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 31, 2001

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

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

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

Yes    X    No

The number of shares of Common Stock, $.01 par value, outstanding as the close
of business on April 28, 2001 was 94,896,063.





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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                        |                            |           |             |           |              |           |          |           | 
|------------------------------------ | ------------------------------------------------------------------------------------------------------ | -------------------------- | --------- | ----------- | --------- | ------------ | --------- | -------- | --------- | 
|                                     |                                                                                                        |                            |           | (Unaudited)
|                                     |                                                                                                        |                            |           | March 31,   |           | December 31,
|(in thousands, except share data)    |                                                                                                        | 2001                       |           | 2000       
|                                     |                                                                                                        |                            |           |            
|ASSETS                              
|                                    
|                                    
|                                    
|                                    
|Current Assets:                     
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents                                                                              |                            | $         | 4,577       |           |              | $         | 6,844    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Receivables, less allowance of $6,382 and $5,983                                                       |                            |           | 134,865     |           |              |           | 168,170  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                                                                            |                            |           | 173,548     |           |              |           | 162,783  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income taxes                                                                                  |                            |           | 18,171      |           |              |           | 18,910   |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other current assets                                                                                   |                            |           | 18,112      |           |              |           | 21,036   |          
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|                                     |                                                                                                        | Total current assets       |           |             | 349,273   |              |           |          | 377,743   | 
|                                    
|                                    
|                                    
|                                    
|Property and equipment, net          |                                                                                                        |                            | 282,972   |             |           |              | 301,027   |         
|                                    
|                                    
|                                    
|                                    
|Deferred income taxes                |                                                                                                        |                            | 53,809    |             |           |              | 55,425    |         
|                                    
|                                    
|                                    
|                                    
|Intangibles, net                     |                                                                                                        |                            | 621,881   |             |           |              | 614,458   |         
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                                                                                        |                            | 33,959    |             |           |              | 33,318    |         
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|                                     |                                                                                                        | $                          | 1,341,894 |             |           | $            | 1,381,971 |         
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|LIABILITIES AND STOCKHOLDERS EQUITY
|                                    
|                                    
|                                    
|                                    
|Current Liabilities:                
|                                    
|                                    
|                                    
|                                    
|                                     | Trade accounts payable                                                                                 |                            | $         | 112,203     |           |              | $         | 139,702  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Short-term borrowings                                                                                  |                            |           | 115,762     |           |              |           | 125,776  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Other current liabilities                                                                              |                            |           | 118,394     |           |              |           | 129,377  |          
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|                                     |                                                                                                        | Total current liabilities  |           |             | 346,359   |              |           |          | 394,855   | 
|                                    
|                                    
|                                    
|                                    
|Long-term debt                       |                                                                                                        |                            | 469,270   |             |           |              | 469,271   |         
|                                    
|                                    
|                                    
|                                    
|Pension and other benefits           |                                                                                                        |                            | 215,455   |             |           |              | 217,035   |         
|                                    
|                                    
|                                    
|                                    
|Other liabilities                    |                                                                                                        |                            | 6,698     |             |           |              | 6,903     |         
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|                                     |                                                                                                        | Total liabilities          |           |             | 1,037,782 |              |           |          | 1,088,064 | 
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|Stockholders Equity:               
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred stock, $.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding        |                            |           |            |           |              |           |         |          
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock, $.01 par value, 300,000,000 shares
authorized; 105,712,924 and 105,679,849 shares issued |                            |           | 1,057       |           |              |           | 1,057    |          
|                                    
|                                    
|                                    
|                                    
|                                     | Additional capital                                                                                     |                            |           | 407,497     |           |              |           | 402,024  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Retained income                                                                                        |                            |           | 163,045     |           |              |           | 153,600  |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                                                                   |                            |           | (3,922      | )         |              |           | (3,465   | )        
|                                    
|                                    
|                                    
|                                    
|                                     | Employee benefits                                                                                      |                            |           | (48,620     | )         |              |           | (45,128  | )        
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock, 10,812,255 and 10,772,046 shares held                                                  |                            |           | (214,945    | )         |              |           | (214,181 | )        
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|                                     |                                                                                                        | Total stockholders equity |           |             | 304,112   |              |           |          | 293,907   | 
|                                     |                                                                                                        |                            |           |             |           |              |           |         
|                                     |                                                                                                        | $                          | 1,341,894 |             |           | $            | 1,381,971 |         
|                                     |                                                                                                        |                            |           |             |           |              |           |         

See Notes to Consolidated Financial Statements.

2



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THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS AND COMPREHENSIVE INCOME

|                                              |                                              |                                         |         |               |               |   |         |         |      |   | 
|--------------------------------------------- | -------------------------------------------- | --------------------------------------- | ------- | ------------- | ------------- | - | ------- | ------- | ---- | - | 
|                                              |                                              |                                         |         |               | (Unaudited)  
|                                              |                                              |                                         |         |               | Quarter Ended
|                                              |                                              |                                         |         |               |              
|(in thousands, except per share data)         |                                              | March 31, 2001                          |         | April 1, 2000
|                                              |                                              |                                         |         |              
|Net sales                                     |                                              | $                                       | 401,480 |               |               | $ | 373,124 |        
|                                              |                                              |                                         |         |               |               |   |         |        
|Costs and expenses:                          
|                                             
|                                             
|                                             
|                                             
|                                              | Cost of products sold                        |                                         |         | 205,366       |               |   |         | 188,511 |     
|                                             
|                                             
|                                             
|                                             
|                                              | Selling, general and administrative expenses |                                         |         | 163,679       |               |   |         | 141,431 |     
|                                              |                                              |                                         |         |               |               |   |         |        
|                                              | Total costs and expenses                     |                                         |         | 369,045       |               |   |         | 329,942 |     
|                                             
|                                             
|                                             
|                                             
|Operating income                              |                                              |                                         | 32,435  |               |               |   | 43,182  |        
|                                             
|                                             
|                                             
|                                             
|Interest and other expenses                   |                                              |                                         | 13,872  |               |               |   | 9,639   |        
|                                             
|                                             
|                                             
|                                             
|Net (income) loss of joint ventures           |                                              |                                         | (1,999  | )             |               |   | 721     |        
|                                              |                                              |                                         |         |               |               |   |         |        
|Income before income taxes                    |                                              |                                         | 20,562  |               |               |   | 32,822  |        
|                                             
|                                             
|                                             
|                                             
|Income taxes                                  |                                              |                                         | 7,464   |               |               |   | 11,324  |        
|                                              |                                              |                                         |         |               |               |   |         |        
|NET INCOME                                    |                                              | $                                       | 13,098  |               |               | $ | 21,498  |        
|                                              |                                              |                                         |         |               |               |   |         |        
|NET INCOME PER SHARE BASIC                   |                                              | $                                       | 0.14    |               |               | $ | 0.23    |        
|                                              |                                              |                                         |         |               |               |   |         |        
|NET INCOME PER SHARE DILUTED                 |                                              | $                                       | 0.14    |               |               | $ | 0.23    |        
|                                              |                                              |                                         |         |               |               |   |         |        
|Weighted average basic shares outstanding     |                                              |                                         | 91,291  |               |               |   | 93,979  |        
|                                             
|                                             
|                                             
|                                             
|                                              | Weighted average equivalent shares           |                                         |         | 294           |               |   |         | 631     |     
|                                              |                                              |                                         |         |               |               |   |         |        
|Weighted average diluted shares outstanding   |                                              |                                         | 91,585  |               |               |   | 94,610  |        
|                                              |                                              |                                         |         |               |               |   |         |        
|                                             
|                                             
|                                             
|                                             
|NET INCOME                                    |                                              | $                                       | 13,098  |               |               | $ | 21,498  |        
|                                             
|                                             
|                                             
|                                             
|Other comprehensive income (loss) net of tax:
|                                             
|                                             
|                                             
|                                             
|                                              |                                              | Foreign currency translation adjustment |         |               | (457          | ) |         |         | 131  |  
|                                             
|                                             
|                                             
|                                             
|                                              |                                              | Minimum pension liability               |         |               |              |   |         |         | (245 | )
|                                              |                                              |                                         |         |               |               |   |         |        
|COMPREHENSIVE INCOME                          |                                              | $                                       | 12,641  |               |               | $ | 21,384  |        
|                                              |                                              |                                         |         |               |               |   |         |        

