SEC Filing - Oil-Dri Corporation Of America

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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 April 30, 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 - 5,162,518 Shares (Including 437,396 Treasury Shares) Class B Stock - 2,071,000 Shares

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statement of Financial Position ASSETS April 30 July 31 (Unaudited) 1996 1995 1995 CURRENT ASSETS Cash and Cash Equivalents $ 9,282,154 $ 7,245,120 $ 8,829,667 Investment Securities, at Cost 1,533,000 1,602,028 2,332,665 Accounts Receivable 21,043,936 22,686,856 21,529,168 Less Allowance for Doubtful Accounts (345,680) (603,482) (180,602) Inventories 12,155,467 10,551,549 10,917,099 Prepaid Expenses and Taxes 5,888,091 6,642,597 5,317,169 Total Current Assets 49,556,968 48,124,668 48,745,166 PROPERTY, PLANT AND EQUIPMENT - AT COST Cost 110,781,206 105,551,718 106,957,911 Less Accumulated Depreciation and Amortization (52,857,763) (45,543,896) (47,498,516) Total Property, Plant and Equipment, Net 57,923,443 60,007,822 59,459,395 OTHER ASSETS Excess of Investment in Subsidiaries Over Fair Value of Assets (Net of 4,205,466 4,337,514 4,304,286 Accumulated Amortization) Deferred Income Taxes 494,731 - 484,324 Other 4,586,871 3,755,190 3,994,512 Total Other 9,287,068 8,092,704 8,783,122 Assets TOTAL ASSETS $116,767,479 $116,225,194 $116,987,683 Certain amounts in prior periods have been restated to conform to the current period classifications.

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statement of Financial Position LIABILITIES & STOCKHOLDERS' EQUITY April 30 July 31 (Unaudited) 1996 1995 1995 CURRENT LIABILITIES Current Maturities of Notes $ 2,149,386 $ 597,959 $ 1,097,976 Payable Accounts Payable - Trade 3,808,468 4,265,711 4,710,251 Dividends Payable 519,286 518,836 511,166 Accrued Expenses Trade Promotions and 4,126,550 3,924,834 4,272,740 Advertising Salaries, Wages and 2,073,225 1,870,872 2,362,102 Advertising Freight 854,762 627,605 747,042 Other 3,192,072 2,568,512 1,969,571 Total Current Liabilities 16,723,749 14,374,329 15,670,848 NONCURRENT LIABILITIES Notes Payable 19,024,000 20,925,659 20,422,265 Deferred Income Taxes - 325,406 - Deferred Compensation 1,986,850 1,722,484 1,778,075 Other 1,319,767 1,131,633 778,112 Total Noncurrent Liabilities 22,330,617 24,105,182 22,978,452 Total Liabilities 39,054,366 38,479,511 38,649,300 STOCKHOLDERS' EQUITY Common Stock 723,352 723,352 723,352 Paid-In Capital in Excess of Par 7,657,394 7,657,394 7,657,394 Value Retained Earnings 77,064,223 75,449,203 76,033,462 Cumulative Translation Adjustment ( 1,044,580) (996,222) (987,781) 84,400,389 82,833,727 83,426,427 Less Treasury Stock, At Cost ( 6,687,276) (5,088,044) (5,088,044) Total Stockholders' Equity 77,713,113 77,745,683 78,338,383 TOTAL LIABILITIES & STOCKHOLDERS' $116,767,479 $116,225,194 $116,987,683 EQUITY Certain amounts in prior periods have been restated to conform to the current period classifications.

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statement of Income and Retained Earnings Nine Months Ended April 30 1996 1995 (Unaudited) (Unaudited) Net Sales $117,532,387 $116,361,064 Cost Of Sales 82,398,383 81,371,973 Gross Profit 35,134,004 34,989,091 Selling, General And Administrative 30,803,160 24,281,958 Expenses Operating Income 4,330,844 10,707,133 OTHER INCOME (EXPENSE) Interest Expense ( 1,444,322) (1,457,217) Interest Income 429,950 286,137 Foreign Exchange Gain (Loss) ( 4,231) 4,514) Other, Net 289,345 (168,325) ( 729,258) (1,343,919) Income Before Income Taxes 3,601,586 9,363,214 Income Taxes 1,041,590 2,430,985 Net Income 2,559,996 6,932,229 RETAINED EARNINGS Balance at Beginning of Year 76,033,462 70,077,278 Less Cash Dividends Declared 1,529,235 (1,560,304) Retained Earnings - April 30 $77,064,223 $75,449,203 Average Shares Outstanding 6,818,940 6,947,709 Net Income Per Share $0.38 $1.00 Certain amounts in prior periods have been restated to conform to the current period classifications.

