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, 2001

             [ ] 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 the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant 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 the Registrant'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]

The aggregate market value of the Registrant's Common Stock owned by
non-affiliates as of September 28, 2001 was $29,713,565.

Number of Shares of each class of the Registrant's Common Stock outstanding as
of September 28, 2001:

         Common Stock - 5,470,435 shares (including 1,279,110 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. The Registrant's Proxy Statement for its 2001 Annual Meeting of
Stockholders ("Proxy Statement"), which will be filed with the Securities and
Exchange Commission not later than November 28, 2001 (120 days after the end of
the Registrant's fiscal year ended July 31, 2001), 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 THE REGISTRANT......................................................................        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..................................................   17 - 21

ITEM 7A:         Quantitative and Qualitative Disclosures About Market Risk...............................        21

ITEM 8:          Financial Statements and Supplementary Data..............................................   22 - 43

ITEM 9:          Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure...................................................        44

INDEPENDENT AUDITOR'S REPORT..............................................................................        44

                                                     PART III

ITEM 10:         Directors and Executive Officers of the Registrant.......................................        45

ITEM 11:         Executive Compensation...................................................................        45

ITEM 12:         Security Ownership of Certain Beneficial Owners and Management...........................        45

ITEM 13:         Certain Relationships and Related Transactions...........................................        45

                                                      PART IV

ITEM 14:         Exhibits, Financial Statement Schedules, and Reports on Form 8-K.........................   46 - 49

SIGNATURES       .........................................................................................   50 - 51
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS..........................................................        52
EXHIBIT INDEX    .........................................................................................        53

                                       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 which was the
successor to a partnership which commenced business in 1941. Except as otherwise
indicated herein or as the context otherwise requires, references herein to
"Registrant" or to "Company" are to Oil-Dri Corporation of America and its
subsidiaries. The Registrant 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. The
Registrant's 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 specialty 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.

         The Registrant's sorbent technologies include absorbent and adsorbent
products. Absorbents, like sponges, draw liquids up into their many pores.
Examples of the Registrant's absorbent clay products are CAT'S PRIDE(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. The Registrant's adsorbents are
used for cleanup and filtration mediums. The Registrant's adsorbent products
include OIL-DRI LITE(R) 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.

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

         Certain financial information on segments is contained in Note 3 of the
"Notes to 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 of the "Notes to Consolidated Financial
Statements."

         Certain financial information about the Registrant's foreign and
domestic operations is contained in Note 3 of the "Notes to Consolidated
Financial Statements," incorporated herein by reference.

Consumer Products

         The Registrant's cat litter products, in both coarse granular and fine
granular clumping (scoopable) forms, are sold under the Registrant's CAT'S
PRIDE(R) and LASTING PRIDE(R) brand names, FRESH STEP(R) brand manufactured for
The Clorox Company, Arm & Hammer(R) SUPER CLAY(TM) brand manufactured for Church
& Dwight Co., Inc., and private label cat litters manufactured for mass
merchandisers, wholesale clubs, drug chains, pet superstores and retail grocery
stores. Alternative litters, made from recycled paper, are sold under the DUST
STOPPER(R) (coarse) and SCOOP 'N FLUSH(R) (scoopable) brand cat litter and are
marketed through similar channels. The Registrant also packages and markets
CAT'S PRIDE(R) KAT KIT cat litter in a disposable tray. These products are sold
through independent food brokers and the Registrant's representatives to major
grocery

                                       4

outlets such as Publix, Kroger, Stop and Shop and others. LASTING
PRIDE(R) cat litter is principally sold to mass merchandisers such as Wal-Mart
and K-Mart.

         The Registrant 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. The Registrant and The Clorox Company have had such an
arrangement under which they developed FRESH STEP(R) premium-priced cat litter
products and under which the Registrant has an exclusive right to supply The
Clorox Company'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 The Clorox Company, such that the Company will continue to supply The
Clorox Company with product. Additionally, during fiscal year 2001, the Company
signed an agreement with The Clorox Company to produce Jonny Cat cat litter for
the eastern half of the U.S. Production will begin late in the first quarter of
fiscal year 2002. The Registrant also has a supply agreement with the Church &
Dwight Co., Inc. whereby they are the exclusive manufacturer of the Arm and
Hammer SUPER CLAY(TM) cat litter.

         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 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 now captured over 50% 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 niche positions
within the category.

         In fiscal 1998, the Registrant purchased Salubrius, Inc., a
manufacturer of dog biscuits, which was subsequently renamed Phoebe Products
Company. During fiscal 2001 most of the Phoebe Products sales were achieved in
the high-end private label market, while branded sales of SMART SNACKS(R) items
have seen mixed results in fiscal 2001 and 2000.

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 the
Registrant'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.

         The Registrant also produces PERFORM(TM) and SELECT(TM) bleaching
clays, which offer performance advances to refiners. The PERFORM(TM) products
are the next generation of bleaching clays, providing 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 replace the water wash step in the caustic
refining of edible oils. Other products include PEL-UNITE(R) and CONDITIONADE(R)
pelleting aids used in the manufacture of animal feeds and POULTRY GUARD(TM)
litter amendments used in controlling ammonia levels in commercial poultry
houses.

Crop Production and Horticultural Products Group

         The Registrant 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.

                                       5

         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. The Registrant'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. The Registrant has also developed the AGSORB(R) product as a
blending agent for fertilizers and chemicals used in the lawn and garden market.
SOILMASTER(R) products include ball field maintenance and turf conditioner
products.

         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. The
Registrant's principal customers for these products include the agricultural
groups of Monsanto, DowElanco, Syngenta and Bayer.

         In October 1999 the Registrant acquired Pro's Choice, Inc., a marketer
and distributor of sports field products. Previously, the Registrant 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. The
Registrant's principal customers for these products are managers of baseball,
football, soccer fields and golf courses.

Industrial and Automotive Products

         Products for industrial applications include the Registrant's oil,
grease and water sorbents, which are cost effective floor maintenance products
that provide a nonslip 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. The Registrant distributes clay-based sorbents
sold in granular form and in other configurations such as socks. The Registrant
also distributes non-clay sorbents including its OIL-DRI Industrial Pad and
OIL-DRI Industrial Rug, which are made of polypropylene.

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

         The Registrant also produces for the consumer market OIL-DRI
Automotive, a floor absorbent for home and garage use. This product is sold
through automobile parts distributors and mass merchandisers.

Patents

         The Registrant has obtained or applied for patents for certain of its
processes and products. These patents expire at various times, beginning in
2001. Patented processes and products are not material to the Registrant'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 the branded products sold by Favorite 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.

         The Registrant's wholly owned subsidiary in England, Oil-Dri, U.K.,
Ltd., packages clay granules produced by the Registrant'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.

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

                                       6

         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. The Registrant
was not materially impacted by these foreign currency fluctuations.

Backlog; Seasonality

         At July 31, 2001 and 2000, the Registrant's backlog of orders was
approximately $2,088,000 and $2,913,000, respectively. The Registrant 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 of
the Registrant (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 21% of the
Registrant's net sales for the fiscal year ended July 31, 2001. Sales to The
Clorox Company accounted for approximately 8% of the Registrant's net sales for
the fiscal year ended July 31, 2001. The Clorox Company and the Registrant are
parties to a long-term supply contract. The loss of any other of the
Registrant's customers would not have a materially adverse effect on the
Registrant.

Competition

         The Registrant has approximately six principal competitors in the
United States, some of which have substantially greater financial resources than
the Company, which compete with the Registrant 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 the
Registrant's markets and competition has historically been very vigorous.

Reserves

         The Registrant 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 Oregon, and
on leased and owned land in Florida (see "Item 2. Properties" below). The
Registrant estimates that its proven recoverable reserves of these sorbent
materials aggregate approximately 478,642,000 tons. Based on its rate of
consumption during the 2001 fiscal year, the Registrant considers its proven
recoverable reserves adequate to supply the Registrant's needs for over 50
years. It is the Registrant'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. The Registrant has a program of exploration
for additional reserves and, although reserves have been acquired, the
Registrant cannot assure that such additional reserves will continue to become
available. The Registrant'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, 2001,
the Registrant utilized these reserves to produce substantially all of the
sorbent minerals that it sold.

         In 1997, the Registrant acquired rights to mineral reserves on
approximately 5,907 acres in Nevada. This acreage is in addition to
approximately 415 acres acquired in 1991 in Washoe County, Nevada. The
Registrant estimates that there are over 300,000,000 tons of proven reserves of
sorbent materials on the combined acreage. Mining and processing these reserves
requires the approval of federal, state and local agencies. The Registrant has
received federal approval to mine these properties and is in the process of
obtaining all other necessary state and local approvals. One of the approvals
needed is the grant of a Special Use Permit by Washoe County, Nevada, permitting
construction of a plant to process the mined material. The Registrant has filed,
and is completing, its application for that permit. The grant of the permit is
being opposed by various environmental groups and by the Reno Sparks Indian
Colony. Washoe County is scheduled to reach a final decision on Registrant's
application for the permit during the first quarter of calendar 2002. Should the
Washoe County Board grant the permit, it is probable that those opposing
construction of the plant will continue their opposition through litigation. An
Environmental Impact Statement (EIS) is also awaiting approval by the Nevada
Bureau of Land Management (BLM). While the Registrant hopes to develop a plant
to process the mined materials, there can be no assurance that this will be
accomplished.

                                       7

         In 1998, mineral reserves on approximately 778 acres in Tennessee and
759 acres in Illinois were acquired in conjunction with the purchase of Oil-Dri,
Mounds Production Company.

Mining Operations

         The Registrant has conducted mining operations in Ripley, Mississippi
since 1963; in Ochlocknee, Georgia since 1971; in Christmas Valley, Oregon since
1979; in Blue Mountain, Mississippi since 1989; and in Mounds, Illinois since
1998.

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

         The Registrant's current operating mines range in distance from
immediately adjacent to several miles from its 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 the Registrant's processing facilities maintains stockpiles of
unprocessed clay of approximately one week of production requirements.

         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.

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

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

                                                                                                               PLANT AND
                                                                                                  LAND         EQUIPMENT
                                                                                                ---------     ----------
                                                                                                    (IN THOUSANDS)

Ochlocknee, Georgia........................................................................     $   2,656     $   14,339
Ripley, Mississippi........................................................................     $   1,522     $    9,868
Mounds, Illinois...........................................................................     $     325     $    7,850
Blue Mountain, Mississippi.................................................................     $     952     $    6,673
Christmas Valley, Oregon...................................................................     $      98     $      337

Employees

         As of July 31, 2001, the Registrant employed 782 persons, 79 of whom
were employed by the Registrant's foreign subsidiaries. The Registrant's
corporate offices, research and development center and manufacturing facilities
are adequately staffed and no material labor shortages are anticipated.
Approximately 41 of the Registrant's employees in the U.S. and approximately 21
of the Registrant'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

         The Registrant's mining and manufacturing operations and facilities in
Georgia, Mississippi, Oregon 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 the Registrant's operations. In recent years, environmental regulation
has grown increasingly stringent, a trend which the Registrant expects will
continue. The Registrant endeavors to stay in substantial compliance with
applicable environmental controls and regulations and to work with regulators to
correct any deficiency. As a result, expenditures relating to environmental
compliance have increased over the years; however, these expenditures have not
been material. The Registrant 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 the Registrant'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 the Registrant's products. The Registrant endeavors to stay
in substantial compliance with that legislation and regulation and to assist its
customers in that compliance.

         The Registrant cannot assure that, despite its best 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

         The Registrant uses coal, natural gas and recycled fuel oil as
permitted for energy sources in the processing of its clay products. In prior
years and again in 2001, the Registrant 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.

