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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended January 31, 2004
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _____________ to ______________
Commission File Number 0-8675
OIL-DRI CORPORATION OF AMERICA
(Exact name of the 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 60611-4213
Suite 400 (Zip Code)
Chicago, Illinois
(Address of principal executive
offices)
The 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 - 5,509,835 Shares (Including 1,474,415 Treasury Shares)
Class B Stock - 1,792,583 Shares (Including 342,241 Treasury Shares)
Indicate by check mark whether the Registrant is an accelerated filer:
Yes No X
------- ------
The aggregate market value of the Registrant's Common Stock owned by
non-affiliates as of January 31, 2004 for accelerated filer purposes was
$66,598,000.
CONTENTS
Page
PART I
Item 1: Financial Statements............................................ 3 - 13
Item 2: Management Discussion And Analysis Of Financial Condition
And The Results Of Operations...................................14 - 19
Item 3: Quantitative And Qualitative Disclosures About Market Risk......19 - 20
Item 4: Controls And Procedures..............................................20
PART II
Item 4: Submission of Matters to a Vote of Security Holders..................21
Item 6: Exhibits And Reports on Form 8-K.....................................22
Signatures...................................................................23
Exhibits................................................................24 - 28
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Balance Sheets
(in thousands of dollars)
January 31,
2004 July 31,
ASSETS (unaudited) 2003
----------------------
Current Assets
Cash and cash equivalents $ 5,911 $ 4,753
Investment in treasury securities 12,022 11,917
Accounts receivable, less allowance
of $587 and $411 at January 31,
2004 and July 31, 2003,
respectively 27,142 23,768
Inventories 12,361 12,819
Prepaid overburden removal expense 2,592 2,492
Prepaid expenses and other assets 5,195 4,881
---------- ----------
Total Current Assets 65,223 60,630
---------- ----------
Property, Plant and Equipment
Cost 142,311 141,276
Less accumulated depreciation and
amortization (95,348) (92,250)
---------- ----------
Total Property, Plant and
Equipment, Net 46,963 49,026
---------- ----------
Other Assets
Goodwill 5,138 5,115
Intangibles, net of accumulated
amortization of $2,601 and $2,474
at January 31, 2004 and July 31,
2003, respectively 3,630 3,869
Deferred income taxes 2,688 2,617
Other 3,400 5,566
---------- ----------
Total Other Assets 14,856 17,167
---------- ----------
Total Assets $ 127,042 $ 126,823
========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Balance Sheets
(in thousands of dollars)
LIABILITIES & STOCKHOLDERS' EQUITY January 31,
2004 July 31,
(unaudited) 2003
------------------------
Current Liabilities
Current maturities of notes payable $ 4,000 $ 4,000
Accounts payable 5,264 6,856
Dividends payable 512 461
Accrued expenses
Salaries, wages and commissions 3,522 4,250
Trade promotions and advertising 5,400 4,160
Freight 1,192 1,089
Other 4,915 4,418
---------- ----------
Total Current Liabilities 24,805 25,234
---------- ----------
Noncurrent Liabilities
Notes payable 24,900 27,400
Deferred compensation 3,032 3,212
Other 2,647 1,963
---------- ----------
Total Noncurrent Liabilities 30,579 32,575
---------- ----------
Total Liabilities 55,384 57,809
---------- ----------
Stockholders' Equity
Common Stock, par value $.10 per
share, issued 5,509,835 shares at
January 31, 2004 and 5,472,935
shares at July 31, 2003 551 547
Class B Stock, par value $.10 per
share, issued 1,792,583 shares at
January 31, 2004 and 1,765,083
shares at July 31, 2003 179 177
Additional paid-in capital 8,404 7,646
Retained earnings 90,427 88,002
Restricted unearned stock compensation (24) (37)
Cumulative translation adjustment (884) (1,082)
---------- ----------
98,653 95,253
Less Treasury stock, at cost
(1,474,415 Common and 342,241
Class B shares at January 31, 2004
and 1,419,065 Common and
342,241 Class B shares at July 31,
2003) (26,995) (26,239)
---------- ----------
Total Stockholders' Equity 71,658 69,014
---------- ----------
Total Liabilities & Stockholders'
Equity $ 127,042 $ 126,823
========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Income and Retained Earnings
(in thousands, except for per share amounts)
(unaudited)
For The Six Months Ended
January 31
------------------------
2004 2003
------------------------
Net Sales $ 94,092 $ 82,186
Cost of Sales 71,921 64,810
----------- -----------
Gross Profit 22,171 17,376
Loss on impaired long-lived assets (464) --
Other contractual income -- 675
Selling, General and
Administrative Expenses (16,148) (14,569)
----------- -----------
Income from Operations 5,559 3,482
Other Income (Expense)
Interest expense (1,064) (1,348)
Interest income 83 119
Gain on the sale of mineral rights -- 139
Other, net 275 (35)
----------- -----------
Total Other Expense, Net (706) (1,125)
----------- -----------
Income Before Income Taxes 4,853 2,357
Income taxes 1,407 727
----------- -----------
Net Income 3,446 1,630
Retained Earnings
Balance at beginning of year 88,002 86,790
Less cash dividends declared 1,021 946
----------- -----------
Retained Earnings - January 31 $ 90,427 $ 87,474
=========== ===========
Net Income Per Share
Basic $ 0.63 $ 0.29
=========== ===========
Diluted $ 0.59 $ 0.29
=========== ===========
Average Shares Outstanding
Basic 5,454 5,615
=========== ===========
Diluted 5,873 5,687
=========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Statements of Consolidated Income
(in thousands of dollars)
(unaudited)
For The Six Months Ended
January 31
------------------------------
2004 2003
------------- -------------
Net Income $3,446 $1,630
Other Comprehensive Income:
Cumulative Translation Adjustments 198 95
------------- -------------
Total Comprehensive Income $3,644 $1,725
============= =============
The accompanying notes are an integral part of the consolidated
financial statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Income and Retained
Earnings
(in thousands, except for per share amounts)
(unaudited)
For The Three Months
Ended
January 31
----------------------
2004 2003
---------- ----------
Net Sales $ 47,800 $ 44,456
Cost of Sales 36,507 34,833
---------- ----------
Gross Profit 11,293 9,623
Loss on impaired long-lived assets (464) --
Other contractual income -- 675
Selling, General and Administrative
Expenses (8,039) (7,952)
---------- ----------
Income from Operations 2,790 2,346
Other Income (Expense)
Interest expense (533) (661)
Interest income 43 55
Other, net 133 32
---------- ----------
Total Other Expense Net (357) (574)
---------- ----------
Income Before Income Taxes 2,433 1,772
Income taxes 705 553
---------- ----------
Net Income 1,728 1,219
Net Income Per Share
Basic $ 0.32 $ 0.22
========== ==========
Diluted $ 0.29 $ 0.21
========== ==========
Average Shares Outstanding
Basic 5,447 5,616
========== ==========
Diluted 6,000 5,701
========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Statements of Consolidated Income
(in thousands of dollars)
(unaudited)
For The Three Months Ended
January 31
-------------------------------
2004 2003
-------------- --------------
Net Income $1,728 $1,219
Other Comprehensive Income:
Cumulative Translation Adjustments 113 117
-------------- --------------
Total Comprehensive Income $1,841 $1,336
============== ==============
The accompanying notes are an integral part of the consolidated financial
statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands of dollars)
(unaudited)
For The Six Months
Ended January 31
--------------------
CASH FLOWS FROM OPERATING ACTIVITIES 2004 2003
--------- ---------
Net Income $ 3,446 $ 1,630
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,124 4,174
Provision for bad debts 156 242
(Gain) loss on the sale of property,
plant and equipment (85) 30
Loss on impaired long-lived assets 464 --
(Increase) Decrease in:
Accounts receivable (3,530) (4,815)
Inventories 458 418
Prepaid overburden removal expense (100) 670
Prepaid expenses (314) (77)
Other assets 2,068 (140)
Increase (Decrease) in:
Accounts payable (1,438) (916)
Accrued expenses 1,112 2,382
Deferred compensation (180) (15)
Other liabilities 684 496
--------- ---------
Total Adjustments 3,419 2,449
--------- ---------
Net Cash Provided By Operating Activities 6,865 4,079
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,227) (2,113)
Proceeds from sale of property,
plant and equipment 124 20
Purchase of net assets -- (6,255)
Purchases of investment securities (18,258) (24,041)
Dispositions of investment securities 23,936 20,233
--------- ---------
Net Cash (Used In) Investing Activities (2,208) (6,373)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (2,500) (1,000)
Dividends paid (969) (946)
Purchase of treasury stock (756) --
Proceeds from issuance of common stock 610 --
Other, net 116 123
--------- ---------
Net Cash (Used) In Financing Activities (3,499) (1,823)
--------- ---------
Net Increase (Decrease) in Cash and
Cash Equivalents 1,158 (4,117)
Cash and Cash Equivalents, Beginning of Year 4,753 7,154
--------- ---------
Cash and Cash Equivalents, January 31 $ 5,911 $ 3,037
========= =========
The accompanying notes are an integral part of the consolidated
financial statements.
OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES
Notes To Consolidated Financial Statements
(Unaudited)
1. BASIS OF STATEMENT PRESENTATION
The financial statements and the related notes are condensed and should be
read in conjunction with the consolidated financial statements and related
notes for the year ended July 31, 2003, included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions are eliminated.
The unaudited financial information reflects all adjustments which are, in
the opinion of management, necessary for a fair presentation of the
statements contained herein.
Certain items in prior year financial statements have been reclassified to
conform to the presentation used in fiscal 2004.
As part of its overall operations, the Company mines sorbent materials on
property that it either owns or leases. A significant part of the Company's
overall mining cost is incurred during the process of removing the overburden
(non-usable material) from the mine site, thus exposing the sorbent material
that is then used in a majority of the Company's production processes. The
cost of the overburden removal is recorded in a prepaid expense account and,
as the usable sorbent material is mined, the prepaid overburden removal
expense is amortized over the estimated available material. As of January
31, 2004, the Company had $2,592,000 of prepaid overburden removal expense
recorded on its consolidated balance sheet. During the first six months of
fiscal 2004, the Company amortized to current expense approximately
$1,387,000 of previously recorded prepaid expense. Please also refer to Note
4 for a discussion of a change in the accounting estimate associated with
this prepaid expense for fiscal 2003 and fiscal 2002.
During the normal course of the Company's overburden removal activities the
Company performs on-going reclamation activities. As overburden is removed
from a pit, it is hauled to a previously mined pit and used to refill the
older site. This process allows the Company to continuously reclaim older
pits and dispose of overburden simultaneously, therefore minimizing the
liability for the reclamation function.
Additionally, it is Oil-Dri's policy to capitalize the purchase cost of land
and mineral rights, including associated legal fees, survey fees and real
estate fees. The costs of obtaining mineral patents, including legal fees
and drilling expenses, are also capitalized. Development costs of
determining the nature and amount of mineral reserves and any prepaid
royalties that are offsetable against future royalties due upon extraction of
the mineral are also capitalized. All exploration related costs are expensed
as incurred.
2. INVENTORIES
The composition of inventories is as follows (in thousands of dollars):
January 31 July 31
(Unaudited) (Audited)
------------------------
2004 2003
------------------------
Finished goods $ 7,119 $ 7,821
Packaging 3,574 3,718
Other 1,668 1,280
---------- ----------
$12,361 $12,819
========== ==========
Inventories are valued at the lower of cost or market. Cost is determined by
the first-in, first-out method.
3. PURCHASE OF ASSETS RELATED TO THE JONNY CAT BRAND OF CAT LITTER
On December 13, 2002, the Company completed the purchase, for $6,000,000 in
cash, of assets related to the Jonny Cat brand of cat litter (the
"Purchase") from a wholly owned subsidiary of The Clorox Company (NYSE: CLX).
The Company has also spent approximately $652,000 on various post-closing
costs related to the Purchase. Included in the Purchase were inventories,
trademarks, a manufacturing plant in Taft, California, and mineral
reserves.
The aggregate purchase price has been allocated as follows:
Inventory $1,507,000
Prepaid Expenses 175,000
Property, Plant & Equipment 4,594,000
Trademarks & Trade Name 376,000
Purchase total $6,652,000
The Company has assessed the pro forma disclosure criteria of SFAS No. 141
and has determined that the Purchase is not material under the asset,
investment and income tests of the pronouncement. Based on that assessment,
the Company has concluded that the pro forma results are not materially
different from the results reported in the current filing.
