CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended OctoberJanuary 31, 19941995 Commission File Number 0-8675
OIL-DRI CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
DELAWARE 36-2048898
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
410 North Michigan Avenue
Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 321-1515
Indicate by check mark whether the registrant (1) has filed all 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 at least the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
Common Stock - 5,100,6235,118,824 Shares (Including 283,696 Treasury Shares)
Class B Stock - 2,132,8952,114,694 Shares
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statement of Financial Position
ASSETS
[CAPTION]
October
January 31 July 31
(Unaudited)
1995 1994 1993 1994
CURRENT ASSETS
Cash and Cash Equivalents $ 2,248,147 $ 2,586,077 $ 6,394,315$1,320,099 $4,748,235 $6,394,315
Investment Securities, at Cost 3,586,569 5,234,9712,739,496 4,491,460 3,351,423
Accounts Receivable 24,424,847 19,619,45724,757,434 21,242,645 19,854,899
Allowance for Doubtful Accounts (186,038) (211,144)(201,006) (225,454) (171,940)
Inventories 12,592,104 9,719,10512,888,361 8,793,088 11,203,008
Prepaid Expenses and Taxes 3,879,701 3,164,0165,491,172 3,814,840 3,730,298
Total Current Assets 46,545,330 40,112,48246,995,556 42,864,814 44,362,003
PROPERTY, PLANT AND EQUIPMENT - AT COST
Cost 102,235,020 90,304,566104,526,298 91,974,433 100,192,811
Less Accumulated Depreciation and 43,647,659 37,021,642 39,949,247
Amortization 41,763,672 35,623,509 39,949,247
Total Property, Plant
and Equipment, Net 60,471,348 54,681,05760,878,639 54,952,791 60,243,564
OTHER ASSETS
Excess of Investment Subsidiaryin
Subsidiaries
Over Fair Value of Assets (Net
of 4,370,454 4,502,455 4,436,334
Accumulated amortization)
4,403,394 4,527,859 4,436,334
Other 3,346,939 2,835,5463,472,126 3,175,775 3,225,281
Total Other 7,750,333 7,363,4057,842,580 7,678,230 7,661,615
Assets
TOTAL ASSETS $114,767,011 $102,156,944$115,716,775 $105,495,835 $112,267,182
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statement of Financial Position
LIABILITIES & STOCKHOLDERS EQUITY
OctoberJanuary 31 July 31
(Unaudited)
1995 1994 1993 1994
CURRENT LIABILITIES
Current Maturities of NoteNotes $ 598,876 $1,340,863 $1,243,479
Payable $ 649,944 $1,017,142 $ 1,243,479
Accounts Payable - Trade 5,258,876 4,005,8406,023,047 4,501,142 4,677,793
Income Taxes Payable - 296,812 -
Dividends Payable 520,552 454,117452,539 449,302
Accrued Expenses 9,377,605 8,505,6068,168,148 8,813,515 9,230,664
Total Current Liabilities 15,806,977 14,279,51715,310,623 15,108,059 15,601,238
NONCURRENT LIABILITIES
Notes Payable 21,519,373 17,170,02021,006,966 16,668,55 21,521,243
Deferred Income Taxes 326,284 1,209,486320,616 1,209,476 323,379
Deferred Compensation 1,610,740 1,456,3091,672,689 1,519,975 1,761,818
Total Noncurrent Liabilities 23,456,397 19,835,81523,000,271 19,398,016 23,606,440
Total Liabilities 39,263,374 34,115,33238,310,894 34,506,075 39,207,678
STOCKHOLDERS EQUITY
Common Stock 723,352 720,208723,168 723,352
Paid-In Capital in Excess of Par Value7,657,393 7,628,795 7,657,394
7,255,015 7,657,394Value
Retained Earnings 72,375,658 64,151,73374,428,396 66,949,539 70,077,278
Cumulative Translation Adjustment (954,458) (1,026,811)(1,104,951) (999,317) (1,135,951)
79,801,946 71,100,14581,704,190 74,302,185 77,322,073
Less Treasury Stock, At Cost 4,298,309 3,058,5333,312,425 4,262,569
