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Mail Stop 7010
January 10, 2006
Mr. Andrew N. Peterson
Chief Financial Officer, Oil-Dri Corporation of America
410 North Michigan Avenue
Suite 400
Chicago, IL 60611-4213
RE: Form 10-K for the fiscal year ended July 31, 2005
Form 10-Q for the quarter ended October 31, 2005
File No. 0-23897
Dear Mr. Peterson:
We have reviewed these filings and have the following
comments.
If you disagree with a comment, we will consider your explanation
as
to why our comment is inapplicable or a revision is unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with information so we
may
better understand your disclosure. After reviewing this
information,
we may or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM 10-K FOR THE YEAR ENDED JULY 31, 2005
General
1. Where a comment below requests additional disclosures or other
revisions, please show us in your supplemental response what the
revisions will look like. These revisions should be included in
your
future filings.
Item 7 - Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 15
Results of Operations, page 15
Fiscal 2005 Compared to Fiscal 2004, page 15
2. Please discuss the business reasons for the changes between
periods in net sales and operating income from operations of each
of
your segments. In doing so, please disclose the amount of each
significant change in line items between periods and the business
reasons for it. In circumstances where there is more than one
business reason for the change, attempt to quantify the
incremental
impact of each individual business reason discussed on the overall
change in the line item. Please show us what your revised MD&A
for
2005 as compared to 2004 will look like. See Item 303(a)(3) of
Regulation S-K and Financial Reporting Codification 501.04.
Liquidity and Capital Resources, page 17
3. You disclose that you accounted for $1.2 million in cash grants
on
a "net" grant accounting basis, thus showing no cash inflow or
capital expenditure outflow. Please tell us what accounting
literature you relied on in determining your presentation.
4. Please revise your liquidity section to discuss the changes in
your operating, investing, and financing cash flows as depicted in
your statement of cash flows. Your discussion should focus on the
primary drivers of and other material factors necessary to an
understanding of your cash flows and the indicative value of
historical cash flows. Please refer to the SEC Interpretive
Release
No. 33-8350.
Contractual Obligations, page 17
5. Please revise your table of contractual obligations to include
payments you are obligated to make under your interest rate swap
agreements. Because the table is aimed at increasing transparency
of
cash flow, we believe these payments should be included in the
table.
Please also disclose any assumptions you made to derive these
amounts.
Item 7a - Quantitative and Qualitative Disclosures About Market
Risk,
page 24
6. Please provide us with additional information to help us
understand why you believe quantitative disclosures for both your
foreign currency and interest rate risks are not required, or
provide
the disclosure required by Item 305 of Regulation S-K. Please
refer
to the appendices to Item 305 for suggested formats for
presentation
of the information.
Item 8 - Financial Statements
Consolidated Statements of Stockholders` Equity, page 28
7. Please revise your statement of stockholders` equity to include
columns disclosing the changes in the number of shares outstanding
and held as treasury stock.
8. Please disclose the amount of income tax expense or benefit
allocated to each component of other comprehensive income in
accordance with paragraph 25 of SFAS 130.
Consolidated Statements of Cash Flows, page 29
9. Please present the effect of exchange rate changes on cash
balances held in foreign currencies as a separate part of the
reconciliation of the change in cash and cash equivalents during
the
period. See paragraph 25 of SFAS 95.
Note 1 - Summary of Significant Accounting Policies, page 30
General
10. Please disclose how you are treating the restricted shares you
have issued in computing both your basic and diluted earnings per
share. See paragraphs 10 and 13 of SFAS 128.
11. Please disclose the types of expenses that you include in the
cost of sales line item and the types of expenses that you include
in
the selling, general and administrative expenses line item.
Please
also disclose whether you include inbound freight charges,
purchasing
and receiving costs, inspection costs, warehousing costs, internal
transfer costs, and the other costs of your distribution network
in
the cost of sales line item. With the exception of warehousing
costs, if you currently exclude a portion of these costs from cost
of
sales, please disclose:
* in a footnote the line items that these excluded costs are
included
in and the amounts included in each line item for each period
presented, and
* in MD&A that your gross margins may not be comparable to those
of
other entities, since some entities include all of the costs
related
to their distribution network in cost of sales and others like you
exclude a portion of them from gross margin, including them
instead
in a line item, such as selling, general and administrative
expenses.
12. Please disclose how you account for your investments in debt
securities. Please also include the disclosures required by
paragraphs 19-22 of SFAS 115, as applicable.