4. CHANGE IN ACCOUNTING ESTIMATE FOR PREPAID OVERBURDEN REMOVAL EXPENSE
During the second quarter of fiscal 2002, an internal review of the estimated
amount of uncovered mineable clay took place at the Company's Georgia
production complex. The quantity of uncovered clay is one of the key
elements in the amortization of the prepaid overburden removal account
balance. The review led to a change in the estimated amount of uncovered
clay. This estimate change then caused a change in the amortization of the
prepaid overburden removal account. The impact of this estimate revision for
fiscal 2003 and 2002 was an additional pre-tax charge to cost of goods sold
of approximately $630,000 and $1,092,000 respectively, versus the previous
estimate. The estimate change also increased the amortization rate
approximately $1.31 per ton of uncovered mineable clay. The Company returned
to using lower rates, more consistent with its historic experience at the
Georgia complex, to amortize the overburden account at the end of the second
quarter of fiscal 2003.
5. SALE OF MINERAL RIGHTS
During the first quarter of fiscal 2003, the Company recorded a $139,000
pre-tax gain from the sale of certain mineral leases on land in Tennessee.
The land was geographically located in an area that the Company was not
actively planning to develop. The mineral rights, had they been pursued,
could have been associated with any or all of the operating segments.
6. OTHER CONTRACTUAL INCOME
During the second quarter of fiscal 2003, the Company recorded $675,000 of
other contractual pre-tax income as a result of a one-time payment from a
customer who failed to meet minimum purchase requirement under a supply
agreement with the Company.
7. LOSS ON IMPAIRED LONG-LIVED ASSETS
During the second quarter of fiscal 2004, the Company recorded a loss on
impaired assets of $464,000. This loss, related to the write-off of a
scoopable "box" product line located at the Company's Georgia facility and
the write-off of the remaining estimated held-for-sale value of a similar box
line at one of the Company's Mississippi facilities, resulted from the shift
from boxed products to jug products and the long term direction of the
Company. Both lines were previously used exclusively by the Consumer Product
group.
8. NEW ACCOUNTING STANDARDS AND PRONOUNCEMENTS
In December 2003, the FASB issued SFAS No. 132 (revised 2003), "Employers'
Disclosures about Pensions and Other Postretirement Benefits", effective for
fiscal periods beginning after December 15, 2003. This standard increases
the existing GAAP disclosure requirements by requiring more details about
pension plan assets, benefit obligations, cashflows, benefit costs and
related information. The required information should be provided separately
for pension plans and for other postretirement benefit plans. The Company
will adopt SFAS No. 132 (revised 2003) for the quarter ending April 30,
2004.
9. SEGMENT REPORTING
The Company has four reportable operating segments: Consumer Products Group,
Specialty Products Group, Crop Production and Horticultural Products Group,
and Industrial and Automotive Products Group. These segments are managed
separately because each business has different economic characteristics.
The accounting policies of the segments are the same as those described in
Note 1 of the consolidated financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended July 31, 2003 filed with
the Securities and Exchange Commission.
Management does not rely on any segment asset allocations and does not
consider them meaningful because of the shared nature of the Company's
production facilities. However the Company has estimated the segment asset
allocations as follows:
--------------------------------
January 31, 2003 July 31, 2003
--------------------------------
ASSETS
--------------------------------
(in thousands)
Consumer Products Group $ 54,734 $ 54,307
Specialty Products Group $ 14,649 $ 17,251
Crop Production and Horticultural
Products Group $ 13,541 $ 12,383
Industrial and Automotive
Products Group $ 8,437 $ 8,539
Unallocated Assets $ 35,681 $ 34,343
Total Assets $127,042 $126,823
---------------------------------------
Six Months Ended January 31,
---------------------------------------
Net Sales Income
---------------------------------------
2004 2003 2004 2003
-------- -------- -------- --------
(in thousands)
Consumer Products Group............$58,425 $49,978 $ 8,695 $ 6,606
Specialty Products Group........... 13,414 12,627 3,304 2,912
Crop Production and
Horticultural Products Group..... 11,379 9,750 1,786 1,057
Industrial and Automotive
Products Group................... 10,874 9,831 (226) (327)
-------- -------- -------- --------
Total Sales/Operating Income.......$94,092 $82,186 13,559 10,248
======== ======== -------- --------
Loss on impaired long-lived assets1................ (464) --
Gain on the Sale of Mineral Rights2................ -- 139
Other Contractual Income3.......................... -- 675
Less:
Corporate Expenses................................. 7,261 7,477
Interest Expense, net of Interest Income........... 981 1,228
-------- --------
Income before Income Taxes........................... 4,853 2,357
Income Taxes......................................... 1,407 727
-------- --------
Net Income........................................... $ 3,446 $ 1,630
======== ========
---------------------------------------
Three Months Ended January 31,
---------------------------------------
Net Sales Income
---------------------------------------
2004 2003 2004 2003
-------- -------- -------- --------
(in thousands)
Consumer Products Group............$29,806 $27,597 $ 4,136 $ 3,800
Specialty Products Group........... 6,710 5,991 1,617 1,226
Crop Production and Horticultural
Products Group................... 5,893 5,884 1,084 848
Industrial and Automotive
Products Group................... 5,391 4,984 (226) (144)
-------- -------- -------- --------
Total Sales/Operating Income.......$47,800 $44,456 6,611 5,730
======== ======== -------- --------
Loss on impaired long-lived assets1................ (464) --
Other Contractual Income3.......................... -- 675
Less:
Corporate Expenses................................. 3,224 4,027
Interest Expense, net of Interest Income........... 490 606
-------- --------
Income before Income Taxes........................... 2,433 1,772
Income Taxes......................................... 705 553
-------- --------
Net Income........................................... $ 1,728 $ 1,219
======== ========
1. See Note 7 for a discussion of the loss on long-lived impaired assets.
2. See Note 5 for a discussion of the gain on the sale of mineral rights.
3. See Note 6 for a discussion of other contractual income.
10. STOCK-BASED COMPENSATION DISCLOSURE
The Company currently accounts for stock-based compensation in accordance
with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees," and related Interpretations. Had the Company accounted for
stock-based compensation in accordance with SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company would have reported the following pro
forma amounts for the quarters, and six-month periods ended January 31, 2004
and 2003:
Three Months Ended Six Months Ended
January 31, January 31,
--------------------------------------------
2004 2003 2004 2003
--------------------------------------------
(in thousands, except for per share amounts)
--------------------------------------------
Net income as reported $ 1,728 $ 1,219 $ 3,446 $ 1,630
Stock-based employee compensation 5 4 10 6
expense included in reported net
income, net of tax
Pro forma adjustment-additional
compensation expense had SFAS
No. 123 been adopted, net of tax (86) (164) (163) (322)
--------------------------------------------
Pro forma net income $ 1,647 $ 1,059 $ 3,293 $ 1,314
============================================
Basic earnings per share,
as reported $ 0.32 $ 0.22 $ 0.63 $ 0.29
Basic earnings per share,
pro forma $ 0.30 $ 0.19 $ 0.60 $ 0.23
Diluted earnings per share,
as reported $ 0.29 $ 0.21 $ 0.59 $ 0.29
Diluted earnings per share,
pro forma $ 0.27 $ 0.18 $ 0.56 $ 0.23
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
SIX MONTHS ENDED JANUARY 31, 2004 COMPARED TO
SIX MONTHS ENDED JANUARY 31, 2003
Results of Operations
Consolidated net sales for the six months ended January 31, 2004 were
$94,092,000, an increase of 14.5% from net sales of $82,186,000 in the first
six months of fiscal 2003. Net income for the first six months of fiscal
2004 was $3,446,000 an increase of 111% from $1,630,000 earned in the first
six months of fiscal 2003. Fiscal 2004's net income was positively impacted
by sales increases from all of the business segments, positive currency
adjustments related to the Canadian dollar and generally improved
manufacturing performance. The sales increase, which is discussed below in
detail, generated additional gross profit for the business. Fiscal 2004's
second quarter and full year income was negatively impacted by a $464,000
pre-tax loss on impaired assets discussed in note number 7. Also, fiscal
2004's second quarter and first six month's income was negatively impacted by
an increased obsolescence reserve of $200,000 on a pre-tax basis. This
adjustment was associated with the continued market decline of the Smart
Snacks product line and the Company's decision to sell its wholly owned
subsidiary Phoebe Products Co. The sale of Phoebe Products Co. which was
completed in the third quarter of fiscal 2004 will not have a material impact
on the sales or profitability of the Company. Fiscal 2003's net income was
positively impacted by a pre-tax gain of $139,000 on the sale of mineral
rights and $675,000 of pre-tax other contractual income. Refer to note
numbers 5 and 6 for a discussion of these items. Basic and diluted net income
per share for the first six months of fiscal 2004 were $0.63 and $0.59,
respectively, versus the $0.29 basic and diluted net income per share
reported for the first six months of fiscal 2003.
Net sales of the Consumer Products Group for the first six months of fiscal
2004 were $58,425,000, an increase of 16.9% from net sales of $49,978,000 in
the first six months of fiscal 2003. This segment's operating income
increased 31.6% from $6,606,000 in the first six months of fiscal 2003 to
$8,695,000 in the first six months of fiscal 2004. Driving the sales and
profit increases were the acquisition of the Jonny Cat line and the Cat's
Pride scooping litters. These products drove both sales and gross profit
growth in the first six months of Fiscal 2004. Offsetting part of the gross
profit increases associated with the increased sales, were expense increases
in commissions and advertising and trade spending related areas. The expense
increases were directed in an effort to stabilize the market share of the
Jonny Cat product line and to continue to grow other product lines in this
group.
Net sales of the Specialty Products Group for the first six months of fiscal
2004 were $13,414,000, an increase of 6.2% from net sales of $12,627,000 in
the first six months of fiscal 2003. This segment's operating income
increased 13.5% from $2,912,000 in the first six months of fiscal 2003 to
$3,304,000 in the first six months of fiscal 2004. Sales growth was seen in
the animal health and nutrition market, led by Poultry Guard litter
amendments and Conditionade binding agents. Sales growth was also seen in
the bleaching earth business in North America. Offsetting these increases
were sales declines in Europe in the bleaching earth markets. The Europe
declines are being driven by increased food-chain regulations.
Net sales of the Crop Production and Horticultural Products Group for the
first six months of fiscal 2004 were $11,379,000, an increase of 16.7% from
net sales of $9,750,000 in the first six months of fiscal 2003. The net
sales increase resulted primarily from increased sales of Agsorb carriers.
Sales of the carriers started strong this year as the major formulators
committed to volumes earlier than in the prior year. Sales continued strong
in the second quarter thanks to joint inventory planning and order management
with the major formulators. A strong sales increase was also seen for the
Flo-Fre product line. Offsetting some of the sales increase just discussed
was a sales decline in sport field products. The golf course construction
industry has not achieved the same early season results as last year. This
segment's operating income increased by 69% from $1,057,000 in the first six
months of fiscal 2003 to $1,786,000 in the first six months of fiscal 2004.
The increase in operating income was driven by the gross profit generated
from increased sales and by selective price increases.
Net sales of the Industrial and Automotive Products Group for the first six
months of fiscal 2004 were $10,874,000, an increase of 10.6% from net sales
of $9,831,000 in the first six months of fiscal 2003. Driving part of this
increase was additional volume generated by the acquisition of the California
production facility. The segment reported an operating loss of $226,000 for
the first six months of fiscal 2004 compared to an operating loss of $327,000
for the first six months of fiscal 2003. Despite both volume and pricing
increases, the group generated an operating loss for the first six months of
fiscal 2004 due to increased material and fuel costs.
Consolidated gross profit as a percentage of net sales for the first six
months of fiscal 2004 increased to 23.6% from 21.1% in the first six months
of fiscal 2003. A favorable sales mix lead by the Jonny Cat product line and
Cat's Pride scooping litters in the Consumer Products Group, strong sales of
Agsorb carriers in Crop Production and Horticultural Products Group and
increased sales of animal health and nutrition products in the Specialty
Group all contributed to the gross profit increase. Also, contributing to
the gross profit increase were price increases and a 1.5% reduction in
manufacturing costs. The manufacturing cost decrease was achieved despite
the fact that fuel costs were up approximately 24% due to the rate increases.
