##### 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 March 29, 2003

Commission file number 1-11793

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

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization) |  | 51-0374887
(I.R.S. Employer
Identification No.)

|                                                                                        |  |                      
|--------------------------------------------------------------------------------------- |  | ---------------------
|15501 NORTH DIAL BOULEVARD
SCOTTSDALE, ARIZONA
(Address of Principal Executive Offices) |  | 85260-1619
(Zip Code)

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

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

|                
|----------------
|Yes   þ   No   o

The number of shares of Common Stock, $0.01 par value, outstanding as of the
close of business on April 25, 2003 was 95,438,061.





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TABLE OF CONTENTS



|                              |                                                                                             |  |  |  |  |  |  | 
|----------------------------- | ------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                               
|                              | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                 
|                              | ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
|                              | Item 4. Controls and Procedures                                                            
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings                                                                  
|                              | Item 6. Exhibits and Reports on Form 8-K                                                   
|SIGNATURES                   
|Certification                
|EXHIBIT INDEX                
|EX-10.1                      
|EX-10.2                      
|EX-99.1                      
|EX-99.2                      



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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEET

|                                             |                                                                                                         |                                            |              |                   |             |           |         |          |           |           | 
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------ | ----------------- | ----------- | --------- | ------- | -------- | --------- | --------- | 
|                                             |                                                                                                         |                                            |              |                   | (Unaudited) |           |         |          |          
|(In thousands, except share data)            |                                                                                                         | March 29, 2003                             |              | December 31, 2002
|                                             |                                                                                                         |                                            |              |                  
|ASSETS                                       |                                                                                                         |                                            |              |                   |             |           |         |         
|Current Assets:                              |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             | Cash and cash equivalents                                                                               |                                            | $            | 246,712           |             |           | $       | 219,554  |          
|                                             | Receivables, less allowance of $2,765 and $1,256                                                        |                                            |              | 84,476            |             |           |         | 88,466   |          
|                                             | Inventories                                                                                             |                                            |              | 139,238           |             |           |         | 131,508  |          
|                                             | Deferred income taxes                                                                                   |                                            |              | 27,394            |             |           |         | 23,255   |          
|                                             | Income tax receivable                                                                                   |                                            |              |                  |             |           |         | 7,901    |          
|                                             | Current assets of discontinued operation                                                                |                                            |              | 20,197            |             |           |         | 18,547   |          
|                                             | Other current assets                                                                                    |                                            |              | 9,336             |             |           |         | 7,605    |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total current assets                       |              |                   | 527,353     |           |         |          | 496,836   |          
|Property and equipment, net                  |                                                                                                         |                                            | 215,179      |                   |             |           | 52,956  |         
|Goodwill                                     |                                                                                                         |                                            | 312,910      |                   |             |           | 312,678 |         
|Other intangibles, net                       |                                                                                                         |                                            | 51,081       |                   |             |           | 51,070  |         
|Non-current assets of discontinued operation |                                                                                                         |                                            | 2,143        |                   |             |           | 2,226   |         
|Other assets                                 |                                                                                                         |                                            | 14,080       |                   |             |           | 9,125   |         
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         |                                            | Total assets |                   | $           | 1,175,702 |         |          | $         | 1,149,739 | 
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|LIABILITIES AND STOCKHOLDERS EQUITY         |                                                                                                         |                                            |              |                   |             |           |         |         
|Current Liabilities:                         |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             | Trade accounts payable                                                                                  |                                            | $            | 94,941            |             |           | $       | 94,187   |          
|                                             | Income taxes payable                                                                                    |                                            |              | 28,187            |             |           |         |         |          
|                                             | Current liabilities of discontinued operation                                                           |                                            |              | 15,080            |             |           |         | 13,512   |          
|                                             | Other current liabilities                                                                               |                                            |              | 122,630           |             |           |         | 161,217  |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total current liabilities                  |              |                   | 260,838     |           |         |          | 268,916   |          
|Long-term debt                               |                                                                                                         |                                            | 460,898      |                   |             |           | 458,393 |         
|Post-retirement and other employee benefits  |                                                                                                         |                                            | 269,559      |                   |             |           | 267,225 |         
|Other liabilities                            |                                                                                                         |                                            | 5,319        |                   |             |           | 6,207   |         
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total liabilities                          |              |                   | 996,614     |           |         |          | 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; 106,374,032 and 106,372,531 shares issued |                                            |              | 1,064             |             |           |         | 1,064    |          
|                                             | Additional paid-in capital                                                                              |                                            |              | 431,660           |             |           |         | 436,262  |          
|                                             | Retained income                                                                                         |                                            |              | 34,749            |             |           |         | 8,835    |          
|                                             | Accumulated other comprehensive loss                                                                    |                                            |              | (31,996           | )           |           |         | (32,350  | )        
|                                             | Unearned employee benefits                                                                              |                                            |              | (39,190           | )           |           |         | (48,103  | )        
|                                             | Treasury stock, 10,935,598 and 10,910,433 shares held                                                   |                                            |              | (217,199          | )           |           |         | (216,710 | )        
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         
|                                             |                                                                                                         | Total stockholders equity                 |              |                   | 179,088     |           |         |          | 148,998   |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |          |          
|                                             |                                                                                                         | Total liabilities and stockholders equity |              | $                 | 1,175,702   |           |         | $        | 1,149,739 |          
|                                             |                                                                                                         |                                            |              |                   |             |           |         |         

See Notes to Consolidated Financial Statements.

