UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                     FOR THE FISCAL YEAR ENDED JULY 31, 2003

             [ ] 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

           DELAWARE                                      36-2048898
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

       410 NORTH MICHIGAN AVENUE, SUITE 400, CHICAGO, ILLINOIS 60611-4213
                                 (312) 321-1515

           Securities registered pursuant to Section 12(b) of the Act:

                     COMMON STOCK, PAR VALUE $0.10 PER SHARE

          Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

Indicate by check mark whether Oil-Dri (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 (or for such shorter period that Oil-Dri was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days:

                                 Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Oil-Dri's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether Oil-Dri is an accelerated filer:

                                 Yes [ ] No [X]

The aggregate market value of Oil-Dri's Common Stock owned by non-affiliates as
of January 31, 2003 for accelerated filer purposes was $38,882,000.

The aggregate market value of Oil-Dri's Common Stock owned by non-affiliates as
of September 29, 2003 was $47,448,000.

Number of shares of each class of Oil-Dri's common stock outstanding as of
September 29, 2003:

         Common Stock - 5,472,935 shares (including 1,434,540 treasury shares)
         Class B Stock - 1,765,083 shares (including 342,241 treasury shares)
         Class A Common Stock - 0 shares

                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference:

         1. Oil-Dri's Proxy Statement for its 2003 Annual Meeting of
Stockholders ("Proxy Statement"), which will be filed with the Securities and
Exchange Commission not later than November 28, 2003 (120 days after the end of
Oil-Dri's fiscal year ended July 31, 2003), is incorporated into Part III of
this Annual Report on Form 10-K, as indicated herein.

                                        2

                                    CONTENTS

                                                                              PAGE
                                                                              ----
                                                                          
                                     PART I

ITEM 1:   Business.........................................................    4 - 9

ITEM 2:   Properties.......................................................  10 - 11

ITEM 3:   Legal Proceedings................................................       11

ITEM 4:   Submission of Matters to a Vote of Security Holders..............       11

EXECUTIVE OFFICERS OF OIL-DRI..............................................       12

                                    PART II

ITEM 5:   Market for Registrant's Common Equity and Related
          Stockholder Matters..............................................       13

ITEM 6:   Selected Financial Data..........................................  14 - 15

ITEM 7:   Management Discussion and Analysis of Financial
          Condition and the Results of Operations..........................  16 - 23

ITEM 7a:  Quantitative and Qualitative Disclosures About Market Risk.......       24

ITEM 8:   Financial Statements and Supplementary Data......................  25 - 51

ITEM 9:   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure...........................       52

REPORT OF INDEPENDENT AUDITORS.............................................       52

                                    PART III

ITEM 10:  Directors and Executive Officers of Oil-Dri......................       53

ITEM 11:  Executive Compensation...........................................       53

ITEM 12:  Security Ownership of Certain Beneficial Owners and
          Management.......................................................       53

ITEM 13:  Certain Relationships and Related Transactions...................       54

ITEM 14:  Controls and Procedures..........................................       54

                                    PART IV

ITEM 15:  Exhibits, Financial Statement Schedules, and Reports on
          Form 8-K.........................................................  55 - 59

SIGNATURES       ..........................................................  60 - 61
REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE.............       62
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS...........................       63
EXHIBIT INDEX    ..........................................................       64

                                        3

                                     PART I

ITEM 1. BUSINESS

         Oil-Dri Corporation of America was incorporated in 1969 in Delaware as
the successor to an Illinois corporation incorporated in 1946; the Illinois
corporation was the successor to a partnership that commenced business in 1941.
Except as otherwise indicated herein or as the context otherwise requires,
references herein to "Oil-Dri" or to the "Company" are to Oil-Dri Corporation of
America and its subsidiaries. Oil-Dri is a leader in developing, manufacturing
and marketing sorbent products and related services for the consumer, specialty,
crop production and horticultural and industrial and automotive markets. Oil-Dri
also manufacturers and sells dog treats, which are part of its consumer products
business. Oil-Dri's sorbent products are principally produced from clay minerals
and, to a lesser extent, other sorbent materials. Consumer products, consisting
primarily of cat litter, are sold through the grocery products industry, mass
merchandisers, warehouse clubs, and pet retail outlets. Specialty products,
consisting primarily of bleaching, filtration and clarification clays, are sold
to processors and refiners of edible and petroleum-based oils. Crop production
and horticultural products, which include carriers for crop protection chemicals
and fertilizers, drying agents, soil conditioners, sports field products, pellet
binders for animal feeds and flowability aids, are sold to manufacturers of
agricultural chemicals and distributors of other agricultural and sports turf
products. Industrial and automotive products, consisting primarily of oil,
grease and water sorbents (both clay and non-clay), are sold to distributors of
industrial cleanup and automotive products, environmental service companies and
retail outlets.

         Oil-Dri's sorbent technologies include absorbent and adsorbent
products. Absorbents, like sponges, draw liquids up into their many pores.
Examples of Oil-Dri's absorbent clay products are Cats Pride(R) and Jonny Cat(R)
Premium cat litter and other cat litters, Oil-Dri All Purpose(R) floor absorbent
and other floor absorbents and Agsorb(R) granular agricultural chemical
carriers.

         Adsorbent products attract liquids, impurities, metals and surfactants
to themselves and form low-level chemical bonds. Oil-Dri's adsorbents are used
for cleanup and filtration mediums. Oil-Dri's adsorbent products include Oil-Dri
Lites(TM) sorbents for industrial cleanup, Pure-Flo(R), Pure-Flo(R) Supreme,
Perform(TM) and Select(TM) bleaching clays for edible oils, fats and tallows,
and Ultra-Clear(R) clarification aids for petroleum-based oils and by-products.

         Oil-Dri has pursued a strategy of developing products for consumer,
specialty, crop protection, horticultural, and industrial and automotive uses,
where Oil-Dri's marketing, manufacturing and research and development
capabilities can play important roles. Oil-Dri's products are sold through its
specialized divisional sales staffs supported by technical service
representatives and a network of industrial distributors and food brokers.
Oil-Dri maintains its own research and development facility and staff.

         Certain financial information on segments is contained in Note 3, in
the Notes to the Consolidated Financial Statements, incorporated herein by
reference. Information concerning total revenue of classes of similar products
accounting for more than 10% of consolidated revenues in any of the last three
fiscal years is not separately provided because it is the same as the
information on net sales of segments furnished in Note 3, in the Notes to the
Consolidated Financial Statements. Certain financial information about Oil-Dri's
foreign and domestic operations is also contained in Note 3, in the Notes to the
Consolidated Financial Statements, and is incorporated herein by reference.

Consumer Products Group

         Oil-Dri's cat litter products, in both coarse granular and fine
granular clumping (scoopable) forms, are sold under Oil-Dri's Cat's Pride(R),
Jonny Cat(R) and Lasting Pride(R) brand names, the Fresh Step(R) brand
manufactured for Clorox ("Clorox"), and private label cat litters manufactured
for mass merchandisers, wholesale clubs, drugstore chains, pet superstores and
retail grocery stores. Oil-Dri also packages and markets Cat's Pride(R) Kat
Kit(R) cat litter in a disposable tray. These products are sold through
independent food brokers and Oil-Dri's sales force to major outlets such as
Wal-Mart, Publix, Kroger, Stop and Shop and others.

         The cat litter market consists of two segments of product, coarse
(traditional) and scoopable. Coarse litters are products that have absorbent and
odor controlling characteristics. Scoopable litters, in addition to having
absorbent and odor controlling characteristics, also have the characteristic of
clumping when exposed to moisture, allowing the consumer to dispose of the used
portion of the litter selectively. The cat litter market has expanded at a
moderate pace

                                        4

in recent years, with the larger portion of the growth coming in the scoopable
segment. Introduced in the early 1990's, the scoopable litters have captured a
significant percentage of the market measured in retail dollars.

         The overwhelming majority of all cat litter is mineral based; however,
over the years various alternative litters have been introduced based on
alternative strata such as paper, various agricultural waste products and most
recently, silica gels. To date, these products have assumed only niche positions
within the category.

         Oil-Dri has several long-term supply agreements under which it
manufactures branded traditional litters for other marketers. Under these
co-manufacturing relationships, the marketer controls all aspects of sales,
marketing, distribution and the odor control formula; the Company is responsible
for manufacturing. Oil-Dri and Clorox have had such an arrangement under which
they developed Fresh Step(R) premium-priced cat litter products and under which
Oil-Dri has an exclusive right to supply Clorox's requirements for Fresh Step(R)
coarse cat litter up to certain levels. During fiscal year 2001, the Company
signed a new long-term agreement with Clorox, such that the Company will
continue to supply Clorox with this product.

         On December 13, 2002, the Company completed the purchase, for
$6,000,000 in cash of assets related to the Jonny Cat(R) brand of cat litter
(the "Purchase") from a wholly owned subsidiary of Clorox. The Company 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. See Note 5, in the Notes to the
Consolidated Financial Statements for a discussion of the Purchase.

         On July 17, 2003, the Company announced a reorganization of service for
its customers in the Pacific Northwest. On July 31, 2003, the Company closed its
Christmas Valley, Ore., facility and transferred existing customers to its newly
acquired plant in Taft, California and other Oil-Dri facilities. See Note 2 in
the Notes to the Consolidated Financial Statements for a discussion of the
closure of the Christmas Valley plant.

         In fiscal 1998, Oil-Dri purchased Salubrious, Inc., a manufacturer of
dog biscuits, which was subsequently renamed Phoebe Products Co. During fiscal
2003 most of the Phoebe Products sales were made in the high-end private label
market.

Specialty Products Group

         Specialty products include Pure-Flo(R) and Pure-Flo(R) Supreme
bleaching clays and Ultra-Clear(R) clarification aids. These products are
supported by a team of technical sales and support representatives employed by
the Company as well as agent representatives and the services of Oil-Dri's
research and development group. The products are marketed in the United States
and international markets.

         Pure-Flo(R) bleaching clays, used in the bleaching of edible oils,
remove impurities and color bodies from these oils. The primary customers for
these products are refiners of food oils. Ultra-Clear(R) clarification aids are
used as filtration and purification mediums for jet fuel and other
petroleum-based oils. These products adsorb unwanted moisture and other
impurities, and are primarily sold to oil refiners.

         Oil-Dri also produces Perform(TM) and Select(TM) bleaching clays, which
offer performance advantages to refiners. The Perform(TM) products provide
increased activity for hard-to-bleach oils. The Select(TM) line of products is
used earlier in the process stream to remove a variety of impurities from edible
oils. Select(TM) bleaching clays can also be used to significantly improve the
refining of edible oils. Other products include Pel-Unite Plus(TM) and
Conditionade(R) pelleting aids used in the manufacturing of animal feeds and
Poultry Guard(R) litter amendments used in controlling ammonia levels in
commercial poultry houses.

                                        5

Crop Production and Horticultural Products Group

         Oil-Dri produces and markets a wide range of granular and powdered
mineral absorbent products that are used with crop protection chemicals,
agricultural drying agents, bulk processing aids, growing media, turf
fertilizers and sports field products. Brands include Agsorb(R) agricultural
chemical carriers and drying agents; Flo-Fre(R), a highly absorbent microgranule
flowability aid; Terra-Green(R) growing media supplement; and Soilmaster(R)
sports field conditioner.

         Agsorb(R) carriers are used as a delivery system for crop protection
chemicals, including herbicides, fungicides, insecticides, and fertilizers.
Agsorb(R) customized carriers are designed to reduce dust and to facilitate
accuracy of application. Oil-Dri's Agsorb(R) drying agent is used to prevent
clogging in specialized farm machinery and enables farmers to evenly apply
granular fertilizers and liquid pesticides to their fields in one application.
Oil-Dri has also developed the Agsorb(R) product as a blending agent for
fertilizers and chemicals used in the lawn and garden market.

         Agricultural products are marketed in the United States by technical
salesmen employed by the Company who sell to crop protection chemical
manufacturers, feed producers and lawn and garden manufacturers. Oil-Dri's
principal customers for these products include the agricultural groups of
Monsanto, DowElanco, Syngenta and Bayer.

         In October 1999, Oil-Dri acquired Pro's Choice, Inc., ("Pro's Choice")
a marketer and distributor of sports field products. Previously, Oil-Dri had
supplied Pro's Choice with specialty clay products for use in these markets.
Products include Soilmaster(R) family of infield conditioners. These products
improve the performance and playability of baseball infields and facilitate root
zone growth when used on the soil of soccer and football fields. Oil-Dri's
principal customers for these products are managers of baseball, football,
soccer fields and golf courses.

Industrial and Automotive Products Group

         Products for industrial applications include Oil-Dri's oil, grease and
water sorbents, which are cost effective floor maintenance products that provide
a non-slip and nonflammable surface for workers. These products are sold through
a wide range of distribution channels and have achieved a high level of brand
name recognition. Oil-Dri distributes clay-based sorbents sold in granular form
and in other configurations such as "socks". Oil-Dri also distributes
polypropylene sorbents in various forms such as pads and rolls.

         Oil-Dri sells its industrial products through a distributor network
that includes industrial, auto parts, safety, sanitary supply, chemical and
paper distributors and environmental service companies. Oil-Dri supports the
efforts of the industrial distributors with specialized divisional sales
personnel.

         Oil-Dri also produces for the consumer market Oil-Dri(R) Automotive, a
floor absorbent for home and garage use. This product is sold through automobile
parts distributors and mass merchandisers.

Patents

         Oil-Dri has obtained or applied for patents for certain of its
processes and products. These patents expire at various times, beginning in
2005. Patented processes and products are not material to Oil-Dri's overall
business.

Foreign

         Favorite Products Company, Ltd. (d.b.a. Oil-Dri Canada) is a
manufacturer and marketer of branded and private label cat litter in the
Canadian market place. Among its branded products are Saular(R), a leading cat
litter brand in Canada; and Saular(R) Kat-Kit(TM), a disposable cat litter tray
and litter combination. Certain of the products sold in Canada are blends of
clay and synthetic sorbent materials.

         Oil-Dri's wholly owned subsidiary in England, Oil-Dri (U.K.), Ltd.,
packages clay granules produced by Oil-Dri's domestic manufacturing facilities
and, for certain applications, blends a synthetic sorbent material which it
manufactures locally. Oil-Dri (U.K.), Ltd. markets these products, primarily in
the United Kingdom, as an oil and grease absorbent and as a cat litter.

                                        6

         Oil-Dri's wholly owned subsidiary in Switzerland, Oil-Dri S.A.,
performs various management, sales and administrative functions for Oil-Dri and
its foreign subsidiaries.

         The Company's foreign operations are subject to the normal risks of
doing business overseas, such as currency devaluations and fluctuations,
restrictions on the transfer of funds and import/export duties. Oil-Dri was not
materially impacted by these foreign currency fluctuations in any of its last
three fiscal years.

Backlog; Seasonality

         At July 31, 2003, 2002 and 2001, Oil-Dri's backlog of orders was
approximately $4,277,000, $2,448,000, and $2,088,000 respectively. Oil-Dri does
not consider its clay sorbent business, taken as a whole, to be seasonal to any
material extent. However, certain business activities of certain customers (such
as agricultural) are subject to such factors as crop acreage planted and product
formulation cycles.

Customers

         Sales to Wal-Mart Stores, Inc. accounted for approximately 19%, 22% and
21% of Oil-Dri's net sales for the fiscal year ended July 31, 2003, 2002 and
2001 respectively. Sales to Clorox accounted for approximately 9%, 10% and 8% of
Oil-Dri's net sales for the fiscal year ended July 31, 2003, 2002 and 2001
respectively. Clorox and Oil-Dri are parties to a long-term supply contract. The
loss of any other of Oil-Dri's customers would not have a materially adverse
effect on Oil-Dri.

Competition

         Oil-Dri has approximately six principal competitors in the United
States, some of which have substantially greater financial resources than the
Company, which compete with Oil-Dri in certain markets and with respect to
certain products. Price, service and technical support, product quality and
delivery are the principal methods of competition in Oil-Dri's markets and
competition has historically been very vigorous.

Reserves

         Oil-Dri mines sorbent materials, consisting of either montmorillonite,
attapulgite or diatomaceous earth on leased or owned land near its manufacturing
facilities in Mississippi, Georgia, Illinois and California; it also has
reserves in Nevada, Oregon and Tennessee (see "Item 2. Properties" below).
Oil-Dri estimates that its proven recoverable reserves of these sorbent
materials aggregate approximately 466,272,000 tons. Based on its rate of
consumption during the 2003 fiscal year, without regard to reserves in Nevada
and Oregon, Oil-Dri considers its proven recoverable reserves adequate to supply
Oil-Dri's needs for over 40 years. It is Oil-Dri's policy to attempt to add to
reserves in most years, but not necessarily in every year, an amount at least
equal to the amount of reserves consumed in that year. Oil-Dri has a program of
exploration for additional reserves and, although reserves have been acquired,
Oil-Dri cannot assure that additional reserves will continue to become
available. Oil-Dri's use of these reserves will be subject to compliance with
existing and future federal and state statutes and regulations regarding mining
and environmental compliance. Also, requirements for environmental compliance
may restrict exploration or use of lands that might otherwise be utilized as a
source of reserves. During the fiscal year ended July 31, 2003, Oil-Dri utilized
these reserves to produce substantially all of the sorbent minerals that it
sold.

         Included in the calculations above are approximately 6,175,000 tons of
proven mineral reserves on approximately 1,825 acres, which were acquired in the
Purchase. The calculations exclude approximately 15,000 tons of proven reserves
in Oregon, which are associated with the Company's now-closed Christmas Valley
facility.

         In 1997, Oil-Dri acquired rights to mineral reserves on approximately
5,827 acres in Washoe County, Nevada. This acreage is in addition to
approximately 415 acres acquired in 1991 in the same county. Oil-Dri estimates
that there are approximately 307,000,000 tons of proven reserves of sorbent
materials on the combined acreage. Mining and processing these reserves,
however, require the approval of federal, state and local agencies. The
calculations above exclude all of these reserves.

                                        7

         Proven reserves are those reserves for which (a) quantity is computed
from dimensions revealed in outcrops, trenches, workings or drill holes; grade
and/or quality are computed from results of detailed sampling, and (b) the sites
for inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well established. Probable reserves are computed from information
similar to that used for proven reserves, but the sites for inspection,
sampling, and measurement are farther apart or are otherwise less adequately
spaced. The degree of assurance, although lower than that for proven reserves,
is high enough to assume continuity between points of observation.

         Oil-Dri employs a staff of geologists and mineral specialists who
estimate and evaluate existing and potential reserves in terms of quality,
quantity and availability.

Mining Operations

         Oil-Dri has conducted mining operations in Ripley, Mississippi since
1963; in Ochlocknee, Georgia since 1971; in Blue Mountain, Mississippi since
1989; in Mounds, Illinois since 1998 and in Taft, California since 2002.

         Oil-Dri's raw materials are surface mined on a year-round basis,
generally using large earth moving scrapers, bulldozers, excavators or off-road
tucks to remove overburden, and then loaded into dump trucks with backhoe or
front end loader for movement to the processing facilities. The mining and
hauling of Oil-Dri's clay is performed by Oil-Dri and by independent
contractors.

