-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UwCErcLcHx2s59J2xON+uNEdHj1dQz8d1mjUFuT85YtZhQ+ru7ag3+4YTDc7l+AJ 5oMBNObc1rTSsEXsIhSqlQ== /in/edgar/work/20000613/0000074046-00-000006/0000074046-00-000006.txt : 20000919 0000074046-00-000006.hdr.sgml : 20000919 ACCESSION NUMBER: 0000074046-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OIL DRI CORPORATION OF AMERICA CENTRAL INDEX KEY: 0000074046 STANDARD INDUSTRIAL CLASSIFICATION: [3990 ] IRS NUMBER: 362048898 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12622 FILM NUMBER: 654094 BUSINESS ADDRESS: STREET 1: 410 N MICHIGAN AVE STE 400 CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3123211515 MAIL ADDRESS: STREET 1: 410 NORTH MICHIGAN AVENUE STREET 2: SUITE 400 CITY: CHICAGO STATE: IL ZIP: 60611 FORMER COMPANY: FORMER CONFORMED NAME: OIL DRI CORP OF AMERICA INC DATE OF NAME CHANGE: 19600201 10-Q 1 0001.txt THIRD QUARTER 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter Ended April 30, 2000 Commission File Number 0-8675 OIL-DRI CORPORATION OF AMERICA (Exact name of the registrant as specified in its charter) DELAWARE 36-2048898 ------------------------------ ------------------ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 410 North Michigan Avenue Chicago, Illinois 60611 -------------------------------------- -------- (Address of principal executive offices) (Zip Code) The Registrant's telephone number, including area code: (312) 321-1515 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for at least the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common Stock - 5,470,435 Shares (Including 1,282,807 Treasury Shares) Class B Stock - 1,765,083 Shares (Including 342,241 Treasury Shares) 2 CONTENTS Page PART I Item 1: Financial Statements And Supplementary Data.................. 3 - 12 Item 2: Management Discussion And Analysis Of Financial Condition And The Results Of Operations................................13 - 18 Item 3: Quantitative And Qualitative Disclosures About Market Risk........18 PART II Item 6: Exhibits And Reports On Form 8-K..................................19 Signatures................................................................20
3 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Balance Sheets (in thousands of dollars) (unaudited)
----------------------- April 30 July 31 ASSETS 2000 1999 ----------------------- CURRENT ASSETS Cash and Cash Equivalents $ 988 $ 4,362 Investment Securities 1,219 1,225 Accounts Receivable, less allowance of $431 and $358 at April 30, 2000 and July 31, 1999, respectively 25,194 25,365 Inventories 17,837 15,165 Prepaid Expenses 8,494 6,963 -------- -------- Total Current Assets 53,732 53,080 -------- -------- PROPERTY, PANT AND EQUIPMENT -- AT COST Cost 134,620 132,479 Less Accumulated Depreciation and Amortization (73,972) (69,631) -------- -------- Total Property, Plant and Equipment, Net 60,648 62,848 -------- -------- OTHER ASSETS Goodwill & Intangibles, net of accumulated amortization of $2,480 and $2,128 at April 30, 2000, and July 31, 1999, respectively 9,621 9,780 Deferred Income Taxes 3,040 3,045 Other 6,140 4,997 -------- -------- Total Other Assets 18,801 17,822 -------- -------- Total Assets $133,181 $133,750 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 4 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Balance Sheets (in thousands of dollars) (unaudited)
------------------------ April 30 July 31 LIABILITIES & STOCKHOLDERS' EQUITY 2000 1999 ------------------------ CURRENT LIABILITIES Current Maturities of Notes Payable $ 2,000 $ 2,226 Accounts Payable 5,002 4,842 Dividends Payable 473 484 Accrued Expenses 6,783 8,387 -------- -------- Total Current Liabilities 14,258 15,939 -------- -------- NONCURRENT LIABILITIES Notes Payable 40,063 38,150 Deferred Compensation 3,075 3,206 Other 1,751 1,948 -------- -------- Total Noncurrent Liabilities 44,889 43,304 -------- -------- Total Liabilities 59,147 59,243 -------- -------- STOCKHOLDERS' EQUITY Common Stock, par value $.10 per share, issued 5,470,435 shares at April 30, 2000, and 5,470,252 shares at July 31, 1999 547 547 Class B Stock, par value $.10 per share, issued 1,765,083 shares at April 30, 2000, and 1,765,266 shares at July 31, 1999 177 177 Additional Paid-In Capital 7,698 7,702 Retained Earnings 91,756 90,430 Restricted Unearned Stock Compensation (19) (9) Cumulative Translation Adjustment (1,238) (1,159) -------- -------- 98,921 97,688 Less Treasury Stock, at cost (1,282,807 Common shares and 342,241 Class B shares at April 30, 2000, and 1,163,764 Common shares and 342,241 Class B shares at July 31, 1999) (24,887) (23,181) -------- -------- Total Stockholders' Equity 74,034 74,507 -------- -------- Total Liabilities & Stockholders' Equity $133,181 $133,750 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 5 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Income and Retained Earnings (in thousands, except for per share amounts) (unaudited)