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

|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |     |         |         | 
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------ | -------------- | ------------- | ------- | ------- | --- | ------- | ------- | 
|                                                                                   |                                                                                     |                                                                                                           |                          |                | Quarter Ended
|                                                                                   |                                                                                     |                                                                                                           |                          |                |              
|(In thousands, except per share data)                                              |                                                                                     | March 29, 2003                                                                                            |                          | March 30, 2002
|                                                                                   |                                                                                     |                                                                                                           |                          |               
|Net sales                                                                          |                                                                                     | $                                                                                                         | 312,401                  |                |               | $       | 294,579 |    
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Costs and expenses:                                                                |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|                                                                                   |                                                                                     | Cost of products sold                                                                                     |                          |                | 193,495       |         |         |     | 186,172 |        
|                                                                                   |                                                                                     | Selling, general and administrative expenses                                                              |                          |                | 61,835        |         |         |     | 60,807  |        
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|                                                                                   |                                                                                     |                                                                                                           | Total costs and expenses |                |               | 255,330 |         |     |         | 246,979 | 
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Operating income                                                                   |                                                                                     |                                                                                                           | 57,071                   |                |               |         | 47,600  |    
|Interest expense                                                                   |                                                                                     |                                                                                                           | 6,760                    |                |               |         | 8,408   |    
|Other expenses, net                                                                |                                                                                     |                                                                                                           | 3,103                    |                |               |         | 2,616   |    
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Income from continuing operations before income taxes                              |                                                                                     |                                                                                                           | 47,208                   |                |               |         | 36,576  |    
|Income taxes on continuing operations                                              |                                                                                     |                                                                                                           | 17,560                   |                |               |         | 13,480  |    
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Income from continuing operations                                                  |                                                                                     |                                                                                                           | 29,648                   |                |               |         | 23,096  |    
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Discontinued operations:                                                           |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|                                                                                   |                                                                                     | Adjustment to loss on disposal of discontinued Specialty Personal
Care segment, net of income tax of $740 |                          |                |              |         |         |     | 1,260   |        
|                                                                                   | Income from operation of discontinued Argentina business, net of
income tax of $485 |                                                                                                           |                          |               |               |         |         | 476 |        
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Total gain from discontinued operations                                            |                                                                                     |                                                                                                           |                         |                |               |         | 1,736   |    
|Cumulative effect of the change in accounting principle, net of income
tax of $661 |                                                                                     |                                                                                                           |                         |                |               |         | (43,308 | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|NET INCOME (LOSS)                                                                  |                                                                                     | $                                                                                                         | 29,648                   |                |               | $       | (18,476 | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Basic net income (loss) per common share:                                          |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Income from continuing operations                                                  |                                                                                     | $                                                                                                         | 0.32                     |                |               | $       | 0.25    |    
|Income from discontinued operations                                                |                                                                                     |                                                                                                           |                         |                |               |         | 0.02    |    
|Effect of change in accounting principle                                           |                                                                                     |                                                                                                           |                         |                |               |         | (0.47   | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|NET INCOME (LOSS) PER SHARE  BASIC                                                |                                                                                     | $                                                                                                         | 0.32                     |                |               | $       | (0.20   | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Diluted net income (loss) per common share:                                        |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Income from continuing operations                                                  |                                                                                     | $                                                                                                         | 0.31                     |                |               | $       | 0.25    |    
|Income from discontinued operations                                                |                                                                                     |                                                                                                           |                         |                |               |         | 0.02    |    
|Effect of change in accounting principle                                           |                                                                                     |                                                                                                           |                         |                |               |         | (0.47   | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|NET INCOME (LOSS) PER SHARE  DILUTED                                              |                                                                                     | $                                                                                                         | 0.31                     |                |               | $       | (0.20   | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Weighted average basic shares outstanding                                          |                                                                                     |                                                                                                           | 93,216                   |                |               |         | 91,794  |    
|Weighted average equivalent shares                                                 |                                                                                     |                                                                                                           | 1,805                    |                |               |         | 1,285   |    
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Weighted average diluted shares outstanding                                        |                                                                                     |                                                                                                           | 95,021                   |                |               |         | 93,079  |    
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|NET INCOME (LOSS)                                                                  |                                                                                     | $                                                                                                         | 29,648                   |                |               | $       | (18,476 | )  
|Other comprehensive income (loss):                                                 |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|Foreign currency translation
adjustment                                            |                                                                                     |                                                                                                           | 353                      |                |               |         | (27,024 | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    
|COMPREHENSIVE INCOME (LOSS)                                                        |                                                                                     | $                                                                                                         | 30,001                   |                |               | $       | (45,500 | )  
|                                                                                   |                                                                                     |                                                                                                           |                          |                |               |         |         |    

See Notes to Consolidated Financial Statements.

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THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(Unaudited)

