  pro forma                                                                                                                   |          | $             | 0.35     |                   |          | $         | 0.31     |           |   | $       | 0.99   |   |   | $      | 0.44   |  

Note 9. Segments of an Enterprise

We are organized into two business segments: (i) Domestic Branded and (ii)
International and Other. The segments were identified based on economic
characteristics, types of products sold, customer base and method of
distribution.

Information related to our operations in different business segments is set
forth below. The calculation of operating income for each segment includes an
allocation of indirect general and administrative expenses based on each
segments share of our consolidated net sales. The accounting policies of the
business segments are the same as those described in the summary of significant
accounting policies in Note 2 to the consolidated financial statements included
in our Annual Report on Form 10-K for the year ended December 31, 2002.

|                   |                    |         |          |           |               |       |   |        |  |  |   |         | 
|------------------ | ------------------ | ------- | -------- | --------- | ------------- | ----- | - | ------ |  |  | - | ------- | 
|                   |                    |         | Domestic |           | International |       |   |        | 
|(In thousands)     |                    | Branded |          | and Other |               | Total
|                   |                    |         |          |           |               |      
|Net Sales:         |                    |         |          |           |               |       |   |        |  |  |   |        
|Quarter Ended:     |                    |         |          |           |               |       |   |        |  |  |   |        
|                   | September 27, 2003 |         | $        | 322,204   |               |       | $ | 31,038 |  |  | $ | 353,242 | 
|                   | September 28, 2002 |         |          | 307,802   |               |       |   | 26,201 |  |  |   | 334,003 | 
|Nine Months Ended: |                    |         |          |           |               |       |   |        |  |  |   |        
|                   | September 27, 2003 |         |          | 911,363   |               |       |   | 86,771 |  |  |   | 998,134 | 
|                   | September 28, 2002 |         |          | 875,894   |               |       |   | 72,703 |  |  |   | 948,597 | 
|Operating Income:  |                    |         |          |           |               |       |   |        |  |  |   |        
|Quarter Ended:     |                    |         |          |           |               |       |   |        |  |  |   |        
|                   | September 27, 2003 |         |          | 57,610    |               |       |   | 7,354  |  |  |   | 64,964  | 
|                   | September 28, 2002 |         |          | 51,058    |               |       |   | 6,574  |  |  |   | 57,632  | 
|Nine Months Ended: |                    |         |          |           |               |       |   |        |  |  |   |        
|                   | September 27, 2003 |         |          | 163,465   |               |       |   | 20,339 |  |  |   | 183,804 | 
|                   | September 28, 2002 |         |          | 142,714   |               |       |   | 20,104 |  |  |   | 162,818 | 
|Goodwill at:       |                    |         |          |           |               |       |   |        |  |  |   |        
|                   | September 27, 2003 |         |          | 313,132   |               |       |   |       |  |  |   | 313,132 | 
|                   | December 31, 2002  |         |          | 312,678   |               |       |   |       |  |  |   | 312,678 | 

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

Potential Sale of Dial And Future Capital Allocation Strategy

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

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



| |  | Acquisitions                   
|- |  | -------------------------------
| 
| |  | Share repurchases              
| 
| |  | Investment in our base business
| 
| |  | Dividend increases             

At the present time, we are not considering reduction of debt as one of our
capital allocation alternatives, but we will continue to evaluate this as an
option in the future.

After completing a review of our capital allocation alternatives in August
2003, our Board of Directors approved a 125% increase in our quarterly dividend
rate, increasing the quarterly cash dividend from $0.04 per share to $0.09 per
share. At the same time, our Board also authorized a repurchase of up to $100
million of our common stock over a two-year period. The repurchase program may
be suspended at any time without notice. The timing of repurchases and the
actual number of shares repurchased will depend upon market conditions,
alternative uses of capital and other considerations.

Critical Accounting Policies

Management has discussed critical accounting policies and estimates used in the
preparation of our financial statements within our Annual Report on Form 10-K
for the year ended December 31, 2002. There have been no changes to our
critical accounting policies in the current year.

