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PENSION AND OTHER POSTRETIREMENT BENEFITS Level 1 (Notes)
 12 Months Ended
Jul. 31, 2021
EMPLOYEE BENEFIT PLANS [Abstract]  
Pension and Other Postretirement Benefits PENSION AND OTHER POSTRETIREMENT BENEFITS
    The Oil-Dri Corporation of America Pension Plan (“Pension Plan”) is a defined benefit pension plan for eligible salaried and hourly employees. Pension benefits are based on a formula of years of credited service and levels of compensation or stated amounts for each year of credited service. On January 9, 2020, we amended the Pension Plan to freeze participation, all future benefit accruals and accrual of benefit service, including consideration of compensation increases, effective March 1, 2020. Consequently, the Pension Plan is closed to new participants and current participants will no longer earn additional benefits on or after March 1, 2020. The amendment of the Pension Plan triggered a pension curtailment, which required a remeasurement of the Pension Plan's obligation. The remeasurement resulted in a decrease in the benefit obligation of approximately $6,632,000, which was recorded in Other Comprehensive Income, net of taxes of $1,592,000 in the second quarter of fiscal year 2020. During the third quarter of fiscal 2020 we offered terminated participants with vested benefits who have not yet begun receipt of benefits under the Plan the opportunity to receive their pension benefits in a single payment (the “Lump Sum Option”). We made payments in the fourth quarter of fiscal year 2020 to those participants who elected the Lump Sum Option by the May 15, 2020 election deadline. The settlement expense was $2,012,000 and was recorded net of tax in Other, net in the Consolidated Statements of Operations. On May 4, 2021 we purchased an annuity for $8,530,000 which decreased both our projected benefit obligation and the fair value of plan assets and resulted in no change in the funded status of the pension plan. The settlement expense related to the annuity purchase was $631,000 and was recorded net of tax in Other, net in the Consolidated Statements of Operations.

A postretirement health benefits plan is also provided to domestic salaried employees who meet specific age, participation and length of service requirements at the time of retirement. Eligible employees may elect to continue their health care coverage under the Oil-Dri Corporation of America Employee Benefits Plan until the date certain criteria are met, including attaining the age of Medicare eligibility. We have the right to modify or terminate the postretirement health benefit plan at any time.

A 401(k) savings plan is maintained under which we match a portion of employee contributions. This plan is available to essentially all domestic employees following a specific number of days of employment. Our contributions to this plan, and to similar plans maintained by our foreign subsidiaries, were $2,784,000 and $2,035,000 for fiscal years 2021 and 2020, respectively. During fiscal year 2020, we changed the percentage of employer matching contributions from 50% of every employee dollar contributed up to 4% of earnings to 100% of every employee dollar contributed up to 6% of earnings.
Obligations and Funded Status

The following tables provide a reconciliation of changes in the plans’ benefit obligations, asset fair values and funded status by fiscal year (in thousands):
 Pension BenefitsPostretirement Health Benefits
 2021202020212020
Change in benefit obligation:
    
Benefit obligation, beginning of year$57,280 $61,553 $3,291 $2,958 
Service cost— 1,096 139 116 
Interest cost1,168 1,900 51 82 
Actuarial (gain)/loss (6,091)8,570 (313)247 
Benefits paid(1,603)(1,663)(43)(112)
Curtailments— (6,632)— — 
Settlements(8,487)(7,544)— — 
Benefit obligation, end of year42,267 57,280 3,125 3,291 
Change in plan assets:    
Fair value of plan assets, beginning of year45,334 40,725 — — 
Actual return on plan assets5,144 5,816 — — 
Employer contribution— 8,000 43 8 
Benefits paid(1,603)(1,663)(43)(8)
Settlements(8,487)(7,544)— — 
Fair value of plan assets, end of year40,388 45,334 — — 
Funded status, recorded in Consolidated Balance Sheets$(1,879)$(11,946)$(3,125)$(3,291)

The change in actuarial (gain)/loss from fiscal year 2020 to fiscal year 2021 relates to a change in discount rate as well as actual participant demographic experience vs. assumed experience.

See “Cash Flows” below for further information about employer contributions and benefits payments.

The accumulated benefit obligation for the Pension Plan was $42,267,000 and $57,280,000 as of July 31, 2021 and July 31, 2020, respectively.