|                                                                                             |                                             |                                   |         |                |         |   |         |       |         |  
|-------------------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------- | ------- | -------------- | ------- | - | ------- | ----- | ------- | -
|                                                                                             |                                             |                                   |         | Quarter Ended 
|                                                                                             |                                             |                                   |         |               
|(In thousands)                                                                               |                                             | March 29, 2003                    |         | March 30, 2002
|                                                                                             |                                             |                                   |         |               
|CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:                                                 |                                             |                                   |         |                |         |   |         |      
|Net income (loss)                                                                            |                                             | $                                 | 29,648  |                |         | $ | (18,476 | )    
|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  | )    
|Argentina business discontinued operation, net of tax                                        |                                             |                                   |        |                |         |   | (476    | )    
|Effect of change in accounting principle, net of tax                                         |                                             |                                   |        |                |         |   | 43,308  |      
|                                                                                             | Depreciation                                |                                   |         | 8,938          |         |   |         | 8,585 |        
|                                                                                             | Amortization                                |                                   |         | 45             |         |   |         | 34    |        
|                                                                                             | Deferred income taxes                       |                                   |         | (83            | )       |   |         | (946  | )      
|                                                                                             | Change in operating assets and liabilities: |                                   |         |                |         |   |         |       |        
|                                                                                             |                                             | Receivables                       |         |                | 3,990   |   |         |       | (6,918  | )
|                                                                                             |                                             | Inventories                       |         |                | (7,730  | ) |         |       | 1,057   |  
|                                                                                             |                                             | Trade accounts payable            |         |                | 754     |   |         |       | (1,333  | )
|                                                                                             |                                             | Income taxes payable              |         |                | 36,088  |   |         |       | 21,155  |  
|                                                                                             |                                             | Other assets and liabilities, net |         |                | (39,779 | ) |         |       | (16,287 | )
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|Net cash provided by operating activities                                                    |                                             |                                   | 31,871  |                |         |   | 28,443  |      
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|CASH FLOWS USED BY INVESTING ACTIVITIES:                                                     |                                             |                                   |         |                |         |   |         |      
|Capital expenditures                                                                         |                                             |                                   | (3,156  | )              |         |   | (2,824  | )    
|Investment in Argentina discontinued operation                                               |                                             |                                   |        |                |         |   | (6,198  | )    
|Proceeds from disposition of discontinued operation                                          |                                             |                                   |        |                |         |   | 2,000   |      
|Proceeds from sale of assets                                                                 |                                             |                                   | 33      |                |         |   | 292     |      
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|Net cash used by investing activities                                                        |                                             |                                   | (3,123  | )              |         |   | (6,730  | )    
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|CASH FLOWS USED BY FINANCING ACTIVITIES:                                                     |                                             |                                   |         |                |         |   |         |      
|Repayment and amortization of debt                                                           |                                             |                                   | (622    | )              |         |   | (447    | )    
|Dividends paid on common stock                                                               |                                             |                                   | (3,734  | )              |         |   | (3,667  | )    
|Cash proceeds from stock options exercised                                                   |                                             |                                   | 2,766   |                |         |   | 1,301   |      
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|Net cash used by financing activities                                                        |                                             |                                   | (1,590  | )              |         |   | (2,813  | )    
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|Effects of foreign currency exchange rates on cash balances                                  |                                             |                                   |        |                |         |   | (570    | )    
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|Net increase in cash and cash equivalents                                                    |                                             |                                   | 27,158  |                |         |   | 18,330  |      
|Cash and cash equivalents, beginning of period                                               |                                             |                                   | 219,554 |                |         |   | 28,310  |      
|                                                                                             |                                             |                                   |         |                |         |   |         |      
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                     |                                             | $                                 | 246,712 |                |         | $ | 46,640  |      
|                                                                                             |                                             |                                   |         |                |         |   |         |      

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.
The sale is subject to satisfaction of negotiated closing conditions and
receipt of approvals under Argentinas bulk transfer laws. The sale is
expected to close late in the second quarter of 2003. As a result of this
pending sale, Argentinas financial position and historical earnings have been
reclassified as a discontinued operation in the accompanying 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 March 29, 2003, and the results of operations and cash flows for
the quarters ended March 29, 2003 and March 30, 2002, have been included.
Interim results of operations are not necessarily indicative of the results of
operations for the full year.

Note 2. Discontinued Operations

Argentina Operations- 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 is
structured as the sale of assets of Dial Argentina, S.A., which includes the
stock of its two subsidiaries, Sulfargen, S.A. and The Dial Corporation San
Juan, S.A. The sale is subject to the satisfaction of negotiated closing
conditions and receipt of approvals under Argentinas bulk transfer laws. The
sale currently is expected to close late in the second quarter of 2003. The
sale price is $6.0 million and resulted in tax benefits of approximately $61
million. In December 2002, we recorded an after-tax loss of $62.4 million on
the pending disposal and reclassified our Argentina business as a discontinued
operation. This primarily non-cash loss includes the reversal of the $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.

In the first quarter of 2003, operation and disposal of our discontinued
Argentina business had no impact on our net income. In the first quarter of
2002, we recorded $0.5 million in after-tax income from operation of our
discontinued Argentina business.

Assets and liabilities of the discontinued Argentina operation included in our
consolidated financial statements as of March 29, 2003 and December 31, 2002
were as follows:

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|                          |                                               |                |        |                   |  |   |        |        | 
|------------------------- | --------------------------------------------- | -------------- | ------ | ----------------- |  | - | ------ | ------ | 
|(In thousands)            |                                               | March 29, 2003 |        | December 31, 2002
|                          |                                               |                |        |                  
|Cash and cash equivalents |                                               | $              | 3,649  |                   |  | $ | 1,657  |       
|Receivables               |                                               |                | 2,299  |                   |  |   | 3,988  |       
|Inventories               |                                               |                | 12,481 |                   |  |   | 10,483 |       
|Other current assets      |                                               |                | 1,768  |                   |  |   | 2,419  |       
|                          |                                               |                |        |                   |  |   |        |       
|                          | Current assets of discontinued operation      |                | $      | 20,197            |  |   | $      | 18,547 | 
|                          |                                               |                |        |                   |  |   |        |       
|Other non-current assets  |                                               |                | 2,143  |                   |  |   | 2,226  |       
|                          |                                               |                |        |                   |  |   |        |       
|                          | Non-current assets of discontinued operation  |                | $      | 2,143             |  |   | $      | 2,226  | 
|                          |                                               |                |        |                   |  |   |        |       
|Trade accounts payable    |                                               |                | 15,080 |                   |  |   | 13,512 |       
|                          |                                               |                |        |                   |  |   |        |       
|                          | Current liabilities of discontinued operation |                | $      | 15,080            |  |   | $      | 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 Income Statement 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 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 arising 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. On December
31, 2001, we had not recorded the $4.0 million in promissory notes because of
uncertainties regarding the realizability of such amounts. In the first
quarter of 2002, we entered into an agreement with the buyer of this business
to resolve disputes that arose in connection with the sale. Under the terms of
that agreement, we received full payment on one of these notes, forgave the
other note and agreed to bear the cost of some disputed expenses. In the first
quarter of 2002, we recorded the $2.0 million ($1.3 million after-tax) received
as a reduction of the loss recognized on the sale of the SPC business.