See Notes to Consolidated Financial Statements.

3



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THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS

|                                                                                  |                                             |                                   |         |               |         |   |         |       |         |  
|--------------------------------------------------------------------------------- | ------------------------------------------- | --------------------------------- | ------- | ------------- | ------- | - | ------- | ----- | ------- | -
|                                                                                  |                                             |                                   |         | (Unaudited)  
|                                                                                  |                                             |                                   |         | Quarter Ended
|                                                                                  |                                             |                                   |         |              
|(in thousands)                                                                    |                                             | March 31, 2001                    |         | April 1, 2000
|                                                                                  |                                             |                                   |         |              
|CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:                              
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net income                                                                        |                                             | $                                 | 13,098  |               |         | $ | 21,498  |      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments to reconcile net income to net cash
provided by operating activities:
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Depreciation                                |                                   |         | 10,029        |         |   |         | 9,395 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Amortization                                |                                   |         | 3,709         |         |   |         | 3,024 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Deferred income taxes                       |                                   |         | 2,355         |         |   |         | 5,205 |        
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  | Change in operating assets and liabilities:
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                             | Receivables                       |         |               | 33,305  |   |         |       | 16,861  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                             | Inventories                       |         |               | (10,765 | ) |         |       | (17,693 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                             | Trade accounts payable            |         |               | (27,499 | ) |         |       | (30,716 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                             | Income taxes payable              |         |               | 4,997   |   |         |       | (21,068 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |                                             | Other assets and liabilities, net |         |               | (14,826 | ) |         |       | (15,917 | )
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|Net cash provided (used) by operating activities                                  |                                             |                                   | 14,403  |               |         |   | (29,411 | )    
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|CASH FLOWS USED BY INVESTING ACTIVITIES:                                         
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Capital expenditures                                                              |                                             |                                   | (3,241  | )             |         |   | (6,284  | )    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Investment in and loans to joint ventures                                         |                                             |                                   |        |               |         |   | (3,264  | )    
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|Net cash used by investing activities                                             |                                             |                                   | (3,241  | )             |         |   | (9,548  | )    
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:                              
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net change in long-term borrowings                                                |                                             |                                   | (1      | )             |         |   | 109,699 |      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Common stock purchased for treasury                                               |                                             |                                   |        |               |         |   | (83,143 | )    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net change in short-term bank loans                                               |                                             |                                   | (10,014 | )             |         |   | 91,644  |      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Dividends paid on common stock                                                    |                                             |                                   | (3,653  | )             |         |   | (7,533  | )    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash proceeds from stock options                                                  |                                             |                                   | 239     |               |         |   | 526     |      
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net change in receivables sold                                                    |                                             |                                   |        |               |         |   | (73,177 | )    
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|Net cash provided (used) by financing activities                                  |                                             |                                   | (13,429 | )             |         |   | 38,016  |      
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|Net decrease in cash and cash equivalents                                         |                                             |                                   | (2,267  | )             |         |   | (943    | )    
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash and cash equivalents, beginning of period                                    |                                             |                                   | 6,844   |               |         |   | 6,126   |      
|                                                                                  |                                             |                                   |         |               |         |   |         |      
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |                                             | $                                 | 4,577   |               |         | $ | 5,183   |      
|                                                                                  |                                             |                                   |         |               |         |   |         |      

See Notes to Consolidated Financial Statements.

4



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THE DIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2000.

Accounting policies utilized in the preparation of the financial information
herein presented are the same as set forth in Dials annual financial
statements except as modified for interim accounting policies which are within
the guidelines set forth in Accounting Principles Board Opinion No. 28,
Interim Financial Reporting. The interim consolidated financial statements
are unaudited. In the opinion of management, all adjustments, consisting of
normal recurring accruals, necessary to present fairly the financial position
as of March 31, 2001 and the results of operations and cash flows for the
quarter ended March 31, 2001 and April 1, 2000 have been included. Interim
results of operations are not necessarily indicative of the results of
operations for the full year.

Note 2. Special Charges

Third Quarter 2000 Special Charges

On October 18, 2000, we announced a special charge related to the Specialty
Personal Care business, the Dial/Henkel joint ventures, and severance costs for
prior management. We recorded $73.9 million ($48.9 million after tax or $0.53
per share) related to this special charge during 2000. We do not anticipate
that any additional charges to net income will be recorded in 2001 with respect
to this special charge. The current period activity relating to the Third
Quarter 2000 Special Charges is summarized below:

|                                                     |       |          |             |               |            |         |          |                |                |         |             |   |  |   |        |   |  |   |       |       | 
|---------------------------------------------------- | ----- | -------- | ----------- | ------------- | ---------- | ------- | -------- | -------------- | -------------- | ------- | ----------- | - |  | - | ------ | - |  | - | ----- | ----- | 
|                                                     |       |          | Beginning   |               |            |         |          |                | Amount of      |         |             |   |  |   | Ending
|                                                     |       |          | reserves at |               | Cash spent |         | reversed |                | Amount charged |         | reserves at
|(in thousands)                                       |       | 12/31/00 |             | during period |            | charges |          | against assets |                | 3/31/01
|                                                     |       |          |             |               |            |         |          |                |                |        
|Employee separations                                 |       | $        | 2,063       |               |            | $       | (470     | )              |                | $       |            |   |  | $ |       |   |  | $ | 1,593 |      
|                                                    
|                                                    
|                                                    
|                                                    
|Discontinued
product inventories
and related charges |       |          | 9,200       |               |            |         | (1,010   | )              |                |         |            |   |  |   |       |   |  |   | 8,190 |      
|                                                    
|                                                    
|                                                    
|                                                    
|Other exit costs                                     |       |          | 135         |               |            |         | (38      | )              |                |         |            |   |  |   |       |   |  |   | 97    |      
|                                                     |       |          |             |               |            |         |          |                |                |         |             |   |  |   |        |   |  |   |       |      
|                                                     | Total |          | $           | 11,398        |            |         | $        | (1,518         | )              |         | $           |  |  |   | $      |  |  |   | $     | 9,880 | 
|                                                     |       |          |             |               |            |         |          |                |                |         |             |   |  |   |        |   |  |   |       |      

The income statement classification of amounts recorded with respect to the
Third Quarter 2000 Special Charges have been previously disclosed and no
additional amounts were charged to net income in the first quarter of 2001.

We have sold or disposed of a portion of the discontinued product inventories
and expect to sell or dispose of the remainder in 2001. In addition, reserves
were established to fund promotional activity for our customers to discontinue
SKUs currently in our customers inventories and for expected returns and
deductions from our customers. Cash requirements for the special charges
currently are expected to be funded from normal operations.

The expected timing and estimated amount of costs and projected savings are
based on managements judgment in light of circumstances and estimates at the
time the judgements were made. Accordingly, such estimates may change as
future events evolve. Among other matters, unforeseen changes in

5



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operating requirements and other factors referred to in Exhibit 99 to this Form
10-Q could cause actual operating benefits to differ materially from
anticipated results.

Second Quarter 2000 Restructuring

On June 28, 2000, we announced a restructuring charge designed to improve
profitability and operational efficiencies. We recorded charges totaling $23.9
million ($14.9 million after tax or $0.16 per share) during 2000 to close our
Bristol, Pennsylvania dry detergent plant, to consolidate the manufacturing and
distribution functions of our Specialty Personal Care business, and to
restructure our domestic and international sales organization. We do not
anticipate that any additional charges to net income will be recorded in 2001
with respect to this restructuring charge. The current period activity
relating to the Second Quarter 2000 Restructuring is summarized below:

|                                                      |       |          |             |               |            |                |                |         |             |   |   |   |        |   |     |       | 
|----------------------------------------------------- | ----- | -------- | ----------- | ------------- | ---------- | -------------- | -------------- | ------- | ----------- | - | - | - | ------ | - | --- | ----- | 
|                                                      |       |          | Beginning   |               |            |                |                |         |             |   |   |   | Ending
|                                                      |       |          | reserves at |               | Cash spent |                | Amount charged |         | reserves at
|(in thousands)                                        |       | 12/31/00 |             | during period |            | against assets |                | 3/31/01
|                                                      |       |          |             |               |            |                |                |        
|Employee separations                                  |       | $        | 828         |               |            | $              | (160           | )       |             | $ |  |   |        | $ | 668 |      
|                                                     
|                                                     
|                                                     
|                                                     
|Asset writedowns
and discontinued
product inventories |       |          |            |               |            |                |               |         |             |   |  |   |        |   |    |      
|                                                     
|                                                     
|                                                     
|                                                     
|Other exit costs                                      |       |          | 859         |               |            |                | (419           | )       |             |   |  |   |        |   | 440 |      
|                                                      |       |          |             |               |            |                |                |         |             |   |   |   |        |   |     |      
|                                                      | Total |          | $           | 1,687         |            |                | $              | (579    | )           |   | $ |  |        |   | $   | 1,108 | 
|                                                      |       |          |             |               |            |                |                |         |             |   |   |   |        |   |     |      

The income statement classification of amounts recorded with respect to the
Second Quarter 2000 Restructuring have been previously disclosed and no
additional amounts were charged in the first quarter of 2001.

We sold or disposed of all of the discontinued product inventory by the end of
the first quarter of 2001. The remaining reserves relating to employees
separations and other exits costs are expected to be utilized in 2001. The
Bristol, Pennsylvania dry detergent facility was sold in April 2001. Cash
requirements for the restructuring currently are expected to be funded from
normal operations.

Note 3. Acquisitions

During the second quarter of 2000, Dial acquired three businesses for $119.2
million in cash. The acquisitions included the Coast(R)bar soap
business in the United States, the Plusbelle(R)hair care business
in Argentina and the Zout(R)stain remover business in the United
States. The purchase price for Zoutmay increase if a specified level of gross
sales of Zoutproduct is achieved in each of the three years following the
acquisition date. The total combined net sales of these acquisitions was $30.4
million during the first quarter of 2001.

The Coast, Plusbelleand Zoutacquisitions were accounted for using the
purchase method of accounting. A portion of the purchase prices have been
allocated to assets acquired of $11.1 million and liabilities assumed of $1.3
million based on estimated fair values at the date of acquisition while the
balance of $109.4 million was recorded as goodwill. We continue to gather and
analyze certain information required to complete the allocation of the purchase
price of these acquisitions. Further adjustments to the allocation of the
purchase price may arise as a result of the finalization of the ongoing study.

6



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Note 4. Dial/Henkel Joint Venture

In April 1999, we formed Dial/Henkel LLC, a joint venture with Henkel KGaA of
Düsseldorf, Germany (Henkel). Dial and Henkel each own 50% of this joint
venture. The joint venture was formed to develop and market a range of
enhanced laundry products in North America. In July 1999, the joint venture
acquired the Custom Cleaner home dry-cleaning business. Our portion of the
cumulative net loss of the joint venture has been included in Dials
consolidated results since the joint venture formation date.

During the third quarter of 2000, the Dial/Henkel LLC joint venture decided to
discontinue operations of Purex Advanced. As a result, Purex Advancedhas been
reflected as a discontinued operation within the Dial/Henkel LLC joint venture
financial statements. In December 2000, we reorganized our joint venture
arrangements with Henkel. Specifically, Dial and Henkel continue to own a
limited U.S. joint venture equally; however, the only business conducted by
this joint venture going forward will be the Custom Cleanerhome dry-cleaning
business.