Operating expenses as a percentage of net sales for the first six months of
fiscal 2004 increased to 17.7% compared to the 16.9% for the first six months
of fiscal 2003. However, if the loss on long-lived impaired assets in fiscal
2004 and the other contractual income in fiscal 2003, which were discussed
above, were excluded from the operating expense calculation then the
percentages would have been 17.1% for the first six month of fiscal 2004 and
17.7% for the same period in fiscal 2003. Operating expenses in the first
six months of fiscal 2004 increased due to the loss on long-live impaired
assets and additional commissions, trade and advertising spending incurred by
the Consumer Product Group. The Company also recorded an increase in
discretionary bonus expense and an increase in research and development
expense.
Net interest expense and interest income for the first six months of fiscal
2004 were down 20.2% from the first six months of fiscal 2003. Interest
expense was down during the time period due to the reduction in debt.
Interest income declined $36,000 from the first six months of fiscal 2003 due
to lower interest rates.
The Company's effective tax rate was 29.0% of pre-tax income in the first six
months of fiscal 2004 versus 30.8% in the first six months of fiscal 2003.
Total assets of the Company increased $219,000 or 0.2% during the first six
months of fiscal 2004. Current assets increased $4,593,000 or 7.6% from
fiscal 2003 year-end balances, primarily due to increased accounts
receivables, prepaid expenses and cash and investment securities. Offsetting
these increases was a decrease in inventory. The Company's inventory
decreased over $1,000,000 between the first and second quarters of fiscal
2004. The increase in accounts receivable was driven by the strong sales for
the period ending January 31, 2004.
Property, plant and equipment, net of accumulated depreciation, decreased
$2,063,000 or 4.2% during the first six months of fiscal 2004. The decrease
was a result of normal depreciation expense exceeding capital expenditures
and the impaired asset write-off.
Total liabilities decreased $2,425,000 or 4.2% during the first six months of
fiscal 2004. Current liabilities decreased $429,000 or 1.7% during the first
six months of fiscal 2004. The decrease in current liabilities was driven by
a reduction of accounts payable and salaries payable. The accounts payable
reduction was related to the timing of purchases and seasonality. Offsetting
most of the decrease in payable accounts and salaries payable was an increase
in accrued trade promotions and advertising expenses. These expense accounts
increased as a result of the previously discussed increase in trade spending
in the Consumer Products Group. Noncurrent liabilities decreased $1,996,000
largely due to the reduction of notes payable.
EXPECTATIONS
The Company believes based on the first six month actual results, that sales
for fiscal 2004 should show an overall increase of six to ten percent
compared to the full year values reported in fiscal 2003. Sales from the
Jonny Cat brand of cat litter and Agsorb carriers should help drive this
projected increase, although sales of Agsorb are expected to level off in the
second half of the year. Based on the results for the first half of the
year, the Company believes that it can increase the fully diluted per share
earnings estimate to a new range of $0.85 to $0.95 for fiscal 2004. This
range assumes spending on the development and introduction of several new
products, which the Company believes will have a negative impact on fiscal
2004's earnings, but which will have a positive impact on future earnings.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased $5,022,000 during the first six months of fiscal
2004 to $40,418,000, primarily due to increases in accounts receivable, cash
and investments, prepaid expenses and decreases in accounts payable and
salaries payable. This increase was offset partially by an increase in
accrued trade promotions and a reduction of inventory.
Cash was used to fund capital expenditures of $2,227,000, make payments on
long-term debt of $2,500,000, to purchase treasury stock of $756,000 and
make dividend payments of $969,000. Cash and investments increased
$7,232,000 during the second quarter of fiscal 2004. The Company's operating
results, along with the continued trend of spending less on capital
expenditures than depreciation and amortization, both contributed to this
improvement. In addition, the Company received $2,241,000 associated with
the termination of two split-dollar life insurance plans. Total cash and
investment balances held by the Company's foreign subsidiaries at January 31,
2004 and July 31, 2003 were $3,273,000 and $2,557,000, respectively.
Accounts receivable, less allowance for doubtful accounts, increased 14.2%
during the first six months of fiscal 2004. This increase was driven by
significantly increased sales. The Company maintains policies and practices
to monitor the creditworthiness of its customers. These policies include
maintaining and monitoring a list of customers whose creditworthiness has
diminished. The total balance of accounts receivable for accounts on that
list represents approximately 2.1% of the Company's outstanding receivables
at January 31, 2004.
The table listed below depicts the Company's Contractual Obligations and
Commercial Commitments at January 31, 2004 for the timeframes listed:
CONTRACTUAL OBLIGATIONS
Payments Due by Period
--------------------------------------------------------------
Contractual Less Than 1 - 3 4 - 5 After 5
Obligations Total 1 Year Years Years Years
- -------------- ----------- ----------- ----------- ----------- -----------
Long-Term Debt $28,900,000 $ 4,080,000 $ 4,660,000 $ 8,080,000 $12,080,000
Operating Leases 13,230,000 1,897,000 2,498,000 2,109,000 6,726,000
Unconditional
Purchase
Obligations 2,011,000 2,011,000 -- -- --
----------- ----------- ----------- ----------- -----------
Total Contractual
Cash Obligations $44,141,000 $ 7,988,000 $ 7,158,000 $10,189,000 $18,806,000
=========== =========== =========== =========== ===========
OTHER COMMERCIAL COMMITMENTS
Amount of Commitment Expiration Per Period
---------------------------------------------------------------
Other Commercial Total Amounts Less Than 1 - 3 4 - 5 After 5
Commitments Committed 1 Year Years Years Years
----------- ----------- ----------- ----------- -----------
Standby
Letters of $ 3,164,000 $ 3,164,000 -- -- --
Credit
Guarantees 500,000 500,000 -- -- --
Other Commercial
Commitments 3,853,000 3,853,000 -- -- --
------------ ----------- ----------- ----------- -----------
Total Commercial
Commitments $ 7,517,000 $ 7,517,000 $ -- $ -- $ --
============ =========== =========== =========== ===========
The Company's liquidity needs have been, and are expected to be, met through
internally generated funds and, to the extent needed, borrowings under the
Company's revolving credit facility with Harris Trust and Savings. During
the quarter the Company extended the Harris Trust and Savings agreement to
January 2005. As of January 31, 2004, the Company had $7,500,000 available
under the credit facility. The Credit Agreement, as amended, contains
restrictive covenants that, among other things and under various conditions
(including a limitation on capital expenditures), limit the Company's ability
to incur additional indebtedness or to acquire or dispose of assets and to
pay dividends.