------------------------- For The Nine Months Ended April 30 ------------------------- 2000 1999 ------------------------- NET SALES $133,832 $133,510 Cost Of Sales 95,308 91,202 -------- -------- GROSS PROFIT 38,524 42,308 Selling, General And Administrative Expenses 31,502 32,704 Restructuring Charge 1,239 -- -------- -------- INCOME FROM OPERATIONS 5,783 9,604 OTHER INCOME/EXPENSE Interest Expense (2,409) (2,401) Interest Income 164 385 Other, Net 339 103 -------- -------- TOTAL OTHER EXPENSE, NET (1,906) (1,913) -------- -------- INCOME BEFORE INCOME TAXES 3,877 7,691 Income Taxes 1,124 2,192 -------- -------- NET INCOME 2,753 5,499 RETAINED EARNINGS Balance at Beginning of Year 90,430 85,158 Less Cash Dividends Declared 1,427 1,421 -------- -------- RETAINED EARNINGS -- APRIL 30 $ 91,756 $ 89,236 ======== ======== Net Income Per Share Basic $ 0.49 $ 0.94 ======== ======== Dilutive $ 0.48 $ 0.92 ======== ======== Average Shares Outstanding Basic 5,660 5,846 ======== ======== Dilutive 5,736 5,995 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 6 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Statements of Comprehensive Income (in thousands of dollars) (unaudited)
------------------------- For The Nine Months Ended April 30 ------------------------- 2000 1999 ------------------------- Net Income $2,753 $5,499 Other Comprehensive Income: Cumulative Translation Adjustments (79) 23 ------ ------ Total Comprehensive Income $2,674 $5,522 ====== ======
The accompanying notes are an integral part of the consolidated financial statements. 7> OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Income and Retained Earnings (in thousands, except for per share amounts) (unaudited)
------------------------- For The Three Months Ended April 30 ------------------------- 2000 1999 ------------------------- NET SALES $ 42,780 $ 42,405 Cost Of Sales 30,543 29,390 -------- -------- Gross Profit 12,237 13,015 Selling, General And Administrative Expenses 10,302 10,743 -------- -------- INCOME FROM OPERATIONS 1,935 2,272 OTHER INCOME (EXPENSE) Interest Expense (786) (807) Interest Income 55 125 Other, Net 111 82 -------- -------- TOTAL OTHER EXPENSE, NET (620) (600) -------- -------- INCOME BEFORE INCOME TAXES 1,315 1,672 Income Taxes 381 477 -------- -------- NET INCOME $ 934 $ 1,195 ======== ======== NET INCOME PER SHARE Basic $ 0.17 $ 0.21 ======== ======== Dilutive $ 0.17 $ 0.20 ======== ======== AVERAGE SHARES OUTSTANDING Basic 5,610 5,813 ======== ======== Dilutive 5,611 6,036 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 8 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Statements of Comprehensive Income (in thousands of dollars) (unaudited)
------------------------- For The Three Months Ended April 30 ------------------------- 2000 1999 ------------------------- NET INCOME $ 934 $1,195 Other Comprehensive Income: Cumulative Translation Adjustments (66) 63 ------ ------ TOTAL COMPREHENSIVE INCOME $ 868 $1,258 ====== ======
The accompanying notes are an integral part of the consolidated financial statements. 9 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands of dollars) (unaudited)
----------------------- For the Nine Months Ended April 30 ----------------------- CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999 ----------------------- NET INCOME $ 2,753 $ 5,499 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 6,792 6,311 Non-Cash Restructuring Charge 1,039 -- Provision for bad debts 102 33 (Increase) Decrease in: Accounts Receivable 69 (711) Inventories (2,672) (1,758) Prepaid Expenses and Taxes (1,531) (404) Deferred Income Taxes 4 (39) Other Assets (1,335) (678) Increase (Decrease) in: Accounts Payable 160 (764) Accrued Expenses (2,009) (2,812) Deferred Compensation (131) (66) Special Charge Reserve -- (133) Other (197) (64) ------- ------- TOTAL