We account for this joint venture under the equity method of accounting. Our
share of the joint ventures income in the first quarter of 2001 results
primarily from lower than expected costs associated with the
discontinued
Purex Advanced business.

Included on Dials consolidated balance sheets are the following:

|                             |  |                |       |                   |  |   |       | 
|---------------------------- |  | -------------- | ----- | ----------------- |  | - | ----- | 
|(in thousands)               |  | March 31, 2001 |       | December 31, 2000
|                             |  |                |       |                  
|Amounts due to joint venture |  | $              | 3,712 |                   |  | $ | 5,968 | 

Note 5. Inventories

Inventories consisted of the following:

|                           |                   |      |           |         |              |   |         |         | 
|-------------------------- | ----------------- | ---- | --------- | ------- | ------------ | - | ------- | ------- | 
|                           |                   |      | March 31, |         | December 31,
|(in thousands)             |                   | 2001 |           | 2000   
|                           |                   |      |           |        
|Raw materials and supplies |                   | $    | 46,572    |         |              | $ | 48,484  |        
|                          
|                          
|                          
|                          
|Work in process            |                   |      | 8,926     |         |              |   | 8,387   |        
|                          
|                          
|                          
|                          
|Finished goods             |                   |      | 118,050   |         |              |   | 105,912 |        
|                           |                   |      |           |         |              |   |         |        
|                           | Total inventories |      | $         | 173,548 |              |   | $       | 162,783 | 
|                           |                   |      |           |         |              |   |         |        



---



Note 6. Debt

Short-term debt consisted of the following:

|                                                                                                       |  |      |           |      |              |  |        |  | 
|------------------------------------------------------------------------------------------------------ |  | ---- | --------- | ---- | ------------ |  | ------ |  | 
|                                                                                                       |  |      | March 31, |      | December 31,
|(in thousands)                                                                                         |  | 2001 |           | 2000
|                                                                                                       |  |      |           |     
|Argentina bank loan repricing
monthly and subject to call
by the bank at the end of
each month         |  |      |          |      |              |  | 14,009 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Short-term bank borrowing,
interest rate of 7.5% at
March 31, 2000                                     |  |      | 6,640     |      |              |  |       | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Current portion of State of
Arizona Economic Development
Loan due beginning July of
2000 over 10 years |  |      | 123       |      |              |  | 70     | 

7



---



|                                                                                                             |                       |      |           |         |              |  |         |         | 
|------------------------------------------------------------------------------------------------------------ | --------------------- | ---- | --------- | ------- | ------------ |  | ------- | ------- | 
|                                                                                                             |                       |      | March 31, |         | December 31,
|(in thousands)                                                                                               |                       | 2001 |           | 2000   
|                                                                                                             |                       |      |           |        
|                                                                                                            
|                                                                                                            
|                                                                                                            
|                                                                                                            
|Borrowing on the short-term
revolving Credit Agreement,
interest rates from 5.75% to
5.94% at March 31, 2001 |                       |      | 108,999   |         |              |  |        |        
|                                                                                                            
|                                                                                                            
|                                                                                                            
|                                                                                                            
|Commercial paper issuances
supported by the short-term
revolving Credit Agreement                            |                       |      |          |         |              |  | 111,697 |        
|                                                                                                             |                       |      |           |         |              |  |         |        
|                                                                                                             | Total short-term debt |      | $         | 115,762 |              |  | $       | 125,776 | 
|                                                                                                             |                       |      |           |         |              |  |         |        

Long-term debt consisted of the following:

|                                                                                                             |                      |      |           |         |              |   |         |         | 
|------------------------------------------------------------------------------------------------------------ | -------------------- | ---- | --------- | ------- | ------------ | - | ------- | ------- | 
|                                                                                                             |                      |      | March 31, |         | December 31,
|(in thousands)                                                                                               |                      | 2001 |           | 2000   
|                                                                                                             |                      |      |           |        
|State of Arizona Economic
Development Loan due
beginning July of 2000
over 10 years                          |                      | $    | 856       |         |              | $ | 910     |        
|                                                                                                            
|                                                                                                            
|                                                                                                            
|                                                                                                            
|$200 million 6.5% Senior
Notes due 2008, net of
issue discount                                               |                      |      | 198,414   |         |              |   | 198,361 |        
|                                                                                                            
|                                                                                                            
|                                                                                                            
|                                                                                                            
|Borrowings on the
long-term revolving
Credit Agreement,
interest rates from 5.75%
to 5.94% at March 31,
2001 |                      |      | 270,000   |         |              |   |        |        
|                                                                                                            
|                                                                                                            
|                                                                                                            
|                                                                                                            
|Commercial paper
supported by long-term
revolving Credit
Agreement                                           |                      |      |          |         |              |   | 270,000 |        
|                                                                                                             |                      |      |           |         |              |   |         |        
|                                                                                                             | Total long-term debt |      | $         | 469,270 |              |   | $       | 469,271 | 
|                                                                                                             |                      |      |           |         |              |   |         |        

In the second quarter of 2000 we entered into a new $450 million credit
facility that replaced our $350 million facility that was established in July
1999. Our credit facility was intended to serve as a backstop facility for our
commercial paper program. However, due to market conditions and the placement
of our short term debt rating on watch by Moodys Investors Service, we have
not been able to access the commercial paper market in the first quarter of
2001. As a result, we have been making borrowings under our credit facility.
Borrowings under our credit facility are on a revolving basis under commitments
available until July 2005 for up to $270 million and under commitments
available until July 2001 for up to $180 million. We will need to refinance
approximately $75 million of short term debt drawn under the $180 million
commitment that expires in July 2001 and are considering a variety of financing
options. The interest rate applicable to borrowings under our credit facility
is, at our option, indexed to the bank prime rate or the London Interbank
Offering Rate (LIBOR), plus appropriate spreads over such indices during the
term of the credit facility. Our credit facility also requires us to pay
commitment fees to the banks making commitments under the credit facility.
These spreads and fees are subject to adjustment if our debt ratings change.