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statement of Income and Retained Earnings Three Months Ended April 30 1996 1995 (Unaudited) (Unaudited) Net Sales $36,427,141 $37,178,378 Cost Of Sales 25,274,538 26,750,874 Gross Profit 11,152,603 10,427,504 Selling, General And Administrative 9,957,996 7,857,049 Expenses Operating Income 1,194,607 2,570,455 OTHER INCOME (EXPENSE) Interest Expense (473,794) (472,309) Interest Income 155,817 118,797 Foreign Exchange Gain (Loss) ( 3,361) 6,735 Other, Net 101,621 (99,417) (219,717) (446,194) Income Before Income Taxes 974,890 2,124,261 Income Taxes 304,968 584,254 Net Income $ 669,922 $ 1,540,007 Average Shares Outstanding 6,803,484 6,928,923 Net Income Per Share $ 0.10 $ 0.22 Certain amounts in prior periods have been restated to conform to the current period classifications.

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statement of Cash Flows For the Nine Months Ended April 30 1996 1995 Unaudited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES Net Income $2,559,996 $6,932,229 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 5,982,566 5,796,844 Provision for bad debts 156,752 38,843 (Increase) Decrease in: Accounts Receivable 475,912 (2,397,324) Inventories (1,261,217) (668,089) Prepaid Expenses and Taxes ( 594,242) (1,577,657) Other Assets ( 656,549) (475,768) Increase (Decrease) in: Accounts Payable ( 785,376) 212,120 Accrued Expenses 802,116 15,262 Deferred Compensation 208,775 (39,334) Other 541,655 273,706 Total Adjustments 4,870,392 1,178,603 Net Cash Provided by Operating Activities 7,430,388 8,110,832 CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (4,394,927) (5,464,611) Purchases of Investment Securities ( 106,000) (2,781,036) Dispositions of Investment Securities 907,270 4,534,553 Other 111,947 19,698 Net Cash Used in Investing Activities (3,481,710) (3,691,396) CASH FLOWS FROM FINANCING ACTIVITIES Principal Payments on Long-Term Debt ( 346,855) (1,241,104) Dividends Paid (1,528,785) (1,496,951) Foreign Currency Translation ( 21,319) (5,101) Adjustment Purchases of Treasury Stock (1,599,232) (825,475) Net Cash Used In Financing Activities (3,496,191) (3,568,631) Net Increase in Cash and Cash 452,487 850,805 Equivalents Cash and Cash Equivalents, Beginning of 8,829,667 6,394,315 Year Cash and Cash Equivalents, April 30 $9,282,154 $7,245,120 Certain amounts in prior periods have been restated to conform to the current period classifications.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NINE MONTHS ENDED APRIL 30, 1996 COMPARED TO NINE MONTHS ENDED APRIL 30, 1995 RESULTS OF OPERATIONS Consolidated net sales for the nine months ended April 30, 1996 were $117,532,000 an increase of 1.0% over net sales of $116,361,000 in the first nine months of fiscal 1995. Net income for the first nine months of fiscal 1996 was $2,560,000 or $0.38 per share, a decrease of 63.1% from $6,932,000 or $1.00 per share earned in the nine months ended April 30, 1995. Net sales of industrial and environmental sorbents decreased $1,045,000 or 7.4% from prior year's levels. Net sales of industrial clay sorbents decreased by $274,000 or 2.7% while sales of non-clay sorbents decreased $771,000 or 19.2% from the same period last year. The decline in non-clay sorbent sales is primarily the result of refocused sales and marketing efforts towards selected higher margin customers. Net sales of cat box absorbents increased $550,000 or 0.9% from the same period last year. This growth is the result of new product introductions and expanded distribution of existing coarse litter products in the grocery industry which were partially offset by lower sales to non-grocery higher margin customers. In particular, net sales to Sam's Club declined $5 million during the nine month period due to the introduction of a private label scoopable litter that replaced the Company's branded scoopable product in a substantial number of Sam's stores. Sam's continues to sell other Company branded products. Net sales of agricultural products increased $1,836,000 or 12.7% from the same period last fiscal year due to increased demand for crop protection products, fueled by expectations of increased planting activity in the next year. Sales of specialty absorbents, primarily fluid filtration and purification products decreased $310,000 or 3.2% from fiscal 1995 due primarily to competitive pressures and continued sluggish demand in certain of the Company's markets. Sales by the Company's transportation subsidiary increased $738,000 or 11.7% due to increased third party hauling. Consolidated gross profit as a percentage of net sales for the nine months ended April 30, 1996 decreased to 29.9% from 30.1% in the first nine months of fiscal 1995. Factors that contributed to this decline included changes in sales mix towards lower margin products, particularly in the consumer non-grocery segment and increased costs of packaging materials and transportation which, due to competitive pressures, have not been fully recovered by price increases. Operating expenses as a percentage of net sales increased to 26.2% in the nine months ended April 30, 1996 from 20.9% in the same period last year. This change reflects the additional costs of approximately $5.2 million for promotional and advertising programs associated with new product introductions. Also included in operating expenses is a charge of $921,000 reflecting the settlement of a patent infringement action in the second quarter of fiscal 1996. Interest expense decreased $13,000, while interest income increased $144,000 from fiscal 1995 due to higher invested balances. The Company's effective tax rate was 28.9% of income in the first nine months of fiscal 1996 as compared to 26.0% in the same period last year. This change is a result of two factors: lower domestic income subject to depletion allowances and a greater percentage of total income earned in higher tax foreign jurisdictions.

Total assets of the Company decreased $220,000 from fiscal year end balances. Current assets increased $812,000 from year end due to higher inventory balances. Property, plant and equipment, net of accumulated depreciation, decreased $1,536,000 due to lower capital expenditures relative to depreciation expense. Total liabilities increased $405,000 in the nine months ended April 30, 1996. Current liabilities increased $1,053,000 while non-current liabilities decreased $648,000 from July 31, 1995. EXPECTATIONS The Company anticipates sales for the remainder of the fiscal year will be flat. Sales of branded cat box absorbent products are expected to increase as new product introductions gain incremental distribution. However, this sales growth is expected to be offset by lower sales to Sam's Club. As a result, the Company expects that earnings will be lower in the fourth quarter of fiscal 1996 as compared to the same period of last year. Investment in the Company's consumer product launch is in line with original budgets and the Company expects the profitability of these products to significantly impact earnings as spending on advertising and promotion returns to more normal levels in fiscal 1997. In addition, Sam's Club has reintroduced certain of the Company's branded products in its stores for evaluation. High crop prices and strong export demand indicate that the market for the Company's agricultural products will remain strong in the foreseeable future. In fluids purification, the new manufacturing facility and process, which will provide higher performance products, will come on line in May, 1996 and the Company's new line of Perform products is expected to compete more effectively in the market. The outlook for this division in the fourth quarter of fiscal 1996 is encouraging. The Company is going through an intensive review of its entire cost structure, with a goal of significantly reducing costs. It also plans selective price increases. The foregoing statements under the heading "EXPECTATIONS" 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 and, particularly, in Sam's Club and the mass merchandising 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 agriculture and demand, including export demand. LIQUIDITY AND CAPITAL RESOURCES The current ratio decreased to 2.96 at April 30, 1996 from 3.11 at July 31, 1995. Working capital decreased 241,000 in the nine months ended April 30, 1996 to $32,833,000. Cash provided by operations continues to be the Company's primary source of funds to finance investing needs and financing activities. During the first nine months of the fiscal year, balances of cash, cash equivalents and other investments decreased $347,000. Cash provided by operating activities was used to fund capital expenditures of $4,395,000, to repurchase shares of the Company's common stock at a cost of $1,599,000, to pay dividends of $1,529,000 and to reduce debt by $347,000. Total cash and investment balances held by the Company's foreign subsidiaries at April 30, 1996 and 1995 were $2,361,000 and $2,898,000 respectively.