Intangibles and Goodwill, page 32
13. Please ensure that you meet all disclosure requirements set
forth
in paragraphs 44-46 of SFAS 142.
Note 6 - Income Taxes, page 41
14. Please disclose the expiration dates of your alternative
minimum
tax credit carryforwards. See paragraph 48 of SFAS 109.
Note 12 - Leases, page 48
15. Please tell us if your leases have (a) step rent provisions
and
escalation clauses and (b) capital improvement funding and other
lease concessions. If so, please tell us how you account for
these
items.
Item 9A - Controls and Procedures, page 54
16. Please note that disclosure controls and procedures are now
defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Please
refer
to Release 33-8238, which became effective August 14, 2003.
17. We note that you have determined that your disclosure controls
and procedures "are effective for gathering, analyzing, and
disclosing the information [you are] required to disclose in
reports
filed under the Act." This is an incomplete definition of
disclosure
controls and procedures per Exchange Act Rules 13a-15(e) and 15d-
15(e). Please revise your definition to clarify that disclosure
controls and procedures are designed to ensure that information
required to be disclosed in [your] filings under the Securities
Exchange Act of 1934 is recorded, processed, summarized and
reported
within the time periods specified in the Securities and Exchange
Commission rules and forms. In addition, your disclosure should
also
clarify that disclosure controls and procedures include controls
and
procedures designed to ensure that information required to be
disclosed by you in the reports that you file or submit under the
Exchange Act is accumulated and communicated to your management,
including your principal executive and principal financial
officers,
or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure. Alternatively,
you
may simply conclude that your disclosure controls and procedures
are
effective or ineffective, whichever the case may be.
18. If true, please revise your disclosure to confirm that you
performed an evaluation of the effectiveness of the design and
operation of your disclosure controls and procedures as of the end
of
the period covered by your report as indicated in your
certifications. Please also confirm whether there were any
changes
in your internal controls over financial reporting during the
fourth
fiscal quarter, rather than subsequent to the date of your
evaluation. Please refer to Items 307 and 308(c) of Regulation S-
K.
Please note that this comment also applies to your quarterly
filings
on Form 10-Q.
Exhibit 31
19. Please revise your certifications to conform to the exact
language of Item 601(b)(31) of Regulation S-K. See also the SEC
Release No. 34-46427. Please note that this comment also applies
to
your quarterly filings on Form 10-Q.
FORM 10-Q FOR THE PERIOD ENDED OCTOBER 31, 2005
General
20. Please address the above comments in your interim filings as
well.
Item 1 - Financial Statements
Note 4 - Recently Issued Accounting Standards and Other Matters,
page
10
21. Please tell us the current status of your evaluation of the
anticipated effects of adopting EITF 04-06, "Accounting for
Stripping
Costs in the Mining Industry."
Note 5 - Segment Reporting, page 11
22. You previously disclosed, in your annual report on Form 10-K,
that you had four reportable segments: the Consumer Products
Group,
the Specialty Products Group, the Crop Production and Horticulture
Group, and the Industrial and Automotive Products Group. It
appears
that these four groups represent at least four separate operating
segments as defined in paragraph 10 of SFAS 131. Please provide
us
with more information regarding your conclusion that you now have
two
reportable segments. If you satisfy the criteria discussed in
paragraph 17 of SFAS 131 for aggregation of your operating
segments
into two reportable segments, please provide us with an analysis
supporting this conclusion. Your analysis should compare the
economic characteristics of your aggregated operating segments,
including margins. In this regard, we note your statement on page
37
of your annual report on Form 10-K that each of the four groups
has
different economic characteristics. Please also refer to
Questions 7
and 8 of the FASB Staff Implementation Guide for SFAS 131.
23. Please provide us with a copy of the operating results
information provided to your chief operating decision maker.
* * * *
Please respond to these comments within 10 business days, or
tell us when you will provide us with a response. Please provide
us
with a response letter that keys your responses to our comments
and
provides any requested information. Detailed letters greatly
facilitate our review. Please file your supplemental response on
EDGAR as a correspondence file. Please understand that we may
have
additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information required under the
Securities Exchange Act of 1934 and that they have provided all
information investors require for an informed decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.
If you have any questions regarding these comments, please
direct them to Jeffrey Gordon, Staff Accountant, at (202) 551-3866
or, in his absence, Scott Watkinson, Staff Accountant, at (202)
551-
3741.
Sincerely,
Rufus Decker
Accounting Branch Chief
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Mr. Andrew N. Peterson
Oil-Dri Corporation of America
January 10, 2006
Page 1 of 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE