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 October 31, 1996 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 - 5,193,150 Shares (Including 565,467 Treasury
Shares)
Class B Stock - 2,042,368 Shares
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Financial Position
ASSETS
October 31 July 31
(Unaudited)
1996 1996
CURRENT ASSETS
Cash and Cash Equivalents $ 8,233,211 $10,113,544
Investment Securities, at Cost 1,905,000 1,594,000
Accounts Receivable 23,311,456 20,666,623
Allowance for Doubtful Accounts (278,487) (225,970)
Inventories 11,064,621 11,737,068
Prepaid Expenses and Taxes 4,602,200 4,325,061
Total Current Assets 48,838,001 48,210,326
PROPERTY, PLANT AND EQUIPMENT - AT COST
Cost 114,437,608 112,943,046
Less Accumulated Depreciation and
Amortization 56,625,627 54,730,624
Total Property, Plant
and Equipment, Net 57,811,981 58,212,422
OTHER ASSETS
Goodwill(Net of Accumulated
Amortization) 4,139,511 4,172,526
Deferred Income Taxes 2,264,291 2,264,291
Other 4,880,428 4,833,303
Total Other 11,284,230 11,270,120
Assets
TOTAL ASSETS $117,934,212 $117,692,868
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Financial Position
LIABILITIES & STOCKHOLDERS' EQUITY
October 31 July 31
(Unaudited)
1996 1996
CURRENT LIABILITIES
Current Maturities of Notes $ 1,626,762 $ 1,626,762
Payable
Accounts Payable - Trade 5,078,266 5,338,787
Dividends Payable 492,756 519,610
Accrued Expenses 10,004,748 10,326,518
Total Current Liabilities 17,202,532 17,811,677
NONCURRENT LIABILITIES
Notes Payable 18,978,000 18,978,000
Deferred Compensation 2,297,943 2,253,313
Other 1,541,724 1,420,382
Total Noncurrent Liabilities 22,817,667 22,651,695
Total Liabilities 40,020,199 40,463,372
STOCKHOLDERS' EQUITY
Common Stock 723,552 723,552
Paid-In Capital in Excess of Par 7,664,006 7,660,600
Value
Retained Earnings 78,823,061 77,385,514
Cumulative Translation Adjustment (940,247) (1,018,416)
86,270,372 84,751,250
Less Treasury Stock, At Cost 8,356,359 7,521,754
Total Stockholders' 77,914,013 77,229,496
Equity
TOTAL LIABILITIES & STOCKHOLDERS' $117,934,212 $117,692,868
EQUITY
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings
Three Months Ended October 31
1996 1995
(Unaudited) (Unaudited)
Net Sales $40,525,138 $39,307,934
Cost Of Sales 28,233,253 27,648,886
Gross Profit 12,291,885 11,659,048
Selling, General And Administrative
Expenses 9,210,274 9,312,281
Operating Income 3,081,411 2,346,767
OTHER INCOME (EXPENSE)
Interest Expense (467,195) (490,161)
Interest Income 150,576 152,594
Foreign Exchange Loss (304) (3,593)
Other, Net
(63,478) (54,426)
(380,401) (395,586)
Income Before Income Taxes 2,701,010 1,951,181
Income Taxes 770,707 538,293
Net Income 1,930,303 1,412,888
RETAINED EARNINGS
Balance at Beginning of Year 77,385,514 76,033,462
Less: Cash Dividends Declared 492,756 517,464
Retained Earnings - October 31 $78,823,061 $76,928,886
Average Shares Outstanding $6,720,704 $6,840,079
Net Income Per Share $0.29 $0.21
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended October 31 (Unaudited)
1996 1995
Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,930,303 $1,412,888
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 1,927,452 2,019,766
Provision for bad debts 75,000 28,735
(Increase) Decrease in:
Accounts Receivable (2,667,316) (2,468,662)
Inventories 672,447 (1,016,138)
Prepaid Expenses and Taxes (282,843) 71,742
Other Assets (48,058) (91,996)
Increase (Decrease) in:
Accounts Payable (970,394) 160,589
Accrued Expenses 381,585 (104,528)
Other 121,341 168,042
Deferred Compensation 44,630 76,235
Total Adjustments (746,156) (1,156,215)
Net Cash Provided by Operating Activities 1,184,147 256,673
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (1,503,092) (863,670)
Purchases of Investment Securities (311,000) -
Dispositions of Investment Securities - 914,428
Other 21,583 -
Net Cash Provided by (Used in) Investing (1,792,509) 50,758
Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Short Term Borrowings - 257,380
Dividends Paid (511,469) (519,286)
Purchases of Treasury Stock (834,605) (1,370,034)
Other 74,103 (23,757)
Net Cash Used In Financing Activities (1,271,971) (1,655,697)
Net Decrease in Cash and Cash Equivalents (1,880,333) (1,348,266)
Cash and Cash Equivalents, Beginning of Year 10,113,544 8,829,667
Cash and Cash Equivalents, October 31 $ 8,233,211 $7,481,401
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1996 COMPARED TO THREE
MONTHS ENDED OCTOBER 31, 1995
RESULTS OF OPERATIONS
Consolidated net sales for the three months ended October 31,
1996 were $40,525,000, an increase of $1,217,000, or 3.0%, over
net sales of $39,308,000 in the first quarter of fiscal 1996.