Total Stockholders 75,503,637 68,041,61277,405,881 70,989,760 73,059,504
Total LiabilitiesEquity
TOTAL LIABILITIES & Stockholders
Equity $114,767,011 $102,156,944STOCKHOLDERS $115,716,775 $105,495,835 $112,267,182
EQUITY
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statement of Income and Retained Earnings
ThreeSix Months Ended OctoberJanuary 31
1995 1994 1993
(Unaudited) (Unaudited)
Net Sales $36,799,337 $33,554,070$74,628,211 $71,004,088
Cost Of Sales 26,631,621 23,824,91654,621,099 50,625,836
Gross Profit 10,167,716 9,729,15420,007,112 20,378,252
Selling, General And Administrative
Expenses 5,995,711 5,984,11911,870,434 12,000,729
Operating Income 4,172,005 3,745,0358,136,678 8,377,523
OTHER INCOME (EXPENSE)
Interest Expense (487,535) (389,325)(984,908) (803,799)
Interest Income 103,539 99,248167,340 176,846
Foreign Exchange Gain (Loss) 3,369 1,233(11,249) 5,542
Other, Net (21,496) (15,152)
(402,123) (303,996)(68,908) (3,900)
(897,725) (625,311)
Income Before Income Taxes 3,769,882 3,441,0397,238,953 7,752,212
Income Taxes
950,950 866,3001,846,731 1,926,925
Net Income 2,818,932 2,574,7395,392,222 5,825,287
RETAINED EARNINGS
Balance at Beginning of Year 70,077,278 62,031,814
Less: Cash Dividends Declared 520,552 454,8201,041,104 907,562
Retained Earnings - OctoberJanuary 31 $72,375,658 $64,151,733$74,428,396 $66,949,539
Average Shares Outstanding 6,957,700 7,027,5066,956,698 7,019,400
Net Income Per Share $ 0.41 $ 0.37$0.78 $0.83
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Three Months Ended October
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statement of Income and Retained Earnings
Three Months Ended January 31
1995 1994
(Unaudited) (Unaudited)
Net Sales $37,828,874 $37,450,018
Cost Of Sales 27,989,478 26,800,920
Gross Profit 9,839,396 10,649,098
Selling, General And Administrative
Expenses 5,874,723 6,016,610
Operating Income 3,964,673 4,632,488
OTHER INCOME (EXPENSE)
Interest Expense (497,373) (414,474)
Interest Income 63,801 77,598
Foreign Exchange Gain (Loss) (14,618) 4,309
Other, Net (47,412 11,252
(495,602) (321,315)
Income Before Income Taxes 3,469,071 4,311,173
Income Taxes 895,781 1,060,625
Net Income $2,573,290 $3,250,548
Average Shares Outstanding 6,955,647 7,011,565
Net Income Per Share $0.37 $0.46
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statement of Cash Flows
For the Six Months Ended January 31 (Unaudited)
1995 1994 1993
Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $2,818,932 $2,574,739$5,392,222 $5,825,287
Adjustments to Reconcile Net Income to
Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,821,537 1,558,3843,828,110 3,133,788
Provision for bad debts 9,229 24,23226,248 44,740
(Increase) Decrease in:
Accounts Receivable (4,515,026) (1,231,276)(4,887,236) (2,858,293)
Inventories (1,350,335) (1,697,586)(1,676,260) (768,486)
Prepaid Expenses and Taxes (154,179) (365,412)(1,776,807) (1,144,147)
Other Assets (97,794) (40,199)(190,217) (368,062)
Increase (Decrease) in:
Accounts Payable 595,723 (1,595,002)1,344,951 (1,095,480)
Accrued Expenses (1,021,121) 473,888
Deferred Taxes and Noncurrent
Income Taxes Payable - 60,945
Accrued Expenses 168,050 165,683(9,880)
Deferred Compensation (151,078) 76,363(89,129) 140,029
Total Adjustments (3,673,873) (3,053,748)(4,441,461) (2,451,903)
Net Cash Used In Operating Activities ( 854,941) (479,009)950,761 3,373,384
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (2,025,333) (2,528,594)(4,465,277) (4,597,984)
Purchases of Investment Securities (2,116,842) (4,251,980)(2,114,772) -
Dispositions of Investment Securities 1,905,413 4,610,7172,700,913 1,114,022
Other 7,600 -19,697 219,175
Net Cash Used in Investing Activities (2,229,162) (2,169,857)(3,859,439) (3,264,787)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Short Term Borrowings - 362,895158,735
Principal Payments on Long Term Debt (595,405) (684,289)(1,158,880) (657,863)
Proceeds from Issuance of Common Stock - 294,935671,675
Dividends Paid (455,483) (453,452)(976,035) (907,772)
Foreign Currency TranslatioNTranslation
Adjustment 24,563 94,3505,117 8,251
Purchases of Treasury Stock (35,740) (690,726)(944,618)
Net Cash Used In Financing Activities (1,062,065) (1,076,287)(2,165,538) (1,671,592)
Net (Decrease) in Cash and Cash
Equivalents (4,146,168) (3,725,153)(5,074,216) (1,562,995)
Cash and Cash Equivalents, Beginning of
Year 6,394,315 6,311,230
Cash and Cash Equivalents, OctoberJanuary 31 $ 2,248,147 $2,586,077$1,320,099 $4,748,235
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREESIX MONTHS ENDED OCTOBERJANUARY 31, 19941995 COMPARED TO THREESIX
MONTHS ENDED OCTOBERJANUARY 31, 19931994
RESULTS OF OPERATIONS
Consolidated net sales for the threesix months ended OctoberJanuary 31, 19941995 were
$36,799,000,$74,628,200, an increase of $3,245,000,$3,624,100, or 9.7%5.1%, over sales of $33,554,000$71,004,100
in the first threesix months of fiscal 1994. Net income for the threesix months
ended OctoberJanuary 31, 19941995 was $2,819,000$5,392,200 or $0.41$0.78 per share, an increasea decrease of
9.5%7.4% from $2,575,000$5,825,300 or $0.37$0.83 per share earned in the first quartersix months of
fiscal 1994.
Net sales of industrial and environmental sorbents decreased $241,000$177,000 from
prior year levels. Sales of industrial clay absorbents decreased slightly
in dollar volume while sales of nonclay sorbents decreased $202,000$165,000 or 13.1%5.6%, reflecting
increased competition in the markets in which the Company participates.
Sales of cat box absorbents increased $2,484,000$2,786,000 or 14.7%7.7% from fiscal 1994
first quarterhalf results. This growth is primarily the result of sales increases in
branded and private label products, both scoopable and traditional coarse
litter, in both the grocery and mass merchandise markets. Sales of
agricultural absorbents increased $397,000decreased $412,000 or 9.2%4.0% from fiscal 1994.1994 due
primarily to changes in the formulation schedules of our major agricultural
chemical customers. Worldwide sales of fluid filtration and purification
products remained unchangeddecreased slightly from prior year levels.levels due to increased
competition and lower demand associated with high-quality oil production
this year.
Consolidated gross profit as a percentage of net sales for the threesix months
ended OctoberJanuary 31, 19941995 decreased to 27.6%26.8% from 29.0%28.7% in the first threesix
months of fiscal 1993.1994. Changes in sales mix towards greater value addedless profitable
products was offset byand increased costs of packaging materials and shipping.shipping
contributed to this decline.
Operating expenses as a percentage of net sales decreased to 16.3%15.9% in the
first quartersix months of fiscal 1995 from 17.8%16.9% in the first quarterhalf of fiscal
1994. This change reflects continued emphasis on controlling variable
costscost control and matching
fixed overhead costs to volume.
Interest expense increased $98,200$181,100 due to increased debt levels. Interest
income increaseddecreased slightly.
The Companys effective tax rate was unchanged atincreased to 25.5% of income in the first
quarterhalf of 1995 as compared to 25.2%24.9% the first quarterhalf of fiscal 1994.
Total assets of the Company increased $2,500,000$3,449,600 during the threesix months
ended OctoberJanuary 31, 1994.1995. Current assets increased $2,183,000$2,633,600 or 4.9%5.9% from
fiscal year end balances reflecting increased accounts receivable and
inventory balances offset against reduced cash and investments to fund
increased sales. Property, plant and equipment, net of accumulated
depreciation, increased $228,000.$635,100.
Total liabilities in the threesix months ended OctoberJanuary 31, 1994 increased
slightly.1995 decreased
$896,800. Current liabilities increased $206,000decreased $290,600 or 1.3%1.9% from July 31,
1994 balances while noncurrent liabilities decreased $150,000$606,200 or 0.6%2.6% from
year end.
The Company expects recent sales patterns of the first half of fiscal 1995 to
continue in fiscal 1995.
Growth is expected to come primarily fromfor the cat box and fluid
purification product lines.balance of the year. Consumer growth is expected to be
achieved through increased distribution in the grocery industry and by
maintaining the Companys strong position in the fast growing mass
merchandising and warehouse club outlets. Growth of specialty adsorbentsIt is expected to
continue with increased market penetrationanticipated that price
increases effective in the third and fourth quarter will offset a portion
of the Companys value-added
fluid filtration and purification products. Finally, the Companys
recently completed expansionincreased costs of its Ripley, Mississippi manufacturing
facility is expected to provide significant new capacity for the
agricultural product line, relieving capacity constraints experienced
during fiscal 1994.sales.
LIQUIDITY AND CAPITAL RESOURCES
The current ratio increased to 2.943.07 at OctoberJanuary 31, 19941995 from 2.84 at July
31, 1994. Working capital increased $1,978,000$2,924,000 in the threesix months ended
OctoberJanuary 31, 19941995 to $30,738,000.$31,684,900. Cash provided by operations continues to
be the Companys primary source of funds to finance operating needs and
capital expenditures. During the quartersix months ended January 31, 1995 the
balances of cash and cash equivalents and other investments declined $3,911,000.$5,074,200. This reduction
in cash and investments was used to fund capital expenditures of
$2,025,000,$4,465,300, to pay dividends of $455,000$976,000 and to reduce debt by $595,000.$1,158,900.
Total cash and investment balances held by the Companys foreign
subsidiaries at OctoberJanuary 31, 1995 and 1994 were $3,132,400 and $4,097,000
respectively.
The Companys long term debt at January 31, 1995 decreased $514,300 from
year end balances. Long term debt to equity decreased to 27.1% from 29.5%
at July 31, 1995.
THREE MONTHS ENDED JANUARY 31, 1995 COMPARED TO
THREE MONTHS ENDED JANUARY 31, 1994
Consolidated net sales for the three months ended January 31, 1995 were
$37,828,900 an increase of 1.0% from net sales of $37,450,000 in the same
period last year. Net income for the quarter ended January 31, 1995 was
$2,573,300, or $0.37 per share a decrease of 20.8% from net income of
$3,250,500 or $0.46 per share reported in the quarter ended January 31,
1994.
Domestic sales of industrial and 1993 were $3,501,000environmental sorbents increased $64,000
or 1.4%. Sales of industrial clay sorbents increased $27,000 or 0.8% while
sales of nonclay sorbents increased $37,000 or 2.6%. Domestic sales of cat
box absorbents increased $302,000, while domestic sales of agricultural
absorbents and $4,408,000specialty adsorbents decreased $809,000 and $73,000
respectively in the second quarter of fiscal 1995 as compared to the same
period last year. Sales of transportation services increased $323,000 in
the second quarter of fiscal 1995 as compared to the second quarter of
fiscal 1994.
