x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended January 31, 2019 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to ______________ |
Delaware (State or other jurisdiction of incorporation or organization) | 36-2048898 (I.R.S. Employer Identification No.) | |
410 North Michigan Avenue, Suite 400 Chicago, Illinois (Address of principal executive offices) | 60611-4213 (Zip Code) |
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o | Smaller reporting company x | Emerging growth company o |
PART I – FINANCIAL INFORMATION | ||
Page | ||
Item 1: | ||
Item 2: | ||
Item 4: | ||
PART II – OTHER INFORMATION | ||
Item 1: | ||
Item 4: | ||
Item 6: | ||
(unaudited) | |||||||
ASSETS | January 31, 2019 | July 31, 2018 | |||||
Current Assets | |||||||
Cash and cash equivalents | $ | 9,375 | $ | 12,757 | |||
Short-term investments | 480 | 7,124 | |||||
Accounts receivable, less allowance of $690 and $817 at January 31, 2019 and July 31, 2018, respectively | 38,282 | 33,602 | |||||
Inventories | 28,123 | 22,521 | |||||
Prepaid repairs expense | 4,116 | 4,111 | |||||
Prepaid expenses and other assets | 1,924 | 2,899 | |||||
Total Current Assets | 82,300 | 83,014 | |||||
Property, Plant and Equipment | |||||||
Cost | 241,425 | 236,091 | |||||
Less accumulated depreciation and amortization | (155,232 | ) | (149,385 | ) | |||
Total Property, Plant and Equipment, Net | 86,193 | 86,706 | |||||
Other Assets | |||||||
Goodwill | 9,262 | 9,262 | |||||
Trademarks and patents, net of accumulated amortization of $283 and $267 at January 31, 2019 and July 31, 2018, respectively | 1,298 | 1,220 | |||||
Customer list, net of accumulated amortization of $5,918 and $5,540 at January 31, 2019 and July 31, 2018, respectively | 1,867 | 2,245 | |||||
Deferred income taxes | 7,013 | 7,349 | |||||
Other | 5,204 | 4,886 | |||||
Total Other Assets | 24,644 | 24,962 | |||||
Total Assets | $ | 193,137 | $ | 194,682 |
(unaudited) | |||||||
LIABILITIES & STOCKHOLDERS’ EQUITY | January 31, 2019 | July 31, 2018 | |||||
Current Liabilities | |||||||
Current maturities of notes payable | $ | 3,083 | $ | 3,083 | |||
Accounts payable | 7,882 | 6,543 | |||||
Dividends payable | 1,680 | 1,627 | |||||
Accrued expenses: | |||||||
Salaries, wages and commissions | 4,518 | 8,974 | |||||
Trade promotions and advertising | 1,132 | 1,280 | |||||
Freight | 5,302 | 1,767 | |||||
Other | 7,492 | 7,675 | |||||
Total Current Liabilities | 31,089 | 30,949 | |||||
Noncurrent Liabilities | |||||||
Notes payable, net of unamortized debt issuance costs of $46 and $60 at January 31, 2019 and July 31, 2018, respectively | 3,038 | 6,107 | |||||
Deferred compensation | 5,664 | 6,100 | |||||
Pension and postretirement benefits | 16,474 | 15,906 | |||||
Other | 4,108 | 3,735 | |||||
Total Noncurrent Liabilities | 29,284 | 31,848 | |||||
Total Liabilities | 60,373 | 62,797 | |||||
Stockholders’ Equity | |||||||
Common Stock, par value $.10 per share, issued 8,236,449 shares at January 31, 2019 and 8,086,849 shares at July 31, 2018 | 823 | 809 | |||||
Class B Stock, par value $.10 per share, issued 2,576,479 shares at January 31, 2019 and 2,468,979 shares at July 31, 2018 | 258 | 247 | |||||
Additional paid-in capital | 39,730 | 38,473 | |||||
Retained earnings | 158,788 | 158,935 | |||||
Noncontrolling interest | 5 | (18 | ) | ||||
Accumulated Other Comprehensive Loss: | |||||||
Pension and postretirement benefits | (10,093 | ) | (10,384 | ) | |||
Cumulative translation adjustment | (267 | ) | (231 | ) | |||
Total Accumulated Other Comprehensive Loss | (10,360 | ) | (10,615 | ) | |||
Less Treasury Stock, at cost (2,924,987 Common and 324,741 Class B shares at January 31, 2019 and 2,914,092 Common and 324,741 Class B shares at July 31, 2018) | (56,480 | ) | (55,946 | ) | |||
Total Stockholders’ Equity | 132,764 | 131,885 | |||||
Total Liabilities & Stockholders’ Equity | $ | 193,137 | $ | 194,682 |
(unaudited) | |||||||
For the Six Months Ended January 31, | |||||||
2019 | 2018 | ||||||
Net Sales | $ | 136,023 | $ | 135,540 | |||
Cost of Sales (1) | (104,609 | ) | (96,908 | ) | |||
Gross Profit | 31,414 | 38,632 | |||||
Selling, General and Administrative Expenses (1) | (27,584 | ) | (29,234 | ) | |||
Income from Operations | 3,830 | 9,398 | |||||
Other Income (Expense) | |||||||
Interest expense | (293 | ) | (400 | ) | |||
Interest income | 96 | 119 | |||||
Other, net (1) | 39 | (207 | ) | ||||
Total Other Expense, Net | (158 | ) | (488 | ) | |||
Income Before Income Taxes | 3,672 | 8,910 | |||||
Income Tax Expense | (456 | ) | (6,956 | ) | |||
Net Income | 3,216 | 1,954 | |||||
Net Income Attributable to Noncontrolling Interest | 23 | — | |||||
Net Income Attributable to Oil-Dri | 3,193 | 1,954 | |||||
Retained Earnings: | |||||||
Balance at beginning of period | 158,935 | 154,735 | |||||
Cash dividends declared | (3,340 | ) | (3,118 | ) | |||
Balance at End of Period | $ | 158,788 | $ | 153,571 | |||
Net Income Per Share | |||||||
Basic Common | $ | 0.46 | $ | 0.29 | |||
Basic Class B Common | $ | 0.34 | $ | 0.22 | |||
Diluted Common | $ | 0.42 | $ | 0.26 | |||
Average Shares Outstanding | |||||||
Basic Common | 5,099 | 5,030 | |||||
Basic Class B Common | 2,069 | 2,097 | |||||
Diluted Common | 7,242 | 7,215 | |||||
Dividends Declared Per Share | |||||||
Basic Common | $ | 0.4800 | $ | 0.4600 | |||
Basic Class B Common | $ | 0.3600 | $ | 0.3450 |
(unaudited) | |||||||
For the Six Months Ended January 31, | |||||||
2019 | 2018 | ||||||
Net Income Attributable to Oil-Dri | $ | 3,193 | $ | 1,954 | |||
Other Comprehensive Income: | |||||||
Pension and postretirement benefits (net of tax) | 291 | 418 | |||||
Cumulative translation adjustment | (36 | ) | 70 | ||||
Other Comprehensive Income | 255 | 488 | |||||
Total Comprehensive Income | $ | 3,448 | $ | 2,442 |
(unaudited) | |||||||
For the Three Months Ended January 31, | |||||||
2019 | 2018 | ||||||
Net Sales | $ | 69,880 | $ | 68,894 | |||
Cost of Sales (1) | (54,476 | ) | (49,237 | ) | |||
Gross Profit | 15,404 | 19,657 | |||||
Selling, General and Administrative Expenses (1) | (12,577 | ) | (14,474 | ) | |||
Income from Operations | 2,827 | 5,183 | |||||
Other Income (Expense) | |||||||
Interest expense | (142 | ) | (199 | ) | |||
Interest income | 47 | 65 | |||||
Other, net (1) | 56 | 22 | |||||
Total Other Expense, Net | (39 | ) | (112 | ) | |||
Income Before Income Taxes | 2,788 | 5,071 | |||||
Income Tax Expense | (506 | ) | (6,167 | ) | |||
Net Income (Loss) | 2,282 | (1,096 | ) | ||||
Net Loss Attributable to Noncontrolling Interest | (5 | ) | — | ||||
Net Income (Loss) Attributable to Oil-Dri | 2,287 | (1,096 | ) | ||||
Net Income (Loss) Per Share | |||||||
Basic Common | $ | 0.33 | $ | (0.17 | ) | ||
Basic Class B | $ | 0.25 | $ | (0.12 | ) | ||
Diluted Common | $ | 0.30 | $ | (0.15 | ) | ||
Average Shares Outstanding | |||||||
Basic Common | 5,121 | 5,035 | |||||
Basic Class B | 2,068 | 2,104 | |||||
Diluted Common | 7,229 | 7,139 | |||||
Dividends Declared Per Share | |||||||
Basic Common | $ | 0.2400 | $ | 0.2300 | |||
Basic Class B | $ | 0.1800 | $ | 0.1725 |
(unaudited) | |||||||
For the Three Months Ended January 31, | |||||||
2019 | 2018 | ||||||
Net Income (Loss) Attributable to Oil-Dri | $ | 2,287 | $ | (1,096 | ) | ||
Other Comprehensive Income: | |||||||
Pension and postretirement benefits (net of tax) | 124 | 237 | |||||
Cumulative translation adjustment | 28 | 144 | |||||
Other Comprehensive Income | 152 | 381 | |||||
Total Comprehensive Income (Loss) | $ | 2,439 | $ | (715 | ) |
(unaudited) | |||||||
For the Six Months Ended January 31, | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | 2019 | 2018 | |||||
Net Income | $ | 3,216 | $ | 1,954 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 6,539 | 6,413 | |||||
Amortization of investment net discount | (10 | ) | (57 | ) | |||
Stock-based compensation | 898 | 770 | |||||
Deferred income taxes | 106 | 5,312 | |||||
Provision for bad debts and cash discounts | (168 | ) | 155 | ||||
Loss on the sale of fixed assets | 1 | 31 | |||||
Life insurance benefits | — | (334 | ) | ||||
(Increase) Decrease in assets: | |||||||
Accounts receivable | (4,529 | ) | 362 | ||||
Inventories | (5,607 | ) | 75 | ||||
Prepaid expenses | 970 | (51 | ) | ||||
Other assets | (422 | ) | 55 | ||||
Increase (Decrease) in liabilities: | |||||||
Accounts payable | 2,295 | (743 | ) | ||||
Accrued expenses | (1,390 | ) | (3,637 | ) | |||
Deferred compensation | (436 | ) | 268 | ||||
Pension and postretirement benefits | 859 | 649 | |||||
Other liabilities | 370 | 407 | |||||
Total Adjustments | (524 | ) | 9,675 | ||||
Net Cash Provided by Operating Activities | 2,692 | 11,629 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures | (6,199 | ) | (6,850 | ) | |||
Proceeds from sale of property, plant and equipment | — | 11 | |||||
Purchases of short-term investments | (3,948 | ) | (24,101 | ) | |||
Dispositions of short-term investments | 10,602 | 25,840 | |||||
Net Cash Provided by (Used in) Investing Activities | 455 | (5,100 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Principal payments on notes payable | (3,083 | ) | (3,083 | ) | |||
Dividends paid | (3,287 | ) | (3,112 | ) | |||
Purchase of treasury stock | (135 | ) | (27 | ) | |||
Net Cash Used in Financing Activities | (6,505 | ) | (6,222 | ) | |||
Effect of exchange rate changes on Cash and Cash Equivalents | (24 | ) | (21 | ) | |||
Net (Decrease) Increase in Cash and Cash Equivalents | (3,382 | ) | 286 | ||||
Cash and Cash Equivalents, Beginning of Period | 12,757 | 9,095 | |||||
Cash and Cash Equivalents, End of Period | $ | 9,375 | $ | 9,381 |
(unaudited) | |||||||
For the Six Months Ended January 31, | |||||||
2019 | 2018 | ||||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Capital expenditures accrued, but not paid | $ | 416 | $ | 890 | |||
Cash dividends declared and accrued, but not paid | $ | 1,680 | $ | 1,559 |
January 31, 2019 | July 31, 2018 | ||||||
Finished goods | $ | 17,747 | $ | 14,223 | |||
Packaging | 6,177 | 5,349 | |||||
Other | 4,199 | 2,949 | |||||
Total Inventories | $ | 28,123 | $ | 22,521 |
2020 | $ | 667 | |
2021 | $ | 483 | |
2022 | $ | 333 | |
2023 | $ | 201 | |
2024 | $ | 68 |
Pension Benefits | |||||||||||||||
(in thousands) | |||||||||||||||
For the Three Months Ended January 31, | For the Six Months Ended January 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Service cost | $ | 391 | $ | 438 | $ | 813 | $ | 862 | |||||||
Interest cost | 517 | 517 | 1,057 | 1,014 | |||||||||||
Expected return on plan assets | (703 | ) | (485 | ) | (1,405 | ) | (971 | ) | |||||||
Amortization of: | |||||||||||||||
Prior service costs | 1 | — | 1 | 1 | |||||||||||
Other actuarial loss | 165 | 354 | 386 | 641 | |||||||||||
Net periodic benefit cost | $ | 371 | $ | 824 | $ | 852 | $ | 1,547 | |||||||
Postretirement Health Benefits | |||||||||||||||
(in thousands) | |||||||||||||||
For the Three Months Ended January 31, | For the Six Months Ended January 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Service cost | $ | 25 | $ | 25 | $ | 52 | $ | 54 | |||||||
Interest cost | 24 | 19 | 49 | 43 | |||||||||||
Amortization of: | |||||||||||||||
Prior service costs | (2 | ) | (1 | ) | (3 | ) | (3 | ) | |||||||
Other actuarial loss | — | (5 | ) | — | — | ||||||||||
Net periodic benefit cost | $ | 47 | $ | 38 | $ | 98 | $ | 94 |
Pension Benefits | Postretirement Health Benefits | ||||||||||
For the Three and Six Months Ended January 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Discount rate for net periodic benefit cost | 4.04 | % | 3.75 | % | 3.81 | % | 3.26 | % | |||
Rate of increase in compensation levels | 3.50 | % | 3.50 | % | — | — | |||||
Long-term expected rate of return on assets | 7.00 | % | 7.00 | % | — | — |
Business to Business Products Group | Retail and Wholesale Products Group | ||||||||||||||
For the Six Months Ended January 31, | |||||||||||||||
Product | 2019 | 2018 | 2019 | 2018 | |||||||||||
Cat Litter | $ | 6,502 | $ | 7,073 | $ | 67,613 | $ | 64,286 | |||||||
Industrial and Sports | — | — | 15,429 | 15,686 | |||||||||||
Agricultural and Horticultural | 12,698 | 12,979 | — | — | |||||||||||
Bleaching Clay and Fluids Purification | 24,454 | 25,545 | 1,197 | 1,126 | |||||||||||
Animal Health and Nutrition | 8,130 | 8,845 | — | — | |||||||||||
Net Sales | $ | 51,784 | $ | 54,442 | $ | 84,239 | $ | 81,098 | |||||||
Business to Business Products Group | Retail and Wholesale Products Group | ||||||||||||||
For the Three Months Ended January 31, | |||||||||||||||
Product | 2019 | 2018 | 2019 | 2018 | |||||||||||
Cat Litter | $ | 3,287 | $ | 3,273 | $ | 35,218 | $ | 33,464 | |||||||
Industrial and Sports | — | — | 7,652 | 7,569 | |||||||||||
Agricultural and Horticultural | 6,646 | 6,936 | — | — | |||||||||||
Bleaching Clay and Fluids Purification | 12,559 | 12,928 | 552 | 506 | |||||||||||
Animal Health and Nutrition | 3,966 | 4,218 | — | — | |||||||||||
Net Sales | $ | 26,458 | $ | 27,355 | $ | 43,422 | $ | 41,539 | |||||||
Assets | |||||||||||
January 31, 2019 | July 31, 2018 | ||||||||||
(in thousands) | |||||||||||
Business to Business Products Group | $ | 60,283 | $ | 65,143 | |||||||
Retail and Wholesale Products Group | 93,950 | 89,623 | |||||||||
Unallocated Assets | 38,904 | 39,916 | |||||||||
Total Assets | $ | 193,137 | $ | 194,682 |
For the Six Months Ended January 31, | |||||||||||||||
Net Sales | Income (Loss) | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Business to Business Products Group | $ | 51,784 | $ | 54,442 | $ | 14,304 | $ | 18,635 | |||||||
Retail and Wholesale Products Group | 84,239 | 81,098 | 2,662 | 4,787 | |||||||||||
Net Sales | $ | 136,023 | $ | 135,540 | |||||||||||
Corporate Expenses | (13,136 | ) | (14,024 | ) | |||||||||||
Income from Operations | 3,830 | 9,398 | |||||||||||||
Total Other Expense, Net | (158 | ) | (488 | ) | |||||||||||
Income before Income Taxes | 3,672 | 8,910 | |||||||||||||
Income Tax Expense | (456 | ) | (6,956 | ) | |||||||||||
Net Income | 3,216 | 1,954 | |||||||||||||
Net Income Attributable to Noncontrolling Interest | 23 | — | |||||||||||||
Net Income Attributable to Oil-Dri | $ | 3,193 | $ | 1,954 | |||||||||||
For the Three Months Ended January 31, | |||||||||||||||
Net Sales | Income (Loss) | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Business to Business Products Group | $ | 26,458 | $ | 27,355 | $ | 7,272 | $ | 9,759 | |||||||
Retail and Wholesale Products Group | 43,422 | 41,539 | 2,653 | 2,422 | |||||||||||
Net Sales | $ | 69,880 | $ | 68,894 | |||||||||||
Corporate Expenses | (7,098 | ) | (6,998 | ) | |||||||||||
Income from Operations | 2,827 | 5,183 | |||||||||||||
Total Other Expense, Net | (39 | ) | (112 | ) | |||||||||||
Income before Income Taxes | 2,788 | 5,071 | |||||||||||||
Income Tax Expense | (506 | ) | (6,167 | ) | |||||||||||
Net Income (Loss) | 2,282 | (1,096 | ) | ||||||||||||
Net Loss Attributable to Noncontrolling Interest | (5 | ) | — | ||||||||||||
Net Income (Loss) Attributable to Oil-Dri | $ | 2,287 | $ | (1,096 | ) |
Restricted Shares (in thousands) | Weighted Average Grant Date Fair Value | |||||
Non-vested restricted stock outstanding at July 31, 2018 | 178 | $ | 32.74 | |||
Granted | 273 | $ | 33.00 | |||
Vested | (60 | ) | $ | 31.82 | ||
Forfeitures | (22 | ) | $ | 30.21 | ||
Non-vested restricted stock outstanding at January 31, 2019 | 369 | $ | 33.23 |
Pension and Postretirement Health Benefits | Cumulative Translation Adjustment | Total Accumulated Other Comprehensive (Loss) Income | |||||||||
Balance as of July 31, 2018 | $ | (10,384 | ) | $ | (231 | ) | $ | (10,615 | ) | ||
Other comprehensive loss before reclassifications, net of tax | — | (36 | ) | (36 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income, net of tax | 291 | (a) | — | 291 | |||||||
Net current-period other comprehensive income (loss), net of tax | 291 | (36 | ) | 255 | |||||||
Balance as of January 31, 2019 | $ | (10,093 | ) | $ | (267 | ) | $ | (10,360 | ) |
For the Six Months Ended January 31, | |||||||
2019 | 2018 | ||||||
Net cash provided by operating activities | $ | 2,692 | $ | 11,629 | |||
Net cash provided by (used in) investing activities | 455 | (5,100 | ) | ||||
Net cash used in financing activities | (6,505 | ) | (6,222 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (24 | ) | (21 | ) | |||
Net decrease (increase) in cash and cash equivalents | $ | (3,382 | ) | $ | 286 |
Exhibit No. | Description | SEC Document Reference | ||
10.1 | Filed herewith. | |||
10.2 | Filed herewith. | |||
10.3 | Incorporated by reference to Exhibit 10.1 to Oil-Dri's (file No. 001-12622) Current Report on Form 8-K filed on January 31, 2019. | |||
10.4 | Incorporated by reference to Exhibit 10.2 to Oil-Dri's (file No. 001-12622) Current Report on Form 8-K filed on January 31, 2019. | |||
11 | Filed herewith. | |||
31 | Filed herewith. | |||
32 | Furnished herewith. | |||
95 | Filed herewith. | |||
101.INS | XBRL Taxonomy Instance Document | Filed herewith. | ||
101.SCH | XBRL Taxonomy Extension Schema Document | Filed herewith. | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. | ||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | Filed herewith. | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | Filed herewith. |
Exhibit No. | Description | ||
10.1 | |||
10.2 | |||
10.3 | |||
10.4 | |||
11 | |||
31 | |||
32 | |||
95 | |||
101.INS | XBRL Taxonomy Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
1. | Your employment with Oil-Dri will terminate on December 10, 2018. |
2. | Although You are not otherwise entitled to receive any severance pay from Oil-Dri, in exchange for your promises contained in this Agreement, Oil-Dri agrees to give You severance compensation as stated below (the “Severance Compensation”). |
3. | All wages, vacation pay and other benefits due to You as of your separation date according to the established policies, plans, and procedures of the Company will be paid to You in accordance with the terms of those established policies, plans, and procedures. In addition, any benefit continuation rights or benefit conversion rights existing under the established plans of the Company will be made available to You in accordance with the terms of such established plans. You will receive a separate letter with details concerning your benefits upon separation. |
4. | You may be eligible for unemployment compensation benefits after the payment of the Severance Compensation. Please contact your local unemployment office for information. In the event you apply for unemployment compensation benefits prior to the full payment of the Severance Compensation, your Severance Compensation will end. If Oil-Dri stops paying the Severance Compensation because of your application for unemployment compensation benefits, that will have no effect upon the release provided in paragraph number five (5) below and the release shall remain in full force and effect. |
5. | In consideration for receiving the Severance Compensation, You waive and release and promise never to assert any claims or causes of action, whether or not now known, against the Company or any of its acquisitions, predecessors, successors, or past or present subsidiaries, officers, directors, agents, employees, assigns and employee benefit plans (collectively, the “Released Parties”), with respect to any matter, including but not limited to, any matter related to your employment with the Company or the termination of that employment. This means, among other things, that You waive any right to assert any claim or complaint against the Released Parties, including, but not limited to, tort claims; claims of wrongful discharge, emotional distress, defamation, fraud, or breach of contract; claims for attorneys’ fees; any claims of discrimination or harassment based on sex, age, race, color, national origin, ancestry, religious creed, disability, sexual orientation, marital status, present or past history of physical or mental disability or handicap, veteran status or on any other basis, under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Georgia Fair Employment Practices Act, the Illinois Human Rights Act, and/or all other local state or federal laws, ordinances and regulations relating to employment. This is a general release. You understand and agree that this general release includes, but is not limited to, any claims arising out of or related to your employment with Oil-Dri and your separation from that employment. However, nothing in this Agreement shall constitute a release by You of any claims that cannot by law be waived. This Agreement does not waive rights or claims that may arise after You sign this Agreement, nor does it prohibit You or the Company from seeking enforcement of the terms contained in this Agreement. In addition, this Agreement does not waive any rights You may have to indemnification, contribution or reimbursement for claims against You arising out of or related to the offices or positions You held during Your employment or the services You provided to the Company, whether under the articles of incorporation, bylaws, or other governing documents of the Company, the common law, any applicable statute, any contract or agreement with the Company, or any policies of insurance. |
6. | You understand and agree that, while this Agreement does not affect your rights to file a charge with or to participate as a witness in an investigation or proceeding conducted by the Equal Employment Opportunity Commission (the “EEOC”) or any similar state |
7. | By signing this Agreement, You are verifying to the Company that You: |
a. | have not suffered a work-related injury that You have not properly disclosed to Oil‑Dri; and |
b. | have been paid in full all wages due and owing to You for any and all work which You performed for Oil-Dri through the pay period of the pay date immediately preceding the date of your signature (Oil-Dri agrees that if You performed work for Oil-Dri after that pay period, payment will be made to You according to the Company’s established payroll practices); and |
c. | understand that your termination and the signing of this Agreement does not limit or release You from the obligations contained in any other Agreements with Oil- Dri, including, but not limited to, any Non-Disclosure Agreements and Non-Competition Agreements. |
8. | You will return to Mary Beth Sullivan all door and file keys, radio, beeper, equipment, tools, computer access codes, disks and instructional manuals, reports, files, memoranda, records, software, credit cards, and other physical or personal property which You received, prepared or helped prepare in connection with your employment with the Company. You agree that You will not keep any copies or excerpts of any of the above items. |
9. | In recognition of the Severance Compensation, You agree to promptly respond to any questions from Dan Jaffee, or any person designated by Dan Jaffee, related to your work at Oil‑Dri until June 15, 2019. For this purpose, You will provide Dan Jaffee with your current phone numbers and e‑mail address, if any. |
10. | You waive and surrender any right You may have, now or hereafter, to employment with Oil‑Dri. In reliance on this waiver, the Company may disregard any employment application submitted by You. |
11. | You agree to refrain from using in any manner and to keep confidential any and all information and data concerning the business and affairs of Oil-Dri or its affiliates which You have received as a result of the employment relationship of the parties, except to the extent that You can demonstrate that the information or data (i) is generally available to the public through no act or failure to act of You, (ii) was already known to You on a non-confidential basis on the date of receipt, (iii) was disclosed to You on a non-confidential basis by a third party not having a confidential relationship with the |
12. | You agree that You will not disclose to others the terms of this Agreement, except that You may disclose such information to your attorney, tax preparer and immediate family. If You properly disclose the terms of the Agreement to anyone, You agree that You shall inform them that the Agreement is strictly confidential, and instruct them not to disclose it to anyone else. |
13. | You will direct all reference inquiries to Mary Beth Sullivan, Vice President, Human Resources, who will respond only with the following information: dates of employment, position(s) held, and confirmation of last salary. To the extent that You direct references to other persons, the Company is not liable for any statements made by such non-designated individuals. You agree that the Company has no liability for any statements made regarding You by persons not employed by the Company at the time such statements are made. Daniel S. Jaffee and Laura G. Scheland have agreed to serve as references for You. |
14. | The Company and You each agree not to do or say anything which criticizes or disparages the other party or his or its management or practices, including any statement or action which disrupts or impairs the Company's normal, ongoing business operations, or which harms the party's reputation with employees, customers, suppliers or the public. |
15. | You understand and agree that if You breach any part of this Agreement, Oil-Dri’s obligation for the Severance Compensation ceases and Oil-Dri may recoup all such payments already made. |
16. | You and Oil-Dri agree that this Agreement constitutes the entire understanding of the parties concerning the cessation of the employment relationship and sets forth all compensation to be paid by the Company to You subsequent to cessation of the employment relationship. This Agreement cancels and supersedes all previous agreements and understandings, oral or written, between the parties with respect to the subject matter hereof and may be modified only in a written document signed by You and a duly authorized officer of the Company. This Agreement does not affect any Non-Disclosure Agreements and Non-Competition Agreements between You and Oil-Dri, copies of which are being provided to you for your reference. |
17. | Nothing in this Agreement shall be treated as an admission by You or the Company of any liability, wrongdoing or violation of any law. |
18. | This Agreement shall be governed by and construed in all respects under the laws of the State of Illinois without reference to its conflicts of laws, rules or principles. If a court finds any part of this Agreement to be invalid or unenforceable, then that provision or part shall be modified so as to render it valid and enforceable, or, if necessary, shall be deemed removed from this Agreement. In any event, the rest of the Agreement shall remain in full force and effect and shall be enforced to the maximum extent permitted by law. |
19. | You have the right to consult with an attorney of your choice before signing this Agreement and Oil-Dri encourages You to do so. You understand that You have up to twenty-one (21) days after receiving this Agreement to review it and to discuss it with an attorney, and that You have seven (7) days after You have signed this Agreement during which You may revoke it. You understand that if You do not return to the Company a signed and dated copy of this Agreement by the close of business on the 21st calendar day after your termination of employment, the provisions of this Agreement, including the severance compensation provisions, will be void and the Company will have no further obligations thereunder. This Agreement must be signed, initialed on each page and returned to Mary Beth Sullivan, Vice President, Human Resources, at the address shown below without any alteration. Enclosed is a self-addressed postage-prepaid envelope for your convenience. Any modification or alteration of any terms of this Agreement voids the Agreement in its entirety. |
1. | Your employment with Oil-Dri will terminate on December 18, 2018. |
2. | Although You are not otherwise entitled to receive any severance pay from Oil-Dri, in exchange for your promises contained in this Agreement, Oil-Dri agrees to give You severance compensation as stated below (the “Severance Compensation”). |
3. | All wages, vacation pay and other benefits due to You as of your separation date according to the established policies, plans, and procedures of the Company will be paid to You in accordance with the terms of those established policies, plans, and procedures. In addition, any benefit continuation rights or benefit conversion rights existing under the established plans of the Company will be made available to You in accordance with the terms of such established plans. You will receive a separate letter with details concerning your benefits upon separation. |
4. | You may be eligible for unemployment compensation benefits after the payment of the Severance Compensation. Please contact your local unemployment office for |
5. | In consideration for receiving the Severance Compensation, You waive and release and promise never to assert any claims or causes of action, whether or not now known, against the Company or any of its acquisitions, predecessors, successors, or past or present subsidiaries, officers, directors, agents, employees, assigns and employee benefit plans (collectively, the “Released Parties”), with respect to any matter, including but not limited to, any matter related to your employment with the Company or the termination of that employment. This means, among other things, that You waive any right to assert any claim or complaint against the Released Parties, including, but not limited to, tort claims; claims of wrongful discharge, emotional distress, defamation, fraud, or breach of contract; claims for attorneys’ fees; any claims of discrimination or harassment based on sex, age, race, color, national origin, ancestry, religious creed, disability, sexual orientation, marital status, present or past history of physical or mental disability or handicap, veteran status or on any other basis, under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Georgia Fair Employment Practices Act, the Illinois Human Rights Act, and/or all other local state or federal laws, ordinances and regulations relating to employment. This is a general release. You understand and agree that this general release includes, but is not limited to, any claims arising out of or related to your employment with Oil-Dri and your separation from that employment. However, nothing in this Agreement shall constitute a release by You of any claims that cannot by law be waived. This Agreement does not waive rights or claims that may arise after You sign this Agreement, nor does it prohibit You or the Company from seeking enforcement of the terms contained in this Agreement. |
6. | You understand and agree that, while this Agreement does not affect your rights to file a charge with or to participate as a witness in an investigation or proceeding conducted by the Equal Employment Opportunity Commission (the “EEOC”) or any similar state agency, by accepting the terms of this Agreement and the compensation provided as a result, You give up your right to receive any relief whatsoever, including but not limited to financial benefit or monetary recovery, from any lawsuit or settlement related to such rights and claims as You waived in paragraph number five (5) above, whether the lawsuit is filed or the settlement reached by the EEOC or anyone else. |
7. | By signing this Agreement, You are verifying to the Company that You: |
a. | have not suffered a work-related injury that You have not properly disclosed to Oil‑Dri; and |
b. | have been paid in full all wages due and owing to You for any and all work which You performed for Oil-Dri through the pay period of the pay date immediately preceding the date of your signature (Oil-Dri agrees that if You performed work for Oil-Dri after that pay period, payment will be made to You according to the Company’s established payroll practices); and |
c. | understand that your termination and the signing of this Agreement does not limit or release You from the obligations contained in any other Agreements with Oil- Dri, including, but not limited to, any Non-Disclosure Agreements and Non-Competition Agreements. |
8. | You will return to Mary Beth Sullivan all door and file keys, radio, beeper, equipment, tools, computer access codes, disks and instructional manuals, reports, files, memoranda, records, software, credit cards, and other physical or personal property which You received, prepared or helped prepare in connection with your employment with the Company. You agree that You will not keep any copies or excerpts of any of the above items. |
9. | In recognition of the Severance Compensation, You agree to promptly respond to any questions from Dan Jaffee, or any person designated by Dan Jaffee, related to your work at Oil‑Dri until June 18, 2019. For this purpose, You will provide Dan Jaffee with your current phone numbers and e‑mail address, if any. |
10. | You waive and surrender any right You may have, now or hereafter, to employment with Oil‑Dri. In reliance on this waiver, the Company may disregard any employment application submitted by You. |
11. | You agree to refrain from using in any manner and to keep confidential any and all information and data concerning the business and affairs of Oil-Dri or its affiliates which You have received as a result of the employment relationship of the parties, except to the extent that You can demonstrate that the information or data (i) is generally available to the public through no act or failure to act of You, (ii) was already known to You on a non-confidential basis on the date of receipt, (iii) was disclosed to You on a non-confidential basis by a third party not having a confidential relationship with the Company with respect to such information, or (iv) has been independently acquired or developed without violating any of your obligations under this provision. Please be reminded that as a Section 16 Reporting Person, you remain subject to rules prohibiting trading of Oil-Dri stock based on insider information and the short swing profit rule. The short-swing profit rule requires any insider to return to the Company the difference between the sales purchase prices (any “profits” made by buying and selling - or selling and buying) of Oil-Dri stock within a six-month period. |
12. | You agree that You will not disclose to others the terms of this Agreement, except that You may disclose such information to your attorney, tax preparer and immediate family. If You properly disclose the terms of the Agreement to anyone, You agree that You shall |
13. | You will direct all reference inquiries to Mary Beth Sullivan, Vice President, Human Resources, who will respond only with the following information: dates of employment, position(s) held, and confirmation of last salary. To the extent that You direct references to other persons, the Company is not liable for any statements made by such non-designated individuals. You agree that the Company has no liability for any statements made regarding You by persons not employed by the Company at the time such statements are made. |
14. | You will not do or say anything which criticizes or disparages the Company, its management or practices, which disrupts or impairs the Company's normal, ongoing business operations, or which harms the Company's reputation with its employees, customers, suppliers or the public. |
15. | You understand and agree that if You breach any part of this Agreement, Oil-Dri’s obligation for the Severance Compensation ceases and Oil-Dri may recoup all such payments already made. |
16. | You and Oil-Dri agree that this Agreement constitutes the entire understanding of the parties concerning the cessation of the employment relationship and sets forth all compensation to be paid by the Company to You subsequent to cessation of the employment relationship. This Agreement cancels and supersedes all previous agreements and understandings, oral or written, between the parties with respect to the subject matter hereof and may be modified only in a written document signed by You and a duly authorized officer of the Company. This Agreement does not affect any Non-Disclosure Agreements and Non-Competition Agreements between You and Oil-Dri, copies of which are being provided to you for your reference. |
17. | Nothing in this Agreement shall be treated as an admission by You or the Company of any liability, wrongdoing or violation of any law. |
18. | This Agreement shall be governed by and construed in all respects under the laws of the State of Illinois without reference to its conflicts of laws, rules or principles. If a court finds any part of this Agreement to be invalid or unenforceable, then that provision or part shall be modified so as to render it valid and enforceable, or, if necessary, shall be deemed removed from this Agreement. In any event, the rest of the Agreement shall remain in full force and effect and shall be enforced to the maximum extent permitted by law. |
19. | You have the right to consult with an attorney of your choice before signing this Agreement and Oil-Dri encourages You to do so. You understand that You have up to twenty-one (21) days after receiving this Agreement to review it and to discuss it with an |
For the Three Months Ended January 31, | For the Six Months Ended January 31, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Net income (loss) available to stockholders | $ | 2,287 | $ | (1,096 | ) | $ | 3,193 | $ | 1,954 | ||||
Less: Distributed and undistributed earnings allocated to non-vested restricted stock | (92 | ) | — | (133 | ) | (46 | ) | ||||||
Earnings (loss) available to common shareholders | $ | 2,195 | $ | (1,096 | ) | $ | 3,060 | $ | 1,908 | ||||
Shares Calculation | |||||||||||||
Average shares outstanding - Basic Common | 5,121 | 5,035 | 5,099 | 5,030 | |||||||||
Average shares outstanding - Basic Class B Common | 2,068 | 2,104 | 2,069 | 2,097 | |||||||||
Potential Common Stock relating to stock options and non-vested restricted stock | 40 | — | 74 | 88 | |||||||||
Average shares outstanding - Assuming dilution | 7,229 | 7,139 | 7,242 | 7,215 | |||||||||
Net Income (Loss) Per Share: Basic Common | $ | 0.33 | $ | (0.17 | ) | $ | 0.46 | $ | 0.29 | ||||
Net Income (Loss) Per Share: Basic Class B Common | $ | 0.25 | $ | (0.12 | ) | $ | 0.34 | $ | 0.22 | ||||
Net Income (Loss) Per Share: Diluted Common | $ | 0.30 | $ | (0.15 | ) | $ | 0.42 | $ | 0.26 |
I. | I, Daniel S. Jaffee, certify that: |
1. | I have reviewed this quarterly report on Form 10-Q of Oil-Dri Corporation of America (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | March 11, 2019 |
By: | /s/ Daniel S. Jaffee |
Daniel S. Jaffee Chairman, President and Chief Executive Officer |
I. | I, Susan M. Kreh, certify that: |
1. | I have reviewed this quarterly report on Form 10-Q of Oil-Dri Corporation of America (the “registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | March 11, 2019 |
By: | /s/ Susan M. Kreh |
Susan M. Kreh Chief Financial Officer |
Dated: | March 11, 2019 |
/s/ Daniel S. Jaffee | |
Name: Daniel S. Jaffee Title: Chairman, President and Chief Executive Officer |
Dated: | March 11, 2019 |
/s/ Susan M. Kreh | |
Name: Susan M. Kreh Title: Chief Financial Officer |
Legal Actions | |||||||||
Mine location | Section 104 “Significant and Substantial” Violations | Section 104(b) Orders | Section 104(d) Citations and Orders | Section 110(b)(2)Flagrant Violations | Section 107(a) Imminent Danger Orders | Total Dollar Value of Proposed MSHA Assessments | Pending as of Last Day of Period | Initiated During Period | Resolved During Period |
(#) | (#) | (#) | (#) | (#) | ($) | (#) | (#) | (#) | |
Ochlocknee, Georgia | — | — | — | — | — | — | — | — | — |
Ripley, Mississippi | — | — | — | — | — | — | — | — | — |
Mounds, Illinois | — | — | — | — | — | — | — | — | — |
Blue Mountain, Mississippi | — | — | — | — | — | — | — | — | — |
Taft, California | 5 | — | — | — | — | 29,150 | — | — | — |
Document and Entity Information |
6 Months Ended |
---|---|
Jan. 31, 2019
shares
| |
Entity Information | |
Entity Registrant Name | Oil-Dri Corp of America |
Entity Central Index Key | 0000074046 |
Current Fiscal Year End Date | --07-31 |
Entity Filer Category | Accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Document Type | 10-Q |
Document Period End Date | Jan. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q2 |
Amendment Flag | false |
Common Stock | |
Entity Information | |
Entity Common Stock, Shares Outstanding | 5,311,462 |
Common Class B | |
Entity Information | |
Entity Common Stock, Shares Outstanding | 2,251,738 |
Condensed Consolidated Balance Sheet Parenthetical - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jul. 31, 2018 |
---|---|---|
Current Assets | ||
Allowance for doubtful accounts | $ 690 | $ 817 |
Other Assets | ||
Accumulated amortization of trademarks and patents | 283 | 267 |
Accumulated amortization of customer lists | 5,918 | 5,540 |
Noncurrent Liabilities | ||
Net unamortized debt issuance costs | $ 46 | $ 60 |
Common Stock | ||
Stockholder's Equity | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares issued | 8,236,449 | 8,086,849 |
Treasury stock, common shares | 2,924,987 | 2,914,092 |
Common Class B | ||
Stockholder's Equity | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares issued | 2,576,479 | 2,468,979 |
Treasury stock, common shares | 324,741 | 324,741 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Net Income (Loss) Attributable to Oil-Dri | $ 2,287 | $ (1,096) | $ 3,193 | $ 1,954 |
Other Comprehensive Income: | ||||
Pension and postretirement benefits (net of tax) | 124 | 237 | 291 | 418 |
Cumulative translation adjustment | 28 | 144 | (36) | 70 |
Other Comprehensive Income | 152 | 381 | 255 | 488 |
Total Comprehensive Income (Loss) | $ 2,439 | $ (715) | $ 3,448 | $ 2,442 |
Basis of Statement Presentation |
6 Months Ended |
---|---|
Jan. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Statement Presentation | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in compliance with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. 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 fiscal year ended July 31, 2018 included in our Annual Report on Form 10-K filed with the SEC. The unaudited Condensed Consolidated Financial Statements include the accounts of Oil-Dri Corporation of America and its subsidiaries. All significant intercompany transactions are eliminated. Except as otherwise indicated herein or as the context otherwise requires, references to “Oil-Dri,” the “Company,” “we,” “us” or “our” refer to Oil-Dri Corporation of America and its subsidiaries. The unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring accruals and reclassifications which are, in the opinion of management, necessary for a fair presentation of the statements contained herein. In addition, certain prior year reclassifications were made to conform to the current year presentation. Operating results for the three and six months ended January 31, 2019 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2019. Management Use of Estimates The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period, as well as the related disclosures. All of our estimates and assumptions are revised periodically. Actual results could differ from these estimates. Summary of Significant Accounting Policies Except as described herein, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018 have not materially changed. However, the unaudited Condensed Consolidated Financial Statements reflect changes required upon adoption of new accounting guidance, as described in Note 2 of the Notes to unaudited Condensed Consolidated Financial Statements. The following is a description of certain of our significant accounting policies. Revenue Recognition. We recognize revenue when performance obligations under the terms of the contracts with customers are satisfied. Our performance obligation generally consists of the promise to sell finished products to wholesalers, distributors and retailers or consumers and our obligations have an original duration of one year or less. Control of the finished products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. We have completed our performance obligation when control is transferred and we recognize revenue accordingly. We have an unconditional right to consideration under the payment terms specified in the contract upon completion of the performance obligation. We may require certain customers to provide payment in advance of product shipment. We recorded a liability for these advance payments of $96,000 and $390,000 as of January 31, 2019 and July 31, 2018, respectively. This liability is reported in Other Accrued Expenses on the Condensed Consolidated Balance Sheet. Revenue recognized during the second quarter ended January 31, 2019 that was included in the liability for advance payments at the beginning of the period was $84,000. We routinely commit to one-time or ongoing trade promotion programs directly with consumers, such as coupon programs, and with customers, such as volume discounts, cooperative marketing and other arrangements. We estimate and accrue the expected costs of these programs. These costs are considered variable consideration under ASC 606, Revenue from Contracts with Customers, and are netted against sales when revenue is recorded. The accruals are based on our best estimate of the amounts necessary to settle future and existing obligations on products sold as of the balance sheet date. To estimate these accruals, we rely on our historical experience of trade spending patterns and that of the industry, current trends and forecasted data. Selling, General and Administrative Expenses. Selling, general and administrative expenses (“SG&A”) include salaries, wages and benefits associated with staff outside the manufacturing and distribution functions, all marketing related costs, any miscellaneous trade spending expenses not required to be included in net sales, research and development costs, depreciation and amortization related to assets outside the manufacturing and distribution process and all other non-manufacturing and non-distribution expenses. Trade Receivables. We record an allowance for doubtful accounts based on our historical experience and a periodic review of our accounts receivable, including a review of the overall aging of accounts, consideration of customer credit risk and analysis of facts and circumstances about specific customer accounts. A customer account is determined to be uncollectible when it is probable that a loss will be incurred after we have completed our internal collection procedures, including termination of shipments, direct customer contact and formal demand of payment. Overburden Removal and Mining Costs. We mine sorbent materials on property that we either own or lease as part of our overall operations. A significant part of our overall mining cost is incurred during the process of removing the overburden (non-usable material) from the mine site, thus exposing the sorbent material used in a majority of our production processes. These stripping costs are treated as a variable inventory production cost and are included in cost of sales in the period they are incurred. We defer and amortize the pre-production overburden removal costs associated with opening a new mine. Additionally, it is our policy to capitalize the purchase cost of land and mineral rights, including associated legal fees, survey fees and real estate fees. The costs of obtaining mineral patents, including legal fees and drilling expenses, are also capitalized. Pre-production development costs on new mines and any prepaid royalties that may be offset against future royalties due upon extraction of the minerals are also capitalized. All exploration related costs are expensed as incurred. We perform ongoing reclamation activities during the normal course of our overburden removal. As overburden is removed from a mine site, it is hauled to previously mined sites and is used to refill older sites. This process allows us to continuously reclaim older mine sites and dispose of overburden simultaneously, therefore minimizing the costs associated with the reclamation process. |
New Accounting Pronouncements |
6 Months Ended |
---|---|
Jan. 31, 2019 | |
NEW ACCOUNTING PRONOUNCEMENTS [Abstract] | |
New Accounting Pronouncements | NEW ACCOUNTING PRONOUNCEMENTS AND REGULATIONS Recently Issued Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance under ASC 842, Leases, which provides that, for leases with a term greater than 12 months, a lessee must recognize in the statement of financial position both a liability to make lease payments and an asset representing its right to use the underlying asset. Other requirements describe expense recognition, as well as financial statement presentation and disclosure. This guidance is effective for our first quarter of fiscal year 2020 using a modified retrospective approach, which includes a number of optional practical expedients. Early adoption is permitted. We are currently evaluating the impact of the adoption of this requirement on our Consolidated Financial Statements. In June 2016, the FASB issued guidance under ASC 326, Financial Instruments-Credit Losses, which requires companies to utilize an impairment model for most financial assets measured at amortized cost and certain other financial instruments, which include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on expected losses rather than incurred losses. In addition, this new guidance changes the recognition method for credit losses on available-for-sale debt securities, which can occur as a result of market and credit risk, as well as additional disclosures. In general, this guidance will require modified retrospective adoption for all outstanding instruments that fall under this guidance. This guidance is effective for our first quarter of fiscal year 2021. We are currently evaluating the impact of the adoption of this requirement on our Consolidated Financial Statements. There have been no other accounting pronouncements issued but not yet adopted by us which are expected to have a material impact on our Consolidated Financial Statements. Recently Adopted Pronouncements In May 2014, the FASB issued guidance under ASC 606, Revenue from Contracts with Customers, and subsequently issued several amendments to further clarify the principles for recognizing revenue. This guidance establishes a single comprehensive revenue recognition model for all contracts with customers and will supersede most existing revenue guidance. The core principle of ASC 606 is that entities should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange. Oil-Dri adopted the new guidance on a modified retrospective basis effective August 1, 2018. We applied the practical expedient available under ASC 606 to disregard determining significant financing components if the good is transferred and payment is received within one year. We also adopted the policy election to exclude from the transaction price all amounts collected from customers for sales and other taxes. We do not expect a material impact on our annual Consolidated Financial Statements from the adoption of this guidance. Results for periods beginning on or after August 1, 2018 are recognized and presented in accordance with ASC 606, while prior period amounts have not been adjusted and continue to be reported in accordance with the prior account guidance under ASC 605, Revenue Recognition. In January 2016, the FASB issued guidance under ASC 825, Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This guidance was effective for our first quarter of fiscal year 2019. The provisions relevant to us relate to fair value disclosures for our notes payable, which are measured at amortized cost on the balance sheet. These provisions require the use of the exit price notion when measuring the fair value of financial instruments for disclosure purposes, as well as eliminate the requirement to disclose the method and significant assumptions used to estimate the fair value in such disclosure. This guidance impacted our disclosures only on a prospective basis and did not have a material impact on our unaudited Condensed Consolidated Financial Statements. See Note 4 of the Notes to unaudited Condensed Consolidated Financial Statements for further information about Fair Value Measurements. In March 2017, the FASB issued guidance under ASC 715, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which requires presenting the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. This standard also requires that other components of the net periodic benefit cost be presented separately from the line items that includes service costs and outside of any subtotal of operating income, if one is presented, on a retrospective basis. We adopted this new guidance in the first quarter of fiscal 2019 and accordingly recorded the non-service cost components of net periodic benefit cost in Other Income (Expense) in the line item Other, net on the unaudited Condensed Consolidated Statements of Income and Retained Earnings. As such, the adoption did not have a material impact on our Consolidated Financial Statements. See Note 6 of the Notes to unaudited Condensed Consolidated Financial Statements for further information about our pension and postretirement health plans. |
Inventories |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES The composition of inventories is as follows (in thousands):
Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory costs include the cost of raw materials, packaging supplies, labor and other overhead costs. We performed a detailed review of our inventory items to determine if an obsolescence reserve adjustment was necessary. The review surveyed all of our operating facilities and sales groups to ensure that both historical issues and new market trends were considered. The obsolescence reserve not only considered specific items, but also took into consideration the overall value of the inventory as of the balance sheet date. The inventory obsolescence reserve values at January 31, 2019 and July 31, 2018 were $1,028,000 and $1,136,000, respectively. |
Fair Value Measurements |
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Jan. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized into categories based on the lowest level of input that is significant to the fair value measurement. The categories in the fair value hierarchy are as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs for similar assets or liabilities or valuation models whose inputs are observable, directly or indirectly. Level 3: Unobservable inputs. Cash equivalents of $7,163,000 and $9,920,000 as of January 31, 2019 and July 31, 2018, respectively, were classified as Level 1. These cash instruments are primarily money market mutual funds and are included in cash and cash equivalents on the unaudited Condensed Consolidated Balance Sheet. Short-term investments included U.S. Treasury securities and certificates of deposit. We intend and have the ability to hold our short-term investments to maturity; therefore, these investments were reported at amortized cost, which approximated fair value as of January 31, 2019 and July 31, 2018. Balances of accounts receivable and accounts payable approximated their fair values at January 31, 2019 and July 31, 2018 due to the short maturity and nature of those balances. Notes payable are reported at the face amount of future maturities. The estimated fair value of notes payable, including current maturities, was $6,384,000 and $9,553,000 as of January 31, 2019 and July 31, 2018, respectively, and are classified as Level 2. The fair value as of January 31, 2019, was determined using the exit price notion of fair value required by the adoption of new accounting guidance for fiscal year 2019, as discussed in Note 2 of the Notes to unaudited Condensed Consolidated Financial Statements. We apply fair value techniques on at least an annual basis associated with: (1) valuing potential impairment loss related to goodwill, trademarks and other indefinite-lived intangible assets and (2) valuing potential impairment loss related to long-lived assets. See Note 5 of the Notes to unaudited Condensed Consolidated Financial Statements for further information about goodwill and other intangible assets. |
Goodwill and Other Intangibles (Notes) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS Intangible amortization expense was $209,000 and $253,000 in the second quarter of fiscal years 2019 and 2018, respectively. Intangible amortization expense was $419,000 and $507,000 in the first six months of fiscal years 2019 and 2018, respectively. Estimated intangible amortization for the remainder of fiscal year 2019 is $417,000. Estimated intangible amortization for the next five fiscal years is as follows (in thousands):
We have one acquired trademark recorded at a cost of $376,000 that was determined to have an indefinite life and is not amortized. We performed our annual goodwill impairment analysis in the fourth quarter of fiscal year 2018 and no impairment was identified. There have been no triggering events that would indicate a new impairment analysis is needed. |
Pension and Other Postretirement Benefits |
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Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Disclosure | PENSION AND OTHER POSTRETIREMENT BENEFITS The components of net periodic pension and postretirement health benefit costs were as follows:
The non-service cost components of net periodic benefit cost are included in Other Income (Expense) in the line item Other, net on the unaudited Condensed Consolidated Statements of Income and Retained Earnings. The pension plan is funded 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. We were not required to make, and did not make, a contribution to the pension plan during the first six months of fiscal year 2019. We have no minimum funding requirements for the remainder of fiscal year 2019. We made a significant voluntary contribution to the pension plan in excess of the minimum required contribution in the third quarter of fiscal year 2018. This voluntary contribution improved the plan's funded status and contributed to a lower net periodic benefit expense for the second quarter and the first six months of fiscal year 2019 compared to the same period in the prior year. The postretirement health plan is an unfunded plan. We pay insurance premiums and claims from our assets. Assumptions used in the previous calculations were as follows:
The medical cost trend assumption for postretirement health benefits was 7.50%. The graded trend rate is expected to decrease to an ultimate rate of 4.50% in fiscal year 2038. |
Operating Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segment Disclosure | OPERATING SEGMENTS We have two operating segments: (1) Business to Business Products Group and (2) Retail and Wholesale Products Group. These operating segments are managed separately and each segment's major customers have different characteristics. The Retail and Wholesale Products Group customers include: mass merchandisers; wholesale clubs; drugstore chains; pet specialty retail outlets; dollar stores; retail grocery stores; distributors of industrial cleanup and automotive products; environmental service companies; and sports field product users. The Business to Business Products Group customers include: processors and refiners of edible oils, petroleum-based oils and biodiesel fuel; manufacturers of animal feed and agricultural chemicals; distributors of animal health and nutrition products; and marketers of consumer products. Our operating segments are also our reportable segments. The accounting policies of the segments are the same as those described in Note 1 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018. Net sales for our principal products by segment are as follows (in thousands):
We do not rely on any segment asset allocations and we do not consider them meaningful because of the shared nature of our production facilities; however, we have estimated the segment asset allocations below for those assets for which we can reasonably determine. The unallocated asset category is the remainder of our total assets. The asset allocation is estimated and is not a measure used by our chief operating decision maker about allocating resources to the operating segments or in assessing their performance.
Net sales and operating income for each segment are provided below. The corporate expenses line includes certain unallocated expenses, including primarily salaries, wages and benefits, purchased services, rent, utilities and depreciation and amortization associated with corporate functions such as research and development, information systems, finance, legal, human resources and customer service. Corporate expenses also include the estimated annual incentive plan bonus accrual.
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Stock-Based Compensation |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments | STOCK-BASED COMPENSATION The Oil-Dri Corporation of America 2006 Long Term Incentive Plan (the “2006 Plan”) permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based and cash-based awards. Our employees and outside directors are eligible to receive grants under the 2006 Plan. The total number of shares of stock subject to grants under the 2006 Plan may not exceed 937,500. Restricted Stock All of our non-vested restricted stock as of January 31, 2019 was issued under the 2006 Plan with vesting periods generally between two years and five years. We determined the fair value of restricted stock as of the grant date. We recognize the related compensation expense over the period from the date of grant to the date the shares vest. There were 117,000 restricted shares of Common Stock and 7,000 restricted shares of Class B Stock granted during the second quarter of fiscal year 2019. No restricted stock was granted during the second quarter of fiscal year 2018. Stock-based compensation expense related to non-vested restricted stock was $229,000 and $426,000 for the second quarter of fiscal years 2019 and 2018, respectively. Stock-based compensation expense related to non-vested restricted stock was $889,000 and $928,000 for the first six months of fiscal years 2019 and 2018, respectively. A summary of restricted stock transactions is shown below:
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Accumulated Other Comprehensive (Loss) Income (Notes) |
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Accumulated Other Comprehensive (Loss) Income | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of January 31, 2019 (in thousands):
(a) Amount is net of tax expense of $93,000. Amount is included in the components of net periodic benefit cost for the pension and postretirement health plans. See Note 6 of the Notes to unaudited Condensed Consolidated Financial Statements for further information. |
Related Party Transactions (Notes) |
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Jan. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure | RELATED PARTY TRANSACTIONS One member of our Board of Directors is the President and Chief Executive Officer of a customer of ours. That customer was a customer of ours before the board member joined that customer and before he became a member of our Board of Directors. Total net sales to that customer, including sales to subsidiaries of that customer, were $105,000 and $77,000 for the second quarters of fiscal years 2019 and 2018, respectively, and were $202,000 and $163,000 for the first six months of fiscal years 2019 and 2018, respectively. Outstanding accounts receivable from that customer, and its subsidiaries, were $45,000 and $14,000 as of January 31, 2019 and July 31, 2018, respectively. One member of our Board of Directors, and of the Compensation Committee of our Board of Directors, is the President and Chief Executive Officer as well as a director and shareholder of a law firm that regularly provides services to us. Total payments to that vendor for fees and cost reimbursements were $51,000 and $53,000 for the second quarters of fiscal years 2019 and 2018, respectively, and were $97,000 and $116,000 for the first six months of fiscal years 2019 and 2018, respectively. There were no outstanding accounts payable to that vendor as of January 31, 2019 or July 31, 2018. |
Basis of Statement Presentation Level 2 (Policies) |
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Jan. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue Recognition | We recognize revenue when performance obligations under the terms of the contracts with customers are satisfied. Our performance obligation generally consists of the promise to sell finished products to wholesalers, distributors and retailers or consumers and our obligations have an original duration of one year or less. Control of the finished products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. We have completed our performance obligation when control is transferred and we recognize revenue accordingly. We have an unconditional right to consideration under the payment terms specified in the contract upon completion of the performance obligation. We may require certain customers to provide payment in advance of product shipment. We recorded a liability for these advance payments of $96,000 and $390,000 as of January 31, 2019 and July 31, 2018, respectively. This liability is reported in Other Accrued Expenses on the Condensed Consolidated Balance Sheet. Revenue recognized during the second quarter ended January 31, 2019 that was included in the liability for advance payments at the beginning of the period was $84,000. We routinely commit to one-time or ongoing trade promotion programs directly with consumers, such as coupon programs, and with customers, such as volume discounts, cooperative marketing and other arrangements. We estimate and accrue the expected costs of these programs. These costs are considered variable consideration under ASC 606, Revenue from Contracts with Customers, and are netted against sales when revenue is recorded. The accruals are based on our best estimate of the amounts necessary to settle future and existing obligations on products sold as of the balance sheet date. To estimate these accruals, we rely on our historical experience of trade spending patterns and that of the industry, current trends and forecasted data. |
Selling, General and Administrative Expenses | Selling, general and administrative expenses (“SG&A”) include salaries, wages and benefits associated with staff outside the manufacturing and distribution functions, all marketing related costs, any miscellaneous trade spending expenses not required to be included in net sales, research and development costs, depreciation and amortization related to assets outside the manufacturing and distribution process and all other non-manufacturing and non-distribution expenses. |
Trade Receivable | We record an allowance for doubtful accounts based on our historical experience and a periodic review of our accounts receivable, including a review of the overall aging of accounts, consideration of customer credit risk and analysis of facts and circumstances about specific customer accounts. A customer account is determined to be uncollectible when it is probable that a loss will be incurred after we have completed our internal collection procedures, including termination of shipments, direct customer contact and formal demand of payment. |
Overburden Removal and Mining Costs | We mine sorbent materials on property that we either own or lease as part of our overall operations. A significant part of our overall mining cost is incurred during the process of removing the overburden (non-usable material) from the mine site, thus exposing the sorbent material used in a majority of our production processes. These stripping costs are treated as a variable inventory production cost and are included in cost of sales in the period they are incurred. We defer and amortize the pre-production overburden removal costs associated with opening a new mine. Additionally, it is our policy to capitalize the purchase cost of land and mineral rights, including associated legal fees, survey fees and real estate fees. The costs of obtaining mineral patents, including legal fees and drilling expenses, are also capitalized. Pre-production development costs on new mines and any prepaid royalties that may be offset against future royalties due upon extraction of the minerals are also capitalized. All exploration related costs are expensed as incurred. |
Reclamation | We perform ongoing reclamation activities during the normal course of our overburden removal. As overburden is removed from a mine site, it is hauled to previously mined sites and is used to refill older sites. This process allows us to continuously reclaim older mine sites and dispose of overburden simultaneously, therefore minimizing the costs associated with the reclamation process. |
Inventories Level 2 (Policies) |
6 Months Ended |
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Jan. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory costs include the cost of raw materials, packaging supplies, labor and other overhead costs. We performed a detailed review of our inventory items to determine if an obsolescence reserve adjustment was necessary. The review surveyed all of our operating facilities and sales groups to ensure that both historical issues and new market trends were considered. The obsolescence reserve not only considered specific items, but also took into consideration the overall value of the inventory as of the balance sheet date. |
Fair Value Measurements Fair Value Measurements (Policies) |
6 Months Ended |
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Jan. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement, Policy | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized into categories based on the lowest level of input that is significant to the fair value measurement. The categories in the fair value hierarchy are as follows: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs for similar assets or liabilities or valuation models whose inputs are observable, directly or indirectly. Level 3: Unobservable inputs. |
Operating Segments Level 2 (Policies) |
6 Months Ended |
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Jan. 31, 2019 | |
Segment Reporting [Abstract] | |
Operating Segments | We have two operating segments: (1) Business to Business Products Group and (2) Retail and Wholesale Products Group. These operating segments are managed separately and each segment's major customers have different characteristics. The Retail and Wholesale Products Group customers include: mass merchandisers; wholesale clubs; drugstore chains; pet specialty retail outlets; dollar stores; retail grocery stores; distributors of industrial cleanup and automotive products; environmental service companies; and sports field product users. The Business to Business Products Group customers include: processors and refiners of edible oils, petroleum-based oils and biodiesel fuel; manufacturers of animal feed and agricultural chemicals; distributors of animal health and nutrition products; and marketers of consumer products. Our operating segments are also our reportable segments. The accounting policies of the segments are the same as those described in Note 1 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2018. |
Inventories Level 3 (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | The composition of inventories is as follows (in thousands):
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Goodwill and Other Intangibles (Tables) |
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Jan. 31, 2019 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated intangible amortization for the next five fiscal years is as follows (in thousands):
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Pension and Other Postretirement Benefits (Tables) |
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Defined Benefit Plan [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The components of net periodic pension and postretirement health benefit costs were as follows:
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Schedule of Assumptions Used | Assumptions used in the previous calculations were as follows:
The medical cost trend assumption for postretirement health benefits was 7.50%. The graded trend rate is expected to decrease to an ultimate rate of 4.50% in fiscal year 2038. |
Operating Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Principal Product by Operating Segment | Net sales for our principal products by segment are as follows (in thousands):
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Operating Segments Information | We do not rely on any segment asset allocations and we do not consider them meaningful because of the shared nature of our production facilities; however, we have estimated the segment asset allocations below for those assets for which we can reasonably determine. The unallocated asset category is the remainder of our total assets. The asset allocation is estimated and is not a measure used by our chief operating decision maker about allocating resources to the operating segments or in assessing their performance.