         Oil-Dri's current operating mines range in distance from immediately
adjacent to approximately 12 miles from the related processing plants. Access to
processing facilities from the mining areas is generally by private road, and in
some instances public highways are utilized.

         Each of Oil-Dri's processing facilities maintains inventories of
unprocessed clay of approximately one week of production requirements.

         The following schedule summarizes, for each of Oil-Dri's manufacturing
facilities, the net book value of land and other plant and equipment:

                                                                   PLANT AND
                                                       LAND        EQUIPMENT
                                                       ----        ---------
                                                         (IN THOUSANDS)
                                                             
Ochlocknee, Georgia.............................     $   2,265     $  11,737
Ripley, Mississippi.............................     $   1,522     $   7,614
Mounds, Illinois................................     $     325     $   7,199
Blue Mountain, Mississippi......................     $     952     $   4,772
Taft, California................................     $   1,219     $   3,088

Employees

         As of July 31, 2003, Oil-Dri employed 840 persons, 72 of who were
employed by Oil-Dri's foreign subsidiaries. Oil-Dri's corporate offices,
research and development center and manufacturing facilities are adequately
staffed and no material labor shortages are anticipated. Approximately 50 of
Oil-Dri's employees in the U.S. and approximately 25 of Oil-Dri's employees in
Canada are represented by labor unions, which have entered into separate
collective bargaining agreements with the Company. Employee relations are
considered satisfactory.

                                        8

Environmental Compliance

         Oil-Dri's mining and manufacturing operations and facilities in
Georgia, Mississippi, Oregon, California and Illinois are required to comply
with state surface mining statutes and various federal, state and local
statutes, regulations and ordinances which govern the discharge of materials,
water and waste into the environment and restrict mining on wetlands or
otherwise regulate Oil-Dri's operations. In recent years, environmental
regulation has grown increasingly stringent, a trend that Oil-Dri expects will
continue. Oil-Dri endeavors to be in substantial compliance at all times with
all applicable environmental controls and regulations. As a result, expenditures
relating to environmental compliance have increased over the years; however,
these expenditures have not been material. Oil-Dri continues, and will continue,
to incur costs in connection with reclaiming exhausted mining sites. The costs
of reclamation have not had a material effect on its mining costs. These costs
are treated as part of Oil-Dri's mining expense.

         In addition to the environmental requirements relating to mining and
manufacturing operations and facilities, there is increasing federal and state
legislation and regulation with respect to the labeling, use, and disposal after
use, of various of Oil-Dri's products. Oil-Dri endeavors to be in substantial
compliance at all times with that legislation and regulation and to assist its
customers in that compliance.

         Oil-Dri cannot assure that, despite all commercially reasonable
efforts, it will always be in compliance with environmental legislation and
regulations or with requirements regarding the labeling, use, and disposal after
use, of its products; nor can it assure that from time to time enforcement of
such requirements will not have an adverse impact on its business.

Energy

         Oil-Dri uses coal, natural gas and recycled fuel oil as permitted for
energy sources in the processing of its clay products. Consistent with prior
years, Oil-Dri has switched from natural gas to other energy sources during
certain months due to seasonal unavailability and the higher cost of natural gas
relative to other fuels. See Item 7a. "Quantitative and Qualitative Disclosures
About Market Risk" with respect to the use of forward contracts.

Research and Development

         At Oil-Dri's research and development facility, the staff develops new
products and applications and improves existing products. The staff and various
consultants consist of geologists, mineralogists and chemists. In the past
several years, Oil-Dri's research efforts have resulted in a number of new
sorbent products and processes. The facility produces prototype samples and
tests new products for customer trial and evaluation.

         Oil-Dri spent approximately $1,923,000, $1,955,000 and $1,953,000
during its fiscal years ended July 31, 2003, 2002 and 2001, respectively, for
research and development. None of such research and development was customer
sponsored, and all research and development costs are expensed in the year in
which incurred. See Note 1, in the Notes to the Consolidated Financial
Statements.

                                        9

ITEM 2. PROPERTIES

         Oil-Dri's properties are generally described below:

                        LAND HOLDINGS & MINERAL RESERVES

                          LAND       LAND            LAND                          PROVEN           PROBABLE
                          OWNED     LEASED     UNPATENTED CLAIMS     TOTAL        RESERVES          RESERVES           TOTAL
                         -------    -------    -----------------    -------    --------------    --------------    --------------
                         (ACRES)    (ACRES)         (ACRES)          (ACRES)    (000S OF TONS)    (000S OF TONS)    (000S OF TONS)
                                                                                              
California............       795         --           1,030           1,825             6,175            11,226            17,401
Georgia...............     1,884      1,639              --           3,523            28,354            11,547            39,901
Illinois..............       161        598              --             759             8,872             5,292            14,164
Mississippi...........     2,182        978              --           3,160           113,026           115,043           228,069
Nevada................       535         --           5,827           6,362           306,830           248,874           555,704
Oregon................       400         --              80             480                15               279               294
Tennessee.............       178         --              --             178             3,000             3,000             6,000
                         -------    -------       ---------         -------    --------------    --------------    --------------
                           6,135      3,215           6,937          16,287           466,272           395,261           861,533
                         =======    =======       =========         =======    ==============    ==============    ==============

         See also "Item 1.  Business--Reserves"

         There are no mortgages on the real property owned by Oil-Dri. The
Mississippi, Georgia, Oregon, Tennessee, Nevada, California and Illinois
properties are primarily mineral in nature. Parcels of such land are also sites
of manufacturing facilities operated by Oil-Dri. The Illinois land also includes
the site of Oil-Dri's research and development facility. Oil-Dri owns
approximately one acre of land in Laval, Quebec, Canada, which is the site of
the processing and packaging facility for Oil-Dri's Canadian subsidiary.

         Oil-Dri's mining operations are conducted on leased or owned land. The
Georgia, Illinois, and Mississippi mining leases generally require that Oil-Dri
pay a minimum monthly rental to continue the lease term. The rental payments are
generally applied against a stated royalty related to the number of unprocessed,
or in some cases processed, tons of mineral extracted from the leased property.
The Georgia and Mississippi leases generally have no stated expiration dates.
The Illinois leases have expiration dates ranging from 2005 to 2053. The
expiration of any of these leases would not have a material adverse effect on
Oil-Dri. Manufacturing at facilities that are not contiguous with the related
mines, Oil-Dri has a variety of access arrangements, some of which are styled as
leases. The expiration or termination of any of these arrangements would not
have a material adverse effect on the Company.

         Of Oil-Dri's total reserves and land around the plants, certain placer
claims and mill sites in California, Nevada and Oregon are claims leased by
Oil-Dri, on which Oil-Dri has the right to conduct mining or processing
activities. The validity of title to unpatented claims is dependent upon
numerous factual matters. Oil-Dri believes the unpatented claims it leases are
in compliance with all applicable federal, state and local mining laws, rules
and regulations. In fiscal 2000, the Bureau of Land Management determined that
Oil-Dri's claim on certain Nevada properties are locatable in nature. This
ruling has the effect of perfecting Oil-Dri's right to mine these claims.
However, with respect to Nevada, see Note 2 in the Notes to the Consolidated
Financial Statements. In the past, members of Congress and the executive branch
of the federal government have proposed amendments to existing federal mining
laws. These amendments could have a prospective effect on mining operations on
federal lands and include, among other changes, the imposition of royalty fees
on the mining of unpatented claims, the elimination or restructuring of the
patent system and an increase in fees for the maintenance of unpatented claims.
To the extent that future proposals may result in the imposition of royalty fees
on unpatented lands, the mining of Oil-Dri's unpatented claims may become
uneconomic. Oil-Dri cannot predict the form that any such amendments might take
or whether or when such amendments might be adopted.

         Oil-Dri operates manufacturing facilities at Ripley, Mississippi;
Ochlocknee, Georgia; Taft, California; Blue Mountain, Mississippi and Mounds,
Illinois; production and packaging plants at Laval, Quebec, Canada and Wisbech,
United Kingdom; a non-clay sorbents processing and warehousing facility in
Alpharetta, Georgia; and a dog biscuit manufacturing plant in Kiel, Wisconsin.
Oil-Dri's facilities at Ripley, Mississippi; Ochlocknee, Georgia; Taft,
California; Mounds, Illinois; Alpharetta, Georgia; Laval, Quebec, Canada and
Wisbech, United Kingdom are wholly owned by Oil-Dri and Oil-Dri's facility at
Blue Mountain, Mississippi is owned in part by Oil-Dri, with the balance

                                       10

leased as hereinafter described. Oil-Dri is a party to leases that relate to
certain plant acquisition and expansion projects at Oil-Dri's facility at Blue
Mountain, Mississippi. The Blue Mountain, Mississippi lease was entered into
with the Town of Blue Mountain, Mississippi in 1988 in connection with the
issuance by the Town of $7,500,000 in aggregate principal amount of industrial
revenue bonds ($5,000,000 of which has been subsequently retired), full payment
of which is guaranteed by Oil-Dri. Upon expiration of the leases in 2008, a
subsidiary of Oil-Dri has the right to purchase the leased property for $100
upon full payment of the bonds. The land on which the manufacturing facility at
Wisbech, United Kingdom is located is leased pursuant to a long-term lease
arrangement with the Port Authority of Wisbech, which expires in 2032. The
facilities in Alpharetta, Georgia and Kiel, Wisconsin are leased.

         All of Oil-Dri's domestic manufacturing facilities, whether owned or
leased, consist of related steel frame, sheet steel covered or brick buildings
of various heights, with concrete floors and storage tanks. The buildings occupy
approximately 208,000 square feet at Ripley, Mississippi; 398,000 square feet at
Ochlocknee, Georgia; 129,000 square feet at Mounds, Illinois; 135,000 square
feet at Taft, California; 26,000 square feet at Alpharetta, Georgia; 16,000
square feet at Kiel, Wisconsin and 140,000 square feet at Blue Mountain,
Mississippi. Oil-Dri maintains railroad siding facilities near the Ripley,
Mississippi; Ochlocknee, Georgia; Blue Mountain, Mississippi; Mounds, Illinois
and Laval, Quebec, Canada manufacturing facilities. Equipment at all facilities
is in good condition, well maintained and adequate for current processing
levels.

         All of Oil-Dri's foreign facilities are owned and consist of related
steel-framed, sheet steel covered or brick buildings of various heights, with
concrete floors and storage tanks. The buildings occupy 22,500 square feet at
Laval, Quebec, Canada and 66,850 square feet at Wisbech, United Kingdom.

         Oil-Dri's research and development facility is located on owned land in
Vernon Hills, Illinois and consists of brick buildings of approximately 19,100
square feet, including a pilot plant facility.

         Oil-Dri's principal executive office, consisting of approximately
20,000 square feet in Chicago, Illinois, is presently occupied under a lease
expiring on June 30, 2018.

ITEM 3. LEGAL PROCEEDINGS

         In April 2002, the Company filed parallel actions in state and federal
courts in Nevada against Washoe County, Nevada, alleging that the County's
denial of a special use permit (sought by the Company in connection with its
plan to build a manufacturing facility outside of Reno, Nevada) violated both
federal and state law. The lawsuits seek damages resulting from the County's
improper denial of the special use permit, which caused the Company to abandon
its plan to build the Reno facility. The federal court action has been dismissed
on jurisdictional grounds, and the state court action is now proceeding. A
hearing on the liability issues in the state court action is expected to be held
in fall 2003. An adverse decision in the matter would not have a material
adverse effect on the Company.

         The Company is involved in other ordinary routine litigation, none
which is material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

                                       11

ITEM 401(b) OF REGULATION S-K. EXECUTIVE OFFICERS OF OIL-DRI

         The following table gives certain information with respect to the
executive officers of Oil-Dri.

                                             PRINCIPAL OCCUPATION
         NAME(1)                          FOR LAST FIVE YEARS                        AGE
         -------                          -------------------                        ---
                                                                               
Daniel S. Jaffee(1)...    President and Chief Executive Officer of Oil-Dri.          39

Eugene W. Kiese(1)....    Vice-President of Specialty Products Group of Oil-Dri.     46
                          Vice-President & General Manager of Global Fluids
                          Purification Division from October, 1997 to January
                          2001.

Wade R. Bradley.......    Vice-President of Global Consumer Products of Oil-Dri;     43
                          Vice-President, Industrial & Automotive
                          Products Group from December 1998 to June
                          2000; General Manager, Industrial &
                          Automotive Products Group from June 1995
                          to December 1998.

Thomas F. Cofsky(2)...    Vice-President of Manufacturing and Logistics of           42
                          Oil-Dri; Vice-President of Logistics,
                          Quality & Service from February 1996 to June 1999.

Jeffrey M. Libert.....    Vice-President & Chief Financial Officer of Oil-Dri;       37
                          Vice-President of Corporate Development and Planning
                          from June 1998 to April 2000.

Charles P. Brissman...    Vice-President, General Counsel and Secretary              43
                          of Oil-Dri; Chief Counsel, Corporate Development and
                          Asset Distribution, and Chief Litigation Counsel, Heller
                          Financial, Inc. April 1998 to October 2002.

Steven M. Azzarello...    Vice-President of new Product Development of Oil-Dri;      44
                          Vice President of Sales and Marketing for the Americas of
                          Oil-Dri from September 2000 to May 2002; General Sales
                          Manager for the Americas of Oil-Dri from January 2000
                          to September 2000: Commercial Director, Latin America
                          from September 1999 to January 2000; Regional Sales
                          Manager, Specialty Products from August 1993 to
                          September 1999.

         The term of each executive officer expires at the 2003 annual meeting
of stockholders and when his successor is elected and qualified.

- ---------------------
(1)  Of the persons in this table, only Daniel S. Jaffee is a director.

(2)  Thomas F. Cofsky is Daniel S. Jaffee's brother-in-law.

                                       12

                                     PART II

ITEM 5. MARKET FOR OIL-DRI'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS

         Information with respect to holders of Common Stock and Class B Stock
is contained in Note 7, in the Notes to the Consolidated Financial Statements
incorporated herein by reference.

         Information concerning stock prices and dividends with regard to the
Common Stock of Oil-Dri, which is traded on the New York Stock Exchange, and
information concerning dividends with regard to the Class B Stock of Oil-Dri,
for which there is no established public trading market, is contained in Note
16, in the Notes to the Consolidated Financial Statements, incorporated herein
by reference. No shares of Class A common stock are outstanding. Oil-Dri's 1993
Note Agreement with Teachers Insurance and Annuity Association and Connecticut
General Life Insurance Company and Oil-Dri's Credit Agreement with Harris Trust
and Savings Bank dated January 29, 1999 require that certain minimum net worth
and tangible net worth levels are to be maintained. To the extent that these
balances are not attained, Oil-Dri's ability to pay dividends may be impaired.
See Note 4, in the Notes to the Consolidated Financial Statements, incorporated
herein by reference.

                                       13

ITEM 6. SELECTED FINANCIAL DATA

                       TEN YEAR SUMMARY OF FINANCIAL DATA

                                                                 2003         2002         2001         2000
                                                               ---------    ---------    ---------    ---------
                                                                 (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
                                                                                          
Summary of Operations....................................
Net Sales ...............................................      $ 173,041    $ 162,345    $ 160,669    $ 164,044
Cost of Sales ...........................................        137,413      131,265      131,804      127,434
                                                               ---------    ---------    ---------    ---------
Gross Profit ............................................         35,628       31,080       28,865       36,610
Other Contractual Income & Non-Recurring Fees ...........            675           --        4,278           --
Loss on Impaired Long-Lived Assets ......................             --       (3,213)          --           --
Selling, General and Administrative Expenses ............        (29,686)     (27,878)     (28,977)     (29,617)
Restructuring and Special Charges .......................             --           --           --       (1,239)
                                                               ---------    ---------    ---------    ---------
Income (Loss) from Operations ...........................          6,617          (11)       4,166        5,754
                                                               ---------    ---------    ---------    ---------
Other Income (Expense)
  Interest Income .......................................            216          295          235          206
  Interest Expense ......................................         (2,361)      (2,575)      (2,916)      (3,185)
  Foreign Exchange Gains (Losses) .......................             22         (133)        (228)        (173)
  Gain on the Sale of Mineral Rights ....................            139          769           --           --
  Other, Net ............................................           (291)          96          212          446
                                                               ---------    ---------    ---------    ---------
    Total Other Expense, Net ............................         (2,275)      (1,548)      (2,697)      (2,706)
                                                               ---------    ---------    ---------    ---------
Income (Loss) before Income Taxes .......................          4,342       (1,559)       1,469        3,048
Income Taxes (Benefit) ..................................          1,259         (465)         556          821
                                                               ---------    ---------    ---------    ---------
Net Income (Loss) .......................................      $   3,083    $  (1,094)   $     913    $   2,227
                                                               =========    =========    =========    =========
AVERAGE SHARES OUTSTANDING
  Basic .................................................          5,574        5,614        5,613        5,647
  Diluted ...............................................          5,708        5,614        5,613        5,677
NET INCOME (LOSS) INCOME PER SHARE
  Basic .................................................      $    0.55    $   (0.19)   $    0.16    $    0.39
  Diluted ...............................................      $    0.54    $   (0.19)   $    0.16    $    0.39
IMPORTANT HIGHLIGHTS
  Total Assets ..........................................      $ 126,823    $ 125,035    $ 130,524    $ 132,844
  Long-Term Debt ........................................      $  27,400    $  31,400    $  34,256    $  39,434
  Working Capital .......................................      $  35,396    $  37,652    $  36,100    $  38,875
  Working Capital Ratio .................................            2.4          2.9          2.8          3.6
  Book Value per Share ..................................      $   12.38    $   12.30    $   12.80    $   13.01
  Dividends Declared ....................................      $   1,883    $   1,894    $   1,892    $   1,900
  Capital Expenditures ..................................      $   4,882    $   4,096    $   5,609    $   6,001
  Depreciation and Amortization .........................      $   8,534    $   8,785    $   9,089    $   9,099
  Net (Loss) Income as a Percent of Sales ...............            1.8%        (0.7%)        0.6%         1.4%
  Return on Average Stockholders' Equity ................            4.5%        (1.6%)        1.3%         3.0%
  Gross Profit as a Percent of Net Sales ................           20.6%        19.1%        18.0%        22.3%
  Operating Expenses as a Percent of Net Sales...........           16.8%        19.2%        15.4%        18.8%

                                       14

                                      YEAR ENDED JULY 31
                                  --------------------------
  1999             1998             1997             1996             1995             1994
- ---------        ---------        ---------        ---------        ---------        ---------
                                                                      
$ 163,888        $ 152,194        $ 148,895        $ 144,210        $ 148,861        $ 146,147
  121,230          111,990          109,906          108,997          109,288          103,457
- ---------        ---------        ---------        ---------        ---------        ---------
   42,658           40,204           38,989           35,213           39,573           42,690
       --               --               --               --               --               --
       --               --               --               --               --               --
  (30,907)         (28,646)         (28,320)         (28,309)         (26,863)         (28,394)
       --           (3,129)              --             (921)              --               --
- ---------        ---------        ---------        ---------        ---------        ---------
   11,751            8,429           10,669            5,983           12,710           14,296
- ---------        ---------        ---------        ---------        ---------        ---------