Research and Development

         At the Registrant's research facility, the research and development
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, the Registrant's research efforts have resulted in a
number of new sorbent products and processes including PURE-FLO(R) Supreme,
PURE-FLO(R) B80, B81, PERFORM(TM), SELECT(TM) and POULTRY GUARD(TM) absorbents,
and CAT'S PRIDE(R) Scoopable, LASTING PRIDE(R), DUST STOPPER(R) and SCOOP 'N
FLUSH(R) cat litters. The technical center produces prototype samples and tests
new products for customer trial and evaluation.

         The Registrant spent approximately $1,953,000, $1,951,000 and
$2,110,000 during its fiscal years ended July 31, 2001, 2000 and 1999,
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.

                                       9

ITEM 2. PROPERTIES

         The Registrant'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)

Florida...................      537           446           --                 983        4,512           1,092          5,604
Georgia...................    1,863         1,594           --               3,457       35,891          10,274         46,165
Illinois..................      161           598           --                 759        8,013           6,000         14,013
Mississippi...............    2,181         1,153           --               3,334      119,121         121,372        240,493
Nevada....................      535            --        5,827               6,362      306,830         248,874        555,704
Oregon....................      405            --          100                 505           25             301            326
Tennessee.................      778            --           --                 778        4,250           4,250          8,500
                             ------     ---------    ---------         -----------     --------       ---------      ---------
                              6,460         3,791        5,927              16,178      478,642         392,163        870,805
                             ======     =========    =========         ===========     ========       =========      =========

         See "Item 1. Business--Reserves"

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

         The Registrant's mining operations are conducted on leased or owned
land and, in Oregon, unpatented mining claims. The Georgia, Illinois, Florida
and Mississippi mining leases, with expiration dates ranging from 2001 to 2053,
none of which is material, generally require that the Registrant pay a minimum
monthly rental to continue the lease term. This rental payment is applied
against a royalty related to the number of unprocessed, or in some cases
processed, tons of mineral extracted from the leased property.

         Of the Registrant's total reserves, certain claims in Nevada and Oregon
are unpatented mining claims leased by the Registrant, on which the Registrant
has the right to conduct mining activities. The validity of title to unpatented
mining claims is dependent upon numerous factual matters. The Registrant
believes the unpatented mining 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 the Registrant's
claim on certain Nevada properties are locatable in nature. This ruling has the
effect of perfecting the Registrant's right to mine these claims. 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 the Registrant's unpatented claims may become uneconomic. The
Registrant cannot predict the form that any such amendments might take or
whether or when such amendments might be adopted.

         The Registrant operates manufacturing facilities at Ripley,
Mississippi; Ochlocknee, Georgia; Christmas Valley, Oregon; 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. The Registrant's facilities at Ripley, Mississippi;
Ochlocknee, Georgia; Christmas Valley, Oregon; Mounds, Illinois; Alpharetta,
Georgia; Laval, Quebec, Canada and Wisbech, United Kingdom are wholly owned by
the Registrant and the Registrant's facility at Blue Mountain, Mississippi is
owned in part by the Registrant, with the balance leased as hereinafter
described. The Registrant is a party to leases that relate to certain plant
acquisition and expansion projects at the Registrant'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

                                       10

industrial revenue bonds ($5,000,000 of which has been subsequently retired),
full payment of which is guaranteed by the Registrant. Upon expiration of the
leases in 2008, a subsidiary of the Registrant 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 the Registrant'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; 18,000 square feet at Christmas Valley, Oregon; 26,000 square feet at
Alpharetta, Georgia; 16,000 square feet at Kiel, Wisconsin and 140,000 square
feet at Blue Mountain, Mississippi. The Registrant 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 the Registrant's foreign facilities are owned and consist of
related steel frame, 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.

         The Registrant'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.

         The Registrant's principal office, consisting of approximately 20,000
square feet in Chicago, Illinois, is presently occupied under a lease expiring
on June 30, 2008.

ITEM 3. LEGAL PROCEEDINGS

         There are no material pending legal proceedings.

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

         Not applicable.

                                       11

ITEM 401(b) OF REGULATION S-K. EXECUTIVE OFFICERS OF THE REGISTRANT

         The following table gives certain information with respect to the
Executive Officers of the Registrant.

                                                 PRINCIPAL OCCUPATION
NAME(1)                                           FOR LAST FIVE YEARS                                                AGE
-------                                           -------------------                                                ---

Daniel S. Jaffee(1)...............    President and Chief Executive Officer of the Registrant; President             37
                                      and Chief Operating Officer from June 1995 until August 1997.

Richard V. Hardin(2)..............    Group Vice-President of Technology of the Registrant.                          62

Eugene W. Kiesel..................    Vice-President of Specialty Products Group of the Registrant                   44
                                      since October 1997; Vice-President of Radian International, LLC,
                                      a subsidiary of Dow Chemical Company from July 1996 to October
                                      1997; General Manager of ACS, a division of Dow Chemical Company
                                      from November 1993 to July 1996.

Wade R. Bradley...................    Vice-President of Global Consumer Products of the Registrant;                  41
                                      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 the                           40
                                      Registrant; Vice-President of Logistics, Quality & Service from
                                      February 1996 to June 1999; General Manager, Logistics, Quality &
                                      Service from February 1995 to February 1996.

Jeffrey M. Libert.................    Vice-President & Chief Financial Officer of the Registrant                     35
                                      since April 2000; Vice-President of Corporate Development
                                      and Planning from June 1998 to April 2000; Manager of
                                      Production Planning from August 1995 to June 1998.

Robert L. Vetere..................    Vice-President of Administration, General Counsel and Secretary                52
                                      of the Registrant; Vice-President Legal and General Counsel of
                                      the Registrant from June 1999 to November 2000; Secretary of
                                      the Registrant since December 1999; Associate General Counsel
                                      and Director of Government Relations of First Brands Corporation
                                      from April 1996 to April 1999.

         The term of each executive officer expires at the 2001 Annual Meeting
of the Stockholders and when his successor is elected and qualified.

----------

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

(2)   Richard V. Hardin and Thomas F. Cofsky are Daniel S. Jaffee's
      brothers-in-law.

                                       12

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS

         Information with respect to holders of Common Stock and Class B Stock
is contained in Note 6 of the "Notes to Consolidated Financial Statements"
incorporated herein by reference.

         Information concerning stock prices and dividends with regard to the
Common Stock of the Registrant, which is traded on the New York Stock Exchange,
and information concerning dividends with regard to the Class B Stock of the
Registrant, for which there is no established public trading market, is
contained in Note 13 of the "Notes to Consolidated Financial Statements,"
incorporated herein by reference. No shares of Class A common stock are
outstanding. The Registrant's ability to pay dividends is limited by the
Registrant's Credit Agreement with Harris Trust and Savings Bank dated January
29, 1999. See Note 4 of "Notes to Consolidated Financial Statements,"
incorporated herein by reference. Information concerning a private placement of
$25,000,000 in principal amount of notes in April 1998 is incorporated herein by
reference to Note 4 of the "Notes to the Consolidated Financial Statements." The
notes were sold in reliance on the exemption from registration under the
Securities Act of 1933 contained in Section 4(2) thereof, based on the fact that
they were privately sold in their entirety to two financial institutions.

                                       13

ITEM 6. SELECTED FINANCIAL DATA

                       TEN YEAR SUMMARY OF FINANCIAL DATA

                                                              2001              2000              1999               1998
                                                           ------------      ------------      ------------      ------------
                                                                      (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
                                                                                                     
SUMMARY OF OPERATIONS
Net Sales(1) ..........................................    $    167,862      $    171,732      $    171,217      $    157,585
Cost of Sales(1) ......................................         129,781           125,184           119,126           110,096
                                                           ------------      ------------      ------------      ------------
Gross Profit(1) .......................................          38,081            46,548            52,091            47,489
Non-recurring Fee .....................................           4,278                --                --                --
Selling, General and Administrative Expenses(1) .......         (38,193)          (39,555)          (40,340)          (35,931)
Restructuring and Special Charges .....................              --            (1,239)               --            (3,129)
                                                           ------------      ------------      ------------      ------------
Income from Operations ................................           4,166             5,754            11,751             8,429
                                                           ------------      ------------      ------------      ------------
Other Income (Expense)
   Interest Income ....................................             235               206               480               491
   Interest Expense ...................................          (2,916)           (3,185)           (3,185)           (2,049)
   Foreign Exchange (Losses) Gains ....................            (228)             (173)             (124)             (146)
   Other, Net .........................................             212               446             1,114              (119)
                                                           ------------      ------------      ------------      ------------
      Total Other Expense, Net ........................          (2,697)           (2,706)           (1,715)           (1,823)
                                                           ------------      ------------      ------------      ------------
Income before Income Taxes ............................           1,469             3,048            10,036             6,606
Income Taxes ..........................................             556               821             2,860             1,883
                                                           ------------      ------------      ------------      ------------
Net Income ............................................    $        913      $      2,227      $      7,176      $      4,723
                                                           ============      ============      ============      ============
AVERAGE SHARES OUTSTANDING
   Basic ..............................................           5,613             5,647             5,827             6,125
   Dilutive ...........................................           5,613             5,677             5,996             6,165
NET INCOME PER SHARE
   Basic ..............................................    $       0.16      $       0.39      $       1.23      $       0.77
   Dilutive ...........................................    $       0.16      $       0.39      $       1.20      $       0.77
IMPORTANT HIGHLIGHTS
   Total Assets .......................................    $    130,524      $    132,844      $    133,750      $    134,215
   Long-Term Debt .....................................    $     34,256      $     39,434      $     38,150      $     39,976
   Working Capital ....................................    $     36,100      $     38,875      $     37,141      $     36,283
   Working Capital Ratio ..............................             2.8               3.6               3.3               3.1
   Book Value per Share ...............................    $      12.80      $      13.01      $      13.00      $      12.15
   Dividends Declared .................................    $      1,892      $      1,900      $      1,904      $      1,808
   Capital Expenditures ...............................    $      5,609      $      6,001      $      8,495      $      6,496
   Depreciation and Amortization ......................    $      9,089      $      9,099      $      8,497      $      7,832
   Operating Cash Flows, less Capital Expenditures ....    $      9,603      $        (33)     $      1,165      $         93
   Long-Term Debt to Total Capital ....................            32.3%             35.1%             33.9%             35.8%
   Net Income as a Percent of Net Sales ...............             0.5%              1.3%              4.2%              3.0%
   Return on Average Stockholders' Equity .............             1.3%              3.0%              9.8%              6.3%
   Gross Profit as a Percent of Net Sales .............            22.7%             27.1%             30.4%             30.1%
   Operating Expenses as a Percent of Net Sales .......            20.2%             23.8%             23.6%             24.8%

----------
(1) Net Sales, Gross Profit and Selling, General and Administrative Expenses
    have been reclassified to reflect the direction provided by EITF 00-22 and
    EITF 00-14 as described in Footnote 1. The reclassification for EITF 00-14
    was done for all years presented. The reclassification for EITF 00-22 was
    done for fiscal years 2001-1995.