The following table shows amounts recognized in the Consolidated Balance Sheets as of July 31 (in thousands):
Pension BenefitsPostretirement Health
Benefits
 2021202020212020
Deferred income taxes$504 $2,443 $792 $850 
Other current liabilities$— $— $(82)$(97)
Other noncurrent liabilities$(1,879)$(11,946)$(3,043)$(3,194)
Accumulated other comprehensive loss – net of tax:
Net actuarial loss$4,311 $11,642 $117 $352 
Benefit Costs and Amortizations
 
The following table shows the components of the net periodic pension and postretirement health benefit costs by fiscal year (in thousands):
 Pension Cost Postretirement Health Benefit Cost
 2021202020212020
Service cost$— $1,096 $139 $116 
Interest cost1,168 1,900 51 82 
Expected return on plan assets(2,816)(2,790)— — 
Amortization of:
Prior service costs (income)— — (6)(6)
Other actuarial loss653 1,005 3 — 
Settlement cost631 2,012 — — 
Net periodic benefit cost$(364)$3,223 $187 $192 
Service cost is recorded in Other, net within Other Income (Expense) in the Consolidated Statements of Operations. As the pension plan is frozen, there was no service cost recorded in fiscal year 2021.


The following table shows amounts, net of tax, that are recognized in other comprehensive income by fiscal year (in thousands):
 Pension Benefits Postretirement Health Benefits
 2021202020212020
Net actuarial (gain) loss$(6,355)$4,243 $(237)$188 
Amortization of:
Prior service income— — 5 5 
Amortization of actuarial loss(496)(763)(3)— 
Curtailment/Settlement$(480)$(6,570)$— $— 
Total recognized in other comprehensive (income) loss$(7,331)$(3,090)$(235)$193 
    
Cash Flows
 
We have funded the Pension Plan based upon actuarially determined contributions that take into account the amount deductible for income tax purposes, the normal cost and the minimum contribution required and the maximum contribution allowed under applicable regulations. During fiscal year 2020, we made two voluntary contributions for $5,000,000 and $3,000,000 in excess of the minimum required amount. The voluntary contributions improved our funded status and contributed to a lower net periodic benefit expense. We made no contributions in fiscal year 2021 and we do not expect to make a contribution to the Pension Plan in fiscal year 2022.    The postretirement health plan is an unfunded plan. Our policy is to pay health insurance premiums and claims from our assets.
The following table shows the estimated future benefit payments by fiscal year (in thousands):
Pension
Benefits		Postretirement
Health Benefits
2022$1,181 $82 
2023$1,192 $108 
2024$1,225 $173 
2025$1,315 $214 
2026$1,445 $210 
2027-31$8,780 $1,360 

Assumptions

Our pension benefit and postretirement health benefit obligations and the related effects on operations are calculated using actuarial models. Critical assumptions that are important elements of plan expenses and asset/liability measurements include discount rate and expected return on assets for the Pension Plan and health care cost trend for the postretirement health plan. We evaluate these critical assumptions at least annually. Other assumptions involving demographic factors such as retirement age, mortality and turnover are evaluated periodically and are updated to reflect our experience and to meet regulatory requirements. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The assumptions used in the previous calculations by fiscal year were as follows:
 Pension BenefitsPostretirement Health Benefits
 2021202020212020
Discount rate for net periodic benefit costs2.14%3.35%1.63%2.93%
Discount rate for year-end obligations2.57%2.14%2.10%1.63%
Rate of increase in compensation levels for net periodic benefit costs—%—%—%—%
Rate of increase in compensation levels for year-end obligations—%—%—%—%
Long-term expected rate of return on assets6.50%7.00%—%—%

The discount rate was based on the FTSE Pension Discount Curve to determine separately for the Pension Plan and the postretirement health plan, the single equivalent rate that would yield the same present value as the specific plan’s expected cash flows.

Our expected rate of return on Pension Plan assets is determined by our asset allocation, our historical long-term investment performance, our estimate of future long-term returns by asset class (using input from our actuaries, investment managers and investment advisors), and long-term inflation assumptions.

For fiscal year 2021, the medical cost trend assumption used for the postretirement health benefit cost was 7.1%. The graded trend rate is expected to decrease to an ultimate rate of 4.5% in fiscal year 2038.