The Company believes that cash flow from operations, availability under its
revolving credit facility and current cash and investment balances will
provide adequate cash funds for foreseeable working capital needs, capital
expenditures at existing facilities and debt service obligations. The
Company's ability to fund operations, to make planned capital expenditures, to
make scheduled debt payments and to remain in compliance with all of the
financial covenants under debt agreements, including, but not limited to, the
Credit Agreement, depends on its future operating performance, which, in
turn, is subject to prevailing economic conditions and to financial, business
and other factors.
The Company as part of its normal course of business guarantees certain debts
and trade payables of its wholly owned subsidiaries. These arrangements are
made at the request of the subsidiaries creditors, as separate financial
statements are not distributed for the wholly owned subsidiaries.
THREE MONTHS ENDED JANUARY 31, 2004 COMPARED TO
THREE MONTHS ENDED JANUARY 31, 2003
Results of Operations
Consolidated net sales for the second quarter of fiscal 2004 were
$47,800,000, an increase of 7.5% from net sales of $44,456,000 in the second
quarter of fiscal 2003. Net income for the second quarter of fiscal 2004 was
$1,728,000 an increase of 41.8% from $1,219,000 earned in the second quarter
of fiscal 2003. The second quarter's net income was positively impacted by a
combination of higher sales for most of the business segments and positive
currency adjustments related to the Canadian dollar. The sales increase,
which is discussed below in detail, generated additional gross profit for the
business. Fiscal 2004's second quarter income was negatively impacted by a
$464,000 pre-tax loss on impaired assets discussed in note number 7. Also,
fiscal 2004's second quarter income was negatively impacted by an increased
obsolescence reserve of $200,000 on a pre-tax basis. This adjustment was
associated with the continued market decline of the Smart Snacks product
line and the Company's decision to sell its wholly owned subsidiary Phoebe
Products Co. The sale of Phoebe Products Co. which was completed in the
third quarter of fiscal 2004 will not have a material impact on the sales or
profitability of the Company. Fiscal 2003's second quarter net income was
positively impacted by $675,000 of pre-tax other contractual income. Refer
to note number 6 for a discussion of this item. Basic and diluted net income
per share for the second quarter of fiscal 2004 were $0.32 and $0.29,
respectively, versus the $0.22 basic and $0.21 diluted net income per share
reported for the second quarter of fiscal 2003.
Net sales of the Consumer Products Group for the second quarter of fiscal
2004 were $29,806,000, an increase of 8.0% from net sales of $27,597,000 in
the second quarter of fiscal 2003. The segment's operating income increased
8.8% from $3,800,000 in the second quarter of fiscal 2003 to $4,136,000 in
the second quarter of fiscal 2004. Driving the sales and profit increases
were the acquisition of Jonny Cat line and the Cat's Pride scooping litters.
Also, lower costs of the Jonny Cat liners contributed to the results of the
quarter. Offsetting part of the gross profit increases associated with the
increased sales, were expense increases in commissions and advertising and
trade spending related areas.
Net sales of the Specialty Products Group for the second quarter of fiscal
2004 were $6,710,000, an increase of 12.0% from net sales of $5,991,000 in
the second quarter of fiscal 2003. This segment's operating income increased
31.9% from $1,226,000 in the second quarter of fiscal 2003 to $1,617,000 in
the second quarter of fiscal 2004. Sales growth was seen in the animal
health and nutrition market, led by Poultry Guard litter amendments and
Conditionade binding agents. Sales growth was also seen in the bleaching
earth business in North America.
Net sales of the Crop Production and Horticultural Products Group for the
second quarter of fiscal 2004 were $5,893,000, an increase of 0.2% from net
sales of $5,884,000 in second quarter of fiscal 2003. Strong Agsorb sales
were offset by weakness in the sports field products. Sales of Agsorb
remained strong due to joint inventory planning and order management with the
major formulators. Sales also remained strong for the Flo-Fre product line
in the second quarter. The segment's operating income increased by 27.8%
from $848,000 in the second quarter of fiscal 2003 to $1,084,000 in the
second quarter of fiscal 2004. The increase in operating income was driven
by the gross profit generated from the Agsorb business, selected price
increases and improved operating efficiency related to the consistent
agricultural and chemical product demand.
Net sales of the Industrial and Automotive Products Group for the second
quarter of fiscal 2004 were $5,391,000, an increase of 8.2% from net sales of
$4,984,000 in the second quarter of fiscal 2003. Driving part of this
increase was additional volume generated by the acquisition of the California
production facility. The segment reported an operating loss of $226,000 for
the second quarter compared to an operating loss of $144,000 for the second
quarter of fiscal 2003. Again, as indicated for the first half results,
despite volume and pricing increases, the group generated an operating loss
for the second quarter of fiscal 2004 due to increased material and fuel
costs.
Consolidated gross profit as a percentage of net sales for the second quarter
of fiscal 2004 increased to 23.6% from 21.6% in the second quarter of fiscal
2003. A favorable sales mix lead by the Jonny Cat product line and Cat's
Pride scooping litters in the Consumer Products Group, consistent sales of
Agsorb carriers in Crop Production and Horticultural Products Group and
increased sales of animal health and nutrition products in the Specialty
Group all contributed to the gross profit increase. Also contributing to
the gross profit increase were price increases.
Operating expenses as a percentage of net sales for the first second quarter
of fiscal 2004 increased to 17.8% compared to the 16.4% for the second
quarter of fiscal 2003. However, if the loss on long-lived impaired assets
in fiscal 2004 and the other contractual income in fiscal 2003, which were
discussed above, were excluded from the operating expense calculation then
the percentages would have been 16.8% for the second quarter of fiscal 2004
and 17.9% for the same period in fiscal 2003. Operating expenses in the
second quarter of fiscal 2004 increased due to the loss on long-live impaired
assets, additional commissions, trade and advertising spending incurred by
Consumer Product group and increased research and development expense.
Net interest expense and interest income for the second quarter of fiscal
2004 were down 19.1% from the second quarter of fiscal 2003. Interest
expense was down during the time period due to the reduction in debt.
Interest income declined $12,000 from the second quarter of fiscal 2003 due
to lower interest rates.
The Company's effective tax rate was 29.0% of pre-tax income in the second
quarter of fiscal 2004 versus 31.2% in the second quarter of fiscal 2003.
FOREIGN OPERATIONS
Net sales by the Company's foreign subsidiaries during the six months ended
January 31, 2004 were $6,714,000 or 7.1% of total Company sales. This
represents an increase of 24.4% from the six months of fiscal 2003, in which
foreign subsidiary sales were $5,396,000 or 6.6% of total Company sales.