Sale of Dial Argentina Business

In December 2002, we announced that we had reached an agreement to sell our
Argentina business to an entity designated by Southern Cross Group, a private
equity investor in Argentina. The transaction was structured as the sale of
assets of Dial Argentina, S.A., which included the stock of its two
subsidiaries, Sulfargen, S.A. and The Dial Corporation San Juan, S.A. In
December 2002, we recorded an after-tax loss of
$62.4 million on the pending sale and reclassified our Argentina business as a
discontinued operation. This primarily non-cash loss includes the reversal of
$92.8 million in currency translation adjustments, which had previously been
recorded as a reduction of equity and an accrual for estimated exit and closing
costs. This transaction also resulted in current tax benefits of approximately
$61 million.

At the beginning of the third quarter of 2003, we completed the sale of our
discontinued Argentina business, based on negotiations concluded prior to June
28, 2003. The sale resulted in higher cash proceeds and lower projected exit
and closing costs than originally anticipated. Accordingly, in the

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second
quarter of 2003, we recognized a $2.1 million after-tax ($3.4 million pre-tax)
reduction in the previously recorded loss on the disposal of our discontinued
Argentina business.

The tax benefits from the sale of Argentina were utilized by the end of the
second quarter of 2003.

In the third quarter of 2003, there was no impact on net income associated with
the disposal of our discontinued Argentina business.

Our Argentina business was classified as a discontinued operation in our
financial statements at December 31, 2002. Accordingly, we have not recognized
any income from operation of this business during 2003. During the first nine
months of 2002, we recorded $3.0 million in net income ($5.4 million pre-tax)
from our discontinued Argentina business.

Our discontinued Argentina business was classified as held for sale on our
balance sheet in December 2002. At the beginning of the third quarter of
2003, we completed the sale of our discontinued Argentina business.
Accordingly, the related assets and liabilities that were sold were removed
from our balance sheet.

In the first quarter of 2002, we recorded a $43.3 million after-tax impairment
loss on the goodwill and trademarks of our Argentina business as a result of
adopting Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets, which established a new method of
testing goodwill for impairment.

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 Freemanand Sarah Michaels
brand names. The sale of SPC was in line with our strategy to fix or jettison
under-performing businesses. As a result of the sale, we incurred a one-time
charge of $198.4 million, net of income tax benefits and expected sale
proceeds, related to the write-off of SPC assets and an accrual for estimated
exit 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 the inventories, fixed assets and intangibles of the SPC
business, but retained the related receivables and liabilities that arose on or
prior to the closing.

As consideration for the sale, we received aggregate purchase price
consideration of $12.0 million, which consisted of $8.0 million in cash and two
subordinated promissory notes in the amount of $2.0 million each. As of
December 31, 2001, 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 throughout 2002. The loss
on the sale of SPC is comprised primarily of the write-off of goodwill and
inventories. In addition, the sale resulted in approximately $52.3 million in
capital losses for which no tax benefits were provided. In the second quarter
of 2003, we utilized $0.7 million of these capital losses. We will realize
additional tax benefits on these capital losses only to the extent that we
generate capital gains before August 2006.

As of September 27, 2003, our balance sheet included $13.1 million in
liabilities related to the discontinued SPC business, primarily for future
operating lease payments. These liabilities will be

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adjusted in the future if
our estimate of remaining lease and other exit costs change. The effect of any
future adjustments to SPC liabilities would be presented in the income
statement as an adjustment to the previously recorded loss on disposal of
discontinued operation.

Recent Developments

IT Outsourcing and SAP Implementation Project

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

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

The implementation of SAP began in the third quarter of 2003 and is currently
expected to be completed over the next 18 months. The implementation of SAP is
currently expected to cost approximately $35 million. As a result of the move
to SAP, we will recognize approximately $8 million of accelerated depreciation
expense over the next 18 months related to our current software system. In
2003 we expect to capitalize approximately $12.3 million in expenditures
related to the SAP implementation.