                                       14

                                 YEAR ENDED JULY 31
                                 ------------------
  1997            1996          1995           1994           1993           1992
---------      ---------      ---------      ---------      ---------      ---------

                                                            
$ 154,056      $ 150,461      $ 149,829      $ 146,147      $ 139,558      $ 122,322
  108,687        107,730        108,268        102,457         97,396         85,116
---------      ---------      ---------      ---------      ---------      ---------
   45,369         42,731         41,561         43,690         42,162         37,206
       --             --             --             --             --             --
  (34,700)       (35,827)       (28,851)       (29,394)       (28,245)       (26,704)
       --           (921)            --             --             --             --
---------      ---------      ---------      ---------      ---------      ---------
   10,669          5,983         12,710         14,296         13,917         10,502
---------      ---------      ---------      ---------      ---------      ---------

      637            587            448            441            452            515
   (1,775)        (1,917)        (1,921)        (1,752)        (1,729)        (1,884)
       --             (7)            (5)             3            (88)            63
      (17)           137            (84)           171           (298)            15
---------      ---------      ---------      ---------      ---------      ---------
   (1,155)        (1,200)        (1,562)        (1,137)        (1,663)        (1,291)
---------      ---------      ---------      ---------      ---------      ---------
    9,514          4,783         11,148         13,159         12,254          9,211
    2,721          1,409          3,145          3,307          2,834          2,110
---------      ---------      ---------      ---------      ---------      ---------
$   6,793      $   3,374      $   8,003      $   9,852      $   9,420      $   7,101
=========      =========      =========      =========      =========      =========

    6,596          6,806          6,932          6,990          6,995          6,994
    6,599          6,807          6,936          7,011          7,031          7,026

$    1.03      $    0.50      $    1.15      $    1.41      $    1.35      $    1.02
$    1.03      $    0.50      $    1.15      $    1.41      $    1.34      $    1.01

$ 114,558      $ 117,693      $ 116,988      $ 112,267      $ 102,117      $  95,018
$  17,052      $  18,978      $  20,422      $  21,521      $  17,766      $  18,831
$  31,165      $  30,399      $  33,074      $  29,337      $  26,043      $  24,359
      3.0            2.7            3.1            3.0            2.7            2.8
$   12.03      $   11.46      $   11.35      $   10.51      $    9.50      $    8.66
$   1,936      $   2,022      $   2,047      $   1,807      $   1,679      $   1,548
$   5,395      $   7,184      $   7,032      $  13,559      $   9,158      $   8,040
$   7,587      $   7,926      $   7,808      $   6,798      $   5,835      $   5,407
$   8,349      $   6,208      $   5,285      $  (3,734)     $   5,080      $     645
     18.1%          19.7%          20.7%          22.8%          21.1%          24.0%
      4.4%           2.2%           5.3%           6.7%           6.7%           5.8%
      8.8%           4.3%          10.6%          14.1%          14.9%          12.3%
     29.4%          28.4%          27.7%          29.9%          30.2%          30.4%
     22.5%          24.4%          19.3%          20.1%          20.2%          21.8%

                                       15

                           [INTENTIONALLY LEFT BLANK]

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

Results of Operations
Fiscal 2001 Compared to Fiscal 2000

         Consolidated net sales for the year ended July 31, 2001, were
$167,862,000, a decrease of 2.3% from net sales of $171,732,000 in fiscal 2000.
This decline was due to decreased sales in the Consumer Products and the
Specialty Products segments, partially offset by increased sales in the Crop
Production and Horticultural Products and Industrial Products segments. Basic
and diluted net income per share was $0.16 for fiscal 2001, versus basic and
diluted net income per share of $0.39 in fiscal 2000. This decrease was due to
lower sales, an unfavorable product mix in our Consumer Products Group, a
significant increase ($3,100,000) in energy costs used in the Company's
manufacturing processes, increased mining costs, unfavorable foreign exchange
rate fluctuations and competitive activities which negatively impacted our
Specialty Products Group. Positively impacting earnings was a non-recurring fee
of $4,278,000, which resulted from the early termination of a supply agreement.

         Net sales for the Consumer Products segment for fiscal 2001 were
$107,921,000, a decrease of 3.8% from net sales of $112,227,000 in fiscal 2000.
Increased sales of private label product to both grocery and mass merchandisers
was overshadowed by lower sales of branded clay and paper cat litter and
contract-manufactured cat litter. Consumer Products' operating income declined
48.1% from $14,212,000 in fiscal 2000 to $7,379,000 in fiscal 2001. This decline
was due to significant increases in energy costs used in the Company's
manufacturing processes, reduced paper litter sales, competitive activities,
unfavorable product mix, reduced co-packaged cat litter sales and increased
material costs in our Canadian operation.

         Net sales of Specialty Products Group for fiscal 2001 were $23,678,000,
a decrease of 5.0% from net sales of $24,919,000 in fiscal 2000. While North
American and Latin American sales of PURE FLO(R) bleaching clays remained flat
compared to fiscal 2000 levels, European sales, specifically by the Company's
United Kingdom subsidiary, decreased. Export sales were hampered by the relative
strength of the U.S. dollar versus other currencies, particularly the Euro.
Also, the Specialty Products Group lost a key European customer late in fiscal
2000. Highlights for this area were increased sales of ULTRA CLEAR(R) and
SELECT(TM) products. Operating income for the Specialty Products segment
decreased 28.9% from $3,863,000 in fiscal 2000 to $2,747,000 in fiscal 2001.
This decrease was due to higher fuel costs, competitive activities and
unfavorable exchange rate fluctuations.

         Fiscal year 2000 net sales and operating income reflect a
reclassification of $2,250,000 and $(346,000), respectively, for Animal Health
and Nutrition products and customers moved from the Crop Production and
Horticultural Products segment to the Specialty Products segment.

         Net sales of the Crop Production and Horticultural Products segment for
fiscal 2001 were $16,691,000, an increase of 4.6% from net sales of $15,949,000
in fiscal 2000. This increase is due to increased sales of SOILMASTER(R) sports
field conditioners. Crop Production and Horticultural Products operating income
decreased 13.4% from $2,229,000 in fiscal 2000 to $1,931,000 in fiscal 2001, due
to the increased energy costs in our manufacturing processes.

         Net sales of the Industrial and Automotive Products segment for fiscal
year 2001 were $19,572,000, an increase of 5.0% from net sales of $18,637,000 in
fiscal 2000 due to increased sales of Lites products and general price increases
instituted during the year. Industrial and Automotive Products' operating income
increased 7.6% from $1,008,000 in fiscal 2000 to $1,085,000 in fiscal 2001 due
to the increase in sales and pricing discussed above.

         Consolidated gross profit as a percentage of net sales for fiscal 2001
decreased to 22.7% from 27.1% in fiscal 2000. This decline was due to an
unfavorable sales mix in the Consumer Products, reduction of
contract-manufactured sales, reduced export profitability due to unfavorable
exchange rate fluctuation, competitive activities, mining costs and a
significant increase ($3,100,000) in our energy costs associated with our
manufacturing processes.

         Operating expenses as a percentage of net sales decreased to 20.2% for
fiscal 2001 from 23.8% in fiscal 2000. Excluding the restructuring charge
recorded in the second quarter of fiscal 2000, operating expenses as a
percentage of net sales were 23.0%. The two other major factors which positively
impacted operating income were the non-recurring fee income and a reduction in
discretionary incentive compensation.

                                       17

         Fiscal 2001 interest expense was down $269,000 from fiscal 2000. Long
term debt was reduced by approximately $4,800,000 during the year. At July 31,
2001, the Company did not have any outstanding borrowing against the revolving
line of credit. At July 31, 2000 the outstanding borrowings were $3,020,000.

         Interest income increased slightly from fiscal 2000.

         The Company's effective tax rate was 37.9% of income before tax in
fiscal 2001 and 26.9% in fiscal 2000. See Note 5 in the Notes to the
Consolidated Financial Statements for the principal reasons for the increase.

         Total assets of the Company decreased $2,320,000 or 1.7% during the
year ended July 31, 2001. Current assets increased $1,783,000 from fiscal 2000
year end balances primarily due to increased cash and cash equivalents and
accounts receivable balances, offset by decreased inventories and income taxes
receivables. Property, plant and equipment, net of accumulated depreciation,
decreased $3,576,000 during the year as depreciation expense exceeded capital
expenditures.

         Total liabilities decreased $1,202,000 or 2.0% during the year due
primarily to decreased noncurrent notes payable balances, partially offset by
increased trade payables and accrued trade promotion and advertising balances.
Current liabilities increased $4,558,000 or 30.2% from July 31, 2000 balances,
due to the increased trade payables and accruals stated above.

Expectations

         The Company anticipates net sales for fiscal 2002 will be in line with
the net sales of fiscal 2001. Sales of branded cat box absorbents are expected
to be flat during the year consistent with projected sales in the overall
category. However, profitability of branded cat box absorbents is expected to
increase moderately due to improved spending controls. Sales of
contract-manufactured and private label litters are expected to increase
moderately. Within the Crop Production and Horticultural Products segment, sales
of agricultural carriers are expected to be up slightly due to recapturing of
prior lost business. Moderate sales growth is expected from market growth and
increased market share of our poultry litter and sports turf products. Sales of
the Company's Specialty products are expected to increase moderately in fiscal
2002, while sales of Industrial and Automotive products are expected to be down
due to the general economic climate.

Liquidity and Capital Resources

         The current ratio decreased to 2.8 at July 31, 2001 from 3.6 at July
31, 2000. Working capital decreased $2,775,000 during fiscal 2001 to
$36,100,000. Cash provided by operations continues to be the Company's primary
source of funds to finance ordinary investing and financing activities. During
the year, the balances of cash, cash equivalents and investment securities
increased $3,094,000. Cash provided by operating activities of $14,716,000 and
cash on hand were used to fund capital expenditures ($5,609,000), principal
payments on long term debt ($4,777,000), dividend payments ($1,892,000). Total
cash and investment balances held by the Company's foreign subsidiaries at July
31, 2001 and July 31, 2000 were $2,241,000 and $2,366,000, respectively.

         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. The credit
agreement contains restrictive covenants that, among other things and under
various conditions, limit the Company's ability to incur additional
indebtedness, to acquire (including a limitation on capital expenditures) 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. However, should new facility construction occur, it is
anticipated that additional borrowings of a long-term nature will be required
outside the existing credit facility.

         The Company's ability to fund operations, make planned capital
expenditures, including new facility construction, to make scheduled debt
payments and to remain in compliance with all of the financial covenants under
debt agreements depends on its future operating performance, which, in turn, is
subject to prevailing economic conditions and to financial, business and other
factors.

                                       18

         The Company entered into an amendment with Teachers Insurance and
Annuity Association and CIGNA Investments, Inc. to amend its Note Purchase
Agreement dated as of April 15, 1998 ("1998 Note Agreement") to modify the fixed
charges coverage ratio covenant therein from the prior ratio of 1.5 to 1, to the
new ratios as follows: (i) for the period ending November 1, 2000 through April
30, 2001 - ratio of 1.00 to 1; (ii) for the period ending May 1, 2001 through
October 31, 2001 - ratio of 1.15 to 1; for the period ending November 1, 2001
through July 31, 2002 - ratio of 1.25 to 1; and for the period ending August 1,
2002 and thereafter - ratio of 1.50 to 1.

         The Company also entered into amendments with Teachers Insurance and
Annuity Association of its Note Agreement dated as of April 15, 1993 and its
Note Agreement dated as of April 15, 1991 to add a fixed charges coverage ratio
on substantially the same terms as those in the 1998 Note Agreement as amended.

Results of Operations
Fiscal 2000 Compared to Fiscal 1999

         Consolidated net sales for the year ended July 31, 2000, were
$171,732,000, an increase of 0.3% over net sales of $171,217,000 in fiscal 1999.
This increase was due to increased sales in the Consumer Products and Industrial
and Automotive Products segments, partially offset by decreased sales in the
Crop Production and Horticultural Products and Specialty Products segments.
Basic and diluted net income per share was $0.39 for fiscal 2000, versus basic
net income per share of $1.23 and diluted net income per share of $1.20 in
fiscal 1999. This decrease was due to a restructuring charge recorded in the
second quarter of fiscal 2000, additional manufacturing costs associated with
the start-up of the Church & Dwight Co., Inc. supply agreement, significant
increases in energy costs used in the Company's manufacturing processes,
increased costs of packaging and distribution, unfavorable foreign exchange rate
fluctuations and a decline in demand for agricultural carriers. The
restructuring charge covered severance costs for certain eliminated positions
($604,000) and the write-off of non-performing assets ($635,000). This charge
reduced income before taxes by $1,239,000, net income by $879,000 and basic and
fully diluted net income per share by $0.16 and $0.15, respectively, for the
year ended July 31, 2000.