      480              491              637              587              448              441
   (3,185)          (2,049)          (1,775)          (1,917)          (1,921)          (1,752)
     (124)            (146)              --               (7)              (5)               3
       --               --               --               --               --               --
    1,114             (119)             (17)             137              (84)             171
- ---------        ---------        ---------        ---------        ---------        ---------
   (1,715)          (1,823)          (1,155)          (1,200)          (1,562)          (1,137)
- ---------        ---------        ---------        ---------        ---------        ---------
   10,036            6,606            9,514            4,783           11,148           13,159
    2,860            1,883            2,721            1,409            3,145            3,307
- ---------        ---------        ---------        ---------        ---------        ---------
$   7,176        $   4,723        $   6,793        $   3,374        $   8,003        $   9,852
=========        =========        =========        =========        =========        =========

    5,827            6,125            6,596            6,806            6,932            6,990
    5,996            6,165            6,599            6,807            6,936            7,011

$    1.23        $    0.77        $    1.03        $    0.50        $    1.15        $    1.41
$    1.20        $    0.77        $    1.03        $    0.50        $    1.15        $    1.41

$ 133,750        $ 134,215        $ 114,558        $ 117,693        $ 116,988        $ 112,267
$  38,150        $  39,976        $  17,052        $  18,978        $  20,422        $  21,521
$  37,141        $  36,283        $  31,165        $  30,399        $  33,074        $  29,337
      3.3              3.1              3.0              2.7              3.1              3.0
$   13.00        $   12.15        $   12.03        $   11.46        $   11.35        $   10.51
$   1,904        $   1,808        $   1,936        $   2,022        $   2,047        $   1,807
$   8,495        $   6,496        $   5,395        $   7,184        $   7,032        $  13,559
$   8,497        $   7,832        $   7,587        $   7,926        $   7,808        $   6,798
      4.4%             3.1%             4.6%             2.3%             5.4%             6.7%
      9.8%             6.3%             8.8%             4.3%            10.6%            14.1%
     26.0%            26.4%            26.2%            24.4%            26.6%            29.2%
     18.9%            20.9%            19.0%            20.3%            18.0%            19.4%

                                       15

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations
Fiscal 2003 Compared to Fiscal 2002

         Consolidated net sales for the year ended July 31, 2003 were
$173,041,000, an increase of 6.6% from net sales of $162,345,000 in fiscal 2002.
Net income for the year was $3,083,000, an increase of $4,177,000 compared to
the loss reported in fiscal 2002 of $1,094,000. Basic income per share was $0.55
and fully diluted income per share was $0.54 in fiscal 2003, versus a basic and
diluted loss per share of $0.19 in fiscal 2002. The fiscal 2003 net income was
positively impacted by a pre-tax gain of $139,000 on the sale of mineral rights,
a pre-tax contractual payment of $675,000 from a customer that failed to meet
minimum purchase requirements under a supply agreement with the Company, a
pre-tax gain on real estate sales of $310,000, improved sales and reduced
distribution costs. The increase in net income was partially offset by a pre-tax
write-off associated with the closure of the Christmas Valley, Oregon production
facility in the fourth quarter of $573,000, a pre-tax asset write-off of
$385,000 and a pre-tax goodwill write-off of $350,000 related to the Company's
equity investment in Kamterter. The fiscal 2002 loss was driven by a $3,213,000
pre-tax write-off associated with a loss on impaired long-lived assets.
Partially offsetting this loss was a $937,000 pre-tax gain on the sales of land
and mineral rights. See Note 2 in the Notes to the Consolidated Financial
Statements for a discussion of the loss on impaired long-lived assets; the gains
on the sale of land and mineral rights, the other contractual income and the
2003 closure and write-off of the Christmas Valley production plant.

         Net sales of the Consumer Products Group for fiscal 2003 were
$105,108,000, an increase of 4.0% from net sales of $101,042,000 in fiscal 2002.
This segment's operating income increased 31.1% from $10,175,000 in fiscal 2002
to $13,343,000 in fiscal 2003. The net sales increase was driven by the addition
of the Jonny Cat(R) product line, which also positively contributed to the
segment's profit through increased gross profit dollars. The sales increase was
partially offset by the elimination of unprofitable business with Wal-Mart,
which was implemented in the fourth quarter of fiscal 2002. In that quarter,
Wal-Mart and Oil-Dri agreed on new terms pursuant to which Oil-Dri stopped
shipping private label cat litter to Wal-Mart distribution centers where the
freight cost (a cost borne by Oil-Dri) was prohibitive. This change caused sales
to be reduced but profits to be increased in terms of both gross profit margin
and absolute dollars. The expenses related to the addition of the Jonny Cat
product line and subsequent marketing investments caused the segment's operating
expenses to increase, but that increase was more than offset by the gross profit
increase. The marketing investments associated with the line are intended to
stabilize the base Jonny Cat business and provide a platform for future growth.

         Net sales of the Specialty Products Group for fiscal 2003 were
$24,990,000, an increase of 2.0% from net sales of $24,499,000 in fiscal 2002.
This segment's operating income increased 15.1% from $4,280,000 in fiscal 2002
to $4,927,000 in fiscal 2003. The profit increase was driven by improved sales
of PelUnite(R) and PelUnite Plus(TM) animal feed binding agents and by improved
pricing from the bleaching earth products due to changes in the geographical
sales mix.

         Net sales of the Crop Production and Horticultural Products Group for
fiscal 2003 were $21,820,000, an increase of 27.2% from net sales of $17,154,000
in fiscal 2002. The net sales increase resulted primarily from increased sales
of Agsorb(R) drying agents and agricultural carriers, and increased sales of
Pro's Choice(R) sports field products. The agricultural carriers business has
seen increased sales due to the spread of rotation resistant corn rootworm
beetles. The sports field products have seen strong growth in the golf course
market place. This segment's operating income increased by 11.2% from $2,350,000
in fiscal 2002 to $2,614,000 in fiscal 2003. The increase in operating income
was driven by the gross profit change from increased sales.

         Net sales of the Industrial and Automotive Products Group for fiscal
2003 were $21,123,000, an increase of 7.5% from net sales of $19,650,000 in
fiscal 2002. This segment's operating income decreased from a profit of $18,000
in fiscal 2002 to a loss of $826,000 in fiscal 2003. The loss was driven by
higher manufacturing processing labor and expenses. Also, the fuel price
increase seen in the second half of fiscal 2003 negatively impacted the income
of this segment.

         Consolidated gross profit as a percentage of net sales for fiscal 2003
increased to 20.6% from 19.1% in fiscal 2002. A favorable sales mix led by the
acquired Jonny Cat product line in the Consumer Products Group, improved

                                       16

sales of PelUnite Plus and price increases in the Specialty Product Group,
increased sales of Agsorb and sports field products in Crop Production and
Horticultural Products Group and the elimination of sales to unprofitable
geographic areas all contributed to this increase. The Company's year-to-date
fuel costs are down approximately 4% as compared to fiscal 2002. While fuel was
down for the year, rate increases in the second half of the year drove the
overall expenses to be down only 4% compared to fiscal 2002.

         The Christmas Valley closure negatively impacted the overall gross
profit. Approximately $484,000 of the $573,000 write-off was reflected in cost
of goods sold. This adjustment reduced the gross profit percentage from 20.9%
for the year, down to the final reported level of 20.6%. The remaining $89,000
of the write-off was reported as part of other income and expense.

         Operating expenses as a percentage of net sales for fiscal 2003
decreased to 16.8% from the 19.2% reported in fiscal 2002. Excluding the other
contractual income in 2003 and the loss on impaired assets in 2002, operating
expenses for 2003 would have remained flat at 17.2% for both years. A good
portion of the absolute dollar value increase in operating expenses in 2003 was
experienced in an effort to support the new Jonny Cat product line. The
increased sales from this line offset the dollar value increase in expense and
therefore led to the consistent expense ratio between the two years, after the
contractual income and loss on impaired asset are excluded.

         Interest expense and interest income for fiscal 2003 decreased 5.9%
from fiscal 2002 due to the reduction in debt.

         The Company's effective tax rate was 29.0% of pre-tax income in fiscal
2003 versus 29.8% in fiscal 2002. The effective tax rate was consistent between
the years.

         Total assets of the Company increased $1,788,000 or 1.4% during fiscal
2003. Current assets increased $3,086,000 or 5.4% from the fiscal 2002 year-end
balances, primarily due to increases in accounts receivable, current deferred
income taxes and inventory. The accounts receivable increase was related to the
improved sales in the fourth quarter. Quarterly sales were up $5,449,000 or
13.9% from the fourth quarter of fiscal 2002. Offsetting some of the increase
were decreases in other receivables and prepaid overburden expense. Other
receivables decreased due to a change from taxes receivable to taxes payable
driven by the profitability of the Company. The prepaid overburden account was
reduced by the extra overburden amortization that was incurred in fiscal 2003.
See Note 2 in the Notes to the Consolidated Financial Statements for a
discussion of this issue.

         Cash, cash equivalents and investments increased 2.7%, or $434,000,
from fiscal 2002 despite the fact that the Company spent over $6,000,000 in cash
to consummate the Purchase from a wholly owned subsidiary of Clorox. Positive
operating cash flows drove the combined cash and investments in treasury
securities balances to a higher level than reported for fiscal 2002.

         Property, plant and equipment, net of accumulated depreciation
increased $404,000, or 0.8%, from the year-end balance in fiscal 2002. The
increase in property, plant and equipment associated with the Purchase and other
normal capital investments were substantially offset by normal depreciation
expense on the Company's pre-existing fixed asset base and the Christmas Valley,
Oregon write-off. See Note 2 in the Notes to the Consolidated Financial
Statements.

         Total liabilities increased $1,845,000, or 3.3%, during fiscal 2003.
Current liabilities increased $5,342,000 or 26.9% during fiscal 2003, as a
result of increases in current maturities of notes payable, accounts payable,
freight payables, accrued trade promotions, and salaries, wages and commissions
payable. The increased business activity in the fourth quarter helped drive
increases in several of the payable balances. Long-term debt decreases
$2,850,000 due to principal payments.

                                       17

Expectations

         The Company believes that sales for fiscal 2004 should show a four to
seven percent increase over those reported in fiscal 2003. The sales from the
Jonny Cat line of products should help to drive this projected increase in
sales. However, the inability to predict potential rate increases in natural gas
and other fuel sources causes the Company to be cautiously optimistic about the
results for fiscal 2004. The Company expects to build on the progress seen in
fiscal 2003 and therefore is projecting earnings in the range of $0.70 to $0.85
per fully diluted share for fiscal 2004.

Liquidity and Capital Resources

         Working capital decreased $2,256,000 during fiscal 2003 to $35,396,000,
primarily due to a reduction of other receivables and prepaid overburden removal
expense and increased current notes payable, accounts payable, accrued trade
promotions and salaries, wages and commissions payables. This decrease was
offset partially by increased accounts receivables, inventories and cash, cash
equivalents and investments in treasury securities.

         Cash provided by operating activities was used to fund capital
expenditures of $4,882,000, the Purchase of $6,652,000, payments on long-term
debt of $2,850,000, repurchases of Treasury Stock of $1,508,000 and dividend
payments of $1,883,000. Total cash and investment balances held by the Company's
foreign subsidiaries at July 31, 2003 and July 31, 2002 were $2,557,000 and
$2,187,000, respectively.

         Accounts receivable, less allowance for doubtful accounts, increased
11.0%, or $2,350,000 for fiscal 2003, due to the strong fourth quarter sales
discussed previously. During fiscal 2003 the Company experienced a slight
decrease in bad debts expense, from the $409,000 in fiscal 2002 to $387,000 in
fiscal 2003. 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 1.4% and 1.3% of the Company's outstanding receivables at July 31,
2003 and 2002 respectively.

         On November 22, 2002, the Company and Harris Trust and Savings Bank
executed a second amendment to the Credit Agreement, dated January 29, 1999,
between them. See Note 4, in the Notes to the Consolidated Financial Statements
for a discussion of this amendment.

The table listed on the following page summarizes the Company's contractual
obligations and commercial commitments at July 31, 2003 for the timeframes
listed:

                                       18

CONTRACTUAL OBLIGATIONS

                                                   PAYMENTS DUE BY PERIOD
                        --------------------------------------------------------------------------------
 CONTRACTUAL
 OBLIGATIONS                TOTAL        LESS THAN 1 YEAR    1 - 3 YEARS    4 - 5 YEARS    AFTER 5 YEARS
- -------------           -------------    ----------------    -----------    -----------    -------------
                                                                            
Long-Term Debt          $  31,400,000    $      4,000,000    $ 7,160,000    $ 8,160,000    $  12,080,000
Operating Leases           14,601,000           2,321,000                     2,182,000        7,473,000
                                                               2,625,000

Unconditional
Purchase Obligations        2,434,000           2,434,000             --             --               --
                        -------------    ----------------    -----------    -----------    -------------
Total Contractual
Cash Obligations        $  48,435,000    $      8,755,000    $ 9,785,000    $10,342,000    $  19,553,000
                        =============    ================    ===========    ===========    =============

OTHER COMMERCIAL COMMITMENTS

                                           AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
                        --------------------------------------------------------------------------------
 OTHER COMMERCIAL       TOTAL AMOUNTS
   COMMITMENTS            COMMITTED      LESS THAN 1 YEAR    1 - 3 YEARS    4 - 5 YEARS    AFTER 5 YEARS
- ------------------      -------------    ----------------    -----------    -----------    -------------
                                                                            
Standby Letters of
Credit                  $   2,963,000    $      2,963,000    $        --    $        --    $          --
Other Commercial
Commitments                 4,848,000           4,848,000             --             --               --
                        -------------    ----------------    -----------    -----------    -------------
Total Commercial
Commitments             $   7,811,000    $      7,811,000    $        --    $        --    $          --
                        =============    ================    ===========    ===========    =============

         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. As of
July 31, 2003, 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 and availability
under its revolving credit facility will provide adequate 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.

                                       19

Results of Operations
Fiscal 2002 Compared to Fiscal 2001

         Consolidated net sales for the year ended July 31, 2002, were
$162,345,000, an increase of 1.0% from net sales of $160,669,000 in fiscal 2001.
The improvement was due to a sales increase reported by all of the business
segments. Basic and diluted income per share was a loss of $0.19, versus basic
and diluted net income per share of $0.16 in fiscal 2001. The loss was driven by
a $3,213,000 pre-tax write-off associated with a loss on impaired long-lived
assets. Partially offsetting this loss were increased sales, a pre-tax gain of
$937,000 on a land sale and the sale of mineral rights, and positive trends in
selling, general & administrative expenses, interest income and interest
expense. Energy costs were stable during the year. The Company's overall sales
mix showed a small negative impact in fiscal 2002. The Consumer segment's
negative mix factors were offset in large part by the other segments. Driving
the fiscal 2001 income was a non-recurring fee of $4,278,000, which was
partially offset by $920,000 of charges covering developmental costs and several
capital asset programs that the Company no longer intended to pursue in their
original form. See Note 2 in the Notes to the Consolidated Financial Statements
for a discussion of the loss on impaired long-lived assets; gain on the sale of
mineral rights and the 2001 non-recurring fee.

         Net sales for the Consumer Products segment for fiscal 2002 were
$101,042,000, an increase of 0.3% from net sales of $100,728,000 in fiscal 2001.
Increased sales of private label cat litter, dog treats and co-manufactured cat
litter items offset the lower sales of branded clay and paper cat litters.
Consumer Products' operating income increased 35.3% from $7,522,000 in fiscal
2001 to $10,175,000 in fiscal 2002. This increase was due to better expense
control in the selling, administrative and advertising areas, improved sales of
the dog treat items, offset partially by reduced product pricing in the
co-manufacturing area and mix weakness in our branded product area.

         Net sales of the Specialty Products Group for fiscal 2002 were
$24,499,000, an increase of 3.5% from net sales of $23,678,000 in fiscal 2001.
The major change was seen in an $800,000 increase in sales to Latin America,
with Conditionade(R) and various bleaching clays all experiencing increases. The
balance of the marketing areas remained relatively flat compared to fiscal 2001.
Operating income for the Specialty Products segment increased 74.6% from
$2,451,000 in fiscal 2001 to $4,280,000 in fiscal 2002. The increase was due to
sales growth in the Latin American market, selling price increases in our animal
health business, the cessation of the unprofitable Rheological products business
and improved profitability in some of the bleaching earth products. The exchange
rate fluctuations seen between the Euro and the Dollar had a minimal impact on
the Company's marketing to European customers.

         Net sales of the Crop Production and Horticultural Products segment for
fiscal 2002 were $17,154,000, an increase of 2.8% from net sales of $16,691,000
in fiscal 2001. This increase is due to increased sales of Soilmaster(R) sports
field conditioners and Terra-Green(R) soil conditioner. Crop Production and
Horticultural Products operating income increased 53.1 % from $1,535,000 in
fiscal 2001 to $2,350,000 in fiscal 2002. The increase was due to increased
selling prices and decreased selling expenses.

         Net sales of the Industrial and Automotive Products segment for fiscal
year 2002 were $19,650,000, an increase of 0.4% from net sales of $19,572,000 in
fiscal 2001. A 29% or approximately $1,000,000 sales increase of Lites(TM)
products and general price increases were offset by lower volumes of clay
products. Industrial and Automotive Products' operating income increased from a
loss of $389,000 in fiscal 2001 to a gain of $18,000 in fiscal 2002. The selling
price increases accounted for much of this change.

         Consolidated gross profit as a percentage of net sales for fiscal 2002
increased to 19.1% from 18.0% in fiscal 2001. This increase was due to several
factors. The Specialty segment contributed additional gross profit from the
growth in the Latin American sales, selling price increases in our animal health
business, the discontinuation of the unprofitable Rheological products business
and improved profitability in some of the bleaching earth products. The
Industrial and Crop Production segments helped the gross profit picture with
price increases. Finally, the Company saw solid growth in the Consumer segment's
dog treat business. Offsetting some of the positive was the continued decline of
the coarse litter branded business in the Consumer segment, a reduction of the
selling prices in the co-manufactured products business and a $175,000 increase
in our obsolescence reserve primarily for product sold by our Consumer Products
Group.

                                       20

         Operating expenses as a percentage of net sales increased to 19.2% for
fiscal 2002 from 15.4% in fiscal 2001. Excluding the loss on impaired assets in
fiscal 2002 and non-recurring fee in fiscal 2001, operating expenses for fiscal
2002 would have been 17.2% and 18.0% in fiscal 2001. Reductions in trade and
advertising spending in the Consumer segment were key contributors to the
adjusted value of 17.2% for fiscal 2002.

         Fiscal 2002 interest expense was down $341,000 from fiscal 2001.
Long-term debt was reduced by approximately $2,156,000 during the year. At July
31, 2002 and 2001, the Company did not have any outstanding borrowing against
the revolving line of credit.

         Fiscal 2002 interest income was up $60,000 from fiscal 2001.

         The Company's effective tax rate was 29.8 % of income before tax in
fiscal 2002 and 37.9% in fiscal 2001. See Note 6, in the Notes to the
Consolidated Financial Statements for the principal reasons for the decrease.