This increase in sales was seen largely in the Company's Canadian operation
where the addition of the Jonny Cat product line and positive currency
movement of the Canadian dollar and select price increases have driven the
improvement. For the six months ended January 31, 2004, the foreign
subsidiaries reported income of $383,000, an improvement of $398,000 from the
$15,000 loss reported in the first six months of fiscal 2003. The
improvement for the first six months was due to improved sales, lower
material costs, higher manufacturing efficiencies and the currency movement,
all of which were reported at the Company's Canadian operation.
Identifiable assets of the Company's foreign subsidiaries as of January 31,
2004 were $10,648,000 compared to $10,202,000 as of January 31, 2003. Most
of the increase was reported in cash and investments.
Net sales by the Company's foreign subsidiaries during the three months ended
January 31, 2004 were $3,340,000 or 7.0% of total Company sales. This
represents an increase of 16.5% from the second quarter of fiscal 2003, in
which foreign subsidiary sales were $2,867,000 or 6.5% of total Company
sales. This increase in sales was again seen largely in the Company's
Canadian operation for the reasons stated above. For the three months ended
January 31, 2004, the foreign subsidiaries reported income of $133,000, an
improvement of $180,000 from the $47,000 loss reported in the second quarter
of fiscal 2003. The improvement for the quarter was driven by the same items
that were noted in the six month analysis.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following chart depicts common stock repurchases for the three months
ended January 31, 2004.
ISSUER PURCHASES OF EQUITY SECURITIES
----------------------------------------------------------
Total
Number of
Shares (d) Maximum
(a) (b) Purchased Number of
Total Average as Part of Shares that
For the Three Number Price Publicly may yet be
Months Ended of Paid Announced Purchased
January 31, Shares per Plans or Under Plans
2004 Purchase Share Programs or Programs
----------------------------------------------------------
November 1,
2003 to
November 30,
2003 -- -- -- 267,260
----------------------------------------------------------
December 1,
2003 to
December 31,
2003 10,300 $15.16 10,300 256,960
----------------------------------------------------------
January 1,
2004 to
January 31,
2004 10,300 $16.35 10,300 246,660
----------------------------------------------------------
FORWARD-LOOKING STATEMENTS
Certain statements in this report, including, but not limited to, those under
the heading "Expectations" and those statements elsewhere in this report that
use forward-looking terminology such as "expect," "would," "could," "should,"
"estimates," "anticipates" and "believes" are "forward-looking statements"
within the meaning of that term in the Securities Exchange Act of 1934, as
amended. Actual results may differ materially from those reflected in these
forward-looking statements, due to uncertainties such as continued vigorous
competition in the grocery, mass merchandiser and club markets and specialty
product markets, the level of success of new products, and the cost of
product introductions and promotions in the consumer market. Forward-looking
statements are also subject to the risk of changes in market conditions in
the overall economy, energy prices, the risk of war or international
instability and, for the fluids purification and agricultural markets,
changes in planting activity, crop quality and overall agricultural demand,
including export demand, increasing regulation of the food chain and foreign
exchange rate fluctuations. Other factors affecting these forward-looking
statements may be detailed from time to time in other reports filed by the
Company with the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk and employs policies and
procedures to manage its exposure to changes in the market risk of its cash
equivalents and short-term investments. The Company had two interest rate
swap agreements as of January 31, 2004. The Company believes that the market
risk arising from holdings of its financial instruments is not material.
The Company is exposed to currency risk as it relates to certain accounts
receivables and the Company's foreign operations. The Company has always
determined that the currency risk is immaterial to the overall presentation
of the financial statements. However, the Company has recently begun a
program of hedging certain receivable balances in a further attempt to
minimize the risk.
The Company is exposed to regulatory risk in the fluid purification and
agricultural markets, principally as a result of the risk of increasing
regulation of the food chain in the United States and Europe. The Company
actively monitors developments in this area, both directly and through trade
organizations of which it is a member.
The Company is exposed to commodity price risk with respect to natural gas.
The Company had contracted for a significant portion of its fuel needs for
fiscal 2004 using forward purchase contracts to manage the volatility related
to this exposure. These contracts will reduce the volatility in fuel prices,
and the weighted average cost of these contracts has been estimated to be
approximately 48% higher than the contracts for fiscal 2003. These contracts
were entered into during the normal course of business and no contracts were
entered into for speculative purposes.
The table below provides information about the Company's natural gas future
contracts, which are sensitive to changes in commodity prices, specifically
natural gas prices. For the future contracts the table presents the notional
amounts in MMBtu's, the weighted average contract prices, and the total
dollar contract amount, which will mature by July 31, 2004. The Fair Value
was determined using the "Most Recent Settle" price for the "Henry Hub
Natural Gas" option contract prices as listed by the New York Mercantile
Exchange on February 26, 2004.
---------------------------------------------------------
Commodity Price Sensitivity
Natural Gas Future Contracts
For the Year Ending July 31, 2004
- -------------------------------------------------------------------
Expected 2004 Fair
Maturity Value
- -------------------------------------------------------------------
Natural Gas Future Volumes (MMBtu's) 693,000 --
Weighted Average Price (Per MMBtu) $ 5.66 --
Contract Amount ($ U.S., in thousands) $3,908.6 $3,617.6
- -------------------------------------------------------------------
Factors that could influence the fair value of the natural gas contracts,
include, but are not limited to, the creditworthiness of the Company's
natural gas suppliers, the overall general economy, developments in world
events, and the general demand for natural gas by the manufacturing sector,
seasonality and the weather patterns throughout the United States and the
world. Some of these same events have allowed the Company to mitigate the
impact of the natural gas contracts by the continued and in some cases
expanded use of recycled oil in our manufacturing processes. Accurate
estimates of the impact that these contracts may have on the Company's fiscal
2004 financial results are difficult to make due to the inherent uncertainty
of future fluctuations in option contract prices in the natural gas options
market.
ITEM 4. CONTROLS AND PROCEDURES
(a) Based on their evaluation within 90 days prior to the filing date of
this Quarterly Report on Form 10-Q, the Company's Chief Executive
Officer and Chief Financial Officer have concluded that the Company's
disclosure controls and procedures as defined in Rule 13a-14(c) under
the Securities Exchange Act of 1934, as amended, are effective for
gathering, analyzing, and disclosing the information the Company is
required to disclose in reports filed under the Act.