THREE MONTHS ENDED APRIL 30, 1996 COMPARED TO THREE MONTHS ENDED APRIL 30, 1995 Consolidated net sales for the three months ended April 30, 1996 were $36,427,000 a decrease of 2.0% from net sales of $37,178,000 in the same period last year. Net income for the quarter ended April 30, 1996 was $670,000 or $0.10 per share, a decrease of 56.5% from net income of $1,540,000 or $0.22 per share reported in the quarter ended April 30, 1995. Net sales of industrial environmental sorbents decreased $708,000, or 14.2% from prior year levels. Net sales of industrial clay absorbents decreased $502,000 or 13.5%, while net sales of nonclay sorbents decreased $206,000 or 16.3% reflecting refocused sales and marketing efforts towards selected higher margin customers. Net sales of cat box absorbents decreased $539,000 or 2.9% from fiscal 1995 third quarter results. Increased net sales to grocery customers were offset by a decrease in net sales to non- grocery customers. In particular, net sales to Sam's Club declined $3 million during the quarter due to the introduction of a private label scoopable litter that replaced the Company's branded scoopable product in a substantial number of Sam's locations. Sam's continues to sell other Company branded products. Net sales of agricultural absorbents increased $863,000 or 17.4% from fiscal 1995 primarily due to increased demand for crop protection products, fueled by expectations of increased planting activity in the next year. Net sales of fluid filtration and purification products decreased $151,000 from prior year levels due to competitive pressures and continued sluggish demand in certain of the Company's markets. Net sales of transportation services increased $85,000 in the third quarter of fiscal 1996 as compared to the third quarter of fiscal 1995. Consolidated gross profit for the three months ended April 30, 1996 increased to 30.6% of net sales as compared to 28.0% in the third quarter of fiscal 1995. Selling, General and Administrative Expenses increased to 27.3% of net sales as compared to 21.1% of net sales in the third quarter of fiscal 1995 primarily due to higher advertising and promotion expenditures for new product introductions in the consumer market. Interest expense for the third quarter of fiscal 1996 compared to the third quarter of fiscal 1995 was unchanged. Interest income increased $37,000 in the same period as a result of larger invested balances. The Company's effective tax rate in the third quarter of fiscal 1996 was 31.3% of income as compared to 27.5% in the same period last year. FOREIGN OPERATIONS Net sales by the Company's foreign subsidiaries for the nine months ended April 30, 1996 were $9,026,000, constituting 7.7% of sales. This represents a decrease of $238,000 or 2.6%, from the first nine months of fiscal 1995, in which foreign subsidiary sales were $9,264,000 and constituted 8.0% of sales. This decrease is primarily due to lower sales in The United Kingdom. Net income of the Company's foreign subsidiaries for the nine months ended April 30, 1996 was $330,000, compared with $358,000 in the nine months of fiscal 1995. Identifiable assets of the Company's foreign subsidiaries as of April 30, 1996 were $9,272,000, a decrease of $136,000 from $9,408,000 as of April 30, 1995. The Company's net sales by its foreign subsidiaries for the three months ended April 30, 1996 were $2,812,000, constituting 7.7% of sales. This represents a decrease of $110,000 or 3.8% from the third quarter of fiscal 1995 in which foreign subsidiary sales were $2,922,000 and constituted 7.9% of sales. This decrease is primarily due to lower sales in The United Kingdom. Net income of the Company's foreign subsidiaries for the three months ended April 30, 1996 was $55,000 compared with $137,000 in the third quarter of fiscal 1995.

Part II - Other Information ITEM 6. (a)Exhibits: The following documents are an exhibit to this report. Exhibit 11: Statement Re: Computation of per share earnings. Exhibit 27: Financial Data Schedule (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/Daniel S. Jaffee Daniel S. Jaffee President and Chief Operating Officer BY /s/Michael L. Goldberg Michael L. Goldberg Vice President, Chief Financial Officer (Principal Financial Officer) Dated: June 11, 1996

                                                                   Exhibit 11
                                                                       Page 1

                      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
                                
April 30, 1996 02/01/96 to           33   6,812,922  224,826,426            
               03/04/96                                    
               03/05/96 to            2   6,809,422  13,618,844            
               03/06/96                                      
               03/07/96 to           12   6,802,922  81,635,064            
               03/18/96                                      
               03/19/96 to           43   6,796,122  292,233,246            
               04/30/96                                     
                                                             
                                     90              612,313,580   6,803,484
                                                            
                                                                          
                                                                         