The financial covenants of the credit agreement require us to maintain
minimum net worth of at least 80% of such net worth as of the date of the
agreement plus 25% of net income subsequent thereto plus certain other
additions to net worth. The covenants also require us to maintain a maximum
ratio of three-to-one for funded debt to earnings before interest, taxes,
depreciation and amortization (EBITDA). The following table reflects the
maximum ratio of funded debt to EBITDA permitted under Dials credit facility:

|               |  |               |              | 
|-------------- |  | ------------- | ------------ | 
|Date           |  | Maximum Ratio
|               |  |              
|March 31, 2001 |  |               | 3.50 to 1.00 | 
|              
|              
|              
|              
|June 30, 2001  |  |               | 3.25 to 1.00 | 
|              
|              
|              
|              
|Thereafter     |  |               | 3.00 to 1.00 | 

8



---



Dial was in compliance with all covenants under the credit facility at
March 31, 2001. As previously disclosed, we are reviewing strategic
alternatives with respect to our Specialty Personal Care business, while
working aggressively to improve the performance of this business. At this time,
we believe that if a decision is made in the future to divest of this business,
a write-down of assets to their estimated market value would be required. If
this takes place, we will need our lenders waiver or amendment of our minimum
net worth covenant because the estimated resulting write-down of assets would
violate this covenant.

Note 7. Segments of an Enterprise

For organizational, marketing and financial reporting purposes, we have
organized into four business segments: (i) Domestic Branded, (ii) Specialty
Personal Care, (iii) International, and (iv) Commercial Markets and Other. The
segments were identified based on the types of products sold, the customer base
and method of distribution.

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

During the third quarter of 2000, we began reflecting our Specialty Personal
Care business as a separate reportable segment. Prior to the third quarter of
2000, this business was included with our Domestic Branded segment. This
change occurred as a result of recurring differences in economic
characteristics between Dials Specialty Personal Care and Domestic Branded
businesses. Our previous segment disclosures have been restated to reflect
this presentation.

The Specialty Personal Care business segment includes the following three
brands: Freeman, Sarah Michaels, and Natures Accents. We acquired Freeman, a
leading manufacturer and marketer of skin, hair, bath, body and foot care
products utilizing natural ingredients all sold under the Freemanbrand name,
on July 1, 1998. We also acquired Sarah Michaels, a leading marketer of
premium specialty bath and body products, including body washes, body mists,
luxury soaps, hand and body lotions, loofahs, sponges and brushes distributed
under the Sarah Michaelsbrand name, on September 14, 1998. These two
acquisitions were combined with our Natures Accentsline of translucent soaps
and specialty care products to create the Specialty Personal Care franchise.
The Natures Accents product line was discontinued in the third quarter of
2000.

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

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

Information as to our operations in different business segments is set forth
below. The calculation of Operating Income for each segment includes an
allocation of general and administrative expenses based on each segments share
of consolidated net sales. The accounting policies of the business
segments are the same as those described in the summary of significant
accounting policies in Note 2 to the Consolidated Financial Statements included
in our Annual Report on Form 10-K for the year ended December 31, 2000.

9



---



|                         |                |                   |  |          |         |          |  |               |         |            |  |   |        |  |  |   |         |  |  |   |           | 
|------------------------ | -------------- | ----------------- |  | -------- | ------- | -------- |  | ------------- | ------- | ---------- |  | - | ------ |  |  | - | ------- |  |  | - | --------- | 
|                         |                |                   |  |          |         |          |  | Specialty     |         | Commercial
|                         |                |                   |  | Domestic |         | Personal |  | Markets &    
|(in thousands)           |                | Branded           |  | Care     |         | Other    |  | International |         | Total     
|                         |                |                   |  |          |         |          |  |               |         |           
|Net Sales:              
|                        
|                        
|                        
|                        
|                         | Quarter ended:
|                        
|                        
|                        
|                        
|                         |                | March 31, 2001    |  | $        | 321,662 |          |  | $             | 10,242  |            |  | $ | 13,869 |  |  | $ | 55,707  |  |  | $ | 401,480   | 
|                        
|                        
|                        
|                        
|                         |                | April 1, 2000     |  |          | 293,714 |          |  |               | 24,771  |            |  |   | 16,121 |  |  |   | 38,518  |  |  |   | 373,124   | 
|                        
|                        
|                        
|                        
|Operating Income (Loss):
|                        
|                        
|                        
|                        
|                         | Quarter ended:
|                        
|                        
|                        
|                        
|                         |                | March 31, 2001    |  |          | 33,742  |          |  |               | (3,786  | )          |  |   | 1,474  |  |  |   | 1,005   |  |  |   | 32,435    | 
|                        
|                        
|                        
|                        
|                         |                | April 1, 2000     |  |          | 39,693  |          |  |               | (1,034  | )          |  |   | 2,386  |  |  |   | 2,137   |  |  |   | 43,182    | 
|                        
|                        
|                        
|                        
|Assets at:              
|                        
|                        
|                        
|                        
|                         |                | March 31, 2001    |  |          | 903,195 |          |  |               | 241,751 |            |  |   | 14,385 |  |  |   | 182,563 |  |  |   | 1,341,894 | 
|                        
|                        
|                        
|                        
|                         |                | December 31, 2000 |  |          | 912,193 |          |  |               | 259,026 |            |  |   | 12,237 |  |  |   | 198,515 |  |  |   | 1,381,971 | 

10



---



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

Forward looking statements

Some statements contained in this Quarterly Report on Form 10-Q may constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Words such as believe, expect, intend,
anticipate, estimate, project and similar expressions identify
forward-looking statements, which speak only as of the date the statement was
made. These forward-looking statements may include, but are not limited to,
the expected repayment of debt in 2001 of approximately $80 to $90 million, not
including any possible proceeds from future asset sales that may also be used
to reduce debt; the potential write-down of assets in the estimated range of
$150 to $170 million if we decide to divest the Specialty Personal Care
business; our belief that the EEOC litigation will not have a material adverse
effect on our operating results or financial condition; our intended efforts
pursuant to our SFX01 initiative; our expected annual pre-tax operating
benefits and savings as a result of the special charges taken in the second and
third quarters of 2000; our expected capital expenditures in 2001 of $40.0
million; our expected trade promotion expenses in 2001 of $390 million; our
expected costs for coupons and rebates in 2001 of $16.0 million and our
expected cost of free products in 2001 of $10.4 million. These statements are
based upon managements beliefs, as well as on assumptions made by and
information currently available to management, and involve various risks and
uncertainties that are beyond our control. Our actual results could differ
materially from those expressed in any forward-looking statements made by, or
on behalf of, us.

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

Announcement of SFX01

As previously disclosed, management has outlined an initiative labeled SFX01.
The three step initiative can be summarized as follows:



| | S | We intend to Stabilize our strong businesses.                                           
| | - | ----------------------------------------------------------------------------------------
|
| | F | We intend to Fix marginal businesses or jettison them.                                  
|
| | X | Once stabilized and fixed, we intend to eXplore our options as a company, which include:



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

11



---





| | 01 |  | We expect to complete this initiative during 2001.
| | -- |  | --------------------------------------------------

We currently are exploring, and will continue to explore, strategic
alternatives available to Dial. Decisions made in the course of SFX01 could
result in Dial recording additional special or restructuring charges or
additional asset writedowns.