$50 Million Pension Contribution

At the beginning of the third quarter of 2003, we made a $50 million
tax-deductible contribution to our pension plans. This contribution reduced
the shortfall between our
pension plan assets and projected pension liabilities. The shortfall is
primarily due to negative returns in the capital markets over the past few
years coupled with the decline in interest rates. The decrease in interest
rates caused the present value of our pension liabilities to increase while the
losses in the capital markets led to a decline in our pension assets, thereby
creating a shortfall in the funded status of the plans. Due to the significant pension
contributions and asset returns in 2003, our
qualified plans are now approximately 90% funded based upon the
difference between plan assets and the projected benefit obligation
as of September 30, 2003.

Guatemala Operations

We are in the beginning stages of evaluating whether we should continue to
maintain our translucent soap manufacturing operations in Guatemala or whether
we should move the manufacturing of these soap products to our plant in Aurora,
Illinois. Any sale or closure of our manufacturing operations in Guatemala
could require us to record an impairment charge which would adversely impact
earnings in the quarter in which any such impairment charge is recorded. Our
balance sheet currently includes approximately $12 million in net assets
related to this manufacturing facility.

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Comparison of the Third Quarter of 2003 with the Third Quarter of 2002

Net sales information for our businesses is set forth below:

|                        |                                       |      |               |         |               |        |         |            |  |   |        |        |  |  |     |      |  
|----------------------- | ------------------------------------- | ---- | ------------- | ------- | ------------- | ------ | ------- | ---------- |  | - | ------ | ------ |  |  | --- | ---- | -
|                        |                                       |      | Quarter Ended |         | Increase     
|                        |                                       |      |               |         |              
|                        |                                       |      | September 27, |         | September 28, |        |         |            |  |   |        |        | 
|(In thousands)          |                                       | 2003 |               | 2002    |               | Amount |         | Percentage
|                        |                                       |      |               |         |               |        |         |           
|Laundry Care            |                                       | $    | 124,905       |         |               | $      | 116,213 |            |  | $ | 8,692  |        |  |  | 7.5 | %   
|Personal Cleansing      |                                       |      | 100,599       |         |               |        | 99,680  |            |  |   | 919    |        |  |  | 0.9 | %   
|Food Products           |                                       |      | 52,851        |         |               |        | 49,685  |            |  |   | 3,166  |        |  |  | 6.4 | %   
|Air Fresheners          |                                       |      | 43,849        |         |               |        | 42,224  |            |  |   | 1,625  |        |  |  | 3.8 | %   
|                        |                                       |      |               |         |               |        |         |            |  |   |        |        |  |  |     |     
|                        | Total Domestic Branded segment        |      |               | 322,204 |               |        |         | 307,802    |  |   |        | 14,402 |  |  |     | 4.7  | %
|                        | Total International and Other
segment |      |               | 31,038  |               |        |         | 26,201     |  |   |        | 4,837  |  |  |     | 18.5 | %
|                        |                                       |      |               |         |               |        |         |            |  |   |        |        |  |  |     |     
|Total Company Net Sales |                                       | $    | 353,242       |         |               | $      | 334,003 |            |  | $ | 19,239 |        |  |  | 5.8 | %   
|                        |                                       |      |               |         |               |        |         |            |  |   |        |        |  |  |     |     

Laundry Care net sales increased primarily due to continued growth in Purex
liquid detergent, offset in part by a 19.1% decline in net sales of our Purex
powder detergent. The increase in Purexliquid detergent sales resulted from
continued promotions and the current consumer preference for liquid detergent
versus powder detergent products. We currently expect that this consumer
preference will continue. Personal Cleansing net sales increased primarily due
to lower promotional spending as a result of fewer new product introductions
and promotional events in 2003. These sales were offset in part by a decrease
bar soap sales driven in part by a growing consumer preference for body washes.
We expect that this consumer preference will continue. Food Products net
sales increased primarily due to stronger sales of Armour branded products,
particularly Armour branded Vienna sausage. These sales were offset in part by
a decline in private label sales. Sales of Armour branded products benefited
from strong consumer purchases due in part to an active hurricane season. Air
Fresheners net sales increased primarily due to higher sales of Renuzit Super
Odor Neutralizer, Adjustables and Renuzit Universal Scented Oil Refills,offset
in part by a decrease in sales due to discontinued products and a continued
weakness in the candle segment.