ADJUSTMENTS 291 (1,085) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 3,044 4,414 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures (4,888) (6,200) Proceeds from sale of property, plant and equipment 12 22 Purchases of Investment Securities (1,219) (1,225) Dispositions of Investment Securities 1,225 1,173 Other (9) (14) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (4,879) (6,244) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Principal Payments on Long-Term Debt (4,326) (134) Proceeds from Issuance of Long-Term Debt 6,013 400 Dividends Paid (1,438) (1,375) Purchases of Treasury Stock (1,727) (1,502) Other (61) 14 ------- ------- NET CASH USED IN FINANCING ACTIVITIES (1,539) (2,597) ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (3,374) (4,427) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,362 9,410 ------- ------- CASH AND CASH EQUIVALENTS, APRIL 30 $ 988 $ 4,983 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. 10 OIL-DRI CORPORATION OF AMERICA & SUBSIDIARIES Notes To Consolidated Financial Statements (Unaudited) 1. BASIS OF STATEMENT PRESENTATION The financial statements and the related notes are condensed and should be read in conjunction with the consolidated financial statements and related notes for the year ended July 31, 1999, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions are eliminated. The unaudited financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the statements contained herein. Certain items in prior year financial statements have been reclassified to conform to the presentation used in fiscal 2000. 2. INVENTORIES The composition of inventories is as follows (in thousands):
------------------------- April 30 July 31 (Unaudited) (Unaudited) ------------------------- 2000 1999 ------------------------- Finished goods $ 10,925 $ 9,593 Packaging 5,577 4,267 Other 1,335 1,305 -------- -------- $ 17,837 $ 15,165 ======== ========
Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. 11 3. RESTRUCTURING CHARGE During 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 are related to a realignment of the Company's personnel costs to bring them more in line with current levels of sales and profitability. The severance accrual represents 13 employees that have been or will be terminated and will be completed by the fourth quarter of fiscal 2000. The majority of the positions terminated are at the selling, general and administrative level. The net book value of the non-performing asset consisted of specific production equipment that has been idled. The equipment had been used in the Agricultural Products segment. Because management does not rely on segment asset allocation, information regarding the results of operations for this specific asset could not be identified. However, the results were included in cost of sales. 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. At April 30, 2000, $404,000 of the restructuring charges remained in current liabilities. A summary of the balance sheet activity is presented below (in thousands): Reserve balance at January 31, 2000 $1,239 Severance costs (200) Write-off of non-performing assets (635) ------ Balance at April 30, 2000 $ 404 ====== 4. NEW ACCOUNTING STANDARDS In June, 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities" which requires companies to recognize all derivatives as assets or liabilities measured at their fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and whether it qualifies for hedge accounting. Although the impact of this statement has not been fully assessed, the Company believes adoption of this statement, as amended by SFAS No. 137, will not have a material financial statement impact. Adoption of this standard is required by July 2001. 12 5. SEGMENT REPORTING The Company has four reportable operating segments: Consumer Products, Fluids Purification Products, Agricultural Products, and Industrial and Automotive Products. These segments are managed separately because each business has different economic characteristics. The accounting policies of the segments are the same as those described in Note 1 of the Company's Annual Report for the year ended July 31, 1999 on Form 10-K filed with the Securities and Exchange Commission. Because management does not rely on segment asset allocation, information regarding segment assets is not meaningful and therefore is not reported.