         Net sales for the Consumer Products segment for fiscal 2000 were
$112,227,000, an increase of 0.3% over net sales of $111,936,000 in fiscal 1999.
Increased sales of contract-manufactured cat litter, primarily FRESH STEP(R)
manufactured for The Clorox Company and Arm & Hammer SUPER CLAY(TM) brand
manufactured for Church & Dwight Co., Inc., offset reduced sales of branded
products and the reduced grocery distribution for paper cat litter products.
Consumer Products' operating income declined 18.0% from $17,331,000 in fiscal
1999 to $14,212,000 in fiscal 2000. This decline was due to significant
increases in energy costs used in the Company's manufacturing processes,
packaging costs, distribution costs, inefficient trade spending, start-up costs
of the Church & Dwight supply agreement and unfavorable sales mix relative to
fiscal 1999.

         Net sales of the Specialty Products segment for fiscal 2000 were
$24,919,000, an increase of 1.2% from net sales of $24,634,000 in fiscal 1999.
While North American and Latin American sales of PURE FLO(R) bleaching clays and
ULTRA CLEAR(R) clarification aids increased over fiscal 1999 levels, European
sales, specifically by the Company's United Kingdom subsidiary, decreased.
Export sales were also hampered by the relative strength of the U.S. dollar
versus other currencies, particularly the Euro. Operating income for the
Specialty Products segment decreased 28.9% from $5,436,000 in fiscal 1999 to
$3,863,000 in fiscal 2000. This decrease was due to higher manufacturing costs,
competitive activities leading to defensive pricing strategies and unfavorable
exchange rate fluctuations.

         Fiscal year 2000 and 1999 net sales reflect a reclassification of
$2,250,000 and $1,563,000, respectively, for Animal Health and Nutrition
products and customers moved from the Crop Production and Horticultural Products
segment to the Specialty Products segment. Fiscal year 2000 and 1999 operating
income reflects a reclassification of $(346,000) and $(205,000), respectively
for the same reclassification.

         Net sales of the Crop Production and Horticultural Products segment for
fiscal 2000 were $15,949,000, a decrease of 9.2% from net sales of $17,556,000
in fiscal 1999. This decline is due to reduced crop protection product
formulations by the Company's agricultural chemical customers resulting from a
depressed farm economy. Crop Production and Horticultural Products operating
income decreased 39.2% from $3,669,000 in fiscal 1999 to $2,229,000 in fiscal
2000, due to the unfavorable sales mix, increased manufacturing costs and
railcar expenses.

                                       19

         Net sales of the Industrial and Automotive Products segment for fiscal
year 2000 were $18,637,000, an increase of 9.0% from net sales of $17,091,000 in
fiscal 1999 due to increased sales volume of clay-based industrial and
automotive products and price increases instituted during the year. Industrial
and Automotive Products' operating income increased 28.7% from $783,000 in
fiscal 1999 to $1,008,000 in fiscal 2000 due to the increase in sales discussed
above.

         Consolidated gross profit as a percentage of net sales for fiscal 2000
decreased to 27.1% from 30.4% in fiscal 1999. This decline was due to an
unfavorable sales mix in the Consumer Products and Crop Production and
Horticultural Products segments, defensive pricing strategies in the overseas
markets of the Specialty Products segment, reduced export profitability due to
unfavorable exchange rate fluctuation, startup costs associated with the Church
& Dwight Co., Inc. agreement as well as higher manufacturing costs in the form
of increased energy, packaging and distribution costs.

         Operating expenses as a percentage of net sales increased to 23.8% for
fiscal 2000 from 23.6% in fiscal 1999. Excluding the restructuring charge
recorded in the second quarter of fiscal 2000, operating expenses as a
percentage of net sales were 23.0%.

         Interest expense was unchanged from fiscal 1999 to fiscal 2000.
Reductions in notes payable from scheduled debt service was offset by line of
credit draws during the year. At July 31, 2000, outstanding borrowings against
the Company's revolving credit agreements was $3,020,000.

         Interest income declined $274,000 from fiscal 1999 due to lower levels
of funds available for investment.

         The Company's effective tax rate was 26.9% of income before tax in
fiscal 2000 and 28.5% in fiscal 1999. The reduction in the rate was due to
current year net operating losses carried back to prior years, resulting in
income tax refunds receivable.

         Total assets of the Company decreased $906,000 or 0.7% during the year
ended July 31, 2000. Current assets increased slightly from fiscal 1999 year end
balances primarily due to decreased cash and cash equivalents and accounts
receivable balances, offset by increases in inventories, income taxes receivable
and prepaid expenses. Property, plant and equipment, net of accumulated
depreciation, decreased $3,236,000 during the year as depreciation expense
exceeded capital expenditures.

         Total liabilities increased $637,000 or 1.1% during the year due
primarily to increased noncurrent notes payable balances, partially offset by
decreased accrued expenses and deferred compensation. Current liabilities
decreased $855,000 or 5.4% from July 31, 1999 balances, due to decreases in
accrued salary, wages and commissions and current maturities of notes payable.

Foreign Operations

         Net sales by the Company's foreign subsidiaries during fiscal 2001 were
$11,799,000 or 7.0% of total Company sales. This represents a decrease of 11.9%
from fiscal 2000 in which foreign subsidiary sales were $13,389,000 or 7.8% of
total Company sales. This decrease is due to lower sales of Specialty products
in the United Kingdom. Net loss of the foreign subsidiaries for fiscal 2001 was
$325,000, a significant increase from net loss of $27,000 in fiscal 2000. This
increase was primarily due to lower gross profit in Canada, which was caused by
higher material and transportation costs and the loss of a key customer and
foreign currency issues in the United Kingdom. Identifiable assets of the
Company's foreign subsidiaries as of July 31, 2001 were $9,809,000, a decrease
of $274,000 from $10,083,000 as of July 31, 2000.

         Net sales by the Company's foreign subsidiaries during fiscal 2000 were
$13,389,000 or 7.8% of total Company sales. This represents a decrease of 7.7%
from fiscal 1999 in which foreign subsidiary sales were $14,501,000 or 8.5% of
total Company sales. This decrease is due to lower sales of Specialty products
in the United Kingdom. Net loss of the foreign subsidiaries for fiscal 2000 was
$27,000, a decrease of 104.6% from net income of $590,000 earned in fiscal 1999.
This decrease was primarily due to unfavorable changes in sales mix and the loss
of a key customer in the United Kingdom. Identifiable assets of the Company's
foreign subsidiaries as of July 31, 2000 were $10,083,000, a decrease of
$981,000 from $11,064,000 as of July 31, 1999.

                                       20

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," 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 primarily to 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. These forward-looking statements also involve
the risk of changes in market conditions in the overall economy and, for the
fluids purification and agricultural markets, in planting activity, crop
quality, and overall agricultural demand, including export demand, fluctuations
of energy costs and foreign exchange rate fluctuations. Other factors affecting
these forward-looking statements may be detailed from time to time in reports
filed with the Securities and Exchange Commission.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company did not have any derivative financial instruments as of
July 31, 2001. However, the Company is exposed to interest rate risk. The
Company employs policies and procedures to manage its exposure to changes in the
market risk of its cash equivalents and short-term investments. The Company
believes that the market risk arising from holdings of its financial instruments
is not material.

         The Company is exposed to commodity price risk with respect to natural
gas. The Company has contracted for a major portion of its fuel needs for fiscal
2002 using forward purchase contracts to manage the volatility related to this
exposure. No contracts were entered into for speculative purposes. These
contracts will reduce the volatility in fuel prices, and the weighted average
cost of these contracts will be consistent with the increased prices paid in
fiscal 2001.

         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, 2002. 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 28, 2001.

                           COMMODITY PRICE SENSITIVITY
                          NATURAL GAS FUTURE CONTRACTS
                        FOR THE YEAR ENDING JULY 31, 2002

                                                     Expected 2002 Maturity        Fair Value
                                                     ----------------------     ----------------
                                                                          
Natural Gas Future Volumes (MMBtu's)                          1,420,000                    --
Weighted Average Price (Per MMBtu)                        $        4.61         $          --
Contract Amount ($ U.S., in thousands)                    $     6,548.1         $     3,774.1

         Factors which could influence the fair value of the natural gas
contracts include, but are not limited to, the overall general economy, the
recent events which occurred on September 11, 2001 in New York and Washington,
the general demand of 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 2002 financial results are difficult
to make due to the inherent uncertainty of future fluctuations in option
contract prices in the natural gas options market.

                                       21

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                           CONSOLIDATED BALANCE SHEETS

                                                                                                   JULY 31,
                                                                                     ----------------------------------
                                                                                        2001                   2000
                                                                                     ------------          ------------
                                                                                          (IN THOUSANDS OF DOLLARS)
                                                                                                     
                                      ASSETS
CURRENT ASSETS
   Cash and cash equivalents ...............................................         $      4,444          $      1,388
   Investment securities ...................................................                1,257                 1,219
   Accounts receivable, less allowance of $1,858 in 2001 and $836 in 2000 ..               24,267                24,438
   Non-recurring fee receivable ............................................                2,078                    --
   Inventories .............................................................               15,445                16,928
   Income taxes receivable .................................................                  419                 2,267
   Prepaid stripping expense ...............................................                3,797                 2,386
   Prepaid expenses ........................................................                4,035                 5,333
                                                                                     ------------          ------------
           Total Current Assets ............................................               55,742                53,959
                                                                                     ------------          ------------

PROPERTY, PLANT AND EQUIPMENT, AT COST
   Buildings and leasehold improvements ....................................               21,647                20,769
   Machinery and equipment .................................................               92,037                88,737
   Office furniture and equipment ..........................................                9,994                 9,532
   Vehicles ................................................................                4,889                 5,166
                                                                                     ------------          ------------
                                                                                          128,567               124,204
   Less accumulated depreciation and amortization ..........................              (83,694)              (76,033)
                                                                                     ------------          ------------
                                                                                           44,873                48,171
   Construction in progress ................................................                3,430                 3,722
   Land ....................................................................                7,733                 7,719
                                                                                     ------------          ------------
          Total Property, Plant and Equipment, Net .........................               56,036                59,612
                                                                                     ------------          ------------

OTHER ASSETS
   Goodwill and intangibles (Net of accumulated
      amortization of $3,569 in 2001 and $2,664 in 2000) ...................                9,691                10,324
   Deferred income taxes ...................................................                3,155                 2,606
   Other ...................................................................                5,900                 6,343
                                                                                     ------------          ------------
          Total Other Assets ...............................................               18,746                19,273
                                                                                     ------------          ------------
   Total Assets ............................................................         $    130,524          $    132,844
                                                                                     ============          ============

                                       22

                                                                                                JULY 31,
                                                                                      -----------------------------
                                                                                         2001              2000
                                                                                      -----------       -----------
                                                                                         (IN THOUSANDS OF DOLLARS)

              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Current maturities of notes payable .........................................      $     2,150       $     1,750
   Accounts payable ............................................................            5,791             4,804
   Dividends payable ...........................................................              473               473
   Accrued expenses
      Salaries, wages and commissions ..........................................            1,524             2,111
      Trade promotions and advertising .........................................            4,006             1,159
      Freight ..................................................................            1,312             1,385
      Other ....................................................................            4,386             3,402
                                                                                      -----------       -----------
           Total Current Liabilities ...........................................           19,642            15,084
                                                                                      -----------       -----------

NONCURRENT LIABILITIES
   Notes payable ...............................................................           34,256            39,434
   Deferred compensation .......................................................            2,769             3,112
   Other .......................................................................            2,011             2,250
                                                                                      -----------       -----------
           Total Noncurrent Liabilities ........................................           39,036            44,796
                                                                                      -----------       -----------
           Total Liabilities ...................................................           58,678            59,880
                                                                                      -----------       -----------