(b) There were no significant changes in the Company's internal controls or
in other factors that could significantly affect those controls since
the date of last evaluation of those internal controls.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 2, 2003, the 2003 Annual Meeting of Stockholders of Oil-Dri
Corporation of America was held for the purpose of considering and
voting on:
1. The election of nine directors.
Election of Directors
The following schedule sets forth the results of the vote to elect
directors. A total of 17,727,085 shares were eligible to vote.
Votes For
Director (Not Less Than)
J. Steven Cole 17,051,011
Arnold W. Donald 17,051,011
Ronald B. Gordon 17,051,011
Daniel S. Jaffee 17,051,011
Richard M. Jaffee 17,051,011
Thomas D. Kuczmarski 17,051,011
Joseph C. Miller 17,051,011
Paul J. Miller 17,051,011
Allan H. Selig 17,051,011
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Company's independent auditor.
Ratification of Independent Auditor
The Audit Committee's selection of PricewaterhouseCoopers LLP was
ratified as the Company's independent auditor for the fiscal year ending
July 31, 2004 was ratified by receiving not less than 17,675,886 votes
of a total 17,727,085 shares eligible to vote.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
Exhibit 11: Statement Re: Computation of per share
earnings
Exhibit 31: Certifications pursuant to Rule 13a - 14(a)
Exhibit 32: Certifications pursuant to Section 1350
(b) REPORTS ON FORM 8-K:
The Company filed a Current Report on Form 8-K dated November 24,
2003, reporting that it had issued a press release announcing its
first quarter results of operations and earnings.
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/Jeffrey M. Libert
Jeffrey M. Libert
Chief Financial Officer
BY /s/Daniel S. Jaffee
Daniel S. Jaffee
President and Chief Executive Officer
Dated: March 10, 2004
EXHIBITS
Exhibit 11: Statement Re: Computation of per share earnings
Exhibit 31: Certifications pursuant to Rule 13a - 14(a)
Exhibit 32: Certifications pursuant to Section 1350
Exhibit 11:
OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES
Computation of Earnings Per Share
(in thousands except for per share amounts)
Six Months Ended
January 31
2004 2003
--------------------
Net income available to Stockholders
(numerator) $3,446 $1,630
--------- ---------
Shares Calculation (denominator):
Average shares outstanding - basic 5,454 5,615
Effect of Dilutive Securities: -- --
Potential Common Stock
relating to stock options 419 72
--------- ---------
Average shares outstanding- assuming dilution 5,873 5,687
========= =========
Earnings per share-basic $ 0.63 $0.29
========= =========
Earnings per share-assuming dilution $ 0.59 $0.29
========= =========
Exhibit 31:
CERTIFICATIONS PURSUANT TO RULE 13a -14(a) UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED
I. I, Daniel S. Jaffee, Chief Executive Officer of Oil-Dri Corporation of
America, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Oil-Dri
Corporation of America ("Oil-Dri");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of Oil-Dri as of, and for, the periods
presented in this report;
4. Oil-Dri's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for Oil-Dri and we have:
a. Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to Oil-Dri, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of Oil-Dri's disclosure controls
and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and
procedures, as of January 31, 2004 based on such evaluation;
and
d. Disclosed in this report any change in Oil-Dri's internal
control over financial reporting that occurred during Oil-Dri's
first fiscal quarter that has materially affected, or is
reasonably likely to materially affect, Oil-Dri's internal
control over financial reporting; and
5. Oil-Dri's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial
reporting, to Oil-Dri's auditors and the audit committee of
Oil-Dri's board of directors:
a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
Oil-Dri's ability to record, process, summarize and report
financial information; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in Oil-Dri's
internal control over financial reporting.
Date: March 10, 2004
--------------------------
By: /s/ Daniel S. Jaffee
--------------------------
Daniel S. Jaffee
President and Chief Executive Officer
Exhibit 31:
CERTIFICATIONS PURSUANT TO RULE 13a -14(a) UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED
I. I, Jeffrey M. Libert, Chief Financial Officer of Oil-Dri Corporation of
America, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Oil-Dri
Corporation of America ("Oil-Dri");
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of Oil-Dri as of, and for, the periods
presented in this report;
4. Oil-Dri's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for Oil-Dri and we have:
a. Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating
to Oil-Dri, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of Oil-Dri's disclosure controls
and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and
procedures, as of January 31, 2004 based on such evaluation;
and
d. Disclosed in this report any change in Oil-Dri's internal
control over financial reporting that occurred during Oil-Dri's
first fiscal quarter that has materially affected, or is
reasonably likely to materially affect, Oil-Dri's internal
control over financial reporting; and
5. Oil-Dri's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial
reporting, to Oil-Dri's auditors and the audit committee of
Oil-Dri's board of directors:
a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial
reporting which are reasonably likely to adversely affect
Oil-Dri's ability to record, process, summarize and report
financial information; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in Oil-Dri's
internal control over financial reporting.
Date: March 10, 2004
--------------------------
By: /s/ Jeffrey M. Libert
--------------------------
Jeffrey M. Libert
Chief Financial Officer
Exhibit 32:
Certifications pursuant to 18 U.S.C. Section 1350
Certification
Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Oil-Dri
Corporation of America (the "Company") hereby certifies that the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31, 2004 (the
"Report") fully complies with the requirements of Section 13(a) or 15(d), as
applicable, of the Securities Exchange Act of 1934 and that the information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operation of the Company.
Dated: March 10, 2004
/s/ Daniel S. Jaffee
- -----------------------
Name: Daniel S. Jaffee
Title: President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been
provided to Oil-Dri Corporation of America and will be retained by Oil-Dri
Corporation of America and furnished to the Securities and Exchange
Commission or its staff upon request.
Certification
Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Oil-Dri
Corporation of America (the "Company") hereby certifies that the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31, 2004 (the
"Report") fully complies with the requirements of Section 13(a) or 15(d), as
applicable, of the Securities Exchange Act of 1934 and that the information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operation of the Company.
Dated: March 10, 2004
/s/ Jeffrey M. Libert
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Name: Jeffrey M. Libert
Title: Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to Oil-Dri Corporation of America and will be retained by Oil-Dri
Corporation of America and furnished to the Securities and Exchange
Commission or its staff upon request.