------------------------------------- Nine Months Ended April 30 ------------------------------------- Net Sales Operating Income ------------------------------------- 2000 1999 2000 1999 ------- -------- -------- -------- (in thousands) Consumer Products........................ $ 87,411 $ 86,698 $ 12,274 $ 13,094 Fluids Purification Products............. 17,520 17,106 3,128 4,148 Agricultural Products.................... 14,992 16,804 1,885 3,255 Industrial and Automotive Products....... 13,909 12,902 819 553 -------- -------- -------- -------- Total Sales/Operating Income............. $133,832 $133,510 $ 18,106 $ 21,050 ======== ======== -------- -------- Less: Restructuring Charge (1)............................. 1,239 -- Corporate Expenses................................... 10,745 11,343 Interest Expense, net of Interest Income............................................... 2,245 2,016 -------- -------- Income before Income Taxes.................................. 3,877 7,691 -------- -------- Income Taxes................................................ 1,124 2,192 -------- -------- Net Income.................................................. $2,753 $5,499 ======== ========
-------------------------------------- Three Months Ended April 30 -------------------------------------- Net Sales Operating Income -------------------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (in thousands) Consumer Products........................ $ 26,594 $ 26,772 $ 3,141 $ 3,504 Fluids Purification Products............. 5,388 5,527 834 1,257 Agricultural Products.................... 5,955 5,595 979 1,151 Industrial and Automotive Products....... 4,843 4,511 282 302 -------- -------- -------- -------- Total Sales/Operating Income............. $ 42,780 $ 42,405 5,236 6,214 ======== ======== ======== ======== Less: Corporate Expenses................................... 3,190 $3,860 Interest Expense, net of Interest Income............................................... 731 682 -------- -------- Income before Income Taxes.................................. 1,315 1,672 -------- -------- Income Taxes................................................ 381 477 -------- -------- Net Income.................................................. $ 934 $1,195 ======== ========
(1) See Note 3 above for a discussion of the restructuring charge recorded in the second quarter of fiscal 2000. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NINE MONTHS ENDED APRIL 30, 2000 COMPARED TO NINE MONTHS ENDED APRIL 30, 1999 RESULTS OF OPERATIONS Consolidated net sales for the nine months ended April 30, 2000 were $133,832,000, an increase of 0.2% versus net sales of $133,510,000 in the first nine months of fiscal 1999. Net income for the first nine months of fiscal 2000 was $2,753,000, a decrease of 49.9% from $5,499,000 earned in the first nine months of fiscal 1999. Basic net income per share for the first nine months of fiscal 2000 was $0.49 and diluted net income per share was $0.48, versus $0.94 basic net income per share and $0.92 diluted net income per share earned in the first nine months of fiscal 1999. The decrease was due to a restructuring charge recorded in the second quarter of fiscal 2000, manufacturing costs associated with the startup of the Church & Dwight supply arrangement and other unfavorable manufacturing variances, the decline in demand for agricultural carriers, a decrease in profitability in the Fluids Purification Products segment, and increases in fuel prices. The restructuring charge, which covered the costs of severance for certain eliminated positions and the write-off of certain non-performing assets, reduced income before taxes by $1,239,000, net income by $879,000, and net income per share by $0.15 (basic and diluted) for the first nine months of fiscal 2000. Net sales of the Consumer Products segment for the first nine months of fiscal 2000 were $87,411,000, an increase of 0.8% over net sales of $86,698,000 in the first nine months of fiscal 1999. This growth was primarily due to incremental sales to Church & Dwight, as well as increased sales to Clorox and the mass merchandiser market, partially offset by reduced sales in the grocery market. Consumer Products' operating income decreased 6.3% from $13,094,000 in the first nine months of fiscal 1999 to $12,274,000 in the first nine months of fiscal 2000 due to manufacturing costs associated with the startup of the Church & Dwight supply arrangement incurred in the first nine months of fiscal 2000 and other unfavorable manufacturing variances, partially offset by a decrease in advertising expenditures and the increase in sales discussed above. Net sales of the Fluids Purification Products segment for the first nine months of fiscal 2000 were $17,520,000, an increase of 2.4% over net sales of $17,106,000 in the first nine months of fiscal 1999. Increased domestic sales of PURE-FLO(r) bleaching clays were the primary driver of the segment's growth in sales, partially offset by competitive pressures in many of our overseas markets that have led to some defensive pricing strategies to maintain market share. Fluids Purification Products' operating income decreased 