Sales in our International and Other segment increased primarily due to higher
Canadian sales of Purexliquid laundry detergent, foreign currency gains and
growth in our Branded Commercial Markets business. International and Other
segment sales increased 13.2% in the third quarter of 2003 excluding foreign
currency gains.

Our gross margin improved 60 basis points to 37.6% from 37.0% last year. This
increase primarily resulted from lower promotional expenses in 2003 due to
fewer new product launches.

Selling, general and administrative expenses increased 2.7% to $67.7 from $66.0
million last year. The increase is primarily due to higher employee benefits
expense, costs to start up and outsource our information technology function
and accelerated depreciation expense on existing information technology assets
resulting from the implementation of SAP, offset in part by decreased legal
expenses.

Interest expense decreased 10.8% to $6.3 million from $7.1 million last year.
The decrease is a result of lower effective interest rates due to our current
and previously terminated interest rate swaps.

Our effective tax rate from continuing operations in the third quarter
decreased to 36.7% from the comparable 2002 rate of 37.0%. The 2003 quarterly
rate benefited from higher export sales, tax-free
municipal interest income and research and development credits. We expect our
full year tax rate to be 37.0%.

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Income from continuing operations was $35.8 million or $0.37 per diluted share,
compared to $30.2 million or $0.32 per diluted share last year. As discussed
above, this increase resulted primarily from higher sales and improved
operating margin. Earnings per share growth was partially offset by an increase
in the number of shares outstanding. The following table reconciles diluted
net income per share from continuing operations to net income per diluted
share:

|                                              |  |               |        |               |  |   |        | 
|--------------------------------------------- |  | ------------- | ------ | ------------- |  | - | ------ | 
|                                              |  | Quarter Ended |        | Quarter Ended
|                                              |  | September 27, |        | September 28,
|                                              |  | 2003          |        | 2002         
|                                              |  |               |        |              
|Diluted net income per common share:          |  |               |        |               |  |   |        | 
|Diluted net income from continuing operations |  | $             | 0.37   |               |  | $ | 0.32   | 
|Discontinued operations                       |  |               | 0.00   |               |  |   | 0.01   | 
|                                              |  |               |        |               |  |   |        | 
|Net income per diluted share                  |  | $             | 0.37   |               |  | $ | 0.33   | 
|                                              |  |               |        |               |  |   |        | 
|Weighted average diluted shares outstanding   |  |               | 95,987 |               |  |   | 94,651 | 

Comparison of the First Nine Months of 2003 with the First Nine Months 2002

Net sales information for our businesses is set forth below:

|                        |                                       |      |                   |         |               |        |         |            |  |   |        |        |  |  |     |      |  
|----------------------- | ------------------------------------- | ---- | ----------------- | ------- | ------------- | ------ | ------- | ---------- |  | - | ------ | ------ |  |  | --- | ---- | -
|                        |                                       |      | Nine Months Ended |         | Increase     
|                        |                                       |      |                   |         |              
|                        |                                       |      | September 27,     |         | September 28, |        |         |            |  |   |        |        | 
|(In thousands)          |                                       | 2003 |                   | 2002    |               | Amount |         | Percentage
|                        |                                       |      |                   |         |               |        |         |           
|Laundry Care            |                                       | $    | 363,300           |         |               | $      | 344,571 |            |  | $ | 18,729 |        |  |  | 5.4 | %   
|Personal Cleansing      |                                       |      | 285,862           |         |               |        | 276,519 |            |  |   | 9,343  |        |  |  | 3.4 | %   
|Food Products           |                                       |      | 142,028           |         |               |        | 136,108 |            |  |   | 5,920  |        |  |  | 4.3 | %   
|Air Fresheners          |                                       |      | 120,173           |         |               |        | 118,696 |            |  |   | 1,477  |        |  |  | 1.2 | %   
|                        |                                       |      |                   |         |               |        |         |            |  |   |        |        |  |  |     |     
|                        | Total Domestic Branded segment        |      |                   | 911,363 |               |        |         | 875,894    |  |   |        | 35,469 |  |  |     | 4.0  | %
|                        | Total International and Other
segment |      |                   | 86,771  |               |        |         | 72,703     |  |   |        | 14,068 |  |  |     | 19.3 | %
|                        |                                       |      |                   |         |               |        |         |            |  |   |        |        |  |  |     |     
|Total Company Net Sales |                                       | $    | 998,134           |         |               | $      | 948,597 |            |  | $ | 49,537 |        |  |  | 5.2 | %   
|                        |                                       |      |                   |         |               |        |         |            |  |   |        |        |  |  |     |     

Laundry Care net sales increased due to higher sales of Purexliquid detergent,
offset in part by a decline in sales of powder detergent. The increase in Purex
liquid detergent sales is due to continued promotions, as well as the current
consumer preference for liquid detergent versus powder detergent products. We
currently expect that this consumer preference will continue. Personal
cleansing net sales increased primarily due to continued strength in body wash
and liquid hand soap sales and lower promotional spending, offset in part by a
decline in bar soap sales. The decline in bar soap sales was driven in part,
by a growing consumer preference for body washes. We expect that this consumer
preference will continue. Food Products net sales were higher primarily as a
result of strong sales of Armour branded products, particularly Armour branded
Vienna sausage. These sales were offset in part by a decline in private label
sales. Sales of Armour branded products were driven in large part by segment
growth, increased promotions and distribution and strong consumer purchases due
in part to an active hurricane season in the third quarter of 2003. Air
Fresheners net sales increased primarily due to higher sales of Renuzit Super
Odor Neutralizer, Renuzit Universal Scented Oil Refillsand Adjustables. This
increase was partially offset by a decrease in sales due to discontinued
products and a continued weakness in the candle segment.

Sales in our International and Other segment increased primarily due to higher
Canadian sales of Purexliquid laundry detergent and foreign currency gains.
International and Other segment sales increased 15.5% in the first nine months
of 2003 excluding foreign currency gains.

Our gross margin improved 20 basis points to 37.6% from 37.4% in the prior
year. This increase was primarily a result of lower promotional expenses,
offset in part by increases in energy and petroleum related costs.

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Selling, general and administrative expenses remained consistent at $192.0, as
compared to $192.4 million last year. Higher employee benefits and legal costs
were offset by lower performance-based compensation expense in 2003.

Interest expense decreased 12.0% to $19.5 million from $22.1 million last year.
The decrease is a result of lower effective interest rates due to our current
and previously terminated interest rate swaps.

Other net expenses decreased 9.1% to $7.4 million from $8.1 million last year
primarily as a result of a $0.7 million gain recorded on the sale of surplus
land adjacent to our Aurora facility in the second quarter of 2003.

We recognized a $1.7 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 Cleanerbusiness. No additional
adjustments have been recorded since the second quarter of 2002.

Our effective tax rate from continuing operations of 37.0% is higher than the
2002 rate of 36.7%. The 2003 rate was higher due to the absence of joint
venture income, which had a lower tax rate.

Income from continuing operations was $98.8 million, or $1.03 per diluted
share, compared to $85.1 million, or $0.90 per diluted share last year. As
discussed above, this increase resulted primarily from higher sales, improved
operating margin and lower interest expense. Earnings per share growth was
partially offset by an increase in the number of shares outstanding. The
following table reconciles diluted net income per share from continuing
operations to net income per diluted share:

|                                                    |  |                   |        |                   |  |   |        |  
|--------------------------------------------------- |  | ----------------- | ------ | ----------------- |  | - | ------ | -
|                                                    |  | Nine Months Ended |        | Nine Months Ended
|                                                    |  | September 27,     |        | September 28,    
|                                                    |  | 2003              |        | 2002             
|                                                    |  |                   |        |                  
|Diluted net income per common share:                |  |                   |        |                   |  |   |        |  
|Diluted net income from continuing operations       |  | $                 | 1.03   |                   |  | $ | 0.90   |  
|Discontinued operations                             |  |                   | 0.02   |                   |  |   | 0.05   |  
|Cumulative effect of change in accounting principle |  |                   |       |                   |  |   | (0.46  | )
|                                                    |  |                   |        |                   |  |   |        |  
|Net income per diluted share                        |  | $                 | 1.06   |                   |  | $ | 0.49   |  
|                                                    |  |                   |        |                   |  |   |        |  
|Weighted average diluted shares outstanding         |  |                   | 95,548 |                   |  |   | 94,162 |  

Financial Condition and Liquidity

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

Net cash provided by operations for the nine months ended September 27, 2003
was $124.6 million, compared to $148.4 million last year. The decrease was
primarily due to a $27.8 million increase in tax-deductible pension
contributions in 2003 as compared to 2002. The increased contributions helped
reduce the shortfall between our pension plan assets and projected pension
liabilities.

Net cash used in investing activities for the nine months ended September 27,
2003 was $11.5 million versus $22.4 million last year. This change was
primarily due to lower cash outflows related to our discontinued operations in
2003, as well as proceeds received from the disposition of our discontinued
Argentina business in 2003. We expect capital expenditures in 2003 to be
approximately $45 million, including $12.3 million in SAP implementation
project expenditures. Capital expenditures will be concentrated primarily on
equipment and information systems that are required to maintain our existing
facilities or provide opportunities to reduce manufacturing, logistics, and
administrative costs. There can be no assurance as to the quantity and the
type of capital spending we may incur.

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Additionally, as previously disclosed, we have entered into an information
technology outsourcing agreement with EDS. EDS will also lead the
implementation of SAP, which commenced in the third quarter of 2003. We
currently anticipate SAP to be implemented within the next 18 months. The
implementation of SAP and related costs are currently expected to be
approximately $35 million.

Net cash used for financing activities was $4.2 million in the first nine
months of 2003 compared to $11.4 million provided by financing activities in
the same period last year. This change is primarily due to the $13.4 million in
proceeds received in 2002 in connection with the termination of our previous
interest rate swaps.

At September 27, 2003, we had $318.9 million invested in short-term investment
vehicles with low principal risk.

As previously disclosed, in the third quarter of 2003 our Board authorized a
repurchase of up to $100 million of our common stock over a two-year period.
The repurchase program may be suspended at any time without notice. The timing
of repurchases and the actual number of shares repurchased will depend upon
market conditions, alternative uses of capital and other considerations. In
the third quarter of 2003, we repurchased 31,500 shares of common stock at an
average price of $19.52 per share.

On April 29, 2003, we announced that we had reached a settlement with the Equal
Employment Opportunity Commission (EEOC) for a lawsuit that we had been
defending. Accordingly, we will pay out the entire settlement amount of $10
million in the first quarter of 2004. There will not be a financial impact as
a result of this payment other than the related reduction of our cash balance.