Restructuring and Special Charges

Third Quarter 2000 Special Charges

On October 18, 2000, we announced a special charge related to the Specialty
Personal Care business, the Dial/Henkel joint ventures, and severance costs for
prior management. We recorded $73.9 million ($48.9 million after tax or $0.53
per share) related to this special charge during 2000. We do not anticipate
that any additional charges to net income will be recorded in 2001 with respect
to this special charge. The current period activity relating to the Third
Quarter 2000 Special Charges is summarized below:

|                                                     |       |          |             |               |            |         |          |                |                |         |             |   |  |   |        |   |  |   |       |       | 
|---------------------------------------------------- | ----- | -------- | ----------- | ------------- | ---------- | ------- | -------- | -------------- | -------------- | ------- | ----------- | - |  | - | ------ | - |  | - | ----- | ----- | 
|                                                     |       |          | Beginning   |               |            |         |          |                | Amount of      |         |             |   |  |   | Ending
|                                                     |       |          | reserves at |               | Cash spent |         | reversed |                | Amount charged |         | reserves at
|(in thousands)                                       |       | 12/31/00 |             | during period |            | charges |          | against assets |                | 3/31/01
|                                                     |       |          |             |               |            |         |          |                |                |        
|Employee separations                                 |       | $        | 2,063       |               |            | $       | (470     | )              |                | $       |            |   |  | $ |       |   |  | $ | 1,593 |      
|                                                    
|                                                    
|                                                    
|                                                    
|Discontinued
product inventories
and related charges |       |          | 9,200       |               |            |         | (1,010   | )              |                |         |            |   |  |   |       |   |  |   | 8,190 |      
|                                                    
|                                                    
|                                                    
|                                                    
|Other exit costs                                     |       |          | 135         |               |            |         | (38      | )              |                |         |            |   |  |   |       |   |  |   | 97    |      
|                                                     |       |          |             |               |            |         |          |                |                |         |             |   |  |   |        |   |  |   |       |      
|                                                     | Total |          | $           | 11,398        |            |         | $        | (1,518         | )              |         | $           |  |  |   | $      |  |  |   | $     | 9,880 | 
|                                                     |       |          |             |               |            |         |          |                |                |         |             |   |  |   |        |   |  |   |       |      

The income statement classification of amounts recorded with respect to the
Third Quarter 2000 Special Charges have been previously disclosed and no
additional amounts were charged to net income in the first quarter of 2001.

We have sold or disposed of a portion of the discontinued product inventories
and expect to sell or dispose of the remainder in 2001. In addition, reserves
were established to fund promotional activity for our customers to discontinue
SKUs currently in our customers inventories and for expected returns and
deductions from our customers. Cash requirements for the special charges
currently are expected to be funded from normal operations.

The expected timing and estimated amount of costs and projected savings are
based on managements judgment in light of circumstances and estimates at the
time the judgements were made. Accordingly, such estimates may change as
future events evolve. Among other matters, unforeseen changes in operating
requirements and other factors referred to in Exhibit 99 to this Form 10-Q
could cause actual operating benefits to differ materially from anticipated
results.

Second Quarter 2000 Restructuring

On June 28, 2000, we announced a restructuring charge designed to improve
profitability and operational efficiencies. We recorded charges totaling $23.9
million ($14.9 million after tax or $0.16 per
share) during 2000 to close our Bristol, Pennsylvania dry detergent plant, to
consolidate the manufacturing and distribution functions of our Specialty
Personal Care busniess, and to restructure our domestic and international sales
organization. We do not anticipate that any additional charges to net

12



---



income
will be recorded in 2001 with respect to this restructuring charge. The
current period activity relating to the Second Quarter 2000 Restructuring is
summarized below:

|                                                      |       |          |             |               |            |                |                |         |             |   |   |   |        |   |     |       | 
|----------------------------------------------------- | ----- | -------- | ----------- | ------------- | ---------- | -------------- | -------------- | ------- | ----------- | - | - | - | ------ | - | --- | ----- | 
|                                                      |       |          | Beginning   |               |            |                |                |         |             |   |   |   | Ending
|                                                      |       |          | reserves at |               | Cash spent |                | Amount charged |         | reserves at
|(in thousands)                                        |       | 12/31/00 |             | during period |            | against assets |                | 3/31/01
|                                                      |       |          |             |               |            |                |                |        
|Employee separations                                  |       | $        | 828         |               |            | $              | (160           | )       |             | $ |  |   |        | $ | 668 |      
|                                                     
|                                                     
|                                                     
|                                                     
|Asset writedowns
and discontinued
product inventories |       |          |            |               |            |                |               |         |             |   |  |   |        |   |    |      
|                                                     
|                                                     
|                                                     
|                                                     
|Other exit costs                                      |       |          | 859         |               |            |                | (419           | )       |             |   |  |   |        |   | 440 |      
|                                                      |       |          |             |               |            |                |                |         |             |   |   |   |        |   |     |      
|                                                      | Total |          | $           | 1,687         |            |                | $              | (579    | )           |   | $ |  |        |   | $   | 1,108 | 
|                                                      |       |          |             |               |            |                |                |         |             |   |   |   |        |   |     |      

The income statement classification of amounts recorded with respect to the
Second Quarter 2000 Restructuring have been previously disclosed and no
additional amounts were charged in the first quarter of 2001.

We sold or disposed of all of the discontinued product inventory by the end of
the first quarter of 2001. The remaining reserves relating to employees
separations and other exits costs are expected to be utilized in 2001. The
Bristol, Pennsylvania dry detergent facility was sold in April 2001. Cash
requirements for the restructuring currently are expected to be funded from
normal operations.

Adjustments to List Prices and Trade Allowances

Beginning in the first quarter of 2001, we adjusted our list prices and trade
promotion spending on selected personal cleansing and laundry care products to
more closely align with our shelf pricing strategies. In the first quarter of
2001, this resulted in a reduction in net sales and trade spending of
approximately $10.0 million. As a result of this change, our gross margin was
reduced by approximately 130 basis points and selling, general and
administrative expenses as a percentage of sales was reduced by approximately
140 basis points. Because the reduction in list price is offset by a reduction
in trade promotion spending, there is no effect on our net earnings.