         Total assets of the Company decreased $5,489,000 or 4.2% during the
year ended July 31, 2002. Current assets increased $1,802,000 from fiscal 2001
year-end balances primarily due to increased cash and cash equivalents and
investments in Treasury securities, offset by decreased accounts receivable and
inventories. Property, plant and equipment, net of accumulated depreciation,
decreased $7,414,000 during the year. A significant part of this reduction was
caused by the impairment loss. However, the fact that depreciation expense
continued to exceed capital expenditures also played a key part in the
reduction.

         Total liabilities decreased $2,714,000 or 4.6% during fiscal 2002. A
majority of the decrease was reported in non-current notes payable. However,
accrued freight expense, accounts payable and accrued trade promotions and
advertising also decreased. Increases occurred in current maturities on notes
payable and accrued wages and salaries expense. Current liabilities increased
$250,000 or 1.3% from July 31, 2001 balances.

Significant Accounting Policies

         Management's discussion and analysis of the financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with the generally accepted
accounting principles of the U.S. The Company annually reviews its financial
reporting and disclosure practices and accounting policies to ensure that its
financial reporting and disclosures provides accurate and transparent
information relative to the current economic and business environment. The
Company believes that of its significant accounting policies stated in Note 1,
of the Notes to the Consolidated Financial Statements the policies listed below
involve a higher degree of judgment and/or complexity. The preparation of the
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities, as well as the reported amounts of revenues
and expenses during the reporting period. Significant estimates included
inventory reserves, allowance for doubtful accounts and the amount of prepaid
overburden. Actual results could differ from these estimates.

         Revenue Recognition. Under the terms of its sales agreements with
customers, the Company recognizes revenue when title is transferred upon product
shipments. Upon shipment an invoice is generated that sets the fixed and
determinable price. Sales returns and allowances, which have historically not
been material, are reviewed to determine if any additional reserve is necessary.
Sales returns and allowances are not material due to the nature of the Company's
business.

         Inventories. Inventories are valued at the lower of cost (first-in,
first-out) or market. Inventory costs include the cost of raw materials,
packaging supplies, labor and other overhead costs. The Company performs a
detailed review of its inventory items to determine if an obsolescence reserve
adjustment is necessary. The review not only considers specific items, but also
takes into consideration the overall value of the inventory as of the balance
sheet date. The Company recorded additional inventory obsolescence reserves of
approximately $441,000, $275,000 and $100,000 in the years 2003, 2002 and 2001
respectively.

         Prepaid Overburden Removal and Mining Costs. 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

                                       21

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. The Company
had $2,492,000 and $3,678,000 of prepaid expense recorded on its consolidated
balance sheet, as of July 31, 2003 and July 31, 2002, respectively. The Company
amortized to current expense approximately $3,552,000 of previously recorded
prepaid expense in fiscal 2003, $3,918,000 in fiscal 2002 and $2,497,000 in
fiscal 2001.

         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 cost 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.

Recently Issued Accounting Standards

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 2000, the FASB issued SFAS No. 138,
"Accounting for Derivative Instruments and Certain Hedging Activities, an
Amendment of SFAS No. 133," which was required to be adopted in fiscal years
beginning after June 15, 2000. In April 2003, the FASB issued SFAS No. 149
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities"
which amended SFAS No. 133 and SFAS No. 138 and provided additional guidance on
accounting for derivative instruments. One of the primary amendments to SFAS No.
133 establishes a "normal purchases and normal sales" exception. This exception
permits a company to exclude contracts that provide for the purchase or sale of
something other than a financial derivative instrument that will be delivered in
quantities expected to be used or sold by the company over a reasonable period
of time in the normal course of its business operations. SFAS No. 149 provides
additional guidance for interpretation and evaluation for "normal purchases and
normal sales" contracts. The Company has forward purchase contracts for certain
natural gas commodities that qualify for the "normal purchase" exception
provisions of the amended statements. The adoption of SFAS No. 133 as amended by
SFAS No. 138 and SFAS No. 149 had no material impact on either the Company's
financial position or results of operations.

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets" effective for fiscal years beginning after December 15, 2001.
Under SFAS No. 142, goodwill is no longer amortized, but is instead subject to
annual impairment tests in accordance with the Statements. Other intangible
assets continue to be amortized over their useful lives. The Company adopted
SFAS No. 142 in the first quarter of fiscal 2003. Management conducted a review
of the estimated fair market value of the business segments during the first
quarter of fiscal 2003, using a combination of discounted cash flow techniques
and an outside appraiser's evaluations. Based upon management's review, no
impairment adjustment was required for fiscal 2003.

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," effective for fiscal years beginning after June 15,
2002. Under the new rules, the fair value of a liability for any asset
retirement obligation is recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The Company adopted SFAS No. 143
during fiscal 2003. 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. Consequently, the Company determined
that an additional liability for land reclamation was immaterial to the overall
presentation of the financial statements.

         In June of 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," effective for exit or disposal
activities that are initiated after December 31, 2002. This statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies

                                       22

Emerging Issues Task force (EITF) Issue No. 94-3. Under the new rules, the
liability for a cost associated with an exit or disposal activity can be
recognized and measured at its fair value only when the liability is incurred.
The Company adopted SFAS No. 146, and utilized the new guidance in conjunction
with the closure of the Christmas Valley, Oregon production plant.

         In December of 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," effective for interim
periods beginning after December 15, 2002. The statement provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, the statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both the annual and interim financial statements about the method
of accounting for stock-based employee compensation and the effect of the method
used on reported results. The Company has adopted the disclosure requirements in
fiscal 2003.

Foreign Operations

         Net sales by the Company's foreign subsidiaries during fiscal 2003 were
$11,400,000 or 6.6% of total Company sales. This represents an increase of 6.0%
from fiscal 2002, in which foreign subsidiary sales were $10,754,000 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 price
increases positively impact their results. For fiscal 2003, the foreign
subsidiaries reported a gain of $281,000, an improvement of $188,000 from the
$93,000 gain reported in fiscal 2002. The improvement for the year was due to
improved sales and lower material costs at the Company's Canadian operation.
Identifiable assets of the Company's foreign subsidiaries as of July 31, 2003
were $9,737,000 compared to $9,542,000 as of July 31, 2002.

         Net sales by the Company's foreign subsidiaries during fiscal 2002 were
$10,754,000 or 6.6% of total Company sales. This represents a decrease of 1.4%
from fiscal 2001 in which foreign subsidiary sales were $10,908,000 or 6.8% of
total Company sales. Net gain of the foreign subsidiaries for fiscal 2002 was
$93,000, a significant increase from net loss of $325,000 in fiscal 2001. Much
of the improvement was driven by the Company's Canadian operations through price
increases and lower material costs. Identifiable assets of the Company's foreign
subsidiaries as of July 31, 2002 were $9,542,000, a decrease of $267,000 from
$9,809,000 as of July 31, 2001. The single largest contributor to this decrease
was the reduction of goodwill, associated with fiscal 2002 normal amortization.

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.

                                       23

ITEM 7a. 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 July 31, 2003. The Company believes that the market risk
arising from holdings of its financial instruments is not material.

         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 has contracted for a 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
59% 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
September 29, 2003.

                          COMMODITY PRICE SENSITIVITY
                          NATURAL GAS FUTURE CONTRACTS
                       FOR THE YEAR ENDING JULY 31, 2004

- ------------------------------------------------------------------------------
                                          Expected 2004 Maturity    Fair Value
- ------------------------------------------------------------------------------
                                                              
Natural Gas Future Volumes (MMBtu's)              390,000

Weighted Average Price (Per MMBtu)              $    6.07

Contract Amount ($ U.S., in thousands)          $ 2,370.5           $  1,995.6
==============================================================================

         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. See
Note 1, in the Notes to the Consolidated Financial Statements, New Accounting
Standards.

                                       24

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                           CONSOLIDATED BALANCE SHEETS

                                                                  JULY 31,
                                                        ----------------------------
                                                            2003            2002
                                                        ------------    ------------
                                                          (IN THOUSANDS OF DOLLARS)
                                                                 
                                  ASSETS

CURRENT ASSETS
  Cash and cash equivalents..........................   $      4,753   $      7,154
  Investment in treasury securities..................         11,917          9,082
  Accounts receivable, less allowance of $441 in
    2003 and $392 in 2002............................         23,765         21,415
  Other receivables..................................              3          1,025
  Inventories........................................         12,819         11,798
  Prepaid overburden removal expense.................          2,492          3,678
  Prepaid expenses and other assets..................          4,881          3,392
                                                        ------------   ------------
               Total Current Assets..................         60,630         57,544
                                                        ------------   ------------
PROPERTY, PLANT AND EQUIPMENT, AT COST
  Buildings and leasehold improvements...............         21,928         22,008
  Machinery and equipment............................         93,078         91,943
  Office furniture and equipment.....................         10,137          9,930
  Vehicles...........................................          4,739          4,511
                                                        ------------   ------------
                                                             129,882        128,392
  Less accumulated depreciation and amortization.....        (92,250)       (88,684)
                                                        ------------   ------------
                                                              37,632         39,708
  Construction in progress...........................          2,563          1,797
  Land...............................................          8,831          7,117
                                                        ------------   ------------
          Total Property, Plant and Equipment, Net...         49,026         48,622
                                                        ------------   ------------
OTHER ASSETS
Goodwill.............................................          5,115          5,430
Intangibles (Net of accumulated amortization
    of $2,474 in 2003 and $1,982 in 2002)............          3,869          3,958
Deferred income taxes................................          2,617          3,972
Other................................................          5,566          5,509
                                                        ------------   ------------
          Total Other Assets.........................         17,167         18,869
                                                        ------------   ------------
Total Assets.........................................   $    126,823   $    125,035
                                                        ============   ============

The accompanying notes are an integral part of the consolidated financial
statements.

                                       25

                                                                   JULY 31,
                                                         ---------------------------
                                                            2003            2002
                                                         -----------     -----------
                                                          (IN THOUSANDS OF DOLLARS)
                                                                  
         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Current maturities of notes payable..................  $     4,000    $     2,850
  Accounts payable.....................................        6,856          5,121
  Dividends payable....................................          461            473
  Accrued expenses
    Salaries, wages and commissions....................        4,250          3,722
    Trade promotions and advertising...................        4,160          2,595
    Freight............................................        1,089            828
    Other..............................................        4,418          4,303
                                                         -----------    -----------
               Total Current Liabilities...............       25,234         19,892
                                                         -----------    -----------
NONCURRENT LIABILITIES
  Notes payable........................................       27,400         31,400
  Deferred compensation................................        3,212          2,954
  Other................................................        1,963          1,718
                                                         -----------    -----------
               Total Noncurrent Liabilities............       32,575         36,072
                                                         -----------    -----------
               Total Liabilities.......................       57,809         55,964
                                                         -----------    -----------
STOCKHOLDERS' EQUITY
  Common Stock, par value $.10 per share, issued
    5,472,935 shares in 2003 and 5,471,685 in 2002.....          547            547
  Class B Stock, par value $.10 per share, issued
    1,765,083 shares in 2003 and 2002..................          177            177
  Additional paid-in capital...........................        7,646          7,677
  Retained earnings....................................       88,002         86,790
  Restricted unearned stock compensation...............          (37)            (4)
  Cumulative translation adjustment....................       (1,082)        (1,288)
                                                         -----------    -----------
                                                              95,253         93,899
  Less treasury stock, at cost (1,419,065 common and
    342,241 Class B shares at July 31, 2003 and
    1,279,700 Common and 342,241 Class B shares at
    July 31, 2002).....................................      (26,239)       (24,828)
                                                         -----------    -----------
               Total Stockholders' Equity..............       69,014         69,071
                                                         -----------    -----------
Total Liabilities and Stockholders' Equity.............  $   126,823    $   125,035
                                                         ===========    ===========

The accompanying notes are an integral part of the consolidated financial
statements.

                                       26

                        CONSOLIDATED STATEMENTS OF INCOME

                                                      YEAR ENDED JULY 31,
                                           -----------------------------------------
                                              2003           2002            2001
                                           -----------    -----------     ----------
                                           (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
                                                                 
NET SALES...............................   $   173,041    $   162,345     $  160,669
COST OF SALES...........................       137,413        131,265        131,804
                                           -----------    -----------     ----------
GROSS PROFIT............................        35,628         31,080         28,865
OTHER CONTRACTUAL INCOME &
  NON-RECURRING FEES....................           675             --          4,278
LOSS ON IMPAIRED LONG-LIVED ASSETS......            --         (3,213)            --
SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES..............................       (29,686)       (27,878)       (28,977)
                                           -----------    -----------     ----------
INCOME (LOSS) FROM OPERATIONS...........         6,617            (11)         4,166
                                           -----------    -----------     ----------
OTHER INCOME (EXPENSE)..................
  Interest income.......................           216            295            235
  Interest expense......................        (2,361)        (2,575)        (2,916)
  Foreign exchange gain (losses)........            22           (133)          (228)
  Other investment (loss)...............           (40)          (187)           (76)
  Gain on the sale of mineral rights....           139            769             --
  Other, net............................          (251)           283            288
                                           -----------    -----------     ----------
           Total Other Expense, Net.....        (2,275)        (1,548)        (2,697)
                                           -----------    -----------     ----------
INCOME (LOSS) BEFORE INCOME TAXES.......         4,342         (1,559)         1,469
INCOME TAXES (BENEFIT)..................         1,259           (465)           556
                                           -----------    -----------     ----------
NET INCOME (LOSS).......................   $     3,083    $    (1,094)    $      913
                                           ===========    ===========     ==========

NET INCOME (LOSS) PER SHARE.............
  Basic.................................   $      0.55    $     (0.19)    $     0.16
                                           ===========    ===========     ==========
  Diluted...............................   $      0.54    $     (0.19)    $     0.16
                                           ===========    ===========     ==========
AVERAGE SHARES OUTSTANDING..............
  Basic.................................         5,574          5,614          5,613
                                           ===========    ===========     ==========
  Diluted...............................         5,708          5,614          5,613
                                           ===========    ===========     ==========

The accompanying notes are an integral part of the consolidated financial
statements.

                                       27

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                              RESTRICTED                 ACCUMULATED
                                      COMMON      ADDITIONAL                   UNEARNED                     OTHER         TOTAL
                                    & CLASS B      PAID-IN       RETAINED       STOCK        TREASURY    COMPREHENSIVE STOCKHOLDERS'
                                      STOCK        CAPITAL       EARNINGS    COMPENSATION     STOCK         INCOME        EQUITY
                                      -----        -------       --------    ------------     -----         ------        ------
                                                                            (in thousands)
                                                                                                  
BALANCE, JULY 31, 2000               $    724      $  7,698      $ 90,757      $    (10)     $(24,895)     $ (1,310)     $ 72,964
                                                                                                                         --------

Net Income                                 --            --           913            --            --            --           913

  Cumulative Translation
    Adjustments                            --            --            --            --            --          (164)         (164)
                                                                                                                         --------
      Total Comprehensive Income                                                                                              749
                                                                                                                         --------
Dividends Declared                         --            --        (1,892)           --            --            --        (1,892)

Purchases of Treasury Stock                --            --            --            --            (3)           --            (3)

Issuance of Stock Under 1995
  Long-Term Incentive Plan                 --           (31)           --           (43)           74            --            --

Amortization of Restricted Common
  Stock Compensation                       --            --            --            28            --            --            28
                                     --------      --------      --------      --------      --------      --------      --------
BALANCE, JULY 31, 2001                    724         7,667        89,778           (25)      (24,824)       (1,474)       71,846
                                                                                                                         --------

Net (Loss)                                 --            --        (1,094)           --            --            --        (1,094)

  Cumulative Translation
    Adjustments                            --            --            --            --            --           186           186
                                                                                                                         --------
      Total Comprehensive(Loss)                                                                                              (908)
                                                                                                                         --------
Dividends Declared                         --            --        (1,894)           --            --            --        (1,894)

Purchases of Treasury Stock                --            --            --            --            (4)           --            (4)

Issuance of Stock Under 1995
  Long-Term Incentive Plan                 --            10            --            --            --            --            10

Amortization of Restricted Common
  Stock Compensation                       --            --            --            21            --            --            21
                                     --------      --------      --------      --------      --------      --------      --------
BALANCE, JULY 31, 2002                    724         7,677        86,790            (4)      (24,828)       (1,288)       69,071
                                                                                                                         --------

Net Income                                 --            --         3,083            --            --                       3,083
  Cumulative Translation
    Adjustments                            --            --            --            --            --           206           206
                                                                                                                         --------
      Total Comprehensive Income                                                                                            3,289
                                                                                                                         --------
Dividends Declared                         --            --        (1,871)           --            --            --        (1,871)

Purchases of Treasury Stock                --            --                          --        (1,508)           --        (1,508)

Issuance of Stock Under 1995
  Long-Term Incentive Plan                 --           (31)           --           (56)           97            --            10

Amortization of Restricted Common
  Stock Compensation                       --            --            --            23            --            --            23
                                     --------      --------      --------      --------      --------      --------      --------
BALANCE, JULY 31, 2003               $    724      $  7,646      $ 88,002      $    (37)     $(26,239)     $ (1,082)     $ 69,014
                                     ========      ========      ========      ========      ========      ========      ========

The accompanying statements are an integral part of the consolidated financial
statements.

                                       28

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                     YEAR ENDED JULY 31,
                                                                      --------------------------------------------------
                                                                         2003                2002                2001
                                                                      ----------          ----------          ----------
                                                                                  (IN THOUSANDS OF DOLLARS)
                                                                                                     
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)                                                     $    3,083          $   (1,094)         $      913
                                                                      ----------          ----------          ----------
Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
    Depreciation and amortization                                          8,534               8,785               9,089
    Deferred income taxes                                                   (118)               (817)               (549)
    Provision for bad debts                                                  387                 409                 142
    Loss on impaired assets                                                   --               3,213                  --
    Loss (Gain) on the sale of fixed assets                                  549                 (78)                237
    (Increase) decrease in:
        Accounts receivable                                               (2,737)              2,443                 (13)
        Other receivables                                                  1,022               1,472                (187)
        Inventories                                                          486               3,647               1,483
        Prepaid overburden removal expense                                 1,186                 119              (1,411)
        Prepaid expenses                                                     159                 643               1,298
        Other assets                                                         229                  (8)                377
    Increase (decrease) in:
        Accounts payable                                                   1,736                (671)                988
        Accrued expenses                                                   2,470                 220               3,250
        Deferred compensation                                                258                 185                (344)
        Other liabilities                                                    245                (292)               (320)
                                                                      ----------          ----------          ----------
           Total Adjustments                                              14,406              19,270              14,040
                                                                      ----------          ----------          ----------
           Net Cash Provided by Operating Activities                      17,489              18,176              14,953
                                                                      ----------          ----------          ----------
CASH FLOWS FROM INVESTING ACTIVITIES
    Capital expenditures                                                  (4,882)             (4,096)             (5,609)
    Proceeds from sale of property, plant and equipment                      679                 319                 496
    Purchases of net assets                                               (6,652)                 --                  --
    Purchases of investment securities                                   (39,310)             (9,639)             (2,487)
    Dispositions of investment securities                                 36,475               1,814               2,450
                                                                      ----------          ----------          ----------
            Net Cash Used in Investing Activities                        (13,690)            (11,602)             (5,150)
                                                                      ----------          ----------          ----------
CASH FLOWS FROM FINANCING ACTIVITIES
    Principal payments on long-term debt                                  (2,850)             (2,156)             (4,777)
    Dividends paid                                                        (1,883)             (1,894)             (1,892)
    Purchase of treasury stock                                            (1,508)                 (4)                 (3)
    Other, net                                                                41                 190                 (75)
                                                                      ----------          ----------          ----------
            Net Cash Used in Financing Activities                         (6,200)             (3,864)             (6,747)
                                                                      ----------          ----------          ----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                      (2,401)              2,710               3,056
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               7,154               4,444               1,388
                                                                      ----------          ----------          ----------
CASH AND CASH EQUIVALENTS, END OF YEAR                                $    4,753          $    7,154          $    4,444
                                                                      ==========          ==========          ==========

The accompanying notes are an integral part of the consolidated financial
statements.