Capital Structure and Resources

Long-term debt consisted of the following at September 27, 2003 and December
31, 2002:

|                                                                      |                         |                    |         |                   |  |   |         |         | 
|--------------------------------------------------------------------- | ----------------------- | ------------------ | ------- | ----------------- |  | - | ------- | ------- | 
|(In thousands)                                                        |                         | September 27, 2003 |         | December 31, 2002
|                                                                      |                         |                    |         |                  
|$250 million 7.0% Senior Notes
due 2006, net of issue
discount        |                         | $                  | 247,979 |                   |  | $ | 247,460 |        
|$200 million 6.5% Senior Notes
due 2008, net of issue
discount        |                         |                    | 198,942 |                   |  |   | 198,785 |        
|                                                                      |                         |                    |         |                   |  |   |         |        
|                                                                      | Total long-term debt    |                    |         | 446,921           |  |   |         | 446,245 | 
|Deferred gain on interest rate
swaps terminated in August
2002        |                         |                    | 9,606   |                   |  |   | 12,148  |        
|Fair market value of interest
rate swaps entered into in
January 2003 |                         |                    | 3,329   |                   |  |   |        |        
|                                                                      |                         |                    |         |                   |  |   |         |        
|                                                                      | Reported long-term debt |                    | $       | 459,856           |  |   | $       | 458,393 | 
|                                                                      |                         |                    |         |                   |  |   |         |        

The increase in total reported debt is primarily due to the fair market value
of our new interest rate swaps discussed below, partially offset by the
amortization of the deferred gain related to our previously terminated interest
rate swaps. The swaps are designated as fair value hedges. Accordingly, the
fair value of the swaps was recorded as an asset and the carrying value of the
underlying debt was increased by an equal amount in accordance with SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities.

In January 2003, we entered into two interest rate swap contracts that
effectively change the interest rate on our 6.5% Senior Notes from fixed to
variable. The $200 million notional value of the interest rate
swaps, which expire in September 2008, effectively converts approximately 45%
of our total debt to variable interest rate debt. Under the interest rate
swaps, we pay a variable rate of interest based on the

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6-month LIBOR plus 278
basis points and receive a fixed interest rate of 6.5%. Variable interest rates
are paid and reset semi-annually.

During the first quarter of 2003, we renewed the $100 million short-term
commitment portion of our $200 million revolving credit facility until March
2004. The remaining $100 million long-term portion of our credit facility, due
in March 2005, has remained unchanged. Terms and conditions under the credit
facility have remained the same and are described within our Annual Report on
Form 10-K for the year ended December 31, 2002. As of September 27, 2003,
there were no amounts outstanding under our credit facility.

At September 27, 2003, we were in compliance with all covenants under our $200
million 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

See Note 1 to the financial statements included in this Form 10-Q for a
description of the recent accounting pronouncements.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, including our chief executive officer and chief financial
officer, have carried out an evaluation of the effectiveness of our disclosure
controls and procedures as of September 27, 2003, pursuant to Exchange Act
Rules 13a-15(e) and 15(d)-15(e). Based upon that evaluation, our chief
executive officer and chief financial officer have concluded that as of such
date, our disclosure controls and procedures in place are adequate to ensure
material information and other information requiring disclosure is identified
and communicated on a timely basis.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, and except as noted below, there have
been no changes in our internal control over financial reporting that have
materially affected or are reasonably likely to materially affect our internal
control over financial reporting.

As noted above, we entered into a seven year outsourcing agreement with EDS in
July under which EDS will provide information technology infrastructure,
support and management services to Dial. Our agreement requires EDS to provide
and maintain acceptable general controls over Dials information system
processing. We have implemented oversight and monitoring procedures to ensure
that these general controls are, and continue to be, appropriately designed and
implemented by EDS.

Also as noted above, we began implementing SAP in the third quarter of 2003 and
expect to complete this implementation over the next 18 months. We anticipate
that the implementation of SAP will result in certain changes to business
processes and internal controls impacting financial reporting. Our
implementation plan includes evaluating any such changes to ensure appropriate
internal controls over financial reporting are maintained.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As we previously disclosed, we were defending a lawsuit filed by the U.S. Equal
Employment Opportunity Commission (EEOC), which was pending in the U.S.
District Court for the Northern District of Illinois, Eastern Division, and was
entitled Equal Employment Opportunity Commission v. The Dial Corporation, Civil
Action No. 99 C 3356. On April 29, 2003, we announced that we had reached a
settlement with the EEOC. See our Quarterly Report on Form 10-Q for the
quarter ended June 28, 2003 for further information regarding this lawsuit and
the related settlement.