Net sales and operating income for each segment are provided below. The corporate expenses line includes certain unallocated expenses, including primarily salaries, wages and benefits, purchased services, rent, utilities and depreciation and amortization associated with corporate functions such as research and development, information systems, finance, legal, human resources and customer service. Corporate expenses also include the estimated annual incentive plan bonus accrual.
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Transactions | A summary of restricted stock transactions is shown below:
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Accumulated Other Comprehensive (Loss) Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jan. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive (Loss) Income by Component | The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of January 31, 2019 (in thousands):
(a) Amount is net of tax expense of $93,000. Amount is included in the components of net periodic benefit cost for the pension and postretirement health plans. See Note 6 of the Notes to unaudited Condensed Consolidated Financial Statements for further information. |
Basis of Statement Presentation Revenue Recognition (Details) - Payments In Advance - USD ($) |
6 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jul. 31, 2018 |
|
Deferred Revenue Arrangement | ||
Liability for Payments in Advance | $ 96,000 | $ 390,000 |
Payments in Advance, Revenue Recognized | $ 84,000 |
Inventories (Details) - USD ($) $ in Thousands |
Jan. 31, 2019 |
Jul. 31, 2018 |
---|---|---|
Inventory | ||
Finished goods | $ 17,747 | $ 14,223 |
Packaging | 6,177 | 5,349 |
Other | 4,199 | 2,949 |
Total Inventories | $ 28,123 | $ 22,521 |
Inventories Narrative (Details) - USD ($) |
Jan. 31, 2019 |
Jul. 31, 2018 |
---|---|---|
Inventory | ||
Inventory obsolescence reserve | $ 1,028,000 | $ 1,136,000 |
Fair Value Measurements Narrative (Details) - USD ($) |
Jan. 31, 2019 |
Jul. 31, 2018 |
---|---|---|
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Cash Equivalents | $ 7,163,000 | $ 9,920,000 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Notes Payable, Fair Value | $ 6,384,000 | $ 9,553,000 |
Goodwill and Other Intangibles (Details) $ in Thousands |
Jan. 31, 2019
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Future Amortization Expense | |
2020 | $ 667 |
2021 | 483 |
2022 | 333 |
2023 | 201 |
2024 | $ 68 |
Goodwill and Other Intangibles Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
Jul. 31, 2018 |
|
Finite-Lived Intangible Assets | |||||
Amortization of intangible assets | $ 209,000 | $ 253,000 | $ 419,000 | $ 507,000 | |
Amortization expense for remainder of current fiscal year | 417,000 | 417,000 | |||
Indefinite-lived trademarks | $ 376,000 | $ 376,000 | |||
Goodwill impairment loss | $ 0 |
Pension and Other Postretirement Benefits (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
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Pension Plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||||
Service cost | $ 391 | $ 438 | $ 813 | $ 862 |
Interest cost | 517 | 517 | 1,057 | 1,014 |
Expected return on plan assets | (703) | (485) | (1,405) | (971) |
Amortization of Prior service costs | 1 | 0 | 1 | 1 |
Amortization of Other actuarial loss | 165 | 354 | 386 | 641 |
Net periodic benefit cost | 371 | 824 | 852 | 1,547 |
Postretirement Health Plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||||
Service cost | 25 | 25 | 52 | 54 |
Interest cost | 24 | 19 | 49 | 43 |
Amortization of Prior service costs | (2) | (1) | (3) | (3) |
Amortization of Other actuarial loss | 0 | (5) | 0 | 0 |
Net periodic benefit cost | $ 47 | $ 38 | $ 98 | $ 94 |
Pension and Other Postretirement Benefits Assumptions (Details) |
6 Months Ended | |
---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Discount rate for net periodic benefit cost | 4.04% | 3.75% |
Rate of increase in compensation levels | 3.50% | 3.50% |
Long-term expected rate of return on assets | 7.00% | 7.00% |
Postretirement Health Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans | ||
Discount rate for net periodic benefit cost | 3.81% | 3.26% |
Rate of increase in compensation levels | 0.00% | 0.00% |
Long-term expected rate of return on assets | 0.00% | 0.00% |
Pension and Other Postretirement Benefits Narrative (Details) |
6 Months Ended |
---|---|
Jan. 31, 2019
USD ($)
| |
Pension Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Employer contributions | $ 0 |
Estimated contributions in remainder of current fiscal year | $ 0 |
Postretirement Health Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans | |
Medical Cost Trend Assumption | 7.50% |
Ultimate Health Care Cost Trend Rate | 4.50% |
Year that Rate Reaches Ultimate Trend Rate | 2038 |
Operating Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
Jul. 31, 2018 |
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Segment Reporting Information | |||||
Assets | $ 193,137 | $ 193,137 | $ 194,682 | ||
Net Sales | 69,880 | $ 68,894 | 136,023 | $ 135,540 | |
Corporate Expenses | (7,098) | (6,998) | (13,136) | (14,024) | |
Income from Operations | 2,827 | 5,183 | 3,830 | 9,398 | |
Total Other Expense, Net | (39) | (112) | (158) | (488) | |
Income before Income Taxes | 2,788 | 5,071 | 3,672 | 8,910 | |
Income Tax Expense | (506) | (6,167) | (456) | (6,956) | |
Net Income (Loss) | 2,282 | (1,096) | 3,216 | 1,954 | |
Net Income (Loss) Attributable to Noncontrolling Interest | (5) | 0 | 23 | 0 | |
Net Income (Loss) Attributable to Oil-Dri | 2,287 | (1,096) | 3,193 | 1,954 | |
Business to Business Products | |||||
Segment Reporting Information | |||||
Assets | 60,283 | 60,283 | 65,143 | ||
Segment Income | 7,272 | 9,759 | 14,304 | 18,635 | |
Net Sales | 26,458 | 27,355 | 51,784 | 54,442 | |
Retail and Wholesale Products | |||||
Segment Reporting Information | |||||
Assets | 93,950 | 93,950 | 89,623 | ||
Segment Income | 2,653 | 2,422 | 2,662 | 4,787 | |
Net Sales | 43,422 | $ 41,539 | 84,239 | $ 81,098 | |
Unallocated Assets | |||||
Segment Reporting Information | |||||
Assets | $ 38,904 | $ 38,904 | $ 39,916 |
Operating Segments Narrative (Details) |
6 Months Ended |
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Jan. 31, 2019
segment
| |
Segment Reporting Information | |
Number of Reportable Segments | 2 |
Stock-Based Compensation Summary of Restricted Stock Transactions (Details) - Restricted Stock shares in Thousands |
6 Months Ended |
---|---|
Jan. 31, 2019
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award | |
Non-vested restricted stock outstanding, beginning balance | shares | 178 |
Granted, number of shares | shares | 273 |
Vested, number of shares | shares | (60) |
Forfeitures, number of shares | shares | (22) |
Non-vested restricted stock outstanding, ending balance | shares | 369 |
Non-vested restricted stock outstanding, weighted average grant date fair value, beginning balance | $ / shares | $ 32.74 |
Granted, weighted average grant date fair value | $ / shares | 33.00 |
Vested, weighted average grant date fair value | $ / shares | 31.82 |
Forfeitures, weighted average grant date fair value | $ / shares | 30.21 |
Non-vested restricted stock outstanding, weighted average grant date fair value, ending balance | $ / shares | $ 33.23 |
Stock-Based Compensation Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jan. 31, 2019 |
Jan. 31, 2018 |
|
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Granted, number of shares | 273,000 | |||
2006 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Number Authorized (shares) | 937,500 | 937,500 | ||
2006 Plan | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Award Vesting Period, Minimum (years) | 2 years | |||
Award Vesting Period, Maximum (years) | 5 years | |||
Share-based Compensation Expense | $ 229,000 | $ 426,000 | $ 889,000 | $ 928,000 |
2006 Plan | Restricted Stock | Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Granted, number of shares | 117,000 | 0 | ||
2006 Plan | Restricted Stock | Common Class B | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Granted, number of shares | 7,000 | 0 |
Accumulated Other Comprehensive (Loss) Income Narrative (Details) |
6 Months Ended |
---|---|
Jan. 31, 2019
USD ($)
| |
Accumulated Other Comprehensive (Loss) Income | |
Tax for reclassification adjustment from AOCI for pension and other postretirement benefits | $ 93,000 |
Related Party Transactions (Details) - Director - USD ($) |
3 Months Ended | ||
---|---|---|---|
Jan. 31, 2019 |
Jan. 31, 2018 |
Jul. 31, 2018 |
|
Related Party Transaction | |||
Net sales to related party | $ 105,000 | $ 77,000 | |
Accounts receivable from related party | 45,000 | $ 14,000 | |
Payments to related party | 51,000 | $ 53,000 | |
Accounts payable to related party | $ 0 | $ 0 |
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