                                       29

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

         The consolidated financial statements include the accounts of Oil-Dri
Corporation of America and its subsidiaries, all of which are wholly owned. All
significant intercompany balances and transactions have been eliminated from the
consolidated financial statements.

Management Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Revenue Recognition

         Under the terms of its sales agreements with customers, the Company
recognizes revenue when title is transferred upon product shipments. At the time
of shipment an invoice is generated which sets the fixed and determinable price.
Sales returns and allowances are not material due to the nature of the Company's
business.

Income Taxes

         Deferred income taxes reflect the impact of temporary differences
between the assets and liabilities recognized for financial reporting purposes
and amounts recognized for tax purposes.

         No provision has been made for possible income taxes which may be paid
on the distribution of approximately $19,533,000 and $18,391,000 as of July 31,
2003 and 2002, respectively, of retained earnings of foreign subsidiaries, as
substantially all such amounts are intended to be indefinitely invested in these
subsidiaries or to be handled in such a way that no additional income taxes
would be incurred when such earnings are distributed. It is not practicable to
determine the amount of income taxes or withholding taxes that would be payable
upon the remittance of assets that represent those earnings.

Reclassification

         Certain items in prior year financial statements have been reclassified
to conform to the presentation used in fiscal 2003.

Translation of Foreign Currencies

         Assets and liabilities of foreign subsidiaries, where the local
currency is the functional currency, are translated at the exchange rates in
effect at period end. Income statement items are translated at the average
exchange rate on a monthly basis. Resulting translation adjustments are recorded
as a separate component of stockholders' equity.

Cash Equivalents and Investments in Treasury Securities

         Cash equivalents are highly liquid investments with maturities of three
months or less when purchased. Investments in treasury securities are carried at
cost, plus accrued interest, which approximates market.

Inventories

         Inventories are valued at the lower of cost (first-in, first-out) or
market. The Company recorded additional inventory obsolescence reserves of
approximately $441,000, $275,000 and $100,000 in the years 2003, 2002 and 2001
respectively. The composition of inventories as of July 31, 2003 is as follows:

                                       30

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                                                      2003             2002
                                                      ----             ----
                                                         (IN THOUSANDS)
                                                              
Finished goods................................    $     7,821       $     6,673
Packaging.....................................          3,718             3,368
Other.........................................          1,280             1,757
                                                  -----------       -----------
                                                  $    12,819       $    11,798
                                                  ===========       ===========

Prepaid Overburden Removal and Mining Costs

         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. The Company had $2,492,000 and
$3,678,000 of prepaid expense recorded on its consolidated balance sheet, as of
July 31, 2003 and July 31, 2002, respectively. The Company amortized to current
expense approximately $3,552,000 of previously recorded prepaid expense in
fiscal 2003, $3,918,000 in fiscal 2002 and $2,497,000 in fiscal 2001.

         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 cost 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.

Concentration of Credit Risk

         Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of cash investments and
accounts receivable. The Company places its cash investments in
government-backed instruments, both foreign and domestic, and with other quality
institutions. Concentrations of credit risk with respect to accounts receivable
are subject to the financial condition of certain major customers, principally
the customer referred to in Note 3. The Company generally does not require
collateral to secure customer receivables.

Property, Plant and Equipment

         Property, plant and equipment expenditures are generally depreciated
using the straight-line method over their estimated useful lives which are
listed below. Major improvements and betterments are capitalized while
maintenance and repairs that do not extend the useful life of the applicable
assets are expensed as incurred.

                                                                      YEARS
                                                                      -----
                                                                   
Buildings and leasehold improvements............................      5-30
Machinery and equipment.........................................      2-20
Office furniture and equipment..................................      2-10
Vehicles........................................................       2-8

                                       31

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Shipping and Handling Costs

         Shipping and handling costs are included in the cost of goods sold and
were $27,568,000, $28,717,000 and $32,075,000 for the years ended July 31, 2003,
2002 and 2001, respectively.

Research and Development

         Research and development costs of $1,923,000, $1,955,000 and $1,953,000
were charged to expense as incurred for the years ended July 31, 2003, 2002 and
2001, respectively.

Intangibles and Goodwill

         Intangibles are amortized on a straight-line basis over periods ranging
from 7 to 35 years. The Company periodically reviews intangibles to assess
recoverability from projected undiscounted cash flows of the related operating
entities.

         Beginning in fiscal 2003, goodwill was no longer amortized; instead it
is tested annually for impairment. The Company tests the fair value of goodwill
using a combination of discounted cash flow techniques and outside appraiser's
evaluations. Based upon the results of the work performed, no impairment
adjustment was required during fiscal year 2003.

Advertising Costs

         The Company defers recognition of advertising production costs until
the first time the advertising takes place; other advertising costs are expensed
as incurred. Advertising expenses were $1,907,000, $1,227,000 and $1,940,000 for
the years ended July 31, 2003, 2002 and 2001, respectively.

Fair Value of Financial Instruments

         Non-derivative financial instruments included in the consolidated
balance sheets are cash and cash equivalents, investment securities and notes
payable. These instruments, except for notes payable, were carried at amounts
approximating fair value as of July 31, 2003 and 2002. The fair value of notes
payable was estimated based on future cash flows discounted at current interest
rates available to the Company for debt with similar maturities and
characteristics. The fair value of notes payable as of July 31, 2003 was greater
than its carrying value by approximately $818,000 and greater than its carrying
value by approximately $998,000 as of July 31, 2002.

Stock Based Compensation

         The Company applies the intrinsic value method under Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees", and related other interpretations to account for its stock option
plans. All the outstanding options issued under the plans have had exercise
prices equal to the market value on the day of issue. Accordingly, the Company
has not recorded any compensation expense associated with its issuance of stock
options. The Company has recorded as expense the fair market value on the date
of issue of any restricted stock awards granted.

                                       32

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         The following table details the effect on net income and earnings per
share if compensation expense for the stock plans had been recorded based on the
fair value method under SFAS 123, "Accounting for Stock Based Compensation".

- ---------------------------------------------------------------------------------------
                                                          YEAR ENDED
- ---------------------------------------------------------------------------------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)                         2003           2002                2001
- ----------------------------------------------------------------------------------------
                                                                       
Reported net income                           $3,083         $(1,094)           $    913
Add: Total stock-based                            13              14                  18
  employee compensation expense
  included in reported net income,
  net of related tax effects
Deduct: Total stock-based                       (699)           (783)               (696)
  employee compensation expense
  determined under fair value
  method for all awards
  net of related tax effects
- ----------------------------------------------------------------------------------------
Pro forma net income                          $2,397         $(1,863)           $    235
- ----------------------------------------------------------------------------------------
Earnings per share:
     Basic - as reported                      $ 0.55         $ (0.19)           $   0.16
     Basic - pro forma                        $ 0.43         $ (0.33)           $   0.04
- ----------------------------------------------------------------------------------------
     Diluted - as reported                    $ 0.54         $ (0.19)           $   0.16
     Diluted - pro forma                      $ 0.42         $ (0.33)           $   0.04
- ----------------------------------------------------------------------------------------

New Accounting Standards

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 2000, the FASB issued SFAS No. 138,
"Accounting for Derivative Instruments and Certain Hedging Activities, an
Amendment of SFAS No. 133," which was required to be adopted in fiscal years
beginning after June 15, 2000. In April 2003, the FASB issued SFAS No. 149
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities"
which amended SFAS No. 133 and SFAS No. 138 and provided additional guidance on
accounting for derivative instruments. One of the primary amendments to SFAS No.
133 establishes a "normal purchases and normal sales" exception. This exception
permits a company to exclude contracts that provide for the purchase or sale of
something other than a financial derivative instrument that will be delivered in
quantities expected to be used or sold by the company over a reasonable period
of time in the normal course of its business operations. SFAS No. 149 provides
additional guidance for interpretation and evaluation for "normal purchases and
normal sales" contracts. The Company has forward purchase contracts for certain
natural gas commodities that qualify for the "normal purchase" exception
provisions of the amended statements. The adoption of SFAS No. 133 as amended by
SFAS No. 138 and SFAS No. 149 had no material impact on either the Company's
financial position or results of operations.

         In June 2001, the FASB issued and SFAS No. 142, "Goodwill and Other
Intangible Assets" effective for fiscal years beginning after December 15, 2001.
Under SFAS No. 142, goodwill is no longer amortized, but is instead subject to
annual impairment tests in accordance with the Statements. Other intangible
assets continue to be amortized over their useful lives. The Company adopted
SFAS No. 142 in the first quarter of fiscal 2003. Management conducted a review
of the estimated fair market value of the business segments during the first
quarter of fiscal 2003, using a combination of discounted cash flow techniques
and an outside appraiser's evaluations.

                                       33

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Based upon management's review, no impairment adjustment was required at October
31, 2002. Had SFAS No. 142 been in effect for fiscal 2002 and 2001, net income
and earnings per share, net of tax, would have been as follows:

                                                   YEAR ENDED JULY 31,
                                         ------------------------------------------
                                            2003          2002             2001
                                         -----------   -----------      -----------
                                         (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
                                                               
Net Income (Loss)
      Net as reported                    $     3,083   $    (1,094)     $       913
      Add back: Goodwill amortization            ---           122              102
                                         -----------   -----------      -----------

      Adjusted Net Income (Loss)         $     3,083   $      (972)     $     1,015
                                         ===========   ===========      ===========

Basic Earnings (Loss) per share
      Net as reported                    $      0.55   $     (0.19)     $      0.16
      Add back: Goodwill amortization            ---          0.02             0.02
                                         -----------   -----------      -----------

      Adjusted Net Income (Loss)         $      0.55   $     (0.17)     $      0.18
                                         ===========   ===========      ===========

Diluted Earnings (Loss) per share
      Net as reported                    $      0.54   $     (0.19)     $      0.16
      Add back: Goodwill amortization            ---          0.02             0.02
                                         -----------   -----------      -----------

      Adjusted Net Income (Loss)         $      0.54   $     (0.17)     $      0.18
                                         ===========   ===========      ===========

Weighted Average shares outstanding
      Basic                                    5,574         5,614            5,613
                                         ===========   ===========      ===========
      Fully diluted                            5,708         5,614            5,613
                                         ===========   ===========      ===========

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," effective for fiscal years beginning after June 15,
2002. Under the new rules, the fair value of a liability for any asset
retirement obligation is recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The Company adopted SFAS No. 143
during fiscal year 2003. 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. Consequently, the Company
determined that an additional liability for land reclamation was immaterial to
the overall presentation of the financial statements.

                                       34

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         In June of 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," effective for exit or disposal
activities that are initiated after December 31, 2002. This statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task force ("EITF") Issue No. 94-3.
Under the new rules, the liability for a cost associated with an exit or
disposal activity can be recognized and measured at its fair value only when the
liability is incurred. The Company adopted SFAS No. 146, and utilized the new
guidance in conjunction with the closure of the Christmas Valley, Oregon
production plant.

         In December of 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure," effective for interim
periods beginning after December 15, 2002. The statement provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, the statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both the annual and interim financial statements about the method
of accounting for stock-based employee compensation and the effect of the method
used on reported results. The Company has adopted the disclosure requirements
for the third quarter of fiscal 2003.

NOTE 2 - SPECIAL CHARGES, FEES AND CHANGES IN ACCOUNTING ESTIMATES

Special Charges - Christmas Valley, Oregon Plant Closure

         On July 17, 2003 the Company announced a reorganization of service for
its customers in the Pacific Northwest. On July 31, 2003 the Company closed its
Christmas Valley, Oregon facility and transferred its existing customer base to
the newly acquired plant in Taft, California and other Oil-Dri production
facilities. The Company recorded a fourth quarter charge of $573,000, which is
detailed below:

                                                             2003
                                                         --------------
                                                         (IN THOUSANDS)
                                                      
Severance Costs                                              $106
Write-off of Obsolete Inventory                               198
Write-off of Fixed Assets                                      89
Reclamation Expense                                           180
                                                             ----
Total                                                        $573
                                                             ====

         Of the $573,000, $484,000 was recorded as part of cost of goods sold
for the fourth quarter 2003. The balance of the adjustment was recorded in other
income and expense.

Non-Recurring Fee

         On April 23, 2001, the Company signed two new long-term supply
contracts with a major customer. At that time the old long-term supply contract
between the Company and this customer was terminated and the Company received a
pre-tax termination fee of $4,278,000, of which $2,200,000 was received in
fiscal 2001 and the balance was received in fiscal 2002.

                                       35

NOTE 2 - SPECIAL CHARGES, FEES AND CHANGES IN ACCOUNTING ESTIMATES (CONTINUED)

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.

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.

         During the third quarter of fiscal 2002, the Company reported a
$769,000 pre-tax gain when it elected to sell certain mineral leases on land in
northern Florida. The land contained minerals for a market that the Company was
not actively planning to pursue. The mineral rights, had they been pursued,
would have been associated with the Company's Specialty Products Group.

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 requirements under a supply
agreement with the Company.

Reno Processing Plant

         During the latter part of the fourth quarter of fiscal 2002, the
Company reviewed both properties in Washoe County, Nevada for possible long-term
asset impairment. The decision to review the properties was driven by a
combination of the February 26, 2002, County Commission decision and the
successful completion in June of 2002 of a significant geographic distribution
change with Wal-Mart.

         The accumulated cost of the Reno project that was reviewed for
impairment was approximately $3,734,000. This value included the cost of
purchased land, water and mineral rights, legal fees associated with the land
and water rights purchases, consulting fees for the design of the proposed
facility, fees associated with an environment impact study, various mining
exploration costs, Company overhead costs for the project, machinery costs and
finally various legal and consulting fees associated with the preparation and
presentation of the special use permit.

         The accumulated cost of the other Washoe County property was
approximately $1,114,000. This value included the purchase price of the land and
associated costs and mineral exploration costs.

                                       36

NOTE 2 - SPECIAL CHARGES, FEES AND CHANGES IN ACCOUNTING ESTIMATES (CONTINUED)

         Based on the February 26, 2002 determination of the County Commission
and the geographic distribution change with Wal-Mart, the Company determined
that a significant portion of the costs of both properties was impaired.
Therefore, a pre-tax loss on impaired long-lived assets of $3,213,000 was
recognized in the fourth quarter of fiscal 2002 to write down the accumulated
costs associated with these projects and the reduction in the value of assets
remaining to the current fair market value. The main business segment impacted
by this impairment was the Company's Consumer Products group.

         In April 2002, the Company filed a lawsuit against Washoe County,
Nevada, alleging that the County's denial of a special use permit (sought by the
Company in connection with its plan to build a manufacturing facility outside of
Reno, Nevada) violated both federal and state law. The lawsuit seeks damages
resulting from the County's improper denial of the special use permit, which
caused the Company to abandon its plan to build the Reno facility. The lawsuit
is now pending in Nevada state court. A hearing on the liability issues in the
lawsuit is expected to be held in fall 2003. An adverse decision in the matter
would not have a material adverse effect on the Company.

         The Company is involved in other ordinary routine litigation, none
which is material.

                                       37

================================================================================

NOTE 3 - OPERATING SEGMENTS

         SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information" establishes standards for reporting information about operating
segments. Under this standard, 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 the summary of significant accounting policies.

         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:

                                                        JULY 31,
                                          -----------------------------------
                                                         ASSETS
                                          -----------------------------------
                                            2003         2002        2001
                                          ---------    ---------    ---------
                                                     (IN THOUSANDS)
 Consumer Products                        $  54,307    $  51,600    $  58,321
 Specialty Products Group                    17,251       15,813       16,022
 Crop Production and Horticulture            12,383       11,043       11,913
 Industrial and Automotive Products           8,539        8,417        9,969
 Unallocated Assets                          34,343       38,162       34,299
                                          ---------    ---------    ---------
 TOTAL ASSETS                             $ 126,823    $ 125,035    $ 130,524
                                          =========    =========    =========

                                                                         YEAR ENDED JULY 31
                                           ------------------------------------------------------------------------------
                                                        NET SALES                                  INCOME
                                           -------------------------------------     ------------------------------------
                                             2003         2002           2001          2003          2002          2001
                                           ---------    ---------      ---------     --------      --------      --------
                                                                          (IN THOUSANDS)
                                                                                               
 Consumer Products                         $ 105,108    $ 101,042      $ 100,728     $ 13,343      $ 10,175      $  7,522
 Specialty Products Group                     24,990       24,499         23,678        4,927         4,280         2,451
 Crop Production and Horticulture             21,820       17,154         16,691        2,614         2,350         1,535
 Industrial and Automotive Products           21,123       19,650         19,572         (826)           18          (389)
                                           ---------    ---------      ---------     --------      --------      --------
 TOTAL SALES/OPERATING INCOME              $ 173,041    $ 162,345      $ 160,669       20,058        16,823        11,119
                                           ---------    ---------      ---------
           Other Contractual Income and
                Nonrecurring Fees(2)                                                      675            --         4,278
           Gain on the Sale of Mineral
                Rights(1)                                                                 139           769            --
 Less:
            Loss on Impaired Assets(3)                                                     --         3,213            --
            Corporate Expenses                                                         14,385        13,658        11,247
            Interest Expense, net of
                interest Income                                                         2,145         2,280         2,681
                                                                                     --------      --------      --------
 INCOME (LOSS) BEFORE INCOME TAXES                                                      4,342        (1,559)        1,469
 INCOME TAXES (BENEFIT) PROVISION                                                       1,259          (465)          556
                                                                                     --------      --------      --------
 NET INCOME (LOSS)                                                                   $  3,083      $ (1,094)     $    913
                                                                                     ========      ========      ========

(1) See Note 2 for a discussion of the gain on the sale of mineral rights.

(2) See Note 2 for a discussion of other contractual income and the
non-recurring fee.

(3) See Note 2 for a discussion of the loss on impaired assets.

