SEC Filing - Oil-Dri Corporation Of America

CONFORMED COPY SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended October 31, 1996 Commission File Number 0-8675 OIL-DRI CORPORATION OF AMERICA (Exact name of registrant as specified in its charter) DELAWARE 36-2048898 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 410 North Michigan Avenue Chicago, Illinois 60611 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (312) 321-1515 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common Stock - 5,193,150 Shares (Including 565,467 Treasury Shares) Class B Stock - 2,042,368 Shares

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Financial Position ASSETS October 31 July 31 (Unaudited) 1996 1996 CURRENT ASSETS Cash and Cash Equivalents $ 8,233,211 $10,113,544 Investment Securities, at Cost 1,905,000 1,594,000 Accounts Receivable 23,311,456 20,666,623 Allowance for Doubtful Accounts (278,487) (225,970) Inventories 11,064,621 11,737,068 Prepaid Expenses and Taxes 4,602,200 4,325,061 Total Current Assets 48,838,001 48,210,326 PROPERTY, PLANT AND EQUIPMENT - AT COST Cost 114,437,608 112,943,046 Less Accumulated Depreciation and Amortization 56,625,627 54,730,624 Total Property, Plant and Equipment, Net 57,811,981 58,212,422 OTHER ASSETS Goodwill(Net of Accumulated Amortization) 4,139,511 4,172,526 Deferred Income Taxes 2,264,291 2,264,291 Other 4,880,428 4,833,303 Total Other 11,284,230 11,270,120 Assets TOTAL ASSETS $117,934,212 $117,692,868

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Financial Position LIABILITIES & STOCKHOLDERS' EQUITY October 31 July 31 (Unaudited) 1996 1996 CURRENT LIABILITIES Current Maturities of Notes $ 1,626,762 $ 1,626,762 Payable Accounts Payable - Trade 5,078,266 5,338,787 Dividends Payable 492,756 519,610 Accrued Expenses 10,004,748 10,326,518 Total Current Liabilities 17,202,532 17,811,677 NONCURRENT LIABILITIES Notes Payable 18,978,000 18,978,000 Deferred Compensation 2,297,943 2,253,313 Other 1,541,724 1,420,382 Total Noncurrent Liabilities 22,817,667 22,651,695 Total Liabilities 40,020,199 40,463,372 STOCKHOLDERS' EQUITY Common Stock 723,552 723,552 Paid-In Capital in Excess of Par 7,664,006 7,660,600 Value Retained Earnings 78,823,061 77,385,514 Cumulative Translation Adjustment (940,247) (1,018,416) 86,270,372 84,751,250 Less Treasury Stock, At Cost 8,356,359 7,521,754 Total Stockholders' 77,914,013 77,229,496 Equity TOTAL LIABILITIES & STOCKHOLDERS' $117,934,212 $117,692,868 EQUITY

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Income and Retained Earnings Three Months Ended October 31 1996 1995 (Unaudited) (Unaudited) Net Sales $40,525,138 $39,307,934 Cost Of Sales 28,233,253 27,648,886 Gross Profit 12,291,885 11,659,048 Selling, General And Administrative Expenses 9,210,274 9,312,281 Operating Income 3,081,411 2,346,767 OTHER INCOME (EXPENSE) Interest Expense (467,195) (490,161) Interest Income 150,576 152,594 Foreign Exchange Loss (304) (3,593) Other, Net (63,478) (54,426) (380,401) (395,586) Income Before Income Taxes 2,701,010 1,951,181 Income Taxes 770,707 538,293 Net Income 1,930,303 1,412,888 RETAINED EARNINGS Balance at Beginning of Year 77,385,514 76,033,462 Less: Cash Dividends Declared 492,756 517,464 Retained Earnings - October 31 $78,823,061 $76,928,886 Average Shares Outstanding $6,720,704 $6,840,079 Net Income Per Share $0.29 $0.21

OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Cash Flows For the Three Months Ended October 31 (Unaudited) 1996 1995 Unaudited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES Net Income $1,930,303 $1,412,888 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 1,927,452 2,019,766 Provision for bad debts 75,000 28,735 (Increase) Decrease in: Accounts Receivable (2,667,316) (2,468,662) Inventories 672,447 (1,016,138) Prepaid Expenses and Taxes (282,843) 71,742 Other Assets (48,058) (91,996) Increase (Decrease) in: Accounts Payable (970,394) 160,589 Accrued Expenses 381,585 (104,528) Other 121,341 168,042 Deferred Compensation 44,630 76,235 Total Adjustments (746,156) (1,156,215) Net Cash Provided by Operating Activities 1,184,147 256,673 CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (1,503,092) (863,670) Purchases of Investment Securities (311,000) - Dispositions of Investment Securities - 914,428 Other 21,583 - Net Cash Provided by (Used in) Investing (1,792,509) 50,758 Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Short Term Borrowings - 257,380 Dividends Paid (511,469) (519,286) Purchases of Treasury Stock (834,605) (1,370,034) Other 74,103 (23,757) Net Cash Used In Financing Activities (1,271,971) (1,655,697) Net Decrease in Cash and Cash Equivalents (1,880,333) (1,348,266) Cash and Cash Equivalents, Beginning of Year 10,113,544 8,829,667 Cash and Cash Equivalents, October 31 $ 8,233,211 $7,481,401

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE MONTHS ENDED OCTOBER 31, 1996 COMPARED TO THREE MONTHS ENDED OCTOBER 31, 1995 RESULTS OF OPERATIONS Consolidated net sales for the three months ended October 31, 1996 were $40,525,000, an increase of $1,217,000, or 3.0%, over net sales of $39,308,000 in the first quarter of fiscal 1996. Net income for the three months ended October 31, 1996 was $1,930,000 or $0.29 per share, an increase of 36.6% from $1,413,000, or $0.21 per share, earned in the prior year's quarter. Net sales of cat box absorbents increased $1,164,000 or 4.9% from fiscal 1996 first quarter results even though sales to Sam's Club were down approximately $2,000,000 in the current quarter compared to the same quarter of the prior fiscal year. The growth resulted from increased sales of branded and private label products in both the grocery and mass merchandiser markets. Net sales of agricultural and fluids purification products increased $1,349,000, or 17.2%, from the comparable period in fiscal 1996. The higher sales resulted from increased demand for AGSORB carriers as well as PURE-FLO Supreme and ULTRA-CLEAR fluids purification products. Net sales of industrial and environmental sorbents decreased $617,000, or 13.2%, from prior year first quarter levels. The decrease resulted from lower net sales of industrial clay absorbents ($459,000) and non-clay sorbents ($158,000). The lower sales are the result of increased competition in the industrial markets in which the Company participates and open positions in the sales force responsible for these products. Net sales of transportation services decreased $421,000 or 17.1% from the first quarter of fiscal 1996. Consolidated gross profit as a percentage of net sales for the three months ended October 31, 1996 increased to 30.3% from 29.7% in the comparable period of fiscal 1996. Changes in sales mix and a Company-wide effort to reduce costs contributed to this increase. Operating expenses as a percentage of net sales decreased to 22.7% in the first quarter of fiscal 1997 from 23.7% in the same quarter of fiscal 1996. This decrease is primarily due to lower advertising and promotion costs for the new consumer products introduced during the first quarter of last year. Interest expense decreased $23,000 while interest income was flat. The Company's effective tax rate was 28.5% of pre-tax income in the first quarter of 1997 as compared to 27.6% for the first quarter of fiscal 1996. Total assets of the Company increased $241,000 during the first quarter of fiscal 1997. Current assets increased $628,000, or 1.3%, from fiscal 1996 year end balances primarily due to increased accounts receivable, partially offset by lower inventory and cash and cash equivalents levels. Property, plant and equipment, net of accumulated depreciation, decreased $400,000 during the quarter. Total liabilities in the three months ended October 31, 1996 decreased $443,000. Current liabilities decreased $609,000 or 3.4% from July 31, 1996 balances while noncurrent liabilities increased $166,000 or 0.7%.