24.6% from $4,148,000 in the first nine months of fiscal 1999 to $3,128,000 in the first nine months of fiscal 2000, which is partially due to the changes in sales mix discussed above, as well as unfavorable manufacturing variances and costs associated with the startup of a new line of rheological products. Net sales of the Agricultural Products segment for the first nine months of fiscal 2000 were $14,992,000, a decrease of 10.8% from net sales of $16,804,000 in the first nine months of fiscal 1999. This overall decline is due primarily to sharply reduced demand for agricultural carriers as a result of a depressed farm economy. Agricultural Products' operating income decreased 42.1% from $3,255,000 in the first 14 nine months of fiscal 1999 to $1,885,000 in the first nine months of fiscal 2000, primarily due to the decrease in sales of agricultural carriers, unfavorable sales mix and manufacturing variances, partially offset by the Company's return on investment in Kamterter II. Net sales of the Industrial and Automotive Products segment for the first nine months of fiscal 2000 were $13,909,000, an increase of 7.8% from net sales of $12,902,000 in the first nine months of fiscal 1999 due to both increased sales volume of clay-based industrial and automotive products and price increases put into effect during the past year. Industrial and Automotive Products' operating income increased 48.1% from $553,000 in the first nine months of fiscal 1999 to $819,000 in the first nine months of fiscal 2000 due to the increase in sales discussed above. Consolidated gross profit as a percentage of net sales for the first nine months of fiscal 2000 decreased to 28.8% from 31.7% in the first nine months of fiscal 1999 due to an unfavorable sales mix in the Agricultural Products segments, defensive pricing strategies in the overseas markets of the Fluids Purification Products segment, manufacturing costs associated with the startup of the Church & Dwight supply arrangement incurred in the first nine months of fiscal 2000 as well as other unfavorable manufacturing variances, and increases in fuel prices. Operating expenses as a percentage of net sales were 24.5% for both the first nine months of fiscal 2000 and the first nine months of fiscal 1999. Excluding the restructuring reserve taken in the second quarter, operating expenses as a percentage of net sales were 23.5% for the first nine months of fiscal 2000. This decrease is primarily due to a reduction in advertising expenditures and cost savings resulting from the restructuring. Interest expense increased $8,000, while interest income for the first nine months of fiscal 2000 decreased $221,000 from fiscal 1999 levels, primarily due to lower levels of funds available for investment. The Company's effective tax rate was 29.0% of pre-tax income in the first nine months of fiscal 2000 versus 28.5% in the first nine months of fiscal 1999. Total assets of the Company decreased $569,000 or 0.4% during the first nine months of fiscal 2000. Current assets increased $652,000 or 1.2% from fiscal 1999 year-end balances primarily due to increases in inventory levels and prepaid expenses, partially offset by decreased cash and cash equivalents and accounts receivable. Property, plant and equipment, net of accumulated depreciation, decreased $2,200,000 or 3.5% during the first nine months as depreciation expense exceeded new capital expenditures and as a result of the write-off of non-performing assets included in the restructuring charge. Total liabilities decreased $96,000 or 0.2% during the first nine months of fiscal 2000 due primarily to a decrease in current liabilities, partially offset by increased levels of long term notes payable. Current liabilities decreased $1,681,000 or 10.5% from fiscal 1999 year-end balances due primarily to a decrease in accrued expenses and in the current maturities of notes payable, partially offset by an increase in accounts payable. 15 EXPECTATIONS The Company anticipates net sales for the remainder of fiscal 2000 will be approximately the same as net sales in the comparable period of fiscal 1999. Sales of branded cat box absorbents are expected to increase slightly due to the re-introduction of jug packaging on branded scoopable products, which the Company believes will have increased sales velocity. However, sales growth of cat box absorbents is subject to continuing competition for shelf space in the grocery, mass merchandiser and club markets. Sales of the Company's fluids purification products and industrial and automotive products are also expected to increase slightly in the remainder of fiscal 2000 from the comparable period in fiscal 1999. Sales of the Company's agricultural products for the remainder of fiscal 2000 are expected to be at least equal to levels achieved in the comparable period of fiscal 1999. LIQUIDITY AND CAPITAL RESOURCES The current ratio increased to 3.8 at April 30, 2000 from 3.3 at July 31, 1999. Working capital increased $2,333,000 during the first nine months of fiscal 2000 to $39,474,000 due to both higher levels of current assets and lower levels of current liabilities, as previously discussed. During the first nine months of fiscal 2000, the balances of cash, cash equivalents and investment securities decreased $3,380,000. Cash provided by operating activities ($3,044,000), increases in the Company's borrowings ($6,000,000), and cash on hand ($4,362,000) were used to fund capital expenditures ($4,888,000), principal payments on long-term debt ($4,326,000), purchases of the Company's common stock ($1,728,000), and dividend payments ($1,438,000). Total cash and investment balances held by the Company's foreign subsidiaries at April 30, 2000 and July 31, 1999 were $2,438,000 and $2,692,000, respectively. THREE MONTHS ENDED APRIL 30, 2000 COMPARED TO THREE MONTHS ENDED APRIL 30, 1999 RESULTS OF OPERATIONS Consolidated net sales for the three months ended April 30, 2000 were $42,780,000, an increase of 0.9% over net sales of $42,405,000 in the third quarter of fiscal 1999. Net income for the three months ended April 30, 2000 was $934,000, a decrease of 21.8% from $1,195,000 earned in last year's quarter. Net income per share for the three months ended April 30, 2000 was $0.17 (basic and diluted) versus $0.21 basic and $0.20 diluted net income per share earned in the same period last year. The decrease was due to ongoing manufacturing costs associated with the startup of the Church & Dwight supply arrangement and other unfavorable manufacturing variances, a decrease in sales and profitability in the Fluids Purification Products segment, and increases in fuel prices. Net sales of the Consumer Products segment for the three months ended April 30, 2000 were $26,594,000, a decrease of 0.7% over net sales of $26,772,000 in the third quarter of fiscal 1999. This decrease was primarily due to decreased sales in the mass merchandiser market, partially offset by increased sales to Clorox and incremental sales to Church & Dwight. Consumer Products' operating income decreased 10.4% from $3,504,000 in the third quarter of fiscal 1999 to $3,141,000 in the third quarter of fiscal 2000 due to ongoing manufacturing costs associated with the startup of the Church & Dwight supply arrangement and other unfavorable manufacturing variances, partially offset by a decrease in advertising expenditures. 16 Net sales of the Fluids Purification Products segment for the three months ended April 30, 2000 were $5,388,000, a decrease of 2.5% from net sales of $5,527,000 in the third quarter of fiscal 1999. This decrease is due to competitive pressures in overseas markets that have led to defensive pricing strategies to maintain market share, partially offset by increased domestic sales of PURE-FLO(r) bleaching clays. Fluids Purification Products' operating income decreased 33.7% from $1,257,000 in the third quarter of fiscal 1999 to $834,000 in the third quarter of fiscal 2000, which is partially due to the changes in sales mix discussed above, unfavorable manufacturing variances and continuing costs associated with the startup of a new line of rheological products. Net sales of the Agricultural Products segment for the three months ended April 30, 2000 were $5,955,000, an increase of 6.4% from net sales of $5,595,000 in the third quarter of fiscal 1999. This growth in sales is due to increased sales of animal health and nutrition products, and clay granules used in turf and ornamental applications, partially offset by reduced demand for agricultural carriers. Agricultural Products' operating income decreased 14.9% from $1,151,000 in the third quarter of fiscal 1999 to $979,000 in the third quarter of fiscal 2000, due to unfavorable manufacturing variances, partially offset by a favorable sales mix. Net sales of the Industrial and Automotive Products segment for the three months ended April 30, 2000 were $4,843,000, an increase of 7.4% from net sales of $4,511,000 in the third quarter of fiscal 1999 due to increased sales volume of automotive and hardware products. Industrial and Automotive Products' operating income decreased 6.6% from $302,000 in the third quarter of fiscal 1999 to $282,000 in the third quarter of fiscal 2000 due to unfavorable manufacturing variances. Consolidated gross profit as a percentage of net sales for the three months ended April 30, 2000 decreased to 28.6% from 30.7% in the third quarter of fiscal 1999 due to defensive pricing strategies in the overseas markets of the Fluids Purification Products segment, ongoing manufacturing costs associated with the startup of the Church & Dwight supply arrangement and other unfavorable manufacturing variances, and increases in fuel prices. Operating expenses as a percentage of net sales decreased to 24.1% for the three months ended April 30,2000 from 25.3% in the third quarter of fiscal 1999. This decrease is due primarily to a decrease in advertising expenditures and cost savings realized from the restructuring charge taken in the second quarter of fiscal 2000. Interest expense decreased $21,000, while interest income for the three months ended April 30, 2000 decreased $70,000 from fiscal 1999 levels, primarily due to lower levels of funds available for investment. The Company's effective tax rate was 29.0% of pre-tax income in the three months ended April 30, 2000 versus 28.5% in the third quarter of fiscal 1999. 17 FOREIGN OPERATIONS Net sales by the Company's foreign subsidiaries for the nine months ended April 30, 2000 were $10,351,000 or 7.7% of total Company sales. This represents a decrease of $799,000 or 7.2% from the same period of fiscal 1999, in which foreign subsidiary sales were $11,150,000 or 8.4% of total Company sales. This decrease is due to reduced sales of fluids purification products in our overseas markets due to defensive pricing strategies implemented to maintain share and reduced bleaching clay usage by a major customer through increased efficiency of its operations. Net income of the foreign subsidiaries for the first nine months of fiscal 2000 was $261,000, a decrease of $99,000 or 27.5% from $360,000 earned in the same period of fiscal 1999. This decrease was primarily due to the reduced sales of fluids purification products in our overseas markets discussed above. Identifiable assets of the Company's foreign subsidiaries as of April 30, 2000 were $10,332,000, a decrease of $709,000 from $11,041,000 as of April 30, 1999, due primarily to decreased levels of inventories. Net sales by the Company's foreign subsidiaries during the three months ended April 30, 2000 were $3,040,000 or 7.1% of total Company sales. This represents a decrease of $413,000 or 12.0% from the third quarter of fiscal 1999 in which foreign subsidiary sales were $3,453,000 or 8.1% of total Company sales. The decrease is due primarily to reduced sales of fluids purification products in overseas markets, as discussed above. Net income of the foreign subsidiaries for the three months ended April 30, 2000 was ($85,000), a decrease of $166,000 or 204.9% from $81,000 earned in the third quarter of fiscal 1999. This decrease was primarily due to the reduced sales of fluids purification products in overseas markets discussed above, as well as increased operating expenses at the Canadian and United Kingdom subsidiaries. 18 YEAR 2000 The Year 2000 ("Y2K") issue was a result of computer programs using a two-digit format, as opposed to four digits, to indicate the year. Such computer systems would have been unable to interpret dates beyond 1999, which could have caused a system failure or application errors, leading to disruptions in operations. As of the date of this report, the Company has not experienced any material problems related to Y2K, nor has the Company received any significant complaints regarding Y2K issues related to its products. Also, the Company is not aware of any significant Y2K issues affecting the Company's major customers or suppliers. The project to address Y2K had been underway since fiscal 1998. Total pre-tax costs incurred were not material. 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, 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, crop prices and overall agricultural demand, including export demand, 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. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company did not have any derivative financial instruments as of April 30, 2000. 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. 19 PART II - OTHER INFORMATION ITEM 6. (a) EXHIBITS: The following documents are an exhibit to this report.
Exhibit Index -------- Exhibit 11: Statement Re: Computation of per 21 share earnings Exhibit 27: Financial Data Schedule 22 (b) During the quarter for which this report is filed, no reports on Form 8-K were filed.
20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OIL-DRI CORPORATION OF AMERICA (Registrant) BY /s/ Jeffrey M. Libert ------------------------------ Jeffrey M. Libert Chief Financial Officer BY /s/ Daniel S. Jaffee ------------------------------ Daniel S. Jaffee President and Chief Executive Officer Dated: June 13, 2000 EX-11 2 0002.txt EXHIBIT 11 21 Exhibit 11 OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES Computation of Earnings Per Share (in thousands except for per share amounts)
----------------------------------- (in thousands, except per share amounts) ----------------------------------- Three Months Nine Months Ended April 30 Ended April 30 ----------------- ---------------- 2000 1999 2000 1999 ----------------- ---------------- Net income available to Stockholders (numerator) $ 934 $1,195 $2,753 $5,499 ====== ====== ====== ====== Shares Calculation (denominator): Average shares outstanding - basic 5,610 5,813 5,660 5,846 Effect of Dilutive Securities: Potential Common Stock relating to stock options 1 223 76 149 ----- ----- ----- ----- Average shares outstanding - assuming dilution 5,611 6,036 5,736 5,995 ===== ===== ===== ===== Earnings per share-basic $0.17 $0.21 $0.49 $0.94 ===== ===== ===== ===== Earnings per share- assuming dilution $0.17 $0.20 $0.48 $0.92 ===== ===== ===== =====
EX-27 3 0003.txt FDS
5 9-MOS JUL-31-2000 APR-30-2000 988,000 1,219,000 25,625,000 431,000 17,837,000 53,732,000 134,620,000 73,972,000 133,181,000 14,258,000 40,063,000 0 0 724,000 73,310,000 133,181,000 133,832,000 133,832,000 95,308,000 95,308,000 32,136,000 102,000 2,409,000 3,877,000 1,124,000 2,753,000 0 0 0 2,753,000 0.49 0.48
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