Item 6. Exhibits and Reports on Form 8-K

(A)  Exhibits

|     |  |                                                                                                                  
|---- |  | -----------------------------------------------------------------------------------------------------------------
|31   |  | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                         
|     |  |                                                                                                                  
|32   |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                        
|     |  |                                                                                                                  
|99.1 |  | Private Securities Litigation Reform Act of 1995 Safe Harbor Compliance Statement for Forward-Looking Statements.

(B)  Reports on Form 8-K

We filed a Current Report on Form 8-K, dated June 30, 2003, reporting that Dial
issued a press release announcing the completion of the divestiture of its
Argentina business, a copy of which was attached as Exhibit 99.1.

We also filed a Current Report on Form 8-K, dated July 23, 2003, reporting that
Dial issued a press release relating to its financial results for the second
quarter ended June 28, 2003 and its outlook for 2003. The press release also
announced an information technology outsourcing and ERP implementation
agreement with EDS and SAP. A copy of the press release was attached as Exhibit
99.

We also filed a Current Report on Form 8-K, dated July 28, 2003, reporting
that Dial issued a press release announcing the appointment of Elizabeth M.
Harvey as Senior Vice President & General Manager - Air Fresheners, a copy of
which was attached as Exhibit 99.1. Dial issued a second press release
announcing the appointment of Shari Brickin as Vice President - Innovation, a
copy of which was attached as Exhibit 99.2.

We also filed a Current Report on Form 8-K, dated August 7, 2003, reporting
that Dial issued a press release declaring a quarterly dividend on Dial Common
Stock and announcing a stock repurchase program, a copy of which was attached
as Exhibit 99.1.

We also filed a Current Report on Form 8-K, dated August 28, 2003, reporting
that Dial issued a press release announcing that The Dial Corporations CEO and
CFO would present at the Prudential Securities 2003 Back-To-School
Conference. The release also announced that Dial remained confident with its
third quarter and full year earnings guidance. A copy of the press release was
attached as Exhibit 99.

We also filed a Current Report on Form 8-K, dated September 3, 2003, reporting
that, as previously announced in its press release dated August 28, 2003, Dial
would make a presentation at the Prudential Securities 2003 Back-To-School
Conference on September 3, 2003. A copy of the presentation was attached as
Exhibit 99.1.

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We also filed a Current Report on Form 8-K, dated September 10, 2003, reporting
that Dial issued a press release announcing that The Dial Corporations CEO and
CFO would present at the Banc of America Securities 33rd Annual Investment
Conference. The release also announced that Dial remained confident with its
third quarter and full year earnings guidance. A copy of the press release was
attached as Exhibit 99.

We also filed a Current Report on Form 8-K, dated September 16, 2003, reporting
that, as previously announced in its press release dated September 9, Dial
would make a presentation at the Banc of America Securities 33rd Annual
Investment Conference on September 16, 2003. A copy of the presentation was
attached as Exhibit 99.

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

We also filed a Current Report on Form 8-K, dated October 14, 2003, reporting
that on October 10, 2003, Dial issued a press release declaring a quarterly
dividend on Dial Common Stock, a copy of which was attached as Exhibit 99.

We also filed a Current Report on Form 8-K, dated October 21, 2003, reporting
that Dial issued a press release announcing that Dials CEO and CFO would
present to the Consumer Analyst Group of New York, a copy of which was attached
as Exhibit 99.

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

The Dial Corporation
(Registrant)

November 5, 2003

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

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EXHIBIT INDEX

|     |  |                                                                                                                  
|---- |  | -----------------------------------------------------------------------------------------------------------------
|31   |  | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                         
|     |  |                                                                                                                  
|32   |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                        
|     |  |                                                                                                                  
|99.1 |  | Private Securities Litigation Reform Act of 1995 Safe Harbor Compliance Statement for Forward-Looking Statements.