                                                                         0
                                                                 
                                                                 6,803,484

Quarter Ended
                                
April 30, 1995 02/01/95 to           28   6,949,822  194,595,016            
               02/28/95                                     
               03/01/95 to            1   6,946,922  6,946,922            
               03/01/95
               03/02/95 to            1   6,945,922  6,945,922            
               03/02/95
               03/03/95 to            3   6,943,922  20,831,766            
               03/05/95                                      
               03/06/95 to            1   6,942,722  6,942,722            
               03/06/95
               03/07/95 to            1   6,936,522  6,936,522            
               03/07/95
               03/08/95 to            2   6,934,822  13,869,644            
               03/09/95                                      
               03/10/95 to            4   6,932,822  27,731,288            
               03/13/95                                      
               03/14/95 to            1   6,932,322  6,932,322            
               03/14/95
               03/15/95 to            1   6,931,322  6,931,322            
               03/15/95
               03/16/95 to            4   6,929,822  27,719,288            
               03/19/95                                      
               03/20/95 to            1   6,928,822  6,928,822            
               03/20/95
               03/21/95 to            1   6,928,322  6,928,322            
               03/21/95
               03/22/95 to            1   6,927,822  6,927,822            
               03/22/95
               03/23/95 to            1   6,927,322  6,927,322            
               03/23/95
               03/24/95 to            3   6,911,322  20,733,966            
               03/26/95                                      
               03/27/95 to           35   6,901,322  241,546,270            
               04/30/95                                     
                                                           
                                     89              616,375,258   6,925,565
                                                            
                                                                          
                                                                     
                                                                     3,358
                                                                 
                                                                 6,928,923

Nine Months Ended
                                
April 30, 1996        08/01/95 to     8   6,901,322  55,210,578      
                         08/08/95
                      08/09/95 to    63   6,841,322 431,003,286           
                         10/10/95
                      10/11/95 to     1   6,814,922   6,814,922           
                         10/11/95
                      10/12/95 to   145   6,812,922 987,873,690           
                         03/04/06
                      03/05/06 to     2   6,809,422  13,618,844           
                         03/06/06
                      03/07/96 to    12   6,802,922  81,635,064           
                         03/18/96
                      03/19/96 to    43   6,796,122 292,233,246           
                         04/30/96
                                                               
                                   273              1,868,389,630    6,818,940

                                                             
                                                                          
                                                                         
                                                                         0
                                                                 
                                                                 6,818,940
                                                                    
Nine Months Ended
                                
April 30, 1995        08/01/94 to     8   6,951,822  55,614,576           
                         08/08/94
                      08/09/95 to   204   6,949,822 1,417,763,688           
                         02/28/95                            
                      12/01/94 to    90   6,949,822 625,483,980           
                         02/28/95
                      03/01/95 to     1   6,946,922   6,946,922           
                         03/01/95
                      03/02/95 to     1   6,945,922   6,945,922           
                         03/02/95
                      03/03/95 to     3   6,943,922  20,831,766           
                         03/95/95
                      03/06/95 to     1   6,942,722   6,942,722           
                         03/06/95
                      03/07/95 to     1   6,936,522   6,936,522           
                         03/07/95
                      03/08/95 to     2   6,934,822  13,869,644           
                         03/09/95
                      03/10/95 to     4   6,932,822  27,731,288           
                         03/13/95
                      03/14/95 to     1   6,932,322   6,932,322           
                         03/14/95
                      03/15/95 to     1   6,931,322   6,931,322           
                         03/15/95
                      03/16/95 to     4   6,929,822  27,719,288           
                         03/19/95
                      03/20/95 to     1   6,928,822   6,928,822           
                         03/20/95
                      03/21/95 to     1   6,928,322   6,928,322           
                         03/21/95
                      03/22/95 to     1   6,927,822   6,927,822           
                         03/22/95
                      03/23/95 to     1   6,927,322   6,927,322           
                         03/23/95
                      03/24/95 to     3   6,911,322  20,733,966           
                         03/26/95
                      03/27/95 to    30   6,901,322 241,546,270           
                         04/30/95
                                                             
                                    273             1,895,158,506  6,941,973
                                                             
                                                                          
Assuming exercise of options reduced by the number of shares              
which could have been purchased with the proceeds from exercise
of such options.
                                                                     
                                                                     5,736
                                                                 
                                                                 6,947,709

  

 5
       
                             
                   9-MOS
                          JUL-31-1996
                               APR-30-1996
                                       9,282,154
                                 1,533,000
                               21,043,936
                                 (345,680)
                                 12,155,467
                            49,556,968
                                     110,781,206
                            (52,857,763)
                             116,767,479
                       16,723,749
                                     19,024,000
                                0
                                          0
                                       723,352
                                  76,989,781
               116,767,479
                                    117,532,387
                           117,532,387
                                       82,398,383
                              113,201,543
                             (871,816)
                               156,752
                           1,444,322
                              3,601,586
                                 1,041,590
                          2,559,996
                                       0
                                      0
                                            0
                                 2,559,996
                                     0.38
                                     0.38