As a result of the loss recognized on the sale, we recorded a current tax
benefit of approximately $40.0 million. 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. We will realize tax
benefits on these capital losses only to the extent that we generate capital
gains within five years of the sale.

As of March 29, 2003, our balance sheet included $14.1 million in liabilities
related to the discontinued SPC business, primarily for future operating lease
payments. These liabilities will be adjusted in the future if our estimate of
remaining lease and other exit costs change. The effect of any future

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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. Inventories

Inventories consisted of the following:

|                           |                   |                |        |                   |  |   |        |         | 
|-------------------------- | ----------------- | -------------- | ------ | ----------------- |  | - | ------ | ------- | 
|(In thousands)             |                   | March 29, 2003 |        | December 31, 2002
|                           |                   |                |        |                  
|Raw materials and supplies |                   | $              | 34,719 |                   |  | $ | 34,575 |        
|Work in process            |                   |                | 6,788  |                   |  |   | 8,515  |        
|Finished goods             |                   |                | 97,731 |                   |  |   | 88,418 |        
|                           |                   |                |        |                   |  |   |        |        
|                           | Total inventories |                | $      | 139,238           |  |   | $      | 131,508 | 
|                           |                   |                |        |                   |  |   |        |        

Note 4. Intangible Assets

Intangible assets subject to amortization consisted of the following:

|                  |       |                |                      |                   |              |   |                    |      |                      |   |              |       |                    |   |       |       |             |   |      |      |   |   |       |       | 
|----------------- | ----- | -------------- | -------------------- | ----------------- | ------------ | - | ------------------ | ---- | -------------------- | - | ------------ | ----- | ------------------ | - | ----- | ----- | ----------- | - | ---- | ---- | - | - | ----- | ----- | 
|(In thousands)    |       | March 29, 2003 |                      | December 31, 2002
|                  |       |                |                      |                  
|                  |       |                |                      |                   |              |   | Accumulated        |      |                      |   |              |       |                    |   |       |       | Accumulated |   |      |      |  
|                  |       |                | Gross Carrying Value |                   | Amortization |   | Net Carrying Value |      | Gross Carrying Value |   | Amortization |       | Net Carrying Value
|                  |       |                |                      |                   |              |   |                    |      |                      |   |              |       |                   
|Patents           |       | $              | 2,160                |                   |              | $ | (179               | )    |                      | $ | 1,981        |       |                    | $ | 2,171 |       |             | $ | (149 | )    |   | $ | 2,022 |      
|Other intangibles |       |                | 900                  |                   |              |   | (593               | )    |                      |   | 307          |       |                    |   | 900   |       |             |   | (578 | )    |   |   | 322   |      
|                  |       |                |                      |                   |              |   |                    |      |                      |   |              |       |                    |   |       |       |             |   |      |      |   |   |       |      
|                  | Total |                | $                    | 3,060             |              |   | $                  | (772 | )                    |   | $            | 2,288 |                    |   | $     | 3,071 |             |   | $    | (727 | ) |   | $     | 2,344 | 
|                  |       |                |                      |                   |              |   |                    |      |                      |   |              |       |                    |   |       |       |             |   |      |      |   |   |       |      

Intangibles not subject to amortization consisted of the following:

|                            |       |                |         |                   |  |   |         |         | 
|--------------------------- | ----- | -------------- | ------- | ----------------- |  | - | ------- | ------- | 
|(In thousands)              |       | March 29, 2003 |         | December 31, 2002
|                            |       |                |         |                  
|Goodwill (1)                |       | $              | 312,910 |                   |  | $ | 312,678 |        
|Trademarks                  |       |                | 39,493  |                   |  |   | 39,426  |        
|Pension Related intangibles |       |                | 9,300   |                   |  |   | 9,300   |        
|                            |       |                |         |                   |  |   |         |        
|                            | Total |                | $       | 361,703           |  |   | $       | 361,404 | 
|                            |       |                |         |                   |  |   |         |        



|(1) |  | Additions to goodwill were the result of the Zout earnout.
|--- |  | ----------------------------------------------------------

Note 5. Long-Term Debt

Long-term debt consisted of the following:

|                                                                      |                         |                |         |                   |  |   |         |         | 
|--------------------------------------------------------------------- | ----------------------- | -------------- | ------- | ----------------- |  | - | ------- | ------- | 
|(In thousands)                                                        |                         | March 29, 2003 |         | December 31, 2002
|                                                                      |                         |                |         |                  
|$250 million 7.0% Senior Notes
due 2006, net of issue
discount        |                         | $              | 247,633 |                   |  | $ | 247,460 |        
|$200 million 6.5% Senior Notes
due 2008, net of issue
discount        |                         |                | 198,837 |                   |  |   | 198,785 |        
|                                                                      |                         |                |         |                   |  |   |         |        
|                                                                      | Total long-term debt    |                |         | 446,470           |  |   |         | 446,245 | 
|Deferred gain on interest rate
swaps terminated in August
2002        |                         |                | 11,301  |                   |  |   | 12,148  |        
|Fair market value of interest
rate swaps entered into in
January 2003 |                         |                | 3,127   |                   |  |   |        |        
|                                                                      |                         |                |         |                   |  |   |         |        
|                                                                      | Reported long-term debt |                | $       | 460,898           |  |   | $       | 458,393 | 
|                                                                      |                         |                |         |                   |  |   |         |        

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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 March 29, 2003, there
were no amounts outstanding under our credit facility.

At March 29, 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 6. 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 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
quarters ended:

|                              |                                                                                                                                       |                |        |                |   |   |         |        |  
|----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------ | -------------- | - | - | ------- | ------ | -
|(In thousands)                |                                                                                                                                       | March 29, 2003 |        | March 30, 2002
|                              |                                                                                                                                       |                |        |               
|Net income (loss) as reported |                                                                                                                                       | $              | 29,648 |                |   | $ | (18,476 | )     
|                              | Deduct: Total
stock-based employee
compensation expense
determined under fair
value method for all
awards, net of
related tax effects |                |        | (2,019         | ) |   |         | (1,171 | )
|                              |                                                                                                                                       |                |        |                |   |   |         |       
|Pro forma net income (loss)   |                                                                                                                                       | $              | 27,629 |                |   | $ | (19,647 | )     
|                              |                                                                                                                                       |                |        |                |   |   |         |       
|Earnings per share:           |                                                                                                                                       |                |        |                |   |   |         |       
|                              | Basic  as reported                                                                                                                   |                | $      | 0.32           |   |   | $       | (0.20  | )
|                              | Basic  pro forma                                                                                                                     |                | $      | 0.30           |   |   | $       | (0.21  | )
|                             
|                              | Diluted  as reported                                                                                                                 |                | $      | 0.31           |   |   | $       | (0.20  | )
|                              | Diluted  pro forma                                                                                                                   |                | $      | 0.29           |   |   | $       | (0.21  | )

Note 7. Segments of an Enterprise

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

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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: |                   |  |           |         |               |  |   |        |  |  |   |        
|                  |                | March 29, 2003    |  | $         | 286,292 |               |  | $ | 26,109 |  |  | $ | 312,401 | 
|                  |                | March 30, 2002    |  |           | 272,626 |               |  |   | 21,953 |  |  |   | 294,579 | 
|Operating Income: |                |                   |  |           |         |               |  |   |        |  |  |  
|                  | Quarter ended: |                   |  |           |         |               |  |   |        |  |  |   |        
|                  |                | March 29, 2003    |  | $         | 53,828  |               |  | $ | 3,243  |  |  | $ | 57,071  | 
|                  |                | March 30, 2002    |  |           | 45,506  |               |  |   | 2,094  |  |  |   | 47,600  | 
|Goodwill at:      |                |                   |  |           |         |               |  |   |        |  |  |  
|                  |                | March 29, 2003    |  | $         | 312,910 |               |  | $ |       |  |  | $ | 312,910 | 
|                  |                | December 31, 2002 |  |           | 312,678 |               |  |   |       |  |  |   | 312,678 | 

Note 8. Subsequent Event  EEOC Litigation Settlement

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

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ITEM 2. MANAGEMENT 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 interest 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 evaluate
capital allocation options in light of the amount of cash we are accumulating.
The capital allocation alternatives we are reviewing include:



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

If suitable acquisition options do not emerge, then we currently expect to use
cash to repurchase shares. We may also consider increasing our dividend or
reducing our debt.

Critical Accounting Policies

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

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



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

Management has discussed these critical accounting estimates within our Annual
Report on Form 10-K for the year ended December 31, 2002.

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Pending 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 is structured as the sale of
assets of Dial Argentina, S.A., which includes the stock of its two
subsidiaries, Sulfargen, S.A. and The Dial Corporation San Juan, S.A. The sale
is subject to the satisfaction of negotiated closing conditions and receipt of
approvals under Argentinas bulk transfer laws. The sale currently is expected
to close late in the second quarter of 2003. The sale price is $6.0 million
and resulted in tax benefits of approximately $61 million. In December 2002,
we recorded an after-tax loss of $62.4 million on the pending disposal and
reclassified our Argentina business as a discontinued operation. This
primarily non-cash loss includes the reversal of the $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.

In the first quarter of 2003, operation and disposal of our discontinued
Argentina business had no impact on our net income. In the first quarter of
2002, we recorded $0.5 million in after-tax income from operation of our
discontinued Argentina business.

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 Standard (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 arising 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. On December
31, 2001, we had not recorded the $4.0 million in promissory notes because of
uncertainties regarding the realizability of such amounts. In the first
quarter of 2002, we entered into an agreement with the buyer of this business
to resolve disputes that arose in connection with the sale. Under the terms of
that agreement, we received full payment on one of these notes, forgave the
other note and agreed to bear the cost of some disputed expenses. In the first
quarter of 2002, we recorded the $2.0 million ($1.3 million after-tax) received
as a reduction of the loss recognized on the sale of the SPC business.

As a result of the loss recognized on the sale, we recorded a current tax
benefit of approximately $40.0 million. 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. We will realize tax
benefits on these capital losses only to the extent that we generate capital
gains within five years of the sale.

As of March 29, 2003, our balance sheet included $14.1 million in liabilities
related to the discontinued SPC business, primarily for future operating lease
payments. These liabilities will be adjusted in the

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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

EEOC Litigation Settlement

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

On April 29, 2003, we announced that we had reached a settlement with the EEOC
that involved a payment of $10 million by Dial. As previously disclosed, this
settlement is not expected to materially affect our earnings for the second
quarter or full year 2003. However, negative publicity resulting from this
lawsuit or the settlement could adversely affect our sales and operating
results.

Kmart Bankruptcy and Store Closings

In January 2002, Kmart Corporation filed for Chapter 11 bankruptcy protection.
Kmart is one of our top ten customers. Prior to March 2003, we sold products to
Kmart primarily through Kmarts distributor, Fleming Companies, Inc. However,
Kmart and Fleming recently agreed that Fleming would no longer be Kmarts
contracted distributor. As a result, in March 2003 we began to sell our
products directly to Kmart.

Kmart closed approximately 600 stores prior to emerging from bankruptcy in May
2003. Our sales to Kmart have decreased as a result of these store closings
and from a decline in consumers visiting Kmarts open stores. Kmarts
bankruptcy has not had a material adverse effect on our planned sales or
operating results. However, Kmarts financial condition could have an adverse
impact on our sales and operating results in 2003.

Fleming Bankruptcy

As mentioned above, we previously sold products to Kmart through Fleming.
Fleming filed for Chapter 11 bankruptcy protection in April 2003. Due to the
uncertainty of Flemings ability to pay its creditors, we have increased our
bad debt reserve for our accounts receivable from Fleming as of March 29, 2003.
To date, Flemings bankruptcy has not had a material adverse effect on our
planned sales or operating results. However, Flemings bankruptcy and
financial condition could have an adverse impact on our sales and operating
results in 2003.

FASMA LLC Bankruptcy

The buyer of our Specialty Personal Care business, FASMA L.L.C., recently filed
for Chapter 11 bankruptcy protection. FASMA was subleasing a facility in
Dedham, Massachusetts from us, but has not paid rent since October 2002.
FASMAs sublease expired in January 2003, and we have been pursuing legal
action to evict FASMA. In addition, FASMA is responsible for all liabilities
related to the SPC business, including customer deductions and returns. It is
too early to determine if FASMAs bankruptcy could impact our financial
results. At March 29, 2003, our balance sheet included $14.1 million in
liabilities related to the discontinued SPC business, primarily for future
operating lease payments. If we

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decide that we need to increase the reserves related to the discontinued SPC
business, our net income could be adversely impacted.

Comparison of the First Quarter of 2003 with the First Quarter of 2002

Net sales increased 6.0% to $312.4 million from $294.6 million in the same
period in 2002 primarily as a result of a 5.0% increase in our Domestic Branded
segment and an 18.9% increase in our International and Other segment. Net
sales information for the businesses is set forth below:

|                                      |                                |                         |         |               |         |                     |         |            |         |   |        |        |        |  |      |     |     |  
|------------------------------------- | ------------------------------ | ----------------------- | ------- | ------------- | ------- | ------------------- | ------- | ---------- | ------- | - | ------ | ------ | ------ |  | ---- | --- | --- | -
|                                      |                                |                         |         | First Quarter |         | Increase (Decrease)
|                                      |                                |                         |         |               |         |                    
|(In thousands)                        |                                | 2003                    |         | 2002          |         | Amount              |         | Percentage
|                                      |                                |                         |         |               |         |                     |         |           
|Laundry Care                          |                                | $                       | 119,422 |               |         | $                   | 107,277 |            |         | $ | 12,145 |        |        |  | 11.3 | %  
|Personal Cleansing                    |                                |                         | 88,041  |               |         |                     | 86,397  |            |         |   | 1,644  |        |        |  | 1.9  | %  
|Food Products                         |                                |                         | 41,997  |               |         |                     | 41,799  |            |         |   | 198    |        |        |  | 0.5  | %  
|Air Fresheners                        |                                |                         | 36,832  |               |         |                     | 37,153  |            |         |   | (321   | )      |        |  | (0.9 | )% 
|                                      |                                |                         |         |               |         |                     |         |            |         |   |        |        |        |  |      |    
|                                      | Total Domestic Branded segment |                         |         | 286,292       |         |                     |         | 272,626    |         |   |        | 13,666 |        |  |      | 5.0 | %  
|Total International and Other
segment |                                |                         | 26,109  |               |         |                     | 21,953  |            |         |   | 4,156  |        |        |  | 18.9 | %  
|                                      |                                |                         |         |               |         |                     |         |            |         |   |        |        |        |  |      |    
|                                      |                                | Total Company Net Sales |         | $             | 312,401 |                     |         | $          | 294,579 |   |        | $      | 17,822 |  |      |     | 6.0 | %
|                                      |                                |                         |         |               |         |                     |         |            |         |   |        |        |        |  |      |    

Laundry Care sales increased due to higher sales of Purexliquid detergent
offset in part by lower sales of powder detergent and other laundry products.
The increase in Purexliquid detergent is due to continued promotions and
consumer demand 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 sales increased mainly due to new
products introduced in the second half of 2002. These sales were offset in
part by a decrease in Dialbar soap sales as well as a decrease in specialty
bar soap sales. The decrease in Dial bar was driven in part by a growing
consumer preference for body washes. We expect that this consumer preference
will continue. Food Products sales were higher primarily as a result of
increased sales of Armour branded Vienna sausage, offset in part by lower
private label sales. Increased sales of Vienna sausage were driven in large
part by segment growth as well as increased promotions and distribution. Air
Fresheners sales decreased primarily as a result of the discontinuation of One
Touchelectric scented oil products combined with continued weakness in the
candle segment. This weakness was offset in part by higher sales of
Adjustables and the launch of three new products, Renuzit Super Odor
Neutralizer, Renuzit High Impact Scented Oiland Renuzit Scented Oil Refills,
which were introduced in the second half of 2002. We are discontinuing Renuzit
High Impact Scented Oiland expect related sales to decline in future periods.

Net sales of our International and Other segment increased primarily due to
higher Canadian sales of Purexliquid laundry detergent and foreign currency
gains.

Our gross margin increased 130 basis points to 38.1% from 36.8% last year.
This improvement primarily resulted from product supply efficiencies, higher
sales volumes and raw materials cost containment, which offset higher energy
related costs.

Selling, general and administrative expenses increased 1.7% to $61.8 from $60.8
million last year. The increase is primarily due to increased bad debt
reserves and higher administrative expenses partially offset by the timing of
consumer marketing expenses for new products.

Interest expense decreased 19.6% to $6.8 million from $8.4 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 of 37.2% is slightly higher
than the 2002 rate of 36.9% due to higher effective state tax rates.