STOCKHOLDERS' EQUITY
   Common Stock, par value $.10 per share, issued 5,470,435
      shares in 2001 and 2000 ..................................................              547               547
   Class B Stock, par value $.10 per share, issued 1,765,083
      shares in 2001 and 2000 ..................................................              177               177
   Additional paid-in capital ..................................................            7,667             7,698
   Retained earnings ...........................................................           89,778            90,757
   Restricted unearned stock compensation ......................................              (25)              (10)
   Cumulative translation adjustments ..........................................           (1,474)           (1,310)
                                                                                      -----------       -----------
                                                                                           96,670            97,859
   Less treasury stock, at cost (1,279,110 Common shares and 342,241 Class B
      shares in 2001 and 1,283,769 Common shares and
      342,241 Class B shares in 2000) ..........................................          (24,824)          (24,895)
                                                                                      -----------       -----------
           Total Stockholders' Equity ..........................................           71,846            72,964
                                                                                      -----------       -----------
   Total Liabilities and Stockholders' Equity ..................................      $   130,524       $   132,844
                                                                                      ===========       ===========

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

                                       23

                        CONSOLIDATED STATEMENTS OF INCOME

                                                                  YEAR ENDED JULY 31,
                                                    ----------------------------------------------
                                                       2001              2000             1999
                                                    ------------     ------------     ------------
                                                                    (IN THOUSANDS
                                                               EXCEPT FOR PER SHARE DATA)

NET SALES ......................................    $    167,862     $    171,732     $    171,217
COST OF SALES ..................................         129,781          125,184          119,126
                                                    ------------     ------------     ------------
GROSS PROFIT ...................................          38,081           46,548           52,091
NON-RECURRING FEE ..............................           4,278               --               --
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ...         (38,193)         (39,555)         (40,340)
RESTRUCTURING AND SPECIAL CHARGES ..............              --           (1,239)              --
                                                    ------------     ------------     ------------
INCOME FROM OPERATIONS .........................           4,166            5,754           11,751
                                                    ------------     ------------     ------------
OTHER INCOME (EXPENSE)
   Interest income .............................             235              206              480
   Interest expense ............................          (2,916)          (3,185)          (3,185)
   Foreign exchange losses .....................            (228)            (173)            (124)
   Other investment (loss) income ..............             (76)             254              939
   Other, net ..................................             288              192              175
                                                    ------------     ------------     ------------
      Total Other Expense, Net .................          (2,697)          (2,706)          (1,715)
                                                    ------------     ------------     ------------
INCOME BEFORE INCOME TAXES .....................           1,469            3,048           10,036
INCOME TAXES ...................................             556              821            2,860
                                                    ------------     ------------     ------------
NET INCOME .....................................    $        913     $      2,227     $      7,176
                                                    ============     ============     ============

NET INCOME PER SHARE
   Basic .......................................    $       0.16     $       0.39     $       1.23
                                                    ============     ============     ============
   Dilutive ....................................    $       0.16     $       0.39     $       1.20
                                                    ============     ============     ============

AVERAGE SHARES OUTSTANDING
   Basic .......................................           5,613            5,647            5,827
                                                    ============     ============     ============
   Dilutive ....................................           5,613            5,677            5,996
                                                    ============     ============     ============

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

                                       24

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                                 RESTRICTED
                                           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, 1998 .................  $     724   $   7,702    $  85,158    $     (51)   $ (20,574)   $  (1,151)   $  71,808
                                                                                                                       ---------

Net Income .............................         --          --        7,176           --           --           --        7,176
  Cumulative Translation Adjustments ...         --          --           --           --           --           (8)          (8)
                                                                                                                       ---------
    Total Comprehensive Income .........                                                                                   7,168
                                                                                                                       ---------
Dividends Declared .....................         --          --       (1,904)          --           --           --       (1,904)
Purchases of Treasury Stock ............         --          --           --           --       (2,607)          --       (2,607)
Amortization of Restricted Common
  Stock Compensation ...................         --          --           --           42           --           --           42
                                          ---------   ---------    ---------    ---------    ---------    ---------    ---------
BALANCE, JULY 31, 1999 .................        724       7,702       90,430           (9)     (23,181)      (1,159)      74,507
                                                                                                                       ---------

Net Income .............................         --          --        2,227           --           --           --        2,227
  Cumulative Translation Adjustments ...         --          --           --           --           --         (151)        (151)
                                                                                                                       ---------
    Total Comprehensive Income .........                                                                                   2,076
                                                                                                                       ---------
Dividends Declared .....................         --          --       (1,900)          --           --           --       (1,900)
Purchases of Treasury Stock ............         --          --           --           --       (1,751)          --       (1,751)
Issuance of Stock Under 1995 Long-Term
  Incentive Plan .......................         --          (4)          --          (33)          37           --           --
Amortization of Restricted Common
  Stock Compensation ...................         --          --           --           32           --           --           32
                                          ---------   ---------    ---------    ---------    ---------    ---------    ---------
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
                                          =========   =========    =========    =========    =========    =========    =========

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

                                       25

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                            YEAR ENDED JULY 31,
                                                                            -------------------
                                                                   2001            2000              1999
                                                                ----------      ----------      ----------
                                                                              (IN THOUSANDS)
                                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................     $      913      $    2,227      $    7,176
                                                                ----------      ----------      ----------
Adjustments to reconcile net income
   to net cash provided by operating activities:
   Depreciation and amortization ..........................          9,089           9,099           8,497
   Non-cash restructuring and special charges .............             --             716              --
   Deferred income taxes ..................................           (549)            439             652
   Provision for bad debts ................................          1,045             523               8
   (Increase) decrease in
      Accounts receivable .................................         (2,952)            404          (1,163)
      Income taxes receivable .............................             --          (2,267)             --
      Inventories .........................................          1,483          (1,763)         (1,906)
      Prepaid stripping expense ...........................         (1,411)           (683)           (550)
      Prepaid expenses and taxes ..........................          3,146             (73)           (855)
      Other assets ........................................            378          (2,426)           (788)
   Increase (decrease) in
      Accounts payable ....................................            988             (38)            426
      Accrued expenses ....................................          3,250            (410)         (1,637)
      Deferred compensation ...............................           (344)            (94)             32
      Other ...............................................           (320)            302            (341)
                                                                ----------      ----------      ----------
         Total Adjustments ................................         13,803           3,729           2,375
                                                                ----------      ----------      ----------
         Net Cash Provided by Operating Activities ........         14,716           5,956           9,551
                                                                ----------      ----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures ...................................         (5,609)         (6,001)         (8,495)
   Proceeds from sale of property, plant and equipment ....            496              12             109
   Purchases of investment securities .....................         (2,487)         (1,219)         (1,225)
   Dispositions of investment securities ..................          2,450           1,225           1,173
   Other ..................................................            237              (9)              5
                                                                ----------      ----------      ----------
         Net Cash Used in Investing Activities ............         (4,913)         (5,992)         (8,433)
                                                                ----------      ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Principal payments on long-term debt ...................         (4,777)         (2,226)         (2,084)
   Proceeds from issuance of long-term debt ...............             --           3,033             400
   Dividends paid .........................................         (1,892)         (1,911)         (1,865)
   Purchase of treasury stock .............................             (3)         (1,751)         (2,607)
   Other ..................................................            (75)            (83)            (10)
                                                                ----------      ----------      ----------
         Net Cash Used in Financing Activities ............         (6,747)         (2,938)         (6,166)
                                                                ----------      ----------      ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......          3,056          (2,974)         (5,048)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ..............          1,388           4,362           9,410
                                                                ----------      ----------      ----------
CASH AND CASH EQUIVALENTS, END OF YEAR ....................     $    4,444      $    1,388      $    4,362
                                                                ==========      ==========      ==========

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

                                       26

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

         Revenues from sales of products are recognized upon shipment.

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 $16,082,000 and $16,953,000 as of July 31,
2001 and 2000, respectively, of retained earnings of foreign subsidiaries, as
substantially all such amounts are intended to be indefinitely invested in these
subsidiaries or 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 2001.

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

         Cash equivalents are highly liquid investments with maturities of three
months or less when purchased.

                                       27

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventories

         Inventories are valued at the lower of cost (first-in, first-out) or
market. The composition of inventories as of July 31 is as follows:

                                                                                        2001               2000
                                                                                     -----------       -----------
                                                                                            (IN THOUSANDS)

       Finished goods.............................................................   $     9,473       $    10,251
       Packaging..................................................................         4,029             5,273
       Other......................................................................         1,943             1,404
                                                                                     -----------       -----------
                                                                                     $    15,445       $    16,928
                                                                                     ===========       ===========

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 as follows:

                                                                                       YEARS
                                                                                       -----

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

Research and Development

         Research and development costs of $1,953,000, $1,951,000 and $2,110,000
were charged to expense as incurred for the years ended July 31, 2001, 2000 and
1999, respectively.

Intangibles and Goodwill

         Intangibles and goodwill are amortized on a straight-line basis over
periods ranging from 15 to 40 years. The Company periodically reviews goodwill
and other intangibles to assess recoverability from projected undiscounted cash
flows of the related operating entities.

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 $2,042,000, $2,252,000 and $3,408,000 for
the years ended July 31, 2001, 2000 and 1999, respectively.

                                       28

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, 2001 and 2000. 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, 2001 and 2000
was less than its carrying value by approximately $201,000 and $2,880,000,
respectively.

New Accounting Standards

         In July 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." This statement established standards for reporting
comprehensive income in the financial statements. The Company adopted this
standard in July 1999 and has elected to disclose comprehensive income, which
for the Company includes net income and foreign currency translation
adjustments, in the consolidated statements of stockholders' equity.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information." This statement established new
standards for the way companies report information about operating segments and
requires that those enterprises report selected information about operating
segments in the financial reports issued to stockholders. The Company adopted
this standard in July 1999 (see Note 3).

         In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosure
about Pension and Other Postretirement Benefits." This statement revises
employers' disclosures about pensions and other postretirement benefit plans. It
does not change the measurement or recognition of those plans in the financial
statements. The Company's adoption of this new standard in July 1999 did not
result in material changes to the previously reported amounts. See Note 8 for
further discussion.

         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," (SFAS No. 138), which was required to be adopted in
years beginning after June 15, 2000. One of the primary amendments to SFAS No.
133 establishes a "normal purchases and normal sales" exception. This exception
permits companies to exclude contracts which 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 entity over a reasonable period of
time in the normal course of business operations. The Company has forward
purchase contracts for certain natural gas commodities that qualify for the
"normal purchase" exception provisions of the amended statement. The adoption of
SFAS No. 133 as amended by SFAS No. 138 had no material impact on either the
financial position or results of operations.

         In September 2000, the Emerging Issues Task Force (EITF) issued EITF
00-10, "Accounting for Shipping and Handling Fees and Costs." Under the
provisions of EITF 00-10, amounts billed to a customer in a sales transaction
related to shipping and handling should be classified as revenue. Effective May
1, 2001, the Company adopted EITF 00-10, which did not have an effect on the
amounts classified as revenue or costs of other services. The adoption had no
impact on the determination of net income.

         Effective May 1, 2001, the Company adopted Staff Accounting Bulletin
No. 101 (SAB 101), "Revenue Recognition in Financial Statements." SAB 101
provides the Securities and Exchange Commission's views in applying accounting
principles generally accepted in the United States to revenue recognition in the
financial statements. The adoption of SAB 101 did not have an effect on the
financial statements of the Company.

         In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets", effective for years
beginning after December 15, 2001. Under the new rules, goodwill will no longer
be amortized, but will be subject to annual impairment tests in accordance with
the Statements. Other intangible assets will

                                       29

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

continue to be amortized over their useful lives. The pooling of interests
method is no longer permitted for business combinations after June 30, 2001.
Early adoption is permitted for companies with fiscal years beginning after
March 15, 2001 provided that their first quarter financial statements have not
been issued. The Company is not required to adopt this new standard until fiscal
year ended July 31, 2003 and is currently evaluating its impact.

         In April 2001, the EITF reached a final consensus on Issue 00-25,
"Accounting for Consideration from a Vendor to a Retailer in Connection with the
Purchase or Promotion of the Vendor's Products." The consensus addresses the
accounting treatment and income statement classification for certain sales
incentives, including cooperative advertising arrangements, buydowns and
slotting fees. The consensus requires that slotting fees, now classified by the
Company as selling, general and administrative expense, be reclassified as a
reduction of gross sales. These guidelines will become effective for the Company
during the third quarter of fiscal 2002. The adoption of EITF 00-25 is not
expected to materially impact the Company's financial statements.

         In 2000, the EITF discussed a number of topics related to certain
expenses that the Company reports in merchandising expenses, a component of SG&A
expenses. In January 2001, the EITF issued No. 00-22, which requires certain
rebate offers and free products that are delivered subsequent to a single
exchange transaction to be recognized when incurred and reported as a reduction
of revenue. EITF No. 00-14 was issued in May 2000 and subsequently amended in
November 2000. This guidance requires certain coupon, rebate offers and free
products offered concurrently with a single exchange transaction with a customer
to be recognized when incurred and reported as revenue. The Company was required
to adopt EITF No. 00-22 and No. 00-14 for the third quarter ending April 30,
2001, and the fourth quarter ending July 31, 2001, respectively. The effect of
the adoptions of EITF No. 00-22 and No. 00-14 resulted in a reclassification of
expenses and a restatement to reduce previously reported net sales and SG&A
expenses. The effect of these reclassifications resulted in a reduction in net
sales and a corresponding decrease in SG&A expenses of $3,449,000, $3,388,000
and $2,768,000 for the years ended July 31, 2001, 2000 and 1999, respectively.

NOTE 2 - SPECIAL CHARGES AND FEES

Special Charges

         In the second quarter of fiscal 2000, the Company recorded a pre-tax
restructuring charge of $1,239,000 against income from operations, as follows
(in thousands):

                                                        
       Severance costs                                     $        604
       Non-performing asset                                         635
                                                           ------------
       Restructuring charge                                $      1,239
                                                           ============

         The severance costs were related to a realignment of the Company's
personnel costs to bring them more in line with the then current levels of sales
and profitability. The severance accrual represented 13 employees that were
terminated during fiscal 2000. The majority of the positions terminated were at
the selling, general and administrative level.

         The net book value of the non-performing asset consisted of specific
production equipment that has been decommissioned. The equipment had been used
primarily in the Agricultural Products segment. The net book value of this asset
was approximately 1% of the net book value of all fixed assets outstanding as of
January 31, 2000.

                                       30

NOTE 2 - SPECIAL CHARGES AND FEES (CONTINUED)

         At July 31, 2001, none of the restructuring charges remained in current
liabilities. A summary of the balance sheet activity for the years ended July 31
is presented below (in thousands):

                                                     2001               2000             1999
                                                  ------------      ------------      ------------
                                                                   (IN THOUSANDS)

Beginning balance ...........................     $         81      $         --      $        358
Restructuring and special charges ...........               --             1,239                --
Utilization of special charges:
      Transportation business exit costs ....               --                --               (68)
      Write-off of non-performing assets ....               --                --              (124)
      Other exit costs ......................               --                --              (166)
Utilization of restructuring charge:
      Severance costs .......................              (81)             (523)               --
      Write-off of non-performing assets ....               --              (635)               --
                                                  ------------      ------------      ------------
Balance at end of year ......................     $         --      $         81      $         --
                                                  ============      ============      ============

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
termination fee of $4,278,000, of which $2,200,000 was received in fiscal 2001.

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 Specialty Products Group was previously described
as the Fluids Purification Products Group, and the Crop Production and
Horticultural Products Group was described as the Agricultural Products Group.
In addition, certain businesses were transferred between the Crop Production and
Horticultural Products Group and the Specialty Products Group as described
below.

         The accounting policies of the segments are the same as those described
in the summary of significant accounting policies.

         Because management does not rely on segment asset allocation,
information regarding segment assets is not meaningful and therefore is not
reported.

                                       31

NOTE 3 - OPERATING SEGMENTS (CONTINUED)

                                                                    YEAR ENDED JULY 31
                                                                    ------------------
                                                              NET SALES                                  INCOME
                                                              ---------                                  ------
                                                   2001          2000        1999            2001         2000             1999
                                                 ---------    ---------    ---------       ---------    ---------       ---------
                                                                              (IN THOUSANDS)

Consumer Products ...........................    $ 107,921    $ 112,227    $ 111,936(4)    $   7,379    $  14,212       $  17,331
Specialty Products Group(2) .................       23,678       24,919       24,634(2)        2,747        3,863(2)        5,436(2)
Crop Production & Horticulture(2) ...........       16,691       15,949       17,556(2)        1,931        2,229(2)        3,669(2)
Industrial and Automotive Products ..........       19,572       18,637       17,091           1,085        1,008             783
                                                 ---------    ---------    ---------       ---------    ---------       ---------
TOTAL SALES/OPERATING INCOME ................    $ 167,862    $ 171,732    $ 171,217          13,142       21,312          27,219
                                                 ---------    ---------    ---------
Less:  Nonrecurring Fee(3) ..................                                                  4,278           --              --
       Special Charges(1) ...................                                                     --        1,239              --
       Corporate Expenses ...................                                                 13,270       14,046          14,478
       Interest Expense, net of interest
          income ............................                                                  2,681        2,979           2,705
                                                                                           ---------    ---------       ---------
INCOME BEFORE INCOME TAXES ..................                                                  1,469        3,048          10,036
INCOME TAXES ................................                                                    556          821           2,860
                                                                                           ---------    ---------       ---------
NET INCOME ..................................                                              $     913    $   2,227       $   7,176
                                                                                           =========    =========       =========

(1)    See Note 2 for a discussion of the special charge recorded in fiscal
       2000.

(2)    Includes reclassification of animal health and nutrition products from
       the Crop Production and Horticultural Products Group to the Specialty
       Products Group to take advantage of international opportunities and
       spread the time-intensive burden of new product and market development
       between the business units.

(3)    See Note 2 for a discussion of the non-recurring fee recorded in fiscal
       2001.

(4)    See Note 1 for a discussion of the restatement of Net Sales in fiscal
       1999, 2000 and 2001.

                                       32

NOTE 3 - OPERATING SEGMENTS (CONTINUED)

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

                                                                            2001             2000           1999
                                                                         ----------      -----------     -----------
                                                                                        (IN THOUSANDS)

           Sales to unaffiliated customers:
                Domestic..............................................   $  156,063      $   158,343     $   156,716
                Foreign subsidiaries..................................   $   11,799      $    13,389     $    14,501
           Sales or transfers between geographic areas:
                Domestic..............................................   $    5,243      $     6,708     $     7,332
           Income before income taxes:
                Domestic..............................................   $    2,006      $     3,064     $     9,263
                Foreign subsidiaries..................................   $     (537)     $       (16)    $       773
           Net Income:
                Domestic..............................................   $    1,238      $     2,254     $     6,586
                Foreign subsidiaries..................................   $     (325)     $       (27)    $       590
           Identifiable assets:
                Domestic..............................................   $  120,715      $   122,761     $   122,686
                Foreign subsidiaries..................................   $    9,809      $    10,083     $    11,064

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

                                                                             2001             2000           1999
                                                                             ----             ----           ----

           Sales for the years ended July 31..........................         21%             20%            20%
           Accounts receivable as of July 31..........................         25%             26%            24%

                                       33

NOTE 4 - NOTES PAYABLE

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

                                                                                              2001             2000
                                                                                          ------------     ------------
                                                                                                  (IN THOUSANDS)
                                                                                                     
Town of Blue Mountain, Mississippi
    Principal payable on October 6, 2008. Interest payable monthly at a variable
    interest rate set weekly based on market conditions for similar instruments
    The average rate was 4.00% and 4.12% in fiscal 2001 and 2000, 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
    Final principal installment payable on November 15, 2002 Interest is payable
    semiannually at an annual rate of 9.38% .........................................            1,000            2,100

Teachers Insurance and Annuity Association of America
    Payable in annual principal installments on August 15: $ 500,000 in fiscal
    2002; $1,000,000 in fiscal 2003; and $2,500,000 in fiscal 2004 and 2005.
    Interest is payable semiannually at an annual rate of 7.17% .....................            6,500            6,500

Harris Trust and Savings Bank
    Payable in annual principal installments on June 20: $650,000 in fiscal
    2002; and $350,000 in fiscal 2003. Interest is payable quarterly at an
    annual rate of 7.78% ............................................................            1,000            1,650

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 2003, 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% ..........           25,000           25,000

Harris Trust and Savings Bank Credit Agreement ......................................               --            3,020

Other ...............................................................................              406              414
                                                                                          ------------     ------------
                                                                                          $     36,406     $     41,184

    Less current maturities of notes payable ........................................           (2,150)          (1,750)
                                                                                          ------------     ------------
                                                                                          $     34,256     $     39,434
                                                                                          ============     ============

         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). This agreement terminates on January 29, 2004, or such earlier date
as provided for in the agreement. 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. Outstanding
borrowings against this or prior lines were $0 and $3,020,000 at July 31, 2001
and 2000, respectively.

                                       34

NOTE 4 - NOTES PAYABLE (CONTINUED)

         In January 2001, the note agreement of 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.

         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 new 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, 2001:

                                                                                                   (IN THOUSANDS)

           2003...................................................................                  $    2,850
           2004...................................................................                       4,000
           2005...................................................................                       4,080
           2006...................................................................                       3,080
           Later years............................................................                      20,246
                                                                                                    ----------
                                                                                                    $   34,256
                                                                                                    ==========

                                       35

NOTE 5 - INCOME TAXES

         The provision for income tax expense consists of the following:

                                               2001           2000           1999
                                            ----------     ----------     ----------
                                                         (IN THOUSANDS)
                                                                 
Current
     Federal ...........................    $      586     $   (1,450)    $    1,324
     Foreign ...........................          (212)            11            182
     State .............................            74           (409)           702
                                            ----------     ----------     ----------
                                                   448         (1,848)         2,208
                                            ----------     ----------     ----------
Deferred
     Federal ...........................            65          1,046            649
     Operating loss carryforward .......            --          1,371             91
     Foreign ...........................            --             --              1
     State .............................            43            252            (89)
                                            ----------     ----------     ----------
                                                   108          2,669            652
                                            ----------     ----------     ----------
Total Income Tax Provision .............    $      556     $      821     $    2,860
                                            ==========     ==========     ==========

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

                                                                   2001            2000            1999
                                                                ----------      ----------      ----------

U.S. federal statutory income tax rate .....................          34.0%           34.0%           34.0%
Depletion deductions allowed for mining ....................         (13.0)           (5.0)          (12.0)
State income tax expense/(benefit), net of federal
  tax (benefit)/expense ....................................           5.3            (3.4)            4.0
Valuation allowance without income tax benefit .............            --            (3.3)            4.6
Difference in effective tax rate of foreign subsidiaries ...          (0.2)           (0.1)           (1.0)
Alternative minimum and foreign tax credits ................           5.4             3.8             1.9
Other ......................................................           6.4             0.9            (3.0)
                                                                ----------      ----------      ----------
                                                                      37.9%           26.9%           28.5%
                                                                ==========      ==========      ==========

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

                                                2001                       2000
                                       -----------------------   ------------------------
                                         ASSETS    LIABILITIES    ASSETS      LIABILITIES
                                       ---------   -----------   ---------    -----------
                                                         (IN THOUSANDS)

Depreciation ......................    $      --    $     810    $      --     $   1,000
Deferred compensation .............        1,075           --        1,207            --
Postretirement benefits ...........          560           --          548            --
Allowance for doubtful accounts ...          721           --          324            --
Other assets ......................          791           --          293            --
Accrued expenses ..................          421           --          255            --
Tax credits .......................          397           --          635            --
Other .............................           --           --           --           259
Operating loss carryforward .......           --           --        1,125            --
                                       ---------    ---------    ---------     ---------
                                           3,965          810        4,387         1,259
Valuation allowance ...............           --           --         (522)           --
                                       ---------    ---------    ---------     ---------
Total deferred taxes ..............    $   3,965    $     810    $   3,865     $   1,259
                                       =========    =========    =========     =========

         As of July 31, 2001, for federal income tax purposes there were
alternative minimum tax credit carryforwards of approximately $397,000. Due to
the higher levels of taxable income at the parent company level in the current
year, the

                                       36

NOTE 5 - INCOME TAXES (CONTINUED)

Company was able to utilize foreign tax credit of $522,000 and net operating
loss carryforwards of approximately $2,899,000. The net decrease in the
valuation allowance of $522,000 is due to the utilization of the foreign tax
credit and net operating loss carryforwards that were partially reserved for in
the prior year.

NOTE 6 - STOCKHOLDERS' EQUITY

         The authorized capital stock of the Company at July 31, 2001 and 2000
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.

         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.

         In December 1999, the Board of Directors of the Company authorized the
repurchase, from time to time, of up to 350,000 additional shares of the
Company's stock. This authorization, in addition to previous authorizations,
totals 1,916,771 shares. As of July 31, 2001, 1,279,110 shares of Common Stock
and 342,241 shares of Class B stock have been repurchased under these
authorizations.

         The number of holders of record of Common Stock and Class B stock on
July 31, 2001 was 975 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.

                                       37

NOTE 7 - 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. Awards of restricted stock in
the amount of 5,000 and 2,500 shares were made during the fiscal years ended
July 31, 2001 and 2000, respectively. On September 18, 1998, 840,125 shares
which had been issued in prior fiscal years under the 1995 Plan at an average
price of $14.83 were reissued at an exercise price of $11.25. The reissued
options awarded to members of the Richard M. Jaffee family covered Class B
shares. A new vesting period applied to all the reissued options. All grants
awarded under this plan have to date an initial term of ten years and vest and
become exercisable gradually over five 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, 2001, 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. 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 and various other types of awards. Grants
awarded under this plan to date have initial terms of ten years and a vesting
period of one year.

         A summary of option transactions under the plans follows:

                                          NUMBER OF        WEIGHTED
                                            SHARES         AVERAGE
                                        (IN THOUSANDS)  EXERCISE PRICE
                                        --------------  --------------

                                                   
Options outstanding at August 1, 1998           1,137    $      15.42
     Granted                                      882    $      11.29
     Exercised                                     --              --
     Canceled                                      81    $      14.73
     Canceled/Reissued                            840    $      14.83
                                         ------------    ------------

Options outstanding at August 1, 1999           1,098    $      12.61
     Granted                                      177    $      12.50
     Exercised                                     --              --
     Canceled                                     280    $      12.40
                                         ------------    ------------
Options outstanding at August 1, 2000             995    $      12.65
     Granted                                      258    $       9.02
     Exercised                                     --              --
     Canceled                                     116    $      13.48
                                         ------------    ------------
OPTIONS OUTSTANDING AT AUGUST 1, 2001           1,137    $      11.74
                                         ============    ============

         Options exercisable were 336,325, 189,500 and 204,537 as of July 31,
2001, 2000 and 1999, respectively. The weighted average exercise price of the
options exercisable as of July 31, 2001, 2000 and 1999 was $14.10, $17.33 and
$17.49, respectively.

         The Company had reserved 587,250, 684,750 and 109,438 shares,
respectively, as of July 31, 2001, 2000 and 1999 under the Oil-Dri Corporation
of America 1995 Long Term Incentive Plan.

         The Company had reserved 40,000, 120,000 and 130,000 shares of Common
Stock, respectively, as of July 31, 2001, 2000 and 1999, under the Oil-Dri
Corporation of America Outside Director's Stock Plan.

                                       38

NOTE 7 - STOCK OPTION PLANS (CONTINUED)

                       OPTIONS OUTSTANDING AND EXERCISABLE
                         BY PRICE RANGE AS OF 7/31/2001

                               Options Outstanding                                               Options Exercisable
----------------------------------------------------------------------------------       ------------------------------------
Range of Exercise          Outstanding as     Weighted Average        Weighted                                    Weighted
                            of 7/31/2001         Remaining             Average               Shares               Average
      Prices               (in thousands)     Contractual Life      Exercise Price       (in thousands)        Exercise Price
-------------------        -------------      ----------------      --------------       --------------        --------------
                                                                                                
   $6.01 - $8.00                      90                  9.3        $        8.00                   --        $        0.00
  $8.01 - $10.00                     210                  8.7        $        9.23                   --        $        0.00
  $10.01 - $12.00                    569                  6.8        $       11.25                  163        $       11.25
  $14.01 - $16.00                    189                  7.1        $       14.67                   94        $       14.70
  $18.01 - $20.00                     79                  3.1        $       19.27                   79        $       19.27
-------------------        -------------        -------------        -------------        -------------        -------------
  $6.01 - $20.00                   1,137                  7.2        $       11.74                  336        $       14.10
===================        =============        =============        =============        =============        =============

         The Company has elected to continue to account for stock-based
compensation using the intrinsic value method under APB Opinion No. 25.
Consequently, no compensation expense has been recognized for stock options. If
compensation expense for the Company's stock options issued in the fiscal years
ended July 31, 2001, 2000 and 1999 had been determined based on the fair value
method of accounting, as defined in SFAS No. 123, the Company's net income and
net income per share would have been reduced to the pro forma amounts indicated
below:

                                                2001             2000            1999
                                            ------------     ------------     ------------
                                                            (IN THOUSANDS
                                                    EXCEPT FOR PER SHARE AMOUNTS)

Net income as reported ................     $        913     $      2,227     $      7,176
Pro forma .............................     $        235     $      1,651     $      6,515

Net income per share as reported
    Basic .............................     $       0.16     $       0.39     $       1.23
    Dilutive ..........................     $       0.16     $       0.39     $       1.20
Pro forma
    Basic .............................     $       0.04     $       0.29     $       1.12
    Dilutive ..........................     $       0.04     $       0.29     $       1.09

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

                                       2001              2000               1999
                                   ------------      ------------      ------------

Dividend Yields ..............              4.2%              3.1%              2.8%
Volatility ...................             37.2%             30.9%             25.8%
Risk-free Interest Rate ......              5.8%              6.1%              5.9%
Expected Life (Years) ........              5.4               5.4               5.4

         The weighted average fair value of the options granted, including the
effect of repricing in fiscal year 1999, was $2.45, $3.66 and $1.42 for the
fiscal years ended July 31, 2001, 2000 and 1999, respectively.

                                       39

NOTE 8 - 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:

                                                             2001             2000               1999
                                                         ------------      ------------      ------------
                                                                          (IN THOUSANDS)

Service cost .......................................     $        424      $        499      $        539
Interest cost on projected benefit obligations .....              682               642               591
Expected return on plan assets .....................             (977)             (904)             (686)
Net amortization and deferral ......................             (122)             (105)              (33)
                                                         ------------      ------------      ------------
Net pension cost ...................................     $          7      $        132      $        411
                                                         ============      ============      ============

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

                                                                                           2001              2000
                                                                                       ------------      ------------
                                                                                              (IN THOUSANDS)

Fair Value of Plan Assets (Less) Greater Than Projected Benefit Obligations ......     $       (435)     $      2,340
Unrecognized Net Gain ............................................................             (929)           (3,679)
Unrecognized Prior Service Cost ..................................................              526               534
Unrecognized Net Liability (Asset) at Transition .................................             (185)             (211)
                                                                                       ------------      ------------
Accrued Pension Included in Noncurrent Liabilities--Other ........................     $     (1,023)     $     (1,016)
                                                                                       ============      ============

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

                                                               2001              2000
                                                           ------------      ------------
                                                                   (IN THOUSANDS)

Change in Plan Assets:
    Plan assets at fair value, beginning of year .....     $     11,040      $     10,059
    Actual return on plan assets .....................             (473)              852
    Contributions ....................................               --               387
    Benefits paid ....................................             (366)             (258)
                                                           ------------      ------------
    Plan assets at fair value, end of year ...........     $     10,201      $     11,040
                                                           ============      ============

Change in Projected Benefit Obligation:
    Projected benefit obligation, beginning of year ..     $      8,700      $      8,370
    Service cost .....................................              424               499
    Interest cost ....................................              681               642
    Change in discount rate ..........................            1,080              (368)
    Other assumption changes .........................               --              (259)
    Plan amendments ..................................               39                --
    Actuarial loss ...................................               78                74
    Benefits paid ....................................             (366)             (258)
                                                           ------------      ------------
    Projected benefit obligation, end of year ........     $     10,636      $      8,700
                                                           ============      ============

                                       40

NOTE 8 - EMPLOYEE BENEFIT PLANS (CONTINUED)

         Assumptions used in the previous calculations are as follows:

                                                                                        2001              2000
                                                                                     ---------         ---------

Discount rate ...............................................................              7.3%              8.0%
Rate of increase in compensation levels for net pension costs ...............              4.5%              5.0%
Rate of increase in compensation levels for projected benefit obligations ...              4.5%              4.5%
Long-term expected rate of return on assets .................................              9.0%              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.

         For the years ended July 31, 2001, 2000 and 1999, 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 at the beginning of the month following thirty or sixty days of
employment. During the period May 1, 1998 through July 31, 1999, domestic
employees were eligible to participate at the beginning of the fiscal quarter
following thirty or sixty days of employment. Prior to May 1, 1998, domestic
employees were eligible to participate after one year of service and the
attainment of age 21. The Company's contributions to this plan, and to similar
plans maintained by the Company's foreign subsidiaries, were $445,000, $489,000
and $449,000 for fiscal years 2001, 2000 and 1999, respectively.

NOTE 9 - 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. The compensation, which has been deferred since
the inception of the original plan, has been accrued as well as earnings
thereon.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

         The Company became a guarantor of certain leases for transportation
equipment reassigned to CRST International, Inc. (CRST) during fiscal 1998, when
exiting the transportation business. Remaining payments due under these lease
agreements by CRST are $156,000 and $65,000 for fiscal years 2002 and 2003,
respectively.

         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 11 - 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 2008. The Alpharetta, Georgia
and Kiel, Wisconsin leases expire in fiscal 2003. The facilities in Europe are
leased on a year-to-year basis.

                                       41

NOTE 11 - LEASES (CONTINUED)

         In addition, the Company leases railcars, mining 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, 2001:

                                                                                                            (IN THOUSANDS)

         2002.............................................................................................    $    2,303
         2003.............................................................................................         1,827
         2004.............................................................................................         1,686
         2005.............................................................................................         1,006
         2006.............................................................................................         1,009
         Later years......................................................................................         3,061
                                                                                                              ----------
                                                                                                              $   10,892
                                                                                                              ==========

         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:

                                                                                      2001         2000          1999
                                                                                   ----------   ----------    ----------
                                                                                              (IN THOUSANDS)

         Transportation equipment..............................................    $      941   $    1,099    $      898
         Office facilities.....................................................           485          480           475
         Warehouse facilities..................................................           408          452           216
         Mining properties
              Minimum..........................................................           192          191           186
              Contingent.......................................................           430          295           410
         Other.................................................................           646          594           630
                                                                                   ----------   ----------    ----------
                                                                                   $    3,102   $    3,111    $    2,815
                                                                                   ==========   ==========    ==========

NOTE 12 - OTHER CASH FLOW INFORMATION

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

                                                                                      2001         2000          1999
                                                                                   ----------   ----------    ----------
                                                                                              (IN THOUSANDS)

         Interest..............................................................    $    2,619   $    2,836    $    2,879
                                                                                   ==========   ==========    ==========
         Income Taxes..........................................................    $    (743)   $    2,051    $    3,152
                                                                                   =========    ==========    ==========

                                       42

NOTE 13 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         A summary of selected information for 2001 and 2000 is as follows:

                                                                             FISCAL 2001 QUARTER ENDED
                                                                             -------------------------
                                                      OCTOBER 31    JANUARY 31    APRIL 30        JULY 31        TOTAL
                                                     ------------  -----------  ------------    -----------   ----------
                                                                   (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

         Net Sales..............................     $     42,531  $    45,544  $     41,274    $    38,513   $  167,862
         Gross Profit...........................     $     10,819  $    10,281  $      9,194    $     7,787   $   38,081
         Net Income.............................     $        433  $      (261) $      1,906    $    (1,165)  $      913
         Net Income Per Share
              Basic.............................     $       0.08  $     (0.05) $       0.34    $     (0.21)  $     0.16
              Dilutive..........................     $       0.08  $     (0.05) $       0.34    $     (0.21)  $     0.16
         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..............................     $      10.00  $      9.50  $       9.20    $      8.35
              Low...............................     $       6.50  $      6.44  $       6.92    $      7.50

                                                                          FISCAL 2000 QUARTER ENDED
                                                                          -------------------------
                                                      OCTOBER 31   JANUARY 31     APRIL 30        JULY 31        TOTAL
                                                     ------------  -----------  ------------    -----------   ----------
                                                                   (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

         Net Sales..............................     $     43,552  $    45,205  $     41,846    $    41,129   $  171,732

         Gross Profit...........................     $     12,583  $    11,409  $     11,303    $    11,253   $   46,548
         Net Income.............................     $      1,479  $      (599) $        560    $       787   $    2,227
         Net Income Per Share
              Basic.............................     $       0.26  $     (0.11) $       0.10    $      0.14   $     0.39
              Dilutive..........................     $       0.25  $     (0.10) $       0.10    $      0.14   $     0.39
         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..............................     $      16.13  $     15.63  $      12.81    $     10.25
              Low...............................     $       9.75  $     11.75  $       6.88    $      7.75

                                       43

                          INDEPENDENT AUDITOR'S REPORT

STOCKHOLDERS AND BOARD OF DIRECTORS
Oil-Dri Corporation of America

    We have audited the consolidated balance sheets of OIL-DRI CORPORATION OF
AMERICA AND SUBSIDIARIES as of July 31, 2001 and 2000, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended July 31, 2001. In connection with our
audits of the consolidated financial statements, we have also audited the
financial statement schedule as listed in Item 14(a). These consolidated
financial statements and the financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and the financial statement schedule
based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of OIL-DRI
CORPORATION OF AMERICA AND SUBSIDIARIES as of July 31, 2001 and 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended July 31, 2001 in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

BLACKMAN KALLICK BARTELSTEIN, LLP

Chicago, Illinois

September 10, 2001

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

    None.

                                       44

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    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 the Registrant's Proxy Statement for
its 2001 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                                                          Senior Partner and President,
                                                                       Kuczmarski & Associates, Inc.
Daniel S. Jaffee
  President and Chief Executive Officer                           Joseph C. Miller
                                                                     Vice-Chairman
J. Steven Cole(1)
  President, Cole & Associates,                                   Paul J. Miller
  Chairman, Sav-A-Life Systems, Inc.                                 Partner, Sonnenschein Nath & Rosenthal

Arnold W. Donald                                                  Allan H. Selig(2)
  Senior Vice-President, Monsanto Life Sciences Co.                  President and Chairman, Selig Lease Company,
                                                                       Commissioner of Major League Baseball
Ronald B. Gordon
  Chief Executive Officer, Beiersdorf North America

     (1) Audit Committee Chair
     (2) Compensation Committee Chair

ITEM 11. EXECUTIVE COMPENSATION

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                       45

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

               Consolidated Balance Sheets as of July 31, 2001 and July 31,
               2000.

               Consolidated Statements of Income for the fiscal years ended July
               31, 2001, July 31, 2000 and July 31, 1999.

               Consolidated Statements of Stockholders' Equity for the fiscal
               years ended July 31, 2001, July 31, 2000 and July 31, 1999.

               Consolidated Statements of Cash Flows for the fiscal years ended
               July 31, 2001, July 31, 2000 and July 31, 1999.

               Notes to Consolidated Financial Statements.

               Independent Auditor's Report.

         (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, 2001, 2000 and 1999.

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

(3)(a)(1)               Articles of Incorporation of the Registrant, as amended.

(3)(b)(2)               Bylaws of the Registrant, as amended June 16, 1995.

(10)(c)(1)(3)           Agreement ("Clorox Agreement") dated January 12, 1981
                        between The Clorox Company and the Registrant, 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 the Registrant on March 20, 1989, between
                        The Clorox Company and the Registrant. (Confidential
                        treatment of certain portions of this Exhibit has been
                        granted.)

(10)(c)(3)(5)           Amendment to Clorox Agreement dated February 14, 1991,
                        between The Clorox Company and the Registrant.
                        (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 "Johnny Cat"(TM), 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.*

(10)(e)(1)(9)           Salary Continuation Agreement dated August 1, 1989
                        between Richard M. Jaffee and the Registrant ("1989
                        Agreement").*

                                       46

(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)(g)(13)             Note Agreement, dated April 5, 1991, between the
                        Registrant and Teacher's Insurance and Annuity
                        Association of America regarding $8,000,000 9.38% Senior
                        Notes due November 15, 2001.

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

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

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

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

(10)(l)(16)             $10,000,000 unsecured line of credit agreement dated as
                        of July 25, 1996 between the Registrant and Harris Trust
                        and Savings Bank.

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

(10)(n)                 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 line of credit agreement dated
                        January 29, 1999 between the Company and Harris Trust
                        and Savings Bank.

(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.*

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

         (b)   Reports on Form 8-K.

               Reports on Form 8-K were filed by the Registrant on November 13,
               2000 and May 1, 2001, reporting on Item 5., other events.

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

(21)                    Subsidiaries of the Registrant.

(23)                    Consent of Blackman Kallick Bartelstein, LLP.

                                       47

-----------------

*        Management contract or compensatory plan or arrangement.

1        Incorporated by reference to Exhibit (4.1) to the Registrant'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 the Registrant's Annual
         Report on Form 10-K for the fiscal year ended July 31, 1995.

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

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

10       Incorporated by reference to Exhibit (10)(n) to the Registrant'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 the Registrant's
         Registration Statement on Form S-8 (Registration No. 33-29650), made
         effective on June 30, 1989.

13       Incorporated by reference to Exhibit (10)(h) to the Registrant's Annual
         Report on Form 10-K for the fiscal year ended July 31, 1991.

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

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

16       Incorporated by reference to Exhibit (10)(l) to the Registrant's Annual
         Report on Form 10-K for the fiscal year ended July 31, 1996.

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

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

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

                                       48

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

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

         The Registrant 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.

                                       49

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      OIL-DRI CORPORATION OF AMERICA
                                      (Registrant)

                                      By    /s/   DANIEL S. JAFFEE
                                         --------------------------------------
                                         Daniel S. Jaffee,
                                         President and Chief Executive Officer,
                                         Director

Dated: October 12, 2001

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

                                                             
   /s/               RICHARD M. JAFFEE                          October 12, 2001
---------------------------------------------------------
                     Richard M. Jaffee
         Chairman of the Board of Directors

   /s/               JEFFREY M. LIBERT                          October 12, 2001
---------------------------------------------------------
                     Jeffrey M. Libert
                      Vice President
                  Chief Financial Officer
                Principal Financial Officer

   /s/                DANIEL T. SMITH                           October 12, 2001
---------------------------------------------------------
                      Daniel T. Smith
                   Corporate Controller
               Principal Accounting Officer

   /s/                J. STEVEN COLE                            October 12, 2001
---------------------------------------------------------
                      J.  Steven Cole
                         Director

   /s/               ARNOLD W. DONALD                           October 12, 2001
---------------------------------------------------------
                     Arnold W. Donald
                         Director

   /s/               RONALD B. GORDON                           October 12, 2001
---------------------------------------------------------
                     Ronald B. Gordon
                         Director

   /s/             THOMAS D. KUCZMARSKI                         October 12, 2001
---------------------------------------------------------
                   Thomas D. Kuczmarski
                         Director

                                       50

                                                             

   /s/               JOSEPH C. MILLER                           October 12, 2001
---------------------------------------------------------
                     Joseph C. Miller
                         Director

   /s/                PAUL J. MILLER                            October 12, 2001
---------------------------------------------------------
                      Paul J. Miller
                         Director

   /s/                ALLAN H. SELIG                            October 12, 2001
---------------------------------------------------------
                      Allan H. Selig
                         Director

                                       51

                                                                     SCHEDULE II

                 OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS

                                                                      YEAR ENDED JULY 31
                                                                      ------------------
                                                        2001                 2000                1999
                                                     ------------        ------------        ------------
                                                                        (IN THOUSANDs)
                                                                                    
    Allowance for doubtful accounts:
         Beginning balance ..................        $        836        $        358        $        351
         Additions charged to expense .......               1,045                 523                   8
         Deductions* ........................                  23                  45                   1
                                                     ------------        ------------        ------------
         Balance at end of year .............        $      1,858        $        836        $        358
                                                     ============        ============        ============

*     Net of recoveries.

    Inventory obsolescence reserve:
         Beginning balance ..................        $        256        $        358        $        540
         Additions charged to expense .......                 100                  --                 300
         Deductions .........................                  --                 102                 482
                                                     ------------        ------------        ------------
         Balance at end of year .............        $        356        $        256        $        358
                                                     ============        ============        ============

    Valuation reserve for income taxes:
         Beginning balance ..................        $        522        $      1,742        $        648
         Additions charged to expense .......                  --                 522               1,094
         Deductions .........................                 522               1,742                  --
                                                     ------------        ------------        ------------
         Balance at end of year .............        $         --        $        522        $      1,742
                                                     ============        ============        ============

                                       52

                                  EXHIBIT INDEX

EXHIBIT
NUMBER       DESCRIPTION
------       -----------
          
(11)         Computation of Net Income Per Share
(21)         Subsidiaries of the Registrant
(23)         Consent of Blackman Kallick Bartelstein, LLP

Note:   Shareholders 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.

                                       53

                                                                      EXHIBIT 11

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

                                                                YEAR ENDED JULY 31
                                                     ----------------------------------------
                                                        2001           2000           1999
                                                     ----------     ----------     ----------

    Net income available to stockholders
       (numerator)                                   $      913     $    2,227     $    7,176
                                                     ==========     ==========     ==========

    Shares Calculation
       (denominator)

    Average shares outstanding -
       basic                                              5,613          5,647          5,827

    Effect of Dilutive Securities:

    Potential Common Stock relating
       to stock options                                       0             30            169
                                                     ----------     ----------     ----------

    Average shares outstanding -
       assuming dilution                                  5,613          5,677          5,996
                                                     ==========     ==========     ==========

    Net Income Per Share:
       Basic                                         $     0.16     $     0.39     $     1.23
                                                     ==========     ==========     ==========

       Dilutive                                      $     0.16     $     0.39     $     1.20
                                                     ==========     ==========     ==========

                                                                      EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT

                                                                              STATE OR COUNTRY
SUBSIDIARY                                                                    OF INCORPORATION
----------                                                                    ----------------

Oil-Dri Corporation of Georgia                                                Georgia
Oil-Dri Production Company                                                    Mississippi
Mounds Production Company, L.L.C.                                             Delaware
Oil-Dri, S.A.                                                                 Switzerland
Favorite Products Company, Ltd.                                               Canada
Blue Mountain Production Co.                                                  Mississippi
Oil-Dri (U.K.) Ltd.                                                           United Kingdom
Ochlocknee Holding Co., S.A.                                                  Spain
Ochlocknee Mining Co., S.A.                                                   Spain
Oil-Dri Corporation of Nevada                                                 Nevada
Phoebe Products Company                                                       Delaware
Mounds Management, Inc.                                                       Delaware
B.T. Acquisition Company                                                      Illinois

                                                                      EXHIBIT 23

                    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, 2001 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 22, 2001