Net income for the three months ended October 31, 1996 was
$1,930,000 or $0.29 per share, an increase of 36.6% from
$1,413,000, or $0.21 per share, earned in the prior year's
quarter.
Net sales of cat box absorbents increased $1,164,000 or 4.9% from
fiscal 1996 first quarter results even though sales to Sam's Club
were down approximately $2,000,000 in the current quarter
compared to the same quarter of the prior fiscal year. The
growth resulted from increased sales of branded and private label
products in both the grocery and mass merchandiser markets. Net
sales of agricultural and fluids purification products increased
$1,349,000, or 17.2%, from the comparable period in fiscal 1996.
The higher sales resulted from increased demand for AGSORB
carriers as well as PURE-FLO Supreme and ULTRA-CLEAR fluids
purification products. Net sales of industrial and environmental
sorbents decreased $617,000, or 13.2%, from prior year first
quarter levels. The decrease resulted from lower net sales of
industrial clay absorbents ($459,000) and non-clay sorbents
($158,000). The lower sales are the result of increased
competition in the industrial markets in which the Company
participates and open positions in the sales force responsible
for these products. Net sales of transportation services
decreased $421,000 or 17.1% from the first quarter of fiscal
1996.
Consolidated gross profit as a percentage of net sales for the
three months ended October 31, 1996 increased to 30.3% from 29.7%
in the comparable period of fiscal 1996. Changes in sales mix
and a Company-wide effort to reduce costs contributed to this
increase.
Operating expenses as a percentage of net sales decreased to
22.7% in the first quarter of fiscal 1997 from 23.7% in the same
quarter of fiscal 1996. This decrease is primarily due to lower
advertising and promotion costs for the new consumer products
introduced during the first quarter of last year.
Interest expense decreased $23,000 while interest income was
flat.
The Company's effective tax rate was 28.5% of pre-tax income in
the first quarter of 1997 as compared to 27.6% for the first
quarter of fiscal 1996.
Total assets of the Company increased $241,000 during the first
quarter of fiscal 1997. Current assets increased $628,000, or
1.3%, from fiscal 1996 year end balances primarily due to
increased accounts receivable, partially offset by lower
inventory and cash and cash equivalents levels. Property, plant
and equipment, net of accumulated depreciation, decreased
$400,000 during the quarter.
Total liabilities in the three months ended October 31, 1996
decreased $443,000. Current liabilities decreased $609,000 or
3.4% from July 31, 1996 balances while noncurrent liabilities
increased $166,000 or 0.7%.
EXPECTATIONS
The Company anticipates continued moderate sales growth for the
remainder of fiscal 1997. Sales of branded cat box absorbents
are expected to increase as new product introductions gain
incremental distribution in the grocery and mass merchandiser
markets. However, this overall sales growth is subject to
continuing competition for shelf space in the grocery, mass
merchandiser and club markets. The Company expects the
profitability of these products to favorably impact earnings as
spending on advertising and promotion returns to more normal
levels throughout the remainder of fiscal 1997. Crop prices and
export demand indicate that the market for the Company's
agricultural products should remain strong in the foreseeable
future.
The foregoing statements under this heading are "forward-looking
statements" within the meaning of that term in the Securities
Exchange Act of 1934, as amended. Actual results may be lower
than those reflected in these forward-looking statements, due
primarily to: continued vigorous competition in the grocery,
mass merchandiser and club markets; the level of success of new
products; and the cost of new product introductions and
promotions in the consumer market. The forward-looking
statements also involve the risk of changes in market conditions
in the overall economy and, for the agricultural division, in
planting activity and overall agricultural demand, including
export demand.
LIQUIDITY AND CAPITAL RESOURCES
The current ratio increased to 2.8 at October 31, 1996 compared
to 2.7 at July 31, 1996. Working capital increased $1,237,000 in
the three months ended October 31, 1996 to $31,635,000. Cash
provided by operations continues to be the Company's primary
source of funds to finance operating needs and capital
expenditures. During the quarter the balances of cash, cash
equivalents and other investments declined $1,569,000 due to
capital expenditures ($1,503,000), purchases of the Company's
Common Stock ($835,000) and dividends paid ($511,000). Total
cash and investment balances held by the Company's foreign
subsidiaries at October 31, 1996 and 1995 were $2,885,000 and
$2,348,000, respectively.
FOREIGN OPERATIONS
Net sales by the Company's foreign subsidiaries for the three
months ended October 31, 1996 were $3,001,000 or 7.4% of sales.
This represents an increase of $93,000, or 3.2%, from the first
quarter of fiscal 1996 in which foreign subsidiary sales were
$2,908,000, also 7.4% of sales. Net income of the foreign
subsidiaries for the first quarter of fiscal 1997 was $145,000
compared with $143,000 in the first quarter of fiscal 1996.
Identifiable assets of the Company's foreign subsidiaries as of
October 31, 1996 were $9,833,000 an increase of $658,000 from
$9,175,000 as of October 31, 1995.
Part II - Other Information
Item 5. (a) Exhibits: The following document is an
exhibit to this report.
Exhibit - 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/MICHAEL L. GOLDBERG
Michael L. Goldberg
Vice President, Chief Financial Officer
BY /s/DANIEL S. JAFFEE
Daniel S. Jaffee
President and Chief Operating Officer
Dated: December 12, 1996