                                       38

NOTE 3 - OPERATING SEGMENTS (CONTINUED)

    The following is a summary of financial information by geographic region for
the years ended July 31:

                                                   2003           2002            2001
                                                   ----           ----            ----
                                                             (IN THOUSANDS)
                                                                      
Sales to unaffiliated customers:
        Domestic...............................  $ 161,641     $  151,591      $  149,761
        Foreign subsidiaries...................  $  11,400     $   10,754      $   10,908
Sales or transfers between geographic areas:
        Domestic...............................  $   5,346     $    5,000      $    5,243
Income (Loss) before income taxes:
        Domestic...............................  $   3,906     $   (1,614)     $    2,006
        Foreign subsidiaries...................  $     436     $       55      $     (537)
Net Income (Loss):
        Domestic...............................  $   2,802     $   (1,187)     $    1,238
        Foreign subsidiaries...................  $     281     $       93      $     (325)
Identifiable assets:
        Domestic...............................  $ 117,086     $  115,493      $  120,715
        Foreign subsidiaries...................  $   9,737     $    9,542      $    9,809

    The Company's largest customer accounted for the following percentage of
consolidated net sales and net accounts receivable under the Consumer Products
segment:

                                                  2003         2002          2001
                                                  ----         ----          ----
                                                                    
Sales for the years ended July 31..............   19%          22%           21%
Accounts receivable as of July 31..............   26%          26%           25%

                                       39

NOTE 4 - NOTES PAYABLE

The composition of notes payable at July 31 is as follows:

                                                           2003        2002
                                                                    ----        ----
                                                                      (IN THOUSANDS)
                                                                       
Town of Blue Mountain, Mississippi
     Principal payable on October 1, 2008. Interest payable
     monthly at a variable interest rate reset weekly based
     on market conditions for similar instruments. The
     average rate was 1.52% and 1.95% in fiscal 2003 and
     2002, respectively. Payment of these bonds by the
     Company is guaranteed by a letter of credit issued by
     Harris Trust and Savings
     Bank....................................................... $   2,500  $   2,500

Teachers Insurance and Annuity Association of America
     Payable in annual principal installments on August 15:
     $2,500,000 in fiscal 2004 and 2005.  Interest is
     payable semiannually at an annual rate of
     7.17%......................................................     5,000      6,000

Harris Trust and Savings Bank
     Final principal installment payable on June 20, 2003.
     Interest was payable quarterly at an annual rate of 7.78%..       ---        350

Teachers Insurance and Annuity Association of America and
    Connecticut General Life Insurance Company
     Payable in annual principal installments on April 15:
     $1,500,000 in fiscal 2004 and 2005; $3,000,000 in
     fiscal 2006; $4,000,000 in fiscal 2007 and 2008;
     $1,500,000 in fiscal 2009; $3,000,000 in fiscal 2010;
     $2,000,000 in fiscal 2011; and $1,500,000 in fiscal
     2012 and 2013. Interest is payable semiannually at an
     annual rate of 6.55%.......................................    23,500     25,000

Other ..........................................................       400        400
                                                                 ---------  ---------
                                                                 $  31,400  $  34,250

    Less current maturities of notes payable....................    (4,000)    (2,850)
                                                                 ---------  ---------
                                                                 $  27,400  $  31,400
                                                                 =========  =========

         On January 29, 1999, the Company entered into a Credit Agreement with
Harris Trust and Savings Bank, which provides for up to $15,000,000 in committed
unsecured revolving credit loans and/or letters of credit (not to exceed
$5,000,000). In May 2002, the Company reduced this facility to $7,500,000 and
amended the definition of Consolidated EBITDA used for covenant compliance
purposes to exclude non-cash charges, up to $3,600,000 relating to the write-off
of its equity investment in the Washoe County, Nevada, project and/or certain
other costs associated with the write-off of the Company's Christmas Valley,
Oregon production facility. See Note 2 in the Notes to the Consolidated
Financial Statements for the description of write-downs totaling $573,000 in
fiscal 2003 and $3,213,000 in fiscal 2002. On November 22, 2002, the Company and
Harris Trust and Savings Bank entered into a second amendment whereby for the
purposes of the fixed charge coverage ratio, as defined, up to $6,000,000 of
capital expenditures incurred by the Company related to its acquisition of the
Taft, California facility and the Jonny Cat brand are excluded from the
computation. This agreement terminates on January 29, 2004, or such earlier date
as provided for in the agreement. The Company is in the process of replacing
this agreement with a similar revolving credit arrangement. Additionally, the
Company decreased its uncommitted line of credit agreement, which is renewable
on an annual basis, with Harris Trust and Savings Bank to $15,000,000 in fiscal
1999. There were not any outstanding borrowings against this facility at July
31, 2003 and 2002.

                                       40

NOTE 4 - NOTES PAYABLE (CONTINUED)

         In January 2001, the note agreement for the $25,000,000 private debt
placement was amended to modify the fixed charges ratio covenant contained
therein from the original ratio of 1.5 to 1.0 to new ratios as follows: (i) for
the period ending November 1, 2000 through April 30, 2001 to 1.00 to 1.00; (ii)
for the period ending May 1, 2001 through October 31, 2001 to 1.15 to 1.00;
(iii) for the period ending November 1, 2001 through July 31, 2002 to 1.25 to
1.00; (iv) and for the period ending August 1, 2002 and thereafter to 1.50 to
1.00. Additionally, prior note agreements dated as of April 15, 1993 and April
15, 1991 with Teachers Insurance and Annuity Association have also been amended
to add a fixed charges coverage ratio covenant at substantially the same terms
as those in the note agreement dated as of April 15, 1998 as amended.

         In July 2002, the 1993 and 1998 note agreements were further amended to
modify the fixed charge covenant ratio for periods beginning May 1, 2002, as
follows: (i) for the period May 1, 2002 through July 31, 2002 the ratio test was
waived by the noteholders; (ii) for the periods ending August 1, 2002 through
January 31, 2002 to 1.00 to 1.00; (iii) for the periods ending February 1, 2003
through October 31, 2003 to 1.25 to 1.00; (iv) and for the periods ending
November 1, 2003 and thereafter to 1.50 to 1.00. Also, for any fiscal quarter
ending on or after July 31, 2002 an additional interest charge of 0.25% is
imposed if the fixed charge coverage ratio is less than 1.25 to 1.00 for the
quarter ended July 31, 2002 and 1.50 to 1.00 for periods thereafter. Finally,
the definition of Consolidated Net Income for covenant compliance purposes also
has been amended to exclude non-cash charges incurred by the Company on or
before July 31, 2003, relating to the write-off of the Company's equity
investments in the Washoe County, Nevada projects and other costs associated
with the write-off of the Company's Christmas Valley, Oregon production
facility. See Note 2 in the Notes to the Consolidated Financial Statements for a
description of a write-down totaling $573,000 in fiscal 2003 and $3,213,000 in
fiscal 2002. The aggregate amount of these write-offs cannot be in excess of
4,700,000.

         The agreements with the Town of Blue Mountain, Mississippi, Teachers
Insurance and Annuity Association of America, Harris Trust and Savings Bank and
Connecticut General Life Insurance Company impose working capital requirements,
dividend and financing limitations, minimum tangible net worth requirements and
other restrictions. The Company's Credit Agreement with Harris Trust and Savings
Bank indirectly restricts dividends by requiring the Company to maintain
tangible net worth, as defined, in the amount of $50,000,000 plus 40% of
cumulative annual earnings from July 31, 1998.

         In prior years, the Town of Blue Mountain, Mississippi issued long-term
bonds to finance the purchase of substantially all of the assets of certain
plant expansion projects, and leased the projects to the Company and various of
its subsidiaries (with the Company and various of its wholly owned subsidiaries
as guarantors) at rentals sufficient to pay the debt service on the bonds.

         The following is a schedule by year of future maturities of notes
payable as of July 31, 2003:

                                                       (IN THOUSANDS)
                                                    
2005................................................      $ 4,080
2006 ...............................................        3,080
2007................................................        4,080
2008................................................        4,080
Later years.........................................       12,080
                                                          -------
                                                          $27,400
                                                          =======

                                       41

NOTE 5 - PURCHASE OF ASSETS RELATED TO THE JONNY CAT(R) 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(R) brand of cat litter
(the "Purchase") from a wholly owned subsidiary of Clorox (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.

NOTE 6 - INCOME TAXES

         The provision for income tax expense consists of the following:

                                                 2003         2002         2001
                                                 ----         ----         ----
                                                          (IN THOUSANDS)
                                                                 
Current
     Federal................................   $  1,061      $    425     $    586
     Foreign................................         45           (14)        (212)
     State..................................        271           (59)          74
                                               --------      --------     --------
                                                  1,377           352          448
                                               --------      --------     --------
Deferred
     Federal................................       (256)          629           65
     Tax effect of operating loss
       carryforward, net....................         --        (1,629)          --
     Foreign................................        110            --           --
     State..................................         28           183           43
                                               --------      --------     --------
                                                   (118)         (817)         108
                                               --------      --------     --------
Total Income Tax Provision (Benefit)........   $  1,259      $   (465)    $    556
                                               ========      ========     ========

     Principal reasons for variations between the statutory federal rate and the
effective rates for the years ended July 31 were as follows:

                                                              2003      2002     2001
                                                              ----      ----     ----
                                                                       
 U.S. federal income tax rate...............................  34.0%    (34.0)%   34.0%
 Depletion deductions allowed for mining....................  (7.4)    (11.4)   (13.0)
 State income tax expense (benefit), net of federal tax
     (benefit)/expense......................................   4.3      (5.3)     5.3
 Valuation allowance without income tax benefit.............    --      22.9       --
 Difference in effective tax rate of foreign subsidiaries...    --      (2.1)    (0.2)
 Credits....................................................  (2.8)       --      5.4
 Other......................................................   0.9       0.1      6.4
                                                             -----   -------     ----
                                                              29.0%    (29.8)%   37.9%
                                                             =====   =======     ====

                                       42

NOTE 6 - INCOME TAXES (CONTINUED)

         The consolidated balance sheets as of July 31 included the following
tax effects of cumulative temporary differences:

                                                2003                    2002
                                      ----------------------   ----------------------
                                       ASSETS    LIABILITIES    ASSETS    LIABILITIES
                                      -------    -----------   -------    -----------
                                                      (IN THOUSANDS)
                                                              
Depreciation........................  $     --     $    451    $      --    $    466
Deferred compensation...............     1,327           --        1,121         --
Postretirement benefits.............       175           --          569         --
Allowance for doubtful accounts.....       265           --          142         --
Other assets........................       372           --          417         --
Accrued expenses....................       991           --          308         --
Tax credits.........................       580           --          199         --
Amortization........................       221           --           --         --
Inventory...........................       217           --           --         --
Depletion...........................        --           53           --         --
Other assets - Foreign..............        --           58           52         --
Operating loss carryforward.........       861           --        1,987         --
                                      --------     --------    ---------    -------
                                         5,009          562        4,795        466
Valuation allowance.................      (357)          --         (357)        --
                                      --------     --------    ---------    -------
Total deferred taxes................  $  4,652     $    562    $   4,438    $   466
                                      ========     ========    =========    =======

         As of July 31, 2003, for federal income tax purposes there were
alternative minimum tax credit carryforwards of approximately $550,000 and
regular tax operating loss carryforwards of approximately $2,255,000. The
operating loss carryforward will expire in 2022. A valuation allowance has been
established for $357,000 of the deferred tax benefit related to those operating
losses which it is more likely than not that the benefit will not be realized.

NOTE 7 - STOCKHOLDERS' EQUITY

         The authorized capital stock of the Company at July 31, 2003 and 2002
consisted of 15,000,000 shares of Common Stock, 7,000,000 shares of Class B
Stock and 30,000,000 shares of Class A Common Stock, each with a par value of
$.10 per share. There are no Class A shares currently outstanding.

         The Common Stock and Class B Stock are equal, on a per share basis, in
all respects except as to voting rights, conversion rights, cash dividends and
stock splits or stock dividends. The Class A Common Stock is equal, on a per
share basis, in all respects, to the Common Stock except as to voting rights and
stock splits or stock dividends. In the case of voting rights, Common Stock is
entitled to one vote per share and Class B Stock is entitled to ten votes per
share, while Class A Common Stock generally has no voting rights. Common Stock
and Class A Common Stock have no conversion rights. Class B Stock is convertible
on a share-for-share basis into Common Stock at any time and is subject to
mandatory conversion under certain circumstances.

         Common Stock is entitled to cash dividends, as and when declared or
paid, equal to 133 1/3% on a per share basis of the cash dividend paid on Class
B Stock. Class A Common Stock is entitled to cash dividends on a per share basis
equal to the cash dividend on Common Stock. Additionally, while shares of Common
Stock, Class A Common Stock and Class B Stock are outstanding, the sum of the
per share cash dividend paid on shares of Common Stock and Class A Common Stock,
must be equal to at least 133 1/3% of the sum of the per share cash dividend
paid on Class B Stock and Class A Common Stock. See Note 4 regarding dividend
restrictions.

                                       43

NOTE 7 - STOCKHOLDERS' EQUITY (CONTINUED)

         Shares of Common Stock, Class A Common Stock and Class B Stock are
equal in respect of all rights to dividends (other than cash) and distributions
in the form of stock or other property (including stock dividends and split-ups)
in each case in the same ratio except in the case of a Special Stock Dividend.
The Special Stock Dividend, which can be issued only once, is either a dividend
of one share of Class A Common Stock for each share of Common Stock and Class B
Stock outstanding or a recapitalization, in which half of each outstanding share
of Common Stock and Class B Stock would be converted into a half share of Class
A Common Stock.

         The Board of Directors of the Company has authorized the repurchase of
1,916,771 shares of the Company stock. As of July 31, 2003, 1,272,520 shares of
Common Stock and 342,241 shares of Class B stock have been repurchased under the
Board approved repurchase authorizations and 146,545 shares of Common Stock by
other authorized transactions.

         The number of holders of record of Common Stock and Class B stock on
July 31, 2003 was 833 and 33, respectively, as reported by the Company's
transfer agent. The Company's Common Stock is traded on the New York Stock
Exchange. There is no established trading market for the Class B Stock.

NOTE 8 - STOCK OPTION PLANS

         The Company instituted the Oil-Dri Corporation of America 1995 Long
Term Incentive Plan during the fiscal year ended July 31, 1996. On December 9,
1997, the stockholders voted to increase the number of shares available for
grant under the 1995 Plan from 500,000 to 1,000,000 and further authorized the
grant of Class B Shares under the Plan to certain members of the Richard M.
Jaffee family. Generally, other than grants to Richard M. Jaffee family members,
shares of stock awarded under the 1995 Plan will be Class A Common Stock, except
that, if there is no Class A Common Stock issued and publicly traded on a
securities exchange when such awards are exercised, the shares awarded would be
Common Stock. On December 7, 1999, the stockholders voted to increase the number
of shares available for grant under the 1995 Plan from 1,000,000 to 1,500,000.
On June 9, 2000, the 1995 Plan was amended to provide 100% vesting and a
three-year exercise period upon the death or disability of a grantee or upon a
grantee's retirement with age plus years of service equal to at least 80. The
Plan provides for various other types of awards. No restricted stock awards were
made during the fiscal year ended July 31, 2002. Awards of restricted stock in
the amount of 7,000 and 5,000 shares were made during the fiscal years ended
July 31, 2003 and 2001, respectively. All stock option grants awarded to date
under this plan have a term of ten years. Grants vest and become exercisable
gradually between two and seven years.

         The Oil-Dri Corporation of America 1988 Stock Option Plan terminated on
December 12, 1995, for purposes of future grants. The outstanding options under
this plan will remain outstanding and exercisable in accordance with their
respective terms. As of July 31, 2003, all options outstanding are vested and
exercisable.

         The Company instituted the Oil-Dri Corporation of America Outside
Director's Stock Plan on June 9, 1998. The Plan is administered by the
Compensation Committee of the Company's Board of Directors. All shares of stock
issued under this plan will be shares of Common Stock issued from Treasury
Stock. The Plan provides for stock option grants, restricted stock, stock awards
and stock units. All awards to date under this plan are stock options that have
a term of ten years and a vesting period of one year.

                                       44

NOTE 8 - STOCK OPTION PLANS (CONTINUED)

            EQUITY COMPENSATION PLAN INFORMATION AS OF JULY 31, 2003

                                                                                               NUMBER OF
                                                                                               SECURITIES
                                                                                               REMAINING
                                                                                             AVAILABLE FOR
                                                        NUMBER OF                           FURTHER ISSUANCE
                                                     SECURITIES TO BE                         UNDER EQUITY
                                                       ISSUED UPON                            COMPENSATION
                                                       EXERCISE OF      WEIGHTED-AVERAGE    PLANS (EXCLUDING
                                                       OUTSTANDING      EXERCISE PRICE OF      SECURITIES
                                                    OPTIONS, WARRANTS      OUTSTANDING        REFLECTED IN
                                                       AND RIGHTS       OPTIONS, WARRANTS      COLUMN (a))
                                                      (IN THOUSANDS)       AND RIGHTS        (IN THOUSANDS)
PLAN CATEGORY                                              (a)                 (b)                (c)
- ------------------------------------------------------------------------------------------------------------
                                                                                   
Equity compensation plans approved by
security holders                                         1,288               $10.44              256
Equity compensation plans not approved by
security holders                                           185               $10.16               15
- ------------------------------------------------------------------------------------------------------------

         A summary of option transactions under the plans follows:

                                                        NUMBER OF           WEIGHTED
                                                         SHARES              AVERAGE
                                                     (IN THOUSANDS)      EXERCISE PRICE
- ---------------------------------------------------------------------------------------
                                                                   
Options outstanding at August 1, 2000                       995             $   12.65
     Granted                                                258             $    9.02
     Canceled                                               116             $   13.48
- -------------------------------------------------------------------------------------
Options outstanding at August 1, 2001                     1,137             $   11.74
     Granted                                                310             $    6.18
     Exercised                                                1             $    8.19
     Canceled                                                45             $   12.65
- -------------------------------------------------------------------------------------
Options outstanding at August 1, 2002                     1,401             $   10.49
     Granted                                                165             $   10.01
     Exercised                                                1             $    8.19
     Canceled                                                92             $   10.92
- -------------------------------------------------------------------------------------
OPTIONS OUTSTANDING AT AUGUST 1, 2003                     1,473             $   10.41

         Options exercisable were 760,512, 576,151 and 336,325 as of July 31,
2003, 2002 and 2001, respectively. The weighted average exercise price of the
options exercisable as of July 31, 2003, 2002 and 2001 was $ 11.74, $12.43, and
$14.10 respectively.

         The Company had reserved 255,750, 350,626 and 587,250 shares,
respectively, as of July 31, 2003, 2002 and 2001 under the Oil-Dri Corporation
of America 1995 Long Term Incentive Plan.

         The Company had reserved 15,000, 5,000 and 40,000 shares of Common
Stock, respectively, as of July 31, 2003, 2002 and 2001, under the Oil-Dri
Corporation of America Outside Director's Stock Plan.

                                       45

NOTE 8 - STOCK OPTION PLANS (CONTINUED)

                       OPTIONS OUTSTANDING AND EXERCISABLE
                         BY PRICE RANGE AS OF 7/31/2003

                               Options Outstanding                                               Options Exercisable
- ---------------------------------------------------------------------------------       --------------------------------------
                                                 Weighted
                         Outstanding as          Average              Weighted                                    Weighted
   Range of                of 7/31/2003          Remaining             Average                Share                Average
Exercise Prices          (in thousands)      Contractual Life      Exercise Price        (in thousands)        Exercise Price
- ---------------          --------------      ----------------      --------------        --------------        --------------
                                                                                                
$6.01 - $8.00                   436                8.2                $  6.75                 118                 $  7.49
$8.01 - $10.00                  181                7.0                $  9.28                  56                 $  9.13
$10.01 - $12.00                 634                5.9                $ 11.28                 403                 $ 11.25
$14.01 - $16.00                 154                5.5                $ 14.64                 116                 $ 14.65
$18.01 - $20.00                  68                1.1                $ 19.29                  68                 $ 19.29
- ---------------               -----                ---                -------                 ---                 -------
$6.01 - $20.00                1,473                6.5                $ 10.41                 761                 $ 11.74
===============               =====                ===                =======                 ===                 =======

         The weighted average fair value of the options granted was $2.59, $1.40
and $2.45 for the fiscal years ended July 31, 2003, 2002 and 2001, respectively.
See Note 1 in the Notes to the Consolidated Financial Statements regarding Stock
Based Compensation.

         The fair value of issued stock options is estimated on the grant date
using the Black-Scholes Option Pricing Method with the following assumptions:

                                            2003           2002          2001
                                            ----           ----          ----
Dividend Yields.........................     3.7%          5.8%           4.2%
Volatility..............................    36.2%         38.1%          37.2%
Risk-free Interest Rate.................     3.5%          4.7%           5.8%
Expected Life (Years)...................     5.4           4.6            5.4

NOTE 9 - EMPLOYEE BENEFIT PLANS

         The Company and its subsidiaries have defined benefit pension plans for
eligible salaried and hourly employees. Benefits are based on a formula of years
of credited service and levels of compensation or stated amounts for each year
of credited service. The assets of these plans are invested in various high
quality marketable securities.

         The net periodic pension cost for the years ended July 31 consists of
the following:

                                            2003           2002          2001
                                            ----           ----          ----
                                                     (IN THOUSANDS)
Service cost..........................   $      600    $       534   $      424
Interest cost on projected
  benefit obligations.................          823            763          681
Expected return on plan assets........         (740)          (912)        (977)
Net amortization and deferral.........           23              3         (121)
                                         ----------    -----------   ----------
Net pension cost......................   $      706    $       388   $        7
                                         ==========    ===========   ==========

         The funded status of the plans at July 31 is as follows:

                                                          2003           2002
                                                          ----           ----
                                                             (IN THOUSANDS)
Fair Value of Plan Assets Less Than Projected
  Benefit Obligations..............................   $     (3,907)    $ (2,159)
Unrecognized Net Loss..............................          2,389          840
Unrecognized Prior Service Cost....................            431          481
Unrecognized Net Asset at Transition...............           (132)        (158)
                                                      ------------     --------
Accrued Pension Included in Noncurrent
  Liabilities--Other...............................   $     (1,219)    $   (996)
                                                      ============     ========

                                       46

NOTE 9 - EMPLOYEE BENEFIT PLANS (CONTINUED)

         Reconciliation of the assets and liabilities of the plans at July 31 is
as follows:

                                                               2003       2002
                                                               ----       ----
                                                                (IN THOUSANDS)
                                                                  
     Change in Plan Assets:
         Plan assets at fair value, beginning of year...... $   9,465   $ 10,201
         Actual return on plan assets......................       740       (727)
         Contributions.....................................       484        415
         Benefits paid.....................................      (465)      (424)
                                                            ---------   --------
         Plan assets at fair value, end of year............ $  10,224   $  9,465
                                                            =========   ========

     Change in Projected Benefit Obligation:
         Projected benefit obligation, beginning of year... $  11,624   $ 10,636
         Service cost......................................       600        534
         Interest cost.....................................       823        763
         Plan amendments...................................        --          4
         Actuarial loss....................................     1,549        111
         Benefits paid.....................................      (465)      (424)
                                                            ---------   --------
         Projected benefit obligation, end of year......... $  14,131   $ 11,624
                                                            =========   ========

         Assumptions used in the previous calculations are as follows:

                                                      2003           2002
                                                      ----           ----
                                                               
Discount rate...................................      6.5%           7.3%
Rate of increase in compensation levels.........      4.5%           4.5%
Long-term expected rate of return on assets.....      8.0%           9.0%

         The Company has funded the plans based upon actuarially determined
contributions that take into account the amount deductible for income tax
purposes and the minimum contribution required under the Employee Retirement
Income Security Act of 1974 (ERISA), as amended.

         Effective August 1, 2002, the defined benefit pension plans for
salaried and hourly employees and the assets of those plans were merged into one
plan and trust. This merger did not change the benefit formulas or eligibility
requirements for either of the two groups of employees.

         For the years ended July 31, 2003, 2002 and 2001, the Company
maintained a 401(k) savings plan under which the Company matches a portion of
employee contributions. The plan is available to essentially all domestic
employees following thirty or sixty days of employment. The Company's
contributions to this plan, and to similar plans maintained by the Company's
foreign subsidiaries, were $509,000, $435,000 and $445,000 for fiscal years
2003, 2002 and 2001, respectively.

         Effective April 1, 2003, the Company adopted the Oil-Dri Corporation of
America Supplemental Executive Retirement Plan ("SERP"). The purpose of the Plan
is to provide certain retired participants in the Oil-Dri Corporation of America
Pension Plan ("Retirement Plan") with the amount of benefits that would have
been provided under the Retirement Plan but for: (1) the limitations on benefits
imposed by Section 415 of the Internal Revenue Code ("Code"), and/or (2) the
limitation on compensation for purposes of calculating benefits under the
Retirement Plan imposed by Section 401(a)(17) of the Code. The Company recorded
$21,904 in expense associated with this plan in the fiscal year ended July 31,
2003. The plan is unfunded and the Company will fund benefits when payments are
made.

                                       47

NOTE 10 - DEFERRED COMPENSATION

         In December 1995, the Company adopted the Oil-Dri Corporation of
America Deferred Compensation Plan. This plan has permitted Directors and
certain management employees to defer portions of their compensation and earn
interest on the deferred amounts. During the period January 1, 1999 through
September 30, 2000, participants' returns were tied to the performance of
various investment elections. After September 30, 2000 the participants' returns
have been set at the Company's long-term cost of borrowing plus 1%. Compensation
deferred since the inception of the plan has been accrued as well as earnings
thereon. Employees have deferred $205,000, $86,000 and $46,000 in fiscal years
2003, 2002 and 2001 respectively.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

         The Company is involved in various litigation of a nature that is
normal to its business. While it is impossible at this time to determine with
certainty the ultimate outcome of these or other lawsuits, each lawsuit is
either covered by insurance or adequate provisions have been made for probable
losses with respect thereto as can best be determined at this time. Management
therefore believes that none of the pending litigation will have a material
adverse effect on the financial condition of the Company or on results of
operations.

NOTE 12 - LEASES

         The Company's mining operations are conducted on leased or owned
property. These leases generally provide the Company with the right to mine as
long as the Company continues to pay a minimum monthly rental, which is applied
against the per ton royalty when the property is mined.

         The Company leases its corporate offices in Chicago, Illinois (20,000
square feet), office, production and warehouse space in Alpharetta, Georgia
(26,000 square feet), office and production facilities in Kiel, Wisconsin
(16,000 square feet) and office facilities in Europe. The office space in
Chicago is subject to a lease expiring in fiscal 2018. The Alpharetta, Georgia
lease expires in fiscal 2008. The facilities in Europe and Kiel, Wisconsin are
leased on a year-to-year basis.

         In addition, the Company leases vehicles, railcars, mining property and
equipment, warehouse space, data processing equipment, and office equipment. In
most cases, the Company expects that, in the normal course of business, leases
will be renewed or replaced by other leases.

         The following is a schedule by year of future minimum rental
requirements under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of July 31, 2003:

                                                                         (IN THOUSANDS)
                                                                         --------------
                                                                      
2004................................................................       $     2,321
2005................................................................             1,369
2006................................................................             1,256
2007................................................................             1,110
2008................................................................             1,072
Later years.........................................................             7,473
                                                                           -----------
                                                                           $    14,601
                                                                           ===========

                                       48

NOTE 12 - LEASES (CONTINUED)

         The following schedule shows the composition of total rental expense
for all operating leases, including those with terms of one month or less which
were not renewed, as of the years ended July 31:

                                 2003           2002             2001
                               --------      -----------     ------------
                                            (IN THOUSANDS)
                                                    
Vehicles and Railcars......    $    884      $       880     $        941
Office facilities..........         499              496              485
Warehouse facilities.......         231              379              408
Mining properties..........
     Minimum...............          91              181              192
     Contingent............         556              516              430
Other......................         883              859              646

                               --------      -----------     ------------
                               $  3,144      $     3,311     $      3,102
                               ========      ===========     ============

         Contingent mining royalty payments are determined based on the tons of
raw clay mined.

NOTE 13 - OTHER CASH FLOW INFORMATION

         Cash payments (refunds) for interest and income taxes were as follows:

                                2003         2002          2001
                                ----         ----          ----
                                        (IN THOUSANDS)
                                              
Interest.................   $    2,147   $    2,283    $    2,619
                            ==========   ==========    ==========
Income taxes.............   $      672   $    1,057    $     (743)
                            ==========   ==========    ==========

NOTE 14 - POST RETIREMENT HEALTH BENEFITS

         Domestic salaried employees who retire prior to reaching age 65 and
have at least 17 years of continuous service and whose age plus years of service
equals at least 80 may elect to continue their health care coverage under the
Oil-Dri Corporation of America Employee Benefits Plan until they reach the age
of 65. The Company accrues the costs of such benefits during the employees'
active years of service.

Net periodic postretirement cost for the years ended July 31, was as follows:

                                                2003       2002        2001
                                                ----       -----       -----
                                                       (IN THOUSANDS)
                                                            
Components of net periodic
  postretirement benefit cost
Service Cost                                   $   40     $    23     $     26
Interest Cost                                      43          37           30
Amortization of Net transition obligation          16          16           16
Amortization of (Gains) Losses                     --          --           (8)
                                              -------    --------    ---------
Net periodic postretirement benefit cost       $   99     $    76     $     64
                                              =======    ========    =========

                                       49

NOTE 14 - POST RETIREMENT HEALTH BENEFITS (CONTINUED)

The accumulated postretirement benefit obligation assumptions were as follows:

                      2003               2002                     2001
                      ----               ----                     ----
                                                 
Discount rate         5.75%              7.25%                     7.3%
Medical trend            6%      7% in 2003 to 6% in      8% in 2002 to 6% in
                                         2004                     2004

A one-percentage point change in assumed health care cost trend would have had
the following effects in the fiscal year ended July 31, 2003:

                                                     (IN THOUSANDS)
                                            One-Percentage      One-Percentage
                                            Point Increase      Point Decrease
                                                          
Effect on total service and                      $ 14                $(12)
interest costs for fiscal year
ended July 31, 2003
Effect on accumulated                            $106                $(90)
postretirement benefit obligation
as of July 31, 2003

The Company's policy is to pay insurance premiums and claims under the
above-mentioned plan from Company assets.

The accrued postretirement benefit liability and the change in benefit
obligation as of July 31, 2003, and July 31, 2002, were as follows:

                                                     July 31,
                                                 -------------------
                                                  2003         2002
                                                 -------     -------
                                                  (IN THOUSANDS)
                                                       
Change in benefit obligation:
Benefit obligation at beginning of year          $   626     $   550
Service cost                                          40          23
Interest cost                                         43          37
Participant contributions                             --          --
Actuarial Loss                                       141          90
Benefits Paid                                        (52)        (74)
                                                 -------     -------
      Benefit obligation at end of year          $   798     $   626
                                                 =======     =======
Change in plan assets:
Employer contribution                            $    52     $    74
Benefits Paid                                        (52)        (74)
                                                 -------     -------
     Fair value of plan assets at end of year    $    --     $    --
                                                 =======     =======

Reconciliation of Funded status:
Funded status                                    $  (798)    $  (626)
Unrecognized net transition obligation               173         188
Unrecognized actuarial loss                          166          25
                                                 -------     -------
     Net amount recognized at end of year        $  (459)    $  (413)
                                                 =======     =======

                                       50

NOTE 15 - DERIVATIVE INSTRUMENTS

         In 1998, the Company entered into two interest rate swap agreements.
The notional amount of these agreements is $23,500,000 at July 31, 2003 and
$25,000,000 at July 31, 2002, respectively. The swap agreements terminate on May
1, 2013. Changes in the fair value of the derivatives are recorded each period
in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. These derivatives do not qualify for hedge accounting and
accordingly, the Company has recorded these derivative instruments and the
associated assets or liabilities at their fair values with the related gains or
losses recorded as other income or expense in the consolidated statements of
income. The Company recognized additional interest expense of $15,000, $15,000
and $7,500 in fiscal years 2003, 2002 and 2001 respectively, as a result of
these contracts.

NOTE 16 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         A summary of selected information for 2003 and 2002 is as follows:

                                                               FISCAL 2003 QUARTER ENDED
                                                               -------------------------
                                            OCTOBER 31    JANUARY 31    APRIL 30      JULY 31        TOTAL
                                            ----------    ----------    --------    -----------   ----------
                                                          (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                   
Net Sales..............................     $  37,730     $ 44,456      $ 46,125    $    44,730   $  173,041
Gross Profit...........................     $   7,753     $  9,623      $  9,915    $     8,337   $   35,628
Net Income (Loss)......................     $     411     $  1,219      $    977    $       476   $    3,083
Net Income (Loss) Per Share
     Basic.............................     $    0.07     $   0.22      $   0.18    $      0.09   $     0.55
     Diluted...........................     $    0.07     $   0.21      $   0.17    $      0.08   $     0.54
Dividends Per Share
     Common............................     $    0.09     $   0.09      $   0.09    $      0.09   $     0.36
     Class B...........................     $    0.07     $   0.07      $   0.07    $      0.07   $     0.27
Company Common Stock Price Range:
     High..............................     $    8.39     $   9.65      $  11.22    $     12.35
     Low...............................     $    7.10     $   7.00      $   8.40    $     10.10

                                                               FISCAL 2002 QUARTER ENDED
                                                               -------------------------
                                            OCTOBER 31    JANUARY 31    APRIL 30      JULY 31      TOTAL
                                            ----------    ----------    --------      -------      -----
                                                          (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                   
Net Sales..............................     $   40,023    $   43,780    $ 39,261    $    39,281   $  162,345
Gross Profit...........................     $    7,857    $    7,947    $  7,270    $     8,006   $   31,080
Net Income (Loss)......................     $      267    $       74    $    504    $    (1,939)  $   (1,094)
Net Income (Loss) Per Share
     Basic.............................     $     0.05    $     0.01    $   0.09    $     (0.35)  $    (0.19)
     Diluted...........................     $     0.05    $     0.01    $   0.09    $     (0.34)  $    (0.19)
Dividends Per Share
     Common............................     $     0.09    $     0.09    $   0.09    $      0.09   $     0.36
     Class B...........................     $     0.07    $     0.07    $   0.07    $      0.07   $     0.27
Company Common Stock Price Range:
     High..............................     $     8.15    $     8.20    $  10.25    $     10.20
     Low...............................     $     5.75    $     6.00    $   7.67    $      7.20

                                       51

                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
of Oil-Dri Corporation of America:

         In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of stockholders' equity, and of
cash flows present fairly, in all material respects, the financial position of
Oil-Dri Corporation of America at July 31, 2003 and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion. The financial statements of the Company as of
July 31, 2002 and the years ended July 31, 2002 and 2001 were audited by other
auditors whose report dated September 10, 2002 expressed an unqualified opinion
on those statements.

As disclosed in Note 1 in the financial statements, the Company changed the
manner in which it accounts for goodwill and other intangible assets upon
adoption of Statement of Financial Accounting Standards No. 142 "Goodwill and
Other Intangibles Assets" on October 1, 2002.

PricewaterhouseCoopers, LLP
Chicago, Illinois
September 12, 2003

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

        None.

                                       52

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF OIL-DRI

         The information required by this Item is (except for information set
forth below concerning the Board of Directors and information in Part I hereof,
concerning executive officers) contained in Oil-Dri's Proxy Statement for its
2003 annual meeting of stockholders ("Proxy Statement") under the caption "1.
Election of Directors" and is incorporated herein by this reference.

                               BOARD OF DIRECTORS

Richard M. Jaffee                           Thomas D. Kuczmarski
    Chairman of the Board of Directors         Senior Partner and President,
                                                 Kuczmarski & Associates, Inc.
Daniel S. Jaffee
   President and Chief Executive Officer    Joseph C. Miller
                                               Vice Chairman of the Board of Directors
J. Steven Cole(1)
   President, Cole & Associates             Paul J. Miller
                                               Partner, Sonnenschein Nath & Rosenthal, LLP
Arnold W. Donald
   Chairman, Merisant Company               Allan H. Selig(2)
                                                 President and Chairman, Selig Lease
Ronald B. Gordon                                 Company
   President and Chief Operating Officer         Commissioner of Major League Baseball
   Nice-Pak Products, Inc.

     (1) Audit Committee Chair

     (2) Compensation Committee Chair

         The Company has adopted a Code of Ethics and Business Conduct (the
"Code") which applies to all of its directors, officers (including the Company's
Chief Executive Officer and senior financial officers) and employees. The Code
is intended to be a "code of ethics" as defined by the rules of the Securities
and Exchange Commission. The Code imposes special responsibilities on the Chief
Executive Officer and the senior financial officers of the Company. A copy of
the Code may be viewed at the Company's website, www.oildri.com. Any amendment
to, or waiver of, a provision of the Code which applies to the Company's Chief
Executive Officer or senior financial officers and relates to the elements of a
"code of ethics" as defined by the Securities and Exchange Commission will also
be posted on the Company's website, www.oildri.com. The Company will also
provide, without charge, a copy of the Code to any person upon request submitted
to Investor Relations, Oil-Dri Corporation of America, 410 North Michigan
Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone (312) 706-3232.

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this Item is contained in Oil-Dri's Proxy
Statement under the captions "Executive Compensation," "Report of the
Compensation and the Stock Option Committees of Oil-Dri Corporation of America
on Executive Compensation," "Compensation Committee Interlocks and Insider
Participation" and "Performance Graph" and is incorporated herein by this
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this Item is contained in Oil-Dri's Proxy
Statement under the captions "General--Principal Stockholders" and "Security
Ownership of Management" and is incorporated herein by this reference.

                                       53

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is contained in Oil-Dri's Proxy
Statement under the caption "Compensation Committee Interlocks and Insider
Participation" and is incorporated herein by this reference.

ITEM 14. CONTROLS AND PROCEDURES

         (a)      Based on their evaluation within 90 days prior to the filing
                  date of this Annual Report on Form 10-K, 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.

                                       54

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

      (a)(1)   The following consolidated financial statements are
               contained herein.

         Consolidated Balance Sheets as of July 31, 2003 and July 31,
         2002.