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Income from continuing operations was $29.6 million or $0.31 per diluted share,
compared to $23.1 million or $0.25 per diluted share last year. As discussed
above, this increase resulted primarily from higher sales, improved gross
margin and lower interest expense. The following table reconciles diluted
earnings per share from income from continuing operations to net income:

|                                                    |  |                |      |                |  |   |       |  
|--------------------------------------------------- |  | -------------- | ---- | -------------- |  | - | ----- | -
|                                                    |  | Quarter ended  |      | Quarter ended 
|Diluted net income (loss) per common share:         |  | March 29, 2003 |      | March 30, 2002
|                                                    |  |                |      |               
|Diluted net income from continuing operations       |  | $              | 0.31 |                |  | $ | 0.25  |  
|Discontinued operation, Specialty Personal Care     |  |                |     |                |  |   | 0.01  |  
|Discontinued operation, Dial Argentina              |  |                |     |                |  |   | 0.01  |  
|Cumulative effect of change in accounting principle |  |                |     |                |  |   | (0.47 | )
|                                                    |  |                |      |                |  |   |       |  
|Net income (loss) per diluted share                 |  | $              | 0.31 |                |  | $ | (0.20 | )
|                                                    |  |                |      |                |  |   |       |  

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,
cash flow from operations and proceeds from divestitures are expected to be
sufficient to meet our anticipated operating, capital expenditure and debt
service requirements during the next year.

Net cash provided by operations for the first quarter of 2003 was $31.9 million
compared to $28.4 million last year. This increase was due to favorable tax
benefits resulting from the loss on the pending sale of our Argentina business
as well as an increase in income from continuing operations. This increase was
partially offset by higher pension contributions and employee incentive
payments.

Net cash used in investing activities for the first quarter of 2003 was $3.1
million versus $6.7 million last year.

Capital expenditures for the first quarter of 2003 were $3.2 million compared
to $2.8 million last year. We expect capital expenditures in 2003 to be
approximately $50 million. These expenditures will be concentrated primarily on
equipment and information systems that provide opportunities to reduce
manufacturing, logistics, and administrative costs or are required to maintain
our existing facilities. There can be no assurance as to the quantity and the
type of capital spending we may incur.

There were no proceeds from the disposition of discontinued operations in the
first quarter of 2003 compared to $2.0 million in 2002 related to our
discontinued SPC segment. Additionally, there was no net cash used in investing
activities from discontinued operations in 2003, compared to the $6.2 million
used last year related to our discontinued Argentina business.

Net cash used by financing activities was $1.6 million in the first quarter of
2003 compared to $2.8 million used last year. This decrease is primarily
related to a $1.5 million increase in proceeds received from stock option
exercises.

At March 29, 2003, we had $240.4 million invested in short-term investment
vehicles with low principal risk.

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Capital Structure and Resources

Long-term debt consisted of the following at March 29, 2003 and December 31,
2002:

|                                                                      |                         |                |         |                   |  |   |         |         | 
|--------------------------------------------------------------------- | ----------------------- | -------------- | ------- | ----------------- |  | - | ------- | ------- | 
|(In thousands)                                                        |                         | March 29, 2003 |         | December 31, 2002
|                                                                      |                         |                |         |                  
|$250 million 7.0% Senior Notes
due 2006, net of issue
discount        |                         | $              | 247,633 |                   |  | $ | 247,460 |        
|$200 million 6.5% Senior Notes
due 2008, net of issue
discount        |                         |                | 198,837 |                   |  |   | 198,785 |        
|                                                                      |                         |                |         |                   |  |   |         |        
|                                                                      | Total long-term debt    |                |         | 446,470           |  |   |         | 446,245 | 
|Deferred gain on interest rate
swaps terminated in August
2002        |                         |                | 11,301  |                   |  |   | 12,148  |        
|Fair market value of interest
rate swaps entered into in
January 2003 |                         |                | 3,127   |                   |  |   |        |        
|                                                                      |                         |                |         |                   |  |   |         |        
|                                                                      | Reported long-term debt |                | $       | 460,898           |  |   | $       | 458,393 | 
|                                                                      |                         |                |         |                   |  |   |         |        

The increase in total 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 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 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 March 29, 2003, there
were no amounts outstanding under our credit facility.

At March 29, 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

In January 2003, the Financial Accounting Standards Board (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 will be effective in the
third quarter of 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 Statement of Financial Accounting Standards
(SFAS) No. 148, Accounting for Stock-Based CompensationTransition and
Disclosure. This Statement amends

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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
and are evaluating the impact of adopting the fair value method of accounting
for stock-based compensation under all allowable methods.

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. We do not anticipate a financial impact as a result of this
Statement.

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. As part of our capital allocation strategy, we
may consider repurchasing debt. We are evaluating the financial impact of this
Statement on a potential debt-repurchasing plan.




Item 4. Controls and Procedures

Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
our chief executive officer and chief financial officer concluded that Dials
disclosure controls and procedures are effective in timely alerting them to
material information relating to the company (including its consolidated
subsidiaries) required to be included our periodic SEC filings. There were no
significant changes in our internal controls or other factors that could
significantly affect these controls subsequent to the date of their evaluation
and there were no corrective actions with regard to significant deficiencies
and material weaknesses.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

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

On April 29, 2003, we announced that we had reached a settlement with the EEOC
that involved a payment of $10 million by Dial. As previously disclosed, this
settlement is not expected to materially affect our earnings for the second
quarter or full year 2003. However, negative publicity resulting from this
lawsuit or the settlement could adversely affect our sales and operating
results.




|                                         |      |  |                                                                                                                   | 
|---------------------------------------- | ---- |  | ----------------------------------------------------------------------------------------------------------------- | 
|Item 6. Exhibits and Reports on Form 8-K
|                                        
|(A)                                      |      |  | Exhibits                                                                                                         
|                                         | 10.1 |  | Waiver of Claims and Acknowledgement Agreement with Mark L.
Whitehouse dated April 1, 2003.                       | 
|                                         | 10.2 |  | Employment Agreement with Richard F. Theiler dated March 22, 2003.                                               
|                                         | 99.1 |  | Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for
Forward-Looking Statements.
|                                         | 99.2 |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                         
|(B)                                      |      |  | Reports on Form 8-K                                                                                              