Gross profit for the three months ended January 31, 1995 decreased to 26.0%
of sales as compared to 28.4% in the second quarter of fiscal 1994 due to
increased costs of packaging material and shipping. Operating expenses
decreased to 15.5% of sales as compared to 16.1% of sales in the second
quarter of fiscal 1995 and 1994 respectively.
Interest expense for the second quarter of fiscal 1995 compared to the
second quarter of fiscal 1994 increased $82,900 reflecting increased debt.
Interest income decreased $9,500 in the same period as a result of lower
invested balances.
The Companys effective tax rate in the second quarter of fiscal 1995 was
25.8% of income as compared to 24.6% in the same period last year.
FOREIGN OPERATIONS
The Companys net sales by its foreign subsidiaries for the six months
ended January 31, 1995 were $5,898,100 constituting 7.9% of sales. This
represents a increase of $738,400 or 14.3%, primarily due to increased
sales in Canada, from the first half of fiscal 1994 in which foreign
subsidiary sales were $5,159,700 and constituted 7.3% of sales. Net income
of the Companys foreign subsidiaries for the six months ended January 31,
1995 was $220,900 compared with $156,700 in the second quarter of fiscal
1994. Identifiable assets of the Companys foreign subsidiaries as of
January 31, 1995 were $10,221,400 a decrease of $78,800 from $10,300,200 as
of January 31, 1994.
The Companys net sales by its foreign subsidiaries for the three months
ended OctoberJanuary 31, 19941995 were $2,775,000$3,122,700 constituting 7.5%8.3% of sales. This
represents a increase of $244,000$494,000 or 9.6%18.8%, primarily due to increased
sales in Canada, from the firstsecond quarter of fiscal 1994 in which foreign
subsidiary sales were $2,531,000$2,628,700 and constituted 7.5%7.0% of sales. Net income
of the Companys foreign subsidiaries for the three months ended OctoberJanuary
31, 19941995 was $94,000$126,900 compared with $257,000$34,000 in the firstsecond quarter of fiscal
1994. Identifiable assets of the Companys foreign subsidiaries
as of October 31, 1994 were $9,803,000 an decrease of $1,113,000
from $10,916,000 as of October 31, 1993.
Part II - Other Information
ITEM 1.Legal Proceedings - A patent infringement action has been initiated
by Edward Lowe Industries, Inc. in the United States District Court
for the Northern District of Illinois, Eastern Division, against
Oil-Dri Corporation of America and Marcal Paper Mills, Inc. The
action alleges that the defendants have infringed certain patents
pertaining to paper granules and their manufacture and seeks
injunctive relief and damages. The Company has reviewed with its
patent counsel all the claims of the patents in question, and its
paper granule products in light of such claims, and finds no merit
in the lawsuit. The Company intends to contest the action
vigorously.
Item 4.Submission of matters to a votes of security holders - On December
14, 1994 the 1994 Annual Meeting of Stockholders of Oil-Dri
Corporation of America was held for the purpose of considering and
voting on:
1. The election of eleven directors.
2. A proposal to amend the Companys Certificate of
Incorporation in order to authorize 30,000,000 shares
of new class of non-voting common stock to be designated
as Class A Common Stock.
The Board of Directors had determined that only holders of
record of outstanding shares of Common Stock and Class B Stock at
the close of business on October 21, 1994 were entitled to notice
of, and to vote at, the annual meeting or any adjournment thereof.
There was present at said meeting either in person or by proxy,
shareholders totaling 25,012,464 votes, which is 95.7% of the total
votes outstanding.
Election of Directors
The election of directors required a plurality of votes
cast. Abstentions and broker non-votes have no effect on the
outcome of the election of directors.
The following schedule sets forth the results of said vote
to elect as directors the eleven nominees to hold office until the
next Annual Meeting Stockholders and until their successors have
been elected and qualify.
Director Votes For Votes Withheld
J. Steven Cole 24,949,455 63,009
Norman B. Gershon 24,619,792 392,672
Daniel S. Jaffee 24,949,455 63,009
Richard M. Jaffee 24,949,455 63,009
Robert D. Jaffee 24,949,455 63,009
Edgar D. Jannotta 24,949,455 63,009
Joseph C. Miller 24,949,455 63,009
Paul J. Miller 24,949,455 63,009
Haydn H. Murray 24,948,955 63,509
Allan H. Selig 24,920,710 91,754
Bruce H. Sone 24,920,714 91,750
Part II - Other Information (Cont'd.)
Proposal to Amend Certificate of Incorporation
The proposed amendment to the Companys Certificate of
Incorporation in order to be adopted had to receive the affirmative
vote of (i) the holders of a majority of the votes of the
outstanding shares of Common Stock (one vote per share) and Class B
Stock (10 votes per share), voting as a single class, (ii) the
holders of a majority of the outstanding shares of Class B Stock,
voting as a class, and (iii) the holders of a majority of the
outstanding shares of Common Stock, voting as a class. Abstentions
and broker non-votes have the effect of votes against the
Amendment.
The following schedule sets forth the results of said vote
to amend the Certificate of Incorporation.
FOR AGAINST ABSTAIN BROKER NON-
VOTES
Common Stock
Votes 2,670,353 852,321 36,531 330,649
Class B Votes 21,122,160 0 0 0
Total Votes 23,792,963 852,321 36,531 330,649
ITEM 5.(a) Exhibits: The following documents are an exhibit to this
report.
Exhibit - 11 -11: Statement Re: Computation of per
share earnings.
(b) During the quarter for which this report is filed, no
reports on Form 8-K were filed.
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.
OIL-DRI CORPORATION OF AMERICA
(Registrant)
BY /s/Donald J. Deegan
Donald J. Deegan
Director of Finance and Accounting,
Chief Accounting Officer
BY /s/Richard M. Jaffee
Richard M. Jaffee
President
Dated: December 14, 1994
INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBIT TITLE SEQUENTIALLY NUMBER PAGE
(11) Statement Re:
Computation of Per Share 12
Earnings
Exhibit 11
OIL-DRI CORPORATION OF AMERICA
Computation of Weighted Average Number
of Shares Outstanding
Average
Shares-
(Weighted
Number Number of Shares) Number
of Shares Weighted of Days
Quarter End Period Days Outstanding Shares As Adjusted
October 31, 1994 08/01/94 to 08/08/94 8 6,951,822 55,614,576
08/09/94 to 10/31/94 84 6,949,822 583,785,048
92 639,399,624 6,949,996
Assuming exercise of options reduced by the number of shares
which could have been purchased with the proceeds from
exercise of such options.
7,704
6,957,700
October 31, 1993 08/01/93 to 08/11/93 11 6,991,285 76,904,135
08/12/92 to 08/23/93 12 6,993,827 83,925,924
08/24/92 to 09/02/93 10 6,995,174 69,951,740
09/03/93 to 09/14/93 12 6,995,638 83,947,656
09/15/93 to 09/19/93 5 6,996,416 34,982,080
09/20/93 to 09/21/93 2 6,997,041 13,994,082
09/22/93 to 09/29/93 8 6,998,121 55,984,968
09/30/93 to 10/03/93 4 6,993,121 27,972,484
10/04/93 to 10/17/93 14 6,988,121 97,833,694
10/18/93 1 6,983,121 6,983,121
10/19/93 to 10/24/93 6 6,978,121 41,868,726
10/25/93 to 10/28/93 4 6,978,972 27,915,888
10/29/93 to 10/31/93 3 6,980,823 20,942,469
92 643,206,967 6,991,380
Assuming exercise of options reduced by the number of shares
which could have been purchased with the proceeds from
exercise of such options.
36,126
7,027,506
March 10, 1995