Comparison of the First Quarter of 2001 with the First Quarter of 2000

Net sales for the quarter increased 7.6% to $401.5 million from $373.1 million
in the same period in 2000 primarily as a result of 9.5% increase in our
Domestic Branded segment and an increase in our International segment of 44.6%,
offset in part by a 58.7% decrease in our Specialty Personal Care segment and a
14.0% decrease in our Commercial Markets and Other segment. First quarter 2001
net sales included $30.4 million from acquisitions of the Coast, Plusbelleand
Zoutbusinesses.

Net sales in our Domestic Branded segment increased 9.5% to $321.7 million from
$293.7 million in the same period last year. Net sales information for the
businesses included in our Domestic Branded segment is set forth below:

|                   |                        |      |               |       |                     |        |       |            |  |   |      |      |  |  |      |     |  
|------------------ | ---------------------- | ---- | ------------- | ----- | ------------------- | ------ | ----- | ---------- |  | - | ---- | ---- |  |  | ---- | --- | -
|                   |                        |      | First Quarter |       | Increase/(Decrease)
|                   |                        |      |               |       |                    
|(in millions)      |                        | 2001 |               | 2000  |                     | Amount |       | Percentage
|                   |                        |      |               |       |                     |        |       |           
|Personal Cleansing |                        | $    | 97.9          |       |                     | $      | 85.6  |            |  | $ | 12.3 |      |  |  | 14.4 | %  
|                  
|                  
|                  
|                  
|Laundry Care       |                        |      | 123.2         |       |                     |        | 112.5 |            |  |   | 10.7 |      |  |  | 9.5  | %  
|                  
|                  
|                  
|                  
|Air Fresheners     |                        |      | 58.4          |       |                     |        | 50.8  |            |  |   | 7.6  |      |  |  | 15.0 | %  
|                  
|                  
|                  
|                  
|Food Products      |                        |      | 42.2          |       |                     |        | 44.8  |            |  |   | (2.6 | )    |  |  | (5.8 | %) 
|                   |                        |      |               |       |                     |        |       |            |  |   |      |      |  |  |      |    
|                   | Total Domestic Branded |      | $             | 321.7 |                     |        | $     | 293.7      |  |   | $    | 28.0 |  |  |      | 9.5 | %
|                   |                        |      |               |       |                     |        |       |            |  |   |      |      |  |  |      |    

13



---



The increase in Personal Cleansing resulted primarily from the acquisition of
Coastin 2000 and the introduction of Dial Complete. The increase in Laundry
Care is primarily due to an increase in Purexliquid detergent
and the inclusion of results from the Zout
acquisition, offset in part by softness in our non-Purex branded dry detergent
business. The increase in Air Fresheners is primarily due to new product
introductions. The decline in Armour resulted primarily from weakened demand
and residual excess trade inventory in distribution channels.

Net sales in our Specialty Personal Care segment decreased 58.7% to $10.2
million from $24.8 million in the same period last year primarily due to
discontinuation of both the Natures Accents product line and other
unprofitable SKUs associated with a special charge taken in the third quarter
of 2000. Historically, approximately 65% of the total net sales of our
Specialty Personal Care business are recorded in the third and fourth quarters.
We currently anticipate that net sales of our Specialty Personal Care segment
will be lower in the second quarter of 2001 compared to the same period last
year as a result of the factors discussed above.

Net sales in our International segment increased 44.6% to $55.7 million from
$38.5 million primarily as a result of the inclusion of the results of the
Plusbelle acquisition in Argentina, partially offset by lower sales in Mexico
caused by difficulties encountered in the outsourcing of our sales
administrative function.

Net sales in our Commercial Markets and Other segment decreased 14.0% to $13.9
million from $16.1 million primarily as a result of softness in our amenities
business and decreased sales of products through secondary channels.

Our gross margin, including the list price adjustment described above,
decreased by 70 basis points to 48.8% from 49.5% in the same period in 2000.
Gross margin increased 60 basis points to 50.1%, excluding the impact of the
adjustment in list prices. This improvement is primarily due to a favorable
sales mix, offset in part by higher energy costs.

Selling, general and administrative expenses are up 15.7% to $163.7 million
from $141.4 million in the same period in 2000. This increase primarily
resulted from an increase in marketing expenses to support our core domestic
brands and new product launches.

Interest and other expenses increased 43.9% to $13.9 million from $9.6 million
in the same period in 2000. The increase was primarily due to increased
borrowings to fund acquisitions of the Coast, Plusbelle and Zout businesses,
our prior investments in the Dial/Henkel joint ventures and our stock
repurchase program in 2000.

Our share of the income in the Dial/Henkel joint venture was $2.0 million in
the first quarter, primarily resulting from lower than expected costs
associated with the discontinued Purex Advancedbusiness.

Our effective income tax rate increased to 36.3% from 34.5% in the same period
in 2000. This increase is primarily attributable to higher non-recurring
Foreign Sales Corporation benefits in 2000, an increase in the amount of
non-deductible goodwill and lower pre-tax income.

Net income was $13.1 million or $0.14 per diluted share, versus $21.5 million,
or $0.23 per diluted share in the first quarter of 2000. This decrease in net
income is primarily attributable to the factors explained above.

Liquidity and Capital Resources

Total debt decreased $10.0 million to $585.0 million from $595.0 million at
December 31, 2000. The
decrease in total debt was funded from cash flow from operations.

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Cash flow from operations in the first quarter of 2001, was $14.4 million
compared to cash used of $29.4 million in the same period in 2000. The
increase in cash provided from operations is primarily attributable to an
improvement in working capital offset in part by a decrease in net income.
Debt repayment in 2001 is expected to be approximately $80 to $90 million, not
including any possible proceeds from future asset sales that may also be used
to reduce debt.

Capital expenditures for the first quarter of 2001 were $3.2 million. Capital
spending in 2001 is expected to approximate $40.0 million. These expenditures
will be concentrated primarily on equipment and information systems that
provide opportunities to reduce manufacturing, logistic and administrative
costs. Our spending plans are dependent on the availability of funds, as well
as identification of projects with sufficient returns. As a result, there can
be no assurance as to the quantity and the type of capital spending in the
future.

In the second quarter of 2000 we entered into a new $450 million credit
facility that replaced our $350 million facility that was established in July
1999. Our credit facility was intended to serve as a backstop facility for our
commercial paper program. However, due to market conditions and the placement
of our short term debt rating on watch by Moodys Investors Service, we have
not been able to access the commercial paper market in the first quarter of
2001. As a result, we have been making borrowings under our credit facility.
Borrowings under our credit facility, are on a revolving basis under
commitments available until July 2005 for up to $270 million and under
commitments available until July 2001 for up to $180 million. We will need to
refinance approximately $75 million of short term debt drawn under the $180
million commitment that expires in July 2001 and are considering a variety of
financing options. The interest rate applicable to borrowings under our credit
facility is, at our option, indexed to the bank prime rate or the London
Interbank Offering Rate (LIBOR), plus appropriate spreads over such indices
during the term of the credit facility. Our credit facility also requires us
to pay commitment fees to the banks making commitments under the credit
facility. These spreads and fees are subject to adjustment if our debt
ratings change.