We also filed a Current Report on Form 8-K, dated January 7, 2003, reporting
that Dial issued a press release relating to the conference call to announce
its fourth quarter and fiscal year 2002 results to be held on Wednesday,
January 29, 2003, a copy of which was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated January 24, 2003, reporting
that Dial supplied information related to its consolidated income statement for
the first, second and third quarters of 2002 and the first nine months of 2002,
each of which had been restated to reflect Dials Argentina business as a
discontinued operation. Dial had previously disclosed that it had entered into
an agreement to sell its Argentina business and, subject to negotiated closing
conditions and Argentine governmental consents, the transaction was expected to
close late in the first quarter or early in the second quarter of 2003.

We also filed a Current Report on Form 8-K, dated January 29, 2003, reporting
that Dial issued a press release relating to its fourth quarter and full year
2002 earnings and outlook for fiscal 2003, a copy of which was filed as Exhibit
99.

We also filed a Current Report on Form 8-K, dated February 7, 2003, reporting
that Dial issued a press release relating to its analyst and investor
conference to be held on Thursday, February 20, 2003, a copy of which was filed
as Exhibit 99.

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We also filed a Current Report on Form 8-K, dated February 20, 2003, reporting
that, as previously announced in Dials press release dated February 7, 2003,
Dial held an analyst and investor conference on February 20, 2003. A copy of
the presentation was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated March 11, 2003, reporting
that Dial issued a press release announcing that Dials CEO and CFO would
present at the Merrill Lynch 16th Annual Global Branded Consumer Products
Conference. The release also announced that Dial remains comfortable the first
quarter guidance. A copy of the press release was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated March 12, 2003, reporting
that Dial issued a press release declaring a quarterly dividend on Dial Common
Stock, a copy of which was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated March 13, 2003, reporting
that Dial issued a press release announcing the resignation of Mark L.
Whitehouse, Senior Vice President-International, Innovation and Business
Development, a copy of which was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated March 18, 2003, reporting
that, as previously announced in Dials press release dated March 11, 2003,
Dial will make a presentation to investors on March 18, 2003. A copy of the
presentation was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated March 26, 2003, reporting
that Dial issued a press release announcing that Dials CEO and CFO will
present at the Bank of America Securities 4th Annual Q&A Consumer Conference.
The release also announced that Dial remains comfortable with the first quarter
guidance. A copy of the release was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated March 31, 2003, reporting
that Dial issued a press release announcing the appointment of Richard F.
Theiler as Senior Vice President-Research & Development, a copy of which was
filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated April 8, 2003, reporting that
Dial issued a press release relating to the conference call to announce its
first quarter 2003 results to be held on Wednesday, April 23, 2003, a copy of
which was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated April 23, 2003, reporting
that Dial issued a press release relating to its financial results for the
first quarter ended March 31, 2003, and its outlook for second quarter and full
year 2003, a copy of which was filed as Exhibit 99.

We also filed a Current Report on Form 8-K, dated April 29, 2003, reporting
that Dial and the EEOC issued a joint press release announcing that they had
reached a settlement of the case relating to Dials Aurora, Illinois
manufacturing facility that was pending in the U.S. District Court for the
Northern District of Illinois entitled Equal Employment Opportunity Commission
v. The Dial Corporation, Civil Action No. 99C 3356. The settlement involves a
$10 million payment by Dial. A copy of the joint press release was filed as
Exhibit 99.1. The press release also announced that the settlement was not
expected to materially affect Dials earnings for the second quarter or the
full year and confirmed that it currently expects earnings per share from
continuing operations to be $0.33 for the second quarter and $1.31 for the
year.

We also filed a Current Report on Form 8-K, dated May 6, 2003, reporting that
Dial issued a press release announcing the resignation of Robert F. Bernstock,
Senior Vice President-General Manager, Air Fresheners, Food Products and
Branded Commercial Markets, a copy of which was filed as Exhibit 99.

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SIGNATURES

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

|                     |                                                       | 
|-------------------- | ----------------------------------------------------- | 
|The Dial Corporation
|(Registrant)        
|                     |                                                       | 
|May 7, 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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Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Herbert M. Baum, certify that:

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

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

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

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

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

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

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

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

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

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

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

|                  |  |                                                     
|----------------- |  | ----------------------------------------------------
|Date: May 7, 2003 |  | /s/ Herbert M. Baum                                 
|                  |  |                                                     
|                  |  | Herbert M. Baum                                     
|                  |  | Chairman, President and                             
|                  |  | Chief Executive Officer                             
|                  |  | (Principal Executive Officer and
Authorized Officer)

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

I, Conrad A. Conrad, certify that:

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

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

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

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

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

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

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

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

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

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

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

|                  |  |                                                     
|----------------- |  | ----------------------------------------------------
|Date: May 7, 2003 |  | /s/ Conrad A. Conrad                                
|                  |  |                                                     
|                  |  | Conrad A. Conrad                                    
|                  |  | Executive Vice President and Chief Financial Officer
|                  |  | (Principal Financial Officer and
Authorized Officer)

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EXHIBIT INDEX




|     |                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------
|10.1 | Waiver of Claims and Acknowledgement Agreement with Mark L.
    Whitehouse dated April 1, 2003.                      
|    
|10.2 | Employment Agreement with Richard F. Theiler dated
    March 22, 2003.                                               
|    
|99.1 | Private Securities Litigation Reform Act of 1995 Safe Harbor
    Compliance Statement for Forward-Looking Statements.
|    
|99.2 | Certifications pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002