Pension Plan Assets
 
The investment objective for the Pension Plan assets is to optimize long-term return at a moderate level of risk in order to secure the benefit obligations to participants at a reasonable cost. To reach this goal, our investment structure includes various asset classes, asset allocations and investment management styles that, in total, have a reasonable likelihood of producing a sufficient level of overall diversification that balances expected return with expected risk over the long-term. The Pension Plan does not invest directly in Company stock.
We measure and monitor the plan’s asset investment performance and the allocation of assets through quarterly investment portfolio reviews. Investment performance is measured by absolute returns, returns relative to benchmark indices and any other appropriate basis of comparison. The targeted allocation percentages of plan assets is shown below for fiscal year 2022 and the actual allocation as of July 31:
Asset AllocationTarget fiscal 202220212020
   Cash and accrued income2%—%1%
   Fixed income38%38%68%
   Equity60%62%31%

    In anticipation of the Lump Sum Option payments we adjusted our asset allocation in fiscal year 2020 and reverted back to our historical asset allocations in fiscal year 2021.

    The following table sets forth by level, within the fair value hierarchy, the Pension Plan's assets carried at fair value (in thousands):
Fair Value At July 31, 2021
TotalQuoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)
   Asset Class   
   Cash and cash equivalents(a)
$16 $16 $— 
   Equity securities(b):
U.S. companies15,241 4,290 10,951 
International companies806 806 — 
   Equity securities - international mutual funds:
       Developed market(c)
5,622 — 5,622 
       Emerging markets(d)
2,389 — 2,389 
   Commodities(e)
829 — 829 
   Fixed Income:
 U.S. Treasuries1,543 — 1,543 
       Debt securities(f)
2,258 — 2,258 
       Government sponsored entities(g)
1,730 — 1,730 
       Multi-strategy bond fund(h)
8,257 — 8,257 
        Money market fund(i)
718 — 718 
   Other(j)
979 — 979 
   Total$40,388 $5,112 $35,276 
Fair Value At July 31, 2020
TotalQuoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)		Significant
Observable
Inputs
(Level 2)
   Asset Class
   Cash and cash equivalents(a)
$557 $557 $— 
   Equity securities(b):
U.S. companies9,401 2,093 7,308 
International companies495 495 — 
   Equity securities - international mutual funds:
       Developed market(c)
2,867 — 2,867 
       Emerging markets(d)
1,022 — 1,022 
   Commodities(e)
— — — 
   Fixed Income:
 U.S. Treasuries3,014 — 3,014 
       Debt securities(f)10,131 — 10,131 
       Government sponsored entities(g)
5,131 — 5,131 
       Multi-strategy bond fund(h)
10,547 — 10,547 
        Money market fund(i)
486 — 486 
   Other(j)
1,683 — 1,683 
   Total$45,334 $3,145 $42,189 

(a)Cash and cash equivalents consists of highly liquid investments which are traded in active markets.
(b)This class represents equities traded on regulated exchanges, as well as funds that invest in a portfolio of such stocks.
(c)These mutual funds seek long-term capital growth by investing no less than 80% of their assets in stocks of non- U.S. companies that are primarily in developed markets, but also may invest in emerging and less developed markets.
(d)These mutual funds seek to track the performance of a benchmark index that measures the investment return of stock issued by companies located in emerging market countries.
(e)These investments seek attractive total return by investing primarily in a diversified portfolio of commodity futures contracts and fixed income investments.
(f)This class includes bonds and loans of U.S. and non-U.S. corporate issuers from diverse industries and bonds of domestic and foreign municipalities.
(g)This class represents a beneficial ownership interest in a pool of single-family residential mortgage loans. These investments are generally not backed by the full faith and credit of the United States government, except for securities valued at $176,000 in our portfolio as of July 31, 2021 and $289,000 as of July 31, 2020.
(h)This class invests at least 80% of its net assets in bonds and other fixed income instruments issued by governmental or private-sector entities. More than 50% of its net assets are invested in asset-backed and mortgage-backed securities. The fund may invest up to 20% of its net assets in securities below investment grade.
(i)These money market mutual funds seek to provide current income consistent with liquidity and stability of principal by investing in a diversified portfolio of high quality, short-term, dollar-denominated debt securities. These funds may include securities issued or guaranteed as to principal and interest by the U.S. government or its agencies, short-term securities issued by domestic or foreign banks, domestic and dollar-denominated foreign commercial papers, and other short-term corporate obligations and obligations issued or guaranteed by one or more foreign governments.
(j)This class includes funds that use a number of other strategies, including arbitrage, to obtain long-term positive returns. The portfolio of instruments may include equities, debt securities, real estate properties, warrants, options, swaps, future contracts, forwards or other types of derivative instruments.