         Consolidated Statements of Income for the fiscal years ended July 31,
         2003, July 31, 2002 and July 31, 2001.

         Consolidated Statements of Stockholders' Equity for the fiscal years
         ended July 31, 2003, July 31, 2002 and July 31, 2001.

         Consolidated Statements of Cash Flows for the fiscal years ended July
         31, 2003, July 31, 2002 and July 31, 2001.

         Notes to Consolidated Financial Statements.

         Report of Independent Auditors.

      (a)(2)   The following financial statement schedules are contained
                  herein:

         Schedule to Financial Statements, as follows:

                  Schedule II--Valuation and Qualifying Accounts, years ended
July 31, 2003, July 31, 2002 and July 31, 2001.

      (a)(3)   The following documents are exhibits to this Report:

                        
(3)(a)(1)                  Articles of Incorporation of Oil-Dri, as amended.

(3)(b)(2)                  Bylaws of Oil-Dri, as amended June 16, 1995.

(10)(c)(1)(3)              Agreement ("Clorox Agreement") dated January 12, 1981
                           between Clorox and Oil-Dri, as amended. (Confidential
                           treatment of certain portions of this Exhibit has been
                           granted.)

(10)(c)(2)(4)              Amendment to Clorox Agreement dated March 3, 1989, as
                           accepted by Oil-Dri on March 20, 1989, between Clorox
                           and Oil-Dri. (Confidential treatment of certain portions
                           of this Exhibit has been granted.)

(10)(c)(3)(5)              Amendment to Clorox Agreement dated February 14, 1991,
                           between Clorox and Oil-Dri. (Confidential treatment of
                           certain portions of this Exhibit has been granted.)

(10)(c)(4)(6)              Memorandum of Agreement #1450 "Fresh Step"(TM), dated as
                           of March 12, 2001 between A&M Products Manufacturing
                           Company and Registrant. (Confidential treatment of
                           certain portions of this Exhibit has been granted.)

(10)(c)(5)(7)              Memorandum of Agreement #1465 "Jonny Cat"(R), dated as
                           of April 18, 2001 between A&M Products Manufacturing
                           Company and Registrant. (Confidential treatment of
                           certain portions of this Exhibit has been granted.)

(10)(d)(8)                 Description of 1987 Executive Deferred Compensation Program.*

                                      55

                        
(10)(e)(1)(9)              Salary Continuation Agreement dated August 1, l989
                           between Richard M. Jaffee and Oil-Dri ("1989
                           Agreement").*

(10)(e)(2)(10)             Extension and Amendment, dated October 9, 1998, to
                           the 1989 Agreement.*

(10)(e)(3)(11)             Second Amendment, Effective October 31, 2000, to the
                           1989 Agreement.*

(10)(f)(12)                1988 Stock Option Plan.*

(10)(h)(14)                Note Agreement, dated as of April 15, 1993, between
                           Oil-Dri and Teacher's Insurance and Annuity
                           Association of America regarding $6,500,000 7.17%
                           Senior Notes due August 15, 2004.

(10)(h)(1)(13)             First Amendment, dated as of January 15, 2001, to the
                           Note Agreement dated as of April 15, 1993.

(10)(h)(2)(25)             Second Amendment dated July 15, 2002 to Note
                           Agreement dated as of April 15, 1993.

(10)(i)(15)                Credit Agreement, dated as of September 21, 1994,
                           between Oil-Dri and Harris Trust and Savings Bank
                           regarding $5,000,000 7.78% Term Loan Note and
                           $5,000,000 Revolving Credit Note.

(10)(j)(22)                The Oil-Dri Corporation of America Deferred
                           Compensation Plan adopted November 15, 1995, as
                           amended and restated effective October 1, 2000.*

(10)(j)(1)(29)             Restatement dated April 1, 2003 of the Oil-Dri
                           Corporation of America November 15, 1995 Deferred
                           Compensation Plan

(10)(k)(23)                The Oil-Dri  Corporation  of America 1995 Long Term
                           Incentive Plan as amended and restated  effective
                           June 9, 2000.*

(10)(l)(30)                Supplemental Executive Retirement Plan dated April 1,
                           2003

(10)(m)(17)                $25,000,000  Note  Purchase  Agreement  dated as of
                           April 15, 1998 between Oil-Dri and Teachers
                           Insurance and Annuity Association of America and
                           Cigna Investments, Inc.

(10)(m)(5)(16)             First Amendment, dated as of January 15, 2001 to the
                           Note Agreement dated as of April 15, 1998.

(10)(m)(6)(26)             Second Amendment dated as of July 15, 2002 to Note
                           Agreement dated as of April 15, 1998.

(10)(n)(24)                The Oil-Dri Corporation of America Outside Director
                           Stock Plan as amended and restated effective  October
                           16, 1999.*

(10)(o)(18)                $15,000,000 unsecured, committed line of credit
                           agreement dated January 29, 1999 between the Company
                           and Harris Trust and Savings Bank.

(10)(o)(1)(27)             First Amendment, dated May 30, 2002 to Credit
                           Agreement dated as of January 29, 1999.

(10)(o)(2)(28)             Second Amendment, dated November 22, 2002, to Credit
                           Agreement dated as of January 29, 1999.

(10)(p)(19)                $15,000,000 unsecured, uncommitted line of credit
                           agreement dated January 29, 1999 between the Company
                           and Harris Trust and Savings Bank.

(10)(q)(20)                Split Dollar Life Insurance Agreements dated February
                           26, 1999.*

                                       56

                        
(10)(r)(21)                Agreement  ("Church & Dwight  Agreement")  dated May
                           19, 1999 between Church & Dwight Co.,  Inc. and
                           Oil-Dri. (Confidential treatment of certain portions
                           of this Exhibit has been granted.)

             (b)  Reports on Form 8-K.

                  The Company filed a Current Report on Form 8-K dated May 29,
                      2003, reporting that it had issued a press release
                      announcing its third quarter and nine month earnings.

                  The Company filed a Current Report on Form 8-K dated July 17,
                      2003, reporting that it had issued a press release
                      announcing its decision to close its Christmas Valley,
                      Oregon facility and transfer existing customers to its
                      newly acquired plant in Taft, California, and other
                      Oil-Dri facilities.

               
(11)              Statement re: Computation of Income per Share.

(21)              Subsidiaries of Oil-Dri.

(23)              Consent of PricewaterhouseCoopers, LLP.
                  Consent of Blackman Kallick Bartelstein, LLP.

(31)              Certifications pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002

(32)              Certifications pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002

- ----------
*        Management contract or compensatory plan or arrangement.

(1)      Incorporated by reference to Exhibit (4.1) to Oil-Dri's Registration
         Statement on Form S-8 (Registration No. 333-57625), made effective on
         June 24, 1998.

(2)      Incorporated by reference to Exhibit (3)(b) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1995.

(3)      Incorporated by reference to Exhibit (10)(f) to Oil-Dri's Registration
         Statement on Form S-2 (Registration No. 2-97248) made effective on May
         29, 1985.

(4)      Incorporated by reference to Exhibit (10)(e)(2) to Oil-Dri's Annual
         Report on Form 10-K for the fiscal year ended July 31, 1989.

(5)      Incorporated by reference to Exhibit (10)(e)(3) to Oil-Dri's Annual
         Report on Form 10-K for the fiscal year ended July 31, 1991.

(6)      Incorporated by reference to Exhibit 10(s) to Registrant's Current
         Report on Form 8-K dated May 1, 2001.

(7)      Incorporated by reference to Exhibit 10(t) to Registrant's Current
         Report on Form 8-K dated May 1, 2001.

(8)      Incorporated by reference to Exhibit (10)(f) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1988.

(9)      Incorporated by reference to Exhibit (10)(g) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1989.

                                       57

(10)     Incorporated by reference to Exhibit (10)(n) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1998.

(11)     Incorporated by reference to Exhibit 99.1 to Registrant's Current
         Report on Form 8-K dated November 13, 2000.

(12)     Incorporated by reference to Exhibit (4)(a) to Oil-Dri's Registration
         Statement on Form S-8 (Registration No. 33-29650), made effective on
         June 30, 1989.

(13)     Incorporated by reference to Exhibit (10)(m)(4) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended January 1, 2001.

(14)     Incorporated by reference to Exhibit (10)(i) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1993.

(15)     Incorporated by reference to Exhibit (10)(i) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1994.

(16)     Incorporated by reference to Exhibit (10)(m)(5) to Oil-Dri's Quarter
         Report on Form 10-Q for the quarter ended January 31, 2001.

(17)     Incorporated by reference to Exhibit (10)(m) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended April 30, 1998.

(18)     Incorporated by reference to Exhibit (10)(o) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended January 31, 1999.

(19)     Incorporated by reference to Exhibit (10)(p) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended January 31, 1999.

(20)     Incorporated by reference to Exhibit (10)(q) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended January 31, 1999.

(21)     Incorporated by reference to Exhibit (10)(r) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 1999.

(22)     Incorporated by reference to Exhibit (10)(j) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 2001.

(23)     Incorporated by reference to Exhibit (10)(k) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 2001.

(24)     Incorporated by reference to Exhibit (10)(n) to Oil-Dri's Annual Report
         on Form 10-K for the fiscal year ended July 31, 2001.

(25)     Incorporated by reference to Exhibit (10)(h)(2) to Oil-Dri's Annual
         Report on Form 10-K for the fiscal year ended July 31, 2002.

(26)     Incorporated by reference to Exhibit (10)(m)(6) to Oil-Dri's Annual
         Report on Form 10-K for the fiscal year ended July 31, 2002.

(27)     Incorporated by reference to Exhibit (10)(o)(1) to Oil-Dri's Annual
         Report on Form 10-K for the fiscal year ended July 31, 2002.

(28)     Incorporated by reference to Exhibit (10)(o)(2) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended January 31, 2003.

                                       58

(29)     Incorporated by reference to Exhibit (10)(j)(1) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended April 30, 2003.

(30)     Incorporated by reference to Exhibit (10)(1) to Oil-Dri's Quarterly
         Report on Form 10-Q for the quarter ended April 30, 2003.

         Oil-Dri agrees to furnish the following agreements upon the request of
         the Commission:

Exhibit(4)(b)     Letter of Credit Agreement, dated as of October 1, 1988
                  between Harris Trust and Savings Bank and Blue Mountain
                  Production Company in the amount of $2,634,590 in connection
                  with the issuance by Town of Blue Mountain, Mississippi of
                  Variable/Fixed Rate Industrial Development Revenue Bonds,
                  Series 1988 B (Blue Mountain Production Company Project) in
                  the aggregate principal amount of $2,500,000 and related
                  Indenture of Trust, Lease Agreement, Remarketing Agreement and
                  Guaranties.

                                       59

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Oil-Dri 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 Executive
                                                Officer, Director

Dated:  October 22, 2003

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Oil-Dri
and in the capacities and on the dates indicated:

   /s/ Richard M. Jaffee
- ---------------------------------------------      October 22, 2003
                     Richard M. Jaffee
         Chairman of the Board of Directors

   /s/ Jeffrey M. Libert
- ---------------------------------------------      October 22, 2003
                     Jeffrey M. Libert
                      Vice President
                  Chief Financial Officer
                Principal Financial Officer

   /s/ Daniel T. Smith
- ---------------------------------------------      October 22, 2003
                      Daniel T. Smith
               Vice President and Controller
               Principal Accounting Officer

   /s/ J. Steven Cole
- ---------------------------------------------      October 22, 2003
                      J.  Steven Cole
                         Director

   /s/ Arnold W. Donald
- ---------------------------------------------      October 22, 2003
                     Arnold W. Donald
                         Director

   /s/ Ronald B. Gordon
- ---------------------------------------------      October 22, 2003
                     Ronald B. Gordon
                         Director

   /s/ Thomas D. Kuczmarski
- ---------------------------------------------      October 22, 2003
                   Thomas D. Kuczmarski
                         Director

                                       60

   /s/ Joseph C. Miller
- ---------------------------------------------      October 22, 2003
                     Joseph C. Miller
      Vice Chairman of the Board of Directors

   /s/ Paul J. Miller
- ---------------------------------------------      October 22, 2003
                      Paul J. Miller
                         Director

   /s/ Allan H. Selig
- ---------------------------------------------      October 22, 2003
                      Allan H. Selig
                         Director

                                       61

                       REPORT OF INDEPENDENT AUDITORS ON
                          FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Stockholders of
Oil-Dri Corporation of America:

         Our audit of the consolidated financial statements referred to in our
report, dated September 12, 2003, appearing in the 2003 Annual Report on Form
10-K of Oil-Dri Corporation of America (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10K) also
included an audit of the financial statement schedule listed in Item 15(a)(2) of
this Form 10-K. In our opinion, this financial statement schedule for the year
ended July 31, 2003, presents fairly, in all material respects, the information
set forth herein when read in conjunction with the related consolidated
financial statements. The financial statements schedules of the Company for the
years ended July 31, 2002 and 2001 were audited by other auditors whose report
dated September 10, 2002 expressed an unqualified opinion on those statements.

PricewaterhouseCoopers, LLP
Chicago, Illinois
September 12, 2003

                                       62

                                                                     SCHEDULE II

                 OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

                                                        YEAR ENDED JULY 31
                                                        ------------------
                                                  2003         2002          2001
                                                  ----         ----          ----
                                                          (IN THOUSANDS)
                                                                  
    Allowance for doubtful accounts:
         Beginning balance...................   $    392     $    455      $    336
         Additions charged to expense........        387          409           142
         Deductions*.........................        338          472            23
                                                --------     --------      --------
         Balance at end of year..............   $    441     $    392      $    455
                                                ========     ========      ========

*     Net of recoveries.

    Inventory obsolescence reserve:
         Beginning balance...................   $    341     $    356      $    256
         Additions charged to expense........        441          275           100
         Deductions..........................        214          290            --
                                                --------     --------      --------
         Balance at end of year..............   $    568     $    341      $    356
                                                ========     ========      ========

    Valuation reserve for income taxes:
         Beginning balance...................   $    357     $     --      $    522
         Additions charged to expense........         --          357            --
         Deductions..........................         --           --           522
                                                --------     --------      --------
         Balance at end of year..............   $    357     $    357      $     --
                                                ========     ========      ========

                                       63

                                    EXHIBITS

  EXHIBIT
   NUMBER
  -------
               
Exhibit 11:       Statement Re:  Computation of per share earnings

Exhibit 21:       Subsidiaries of Oil-Dri

Exhibit 23:       Consent of PricewaterhouseCoopers, LLP

Exhibit 23:       Consent of Blackman Kallick Bartelstein, LLP

Exhibit 31:       Certifications  by Daniel S. Jaffee,  President and Chief
                  Executive  Officer and Jeffrey M. Libert,  Chief Financial
                  Officer, required by Rule 13a-14(a)

Exhibit 32:       Additional Exhibits: Certifications pursuant to Section 906
                  of the Sarbanes-Oxley Act of 2002

Note:   Stockholders may receive copies of the above listed exhibits, without
        fee, by written request to Investor Relations, Oil-Dri Corporation of
        America, 410 North Michigan Avenue, Suite 400, Chicago, Illinois
        60611-4213.

                                       64

                                                                               .
                                                                               .
                                                                               .
Exhibit 11:

                         OIL-DRI CORPORATION OF AMERICA
                       COMPUTATION OF NET INCOME PER SHARE
                   (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)

                                                          YEAR ENDED JULY 31
                                                          ------------------
                                                   2003         2002            2001
                                                   ----         ----            ----
                                                                    
Net income (loss) available to stockholders     $    3,083    $  (1,094)     $      913
                                                ==========    =========      ==========
   (numerator)

Shares Calculation
   (denominator)

Average shares outstanding -
   Basic                                             5,574        5,614           5,613

Effect of Dilutive Securities:

Potential Common Stock relating
   To stock options                                    134           --              --
                                                ----------    ---------      ----------

Average shares outstanding -
   Assuming dilution                                 5,708        5,614           5,613
                                                ==========    =========      ==========

Net Income (Loss) Per Share:
   Basic                                        $     0.55    $   (0.19)     $     0.16
                                                ==========    =========      ==========

   Diluted                                      $     0.54    $   (0.19)     $     0.16
                                                ==========    =========      ==========

                                       65

                                                                               .
                                                                               .
                                                                               .

Exhibit 21:

                             SUBSIDIARIES OF OIL-DRI

                                                        STATE OR COUNTRY
SUBSIDIARY                                              OF INCORPORATION
- ----------                                              ----------------
                                                     
Blue Mountain Production Company                        Mississippi
Favorite Products Company, Ltd.                         Canada
Mounds Management, Inc.                                 Delaware
Mounds Production Company, LLC                          Illinois
Ochlocknee Holding Co., S.A.                            Spain
Ochlocknee Mining Co., S.A.                             Spain
ODC Acquisition Corp.                                   Illinois
Oil-Dri Corporation of Georgia                          Georgia
Oil-Dri Corporation of Nevada                           Nevada
Oil-Dri Production Company                              Mississippi
Oil-Dri, S.A.                                           Switzerland
Oil-Dri (U.K.) Limited                                  United Kingdom
Phoebe Products Co.                                     Illinois
Taft Production Company                                 Delaware

                                       66

Exhibit 23:

                         CONSENT OF INDEPENDENT AUDITORS

         We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-87008 and No. 333-87010) of Oil-Dri Corporation
of America of our report dated September 12, 2003 relating to the financial
statements and financial statement schedule, which appears in this Form 10-K.

PricewaterhouseCoopers, LLP

Chicago, Illinois

October 24, 2003

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         As independent public accountants, we hereby consent to the use of our
reports and to all references to our Firm included in or by incorporation by
reference made a part of the Annual Report on Form 10-K of Oil-Dri Corporation
of America for the fiscal year ended July 31, 2002 and the Registration
Statement on Form S-8 relating to the 1995 Long Term Incentive Plan and the 1988
Stock Option Plan.

Blackman Kallick Bartelstein, LLP

October 15, 2003

                                       67

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 annual report on Form 10-K of Oil-Dri
                  Corporation of America ("Oil-Dri");

            2.    Based on my knowledge, this annual 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
                  annual report;

            3.    Based on my knowledge, the financial statements, and other
                  financial information included in this annual 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 annual 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 July 31, 2003 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 fourth 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: October 22, 2003

      By:   /s/ Daniel S. Jaffee
            --------------------
            Daniel S. Jaffee
            President and Chief Executive Officer

                                       68

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 annual report on Form 10-K of Oil-Dri
                  Corporation of America ("Oil-Dri");

            2.    Based on my knowledge, this annual 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
                  annual report;

            3.    Based on my knowledge, the financial statements, and other
                  financial information included in this annual 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 annual 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 July 31, 2003 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 fourth 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: October 22, 2003

      By:   /s/ Jeffrey M. Libert
            ------------------------
            Jeffrey M. Libert
            Chief Financial Officer

                                       69

Exhibit 32:

    CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO

                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

                                  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
Annual Report on Form 10-K for the year ended July 31, 2003 (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: October 22, 2003

/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
Annual Report on Form 10-K for the quarter ended July 31, 2003 (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: October 22, 2003

/s/ Jeffrey M. Libert
- -----------------------
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.

                                       70