The financial covenants of the credit agreement require us to maintain minimum
net worth of at least 80% of such net worth as of the date of the agreement
plus 25% of net income subsequent thereto plus certain other additions to net
worth. The covenants also require us to maintain a maximum ratio of
three-to-one for funded debt to earnings before interest, taxes, depreciation
and amortization (EBITDA). The following table reflects the maximum ratio of
funded debt to EBITDA permitted under Dials credit facility:

|               |  |               |              | 
|-------------- |  | ------------- | ------------ | 
|Date           |  | Maximum Ratio
|               |  |              
|March 31, 2001 |  |               | 3.50 to 1.00 | 
|              
|              
|              
|              
|June 30, 2001  |  |               | 3.25 to 1.00 | 
|              
|              
|              
|              
|Thereafter     |  |               | 3.00 to 1.00 | 

Dial was in compliance with all covenants under the credit facility at March
31, 2001. As previously disclosed, we are reviewing strategic alternatives
with respect to our Specialty Personal Care business, while working
aggressively to improve the performance of this business. At this time, we
believe that if a decision is made in the future to divest of this business, a
write-down of assets to their estimated market value would be required. Based
on current estimates, such a writedown would be in the range of $150 to $170
million after tax. If this takes place, we will need our lenders waiver or
amendment of our minimum net worth covenant because the estimated resulting
write-down of assets would violate this covenant.

Recent Accounting Pronouncements

The Financial Accounting Standards Board issued a Proposed Statement of
Accounting Standards,
Business Combinations and Intangible Assets  Accounting for Goodwill. The
proposed Statement

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would prohibit goodwill amortization and establish a new
method of testing goodwill for impairment. The proposed statement would also
prohibit the pooling of interest method of accounting for business combinations
and establish a new accounting standard for goodwill acquired in a business
combination. The provisions of the proposed Statement would be effective for
fiscal quarters beginning after the issuance of a final Statement. The impact
of the Statement may be significant if it is issued as currently proposed, as
we would be required to test our goodwill for impairment under new standards
and would no longer recognize goodwill amortization expense. In first quarter
2001, we incurred $2.9 million in goodwill amortization compared to $2.3
million in the first quarter of 2000.

In May 2000, the Financial Accounting Standards Boards Emerging Issues Task
Force (EITF) released Issue No. 00-14, Accounting for Certain Sales
Incentives. This issue addresses the recognition, measurement, and income
statement classification for certain sales incentives, including coupons,
rebates and free products. The consensus on EITF 00-14 will be effective for
Dial in the first quarter of 2002. The implementation of this consensus will
require us to change the way we classify certain sales incentives that are
currently recorded as selling, general and administrative expense. The cost of
coupons and rebates, which is anticipated to be approximately $16.0 million in
2001, will be recorded as a reduction of net sales. The cost of free products,
which is anticipated to be approximately $10.4 million in 2001, will be recorded
as cost of products sold.

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

We currently record all of the consideration we provide to our customers to
promote our products as trade promotion expense. Such costs include
consideration given to customers for space in their stores (slotting fees),
consideration given to obtain favorable display positions in the retailers
stores and other promotional activity. For income statement purposes, we
currently record all trade promotion expense as Selling, general and
administrative expense.The consensus on EITF 00-25 will be effective for Dial
in the first quarter of 2002. The implementation of this consensus will
require that most or all of the these types of trade promotion costs be
recorded as a reduction of sales rather than as selling, general and
administrativeexpenses. We expense these promotional activities in the period
during which the related product ships. In 2001, we expect to incur
approximately $390 million of trade promotion expense.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

On May 21, 1999, we were served with a complaint filed by the U.S. Equal
Employment Opportunity Commission (the EEOC) in the U.S. District Court for
the Northern District of Illinois, Eastern Division. This action is entitled
Equal Employment Opportunity Commission v. The Dial Corporation, Civil Action
No. 99 C 3356. The EEOC alleges that Dial has engaged in a pattern and
practice of discrimination against a class of female employees by subjecting
them to sexual or sex-based harassment and failing to take prompt remedial
action after these employees complained about this alleged harassment. The
EEOC is seeking to enjoin Dial from this alleged harassment, to require us to
train our managerial employees regarding the requirements of Title VII of the
Civil Rights Act of 1964 and to recover unspecified compensatory and punitive
damages. We have denied the EEOCs allegations. Discovery has been completed
and we have filed dispositive motions. Based upon our insurance coverage for
this lawsuit, we currently do not believe that this lawsuit will have a
material adverse effect on our operating results or financial condition.
However, assurances cannot be given regarding the ultimate outcome of this
matter.

Item 6. Exhibits and Reports on Form 8-K

(A) Exhibits



| | 99. |  | Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for Forward-Looking Statements.
| | --- |  | -----------------------------------------------------------------------------------------------------------------

(B) Reports on Form 8-K



| |  | We filed a Current Report on Form 8-K, dated March 28, 2001, reporting that
Dial issued a press release announcing that Conrad A. Conrad, Executive Vice
president and CFO, will present to investors at the Bank of America
Securities Consumer Conference. The press release also announced that Dial
was comfortable with the First Call earnings per share estimate for the
first quarter 2001 and for the full year.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | We filed a Current Report on Form 8-K, dated April 5, 2001, reporting that
Dial issued a press release relating to the earnings release conference call
held on Wednesday April 25, 2001.                                                                                                                                                                                                                                
|
| |  | We filed a Current Report on Form 8-K, dated April 26, 2001, reporting that
Dial issued a press release relating to its financial results for the first
quarter of 2001, and its outlook for the remainder of 2001.                                                                                                                                                                                                      

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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 10, 2001



| | /s/ Conrad A. Conrad
Conrad A. Conrad
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Authorized Officer)
| | -----------------------------------------------------------------------------------------------------------------------------------------------



| | /s/ John F. Tierney
John F. Tierney
Senior Vice President and Controller
(Principal Accounting Officer and Authorized Officer)
| | ------------------------------------------------------------------------------------------------------------------------------

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EXHIBIT INDEX

|            |  |                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                      
|            |  |                                                                                                                  
|99.         |  | Private Securities Litigation Reform Act of 1995 Safe Harbor
Compliance Statement for Forward-Looking Statements.