EXPECTATIONS The Company anticipates continued moderate sales growth for the remainder of fiscal 1997. Sales of branded cat box absorbents are expected to increase as new product introductions gain incremental distribution in the grocery and mass merchandiser markets. However, this overall sales growth is subject to continuing competition for shelf space in the grocery, mass merchandiser and club markets. The Company expects the profitability of these products to favorably impact earnings as spending on advertising and promotion returns to more normal levels throughout the remainder of fiscal 1997. Crop prices and export demand indicate that the market for the Company's agricultural products should remain strong in the foreseeable future. The foregoing statements under this heading are "forward-looking statements" within the meaning of that term in the Securities Exchange Act of 1934, as amended. Actual results may be lower than those reflected in these forward-looking statements, due primarily to: continued vigorous competition in the grocery, mass merchandiser and club markets; the level of success of new products; and the cost of new product introductions and promotions in the consumer market. The forward-looking statements also involve the risk of changes in market conditions in the overall economy and, for the agricultural division, in planting activity and overall agricultural demand, including export demand. LIQUIDITY AND CAPITAL RESOURCES The current ratio increased to 2.8 at October 31, 1996 compared to 2.7 at July 31, 1996. Working capital increased $1,237,000 in the three months ended October 31, 1996 to $31,635,000. Cash provided by operations continues to be the Company's primary source of funds to finance operating needs and capital expenditures. During the quarter the balances of cash, cash equivalents and other investments declined $1,569,000 due to capital expenditures ($1,503,000), purchases of the Company's Common Stock ($835,000) and dividends paid ($511,000). Total cash and investment balances held by the Company's foreign subsidiaries at October 31, 1996 and 1995 were $2,885,000 and $2,348,000, respectively. FOREIGN OPERATIONS Net sales by the Company's foreign subsidiaries for the three months ended October 31, 1996 were $3,001,000 or 7.4% of sales. This represents an increase of $93,000, or 3.2%, from the first quarter of fiscal 1996 in which foreign subsidiary sales were $2,908,000, also 7.4% of sales. Net income of the foreign subsidiaries for the first quarter of fiscal 1997 was $145,000 compared with $143,000 in the first quarter of fiscal 1996. Identifiable assets of the Company's foreign subsidiaries as of October 31, 1996 were $9,833,000 an increase of $658,000 from $9,175,000 as of October 31, 1995.

Part II - Other Information Item 5. (a) Exhibits: The following document is an exhibit to this report. Exhibit - 11 - Statement Re: Computation of Per Share Earnings. (b) During the quarter for which this report is filed, no reports on Form 8-K were filed.

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OIL-DRI CORPORATION OF AMERICA (Registrant) BY /s/MICHAEL L. GOLDBERG Michael L. Goldberg Vice President, Chief Financial Officer BY /s/DANIEL S. JAFFEE Daniel S. Jaffee President and Chief Operating Officer Dated: December 12, 1996

Exhibit 11 OIL-DRI CORPORATION OF AMERICA Computation of Weighted Average Number of Shares Outstanding Average Shares- (Weighted Number Number of Shares)Number of Shares Weighted of Days Quarter End Period Days Outstanding Shares As Adjusted October 31, 08/01/96 to 55 6,736,451 370,504,805 1996 09/24/96 09/25/96 to 1 6,733,951 6,733,951 09/25/96 09/26/96 to 1 6,717,551 6,717,551 09/26/96 09/27/96 to 3 6,710,451 20,131,353 09/29/96 09/30/96 to 1 6,708,451 6,708,451 09/30/96 10/01/96 to 1 6,705,251 6,705,251 10/01/96 10/02/96 to 1 6,702,251 6,702,251 10/02/96 10/03/96 to 12 6,701,751 80,421,012 10/14/96 10/15/96 to 1 6,698,451 6,698,451 10/15/96 10/16/96 to 1 6,695,751 6,695,751 10/16/96 10/17/96 to 1 6,690,251 6,690,251 10/17/96 10/18/96 to 11 6,678,051 73,458,561 10/28/96 10/29/96 to 3 6,670,051 20,010,153 10/31/96 92 618,177,7 6,719,324 92 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options. 1,380 6,720,704 October 31, 08/01/95 to 8 6,901,322 55,210,576 1995 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 20 6,812,922 136,258,440 10/31/95 92 629,287,224 6,840,079 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options. 0 6,840,079

5 3-MOS JUL-31-1997 OCT-31-1996 8,233,211 1,905,000 23,311,456 278,487 11,064,621 48,838,001 114,437,608 (56,625,627) 117,934,212 17,202,532 18,978,000 0 0 723,552 77,914,013 117,934,212 40,525,138 40,525,138 28,233,253 28,233,253 9,048,680 75,000 467,195 2,701,010 770,707 1,930,303 0 0 0 1,930,303 0.29 0.29