UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest even reported) SEPTEMBER 22, 2004
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OIL-DRI CORPORATION OF AMERICA
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(Exact name of registrant as specified in its charter)
DELAWARE 0-8675 36-2048898
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
410 NORTH MICHIGAN AVENUE
SUITE 400
CHICAGO, ILLINOIS 60611-4213
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (312) 321-1515
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On September 22, 2004, Oil-Dri Corporation of America (the "Registrant") issued
a press release announcing its fourth quarter and full fiscal year results of
operations for its fiscal year ended July 31, 2004. A copy of the press release
is attached as Exhibit 99.1 and the information contained therein is
incorporated herein by reference. The information contained in this Form 8-K,
including the exhibit, shall not be deemed "filed" for purposes of Section 18 of
the Securities Exchange Act of 1934, and it shall not be deemed incorporated by
reference into any filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference in such filing.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) None.
(b) None.
(c) Exhibits:
Exhibit
NUMBER Description of Exhibits
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99.1 Press Release of Registrant dated September 22, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OIL-DRI CORPORATION OF AMERICA
By: /S/ CHARLES P. BRISSMAN
--------------------------------
Charles P. Brissman
Vice President and General Counsel
Date: September 24, 2004
EXHIBIT INDEX
Exhibit
NUMBER Description of Exhibits
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99.1 Press Release of Registrant dated September 22, 2004.
Exhibit 99.1
RELEASE: Immediate CONTACT: Kathy Arford
312-706-3274
OIL-DRI REPORTS NET INCOME UP 63% FOR FISCAL YEAR
CHICAGO - September 22, 2004 - Oil-Dri Corporation of America (NYSE: ODC) today
announced sales of $44,803,000 for the fourth quarter ended July 31, 2004
compared to sales of $44,730,000 in the same quarter one year ago. The company
reported a net loss of $237,000 or $0.04 per diluted share in the fourth quarter
compared to net income of $476,000 or $0.08 per diluted share in the same
quarter one year ago.
Sales for fiscal year 2004 were $185,511,000, a 7% increase from sales of
$173,041,000 for fiscal year 2003. Net income for the fiscal year was $5,033,000
or $0.84 per diluted share, a 63% increase in net income over net income of
$3,083,000 or $0.54 per diluted share for fiscal year 2003.
The fourth quarter pre-tax loss of $153,000 includes settlement costs of
$1,250,000 and defense costs of approximately $700,000 associated with the
Company's settlement of previously disclosed patent infringement litigation.
Excluding these items, the company earned pre-tax income of $1,797,000 during
the quarter. In the same quarter one year ago, the company reported pre-tax
income of $511,000 that included a write-off of $573,000 associated with the
Christmas Valley, Ore., plant closing. Excluding this item, the company earned
pre-tax income of $1,084,000 in the same quarter one year ago.
Fiscal year 2004 pre-tax income of $6,931,000 includes a $464,000 loss on
impaired assets related to a write-off of box line packaging equipment, and a
$200,000 reserve for obsolete packaging inventory in conjunction with the sale
of the dog treats business and the patent infringement litigation defense and
settlement costs mentioned above. Excluding these items, the company earned
pre-tax income of $9,545,000 in fiscal year 2004.
Fiscal year 2003 pre-tax income of $4,342,000 included gains from sales of real
estate and mineral rights totaling $449,000, and a payment of $675,000 from a
customer who failed to meet minimum purchase requirements under a supply
agreement. It also included a $385,000 asset write-off, a $350,000 goodwill
write-down associated with an equity investment and the Christmas Valley plant
asset write-off of $573,000. Excluding all of these items, the company earned
pre-tax income of $4,526,000 for fiscal 2003.
FISCAL 2004 IN REVIEW
Daniel S. Jaffee, President and CEO commented, "This year we benefited from our
focused efforts to reduce costs while growing our business. Over the past
several years we have communicated our need to strengthen the company's national
presence, increase sales and profitability and expand our new product
development effort.
"We have completed one full year of national manufacturing and distribution
presence through the acquisition of the Jonny Cat(R) brand and our mining and
production facilities in Taft, Calif. We have also been able to increase
profitability through targeted marketing efforts in all major markets.
Additionally, our attention to new product development is making headway as we
go into fiscal 2005.
"Despite severe volatility in the cost of oil and natural gas, margins have
increased year over year as a result of manufacturing process improvements and
our ability to increase prices to cover the rising cost of energy.
"While we are generally pleased with sales and earnings for the year, we faced
some challenges in the fourth quarter. Among these were the heavy marketing and
introduction costs for the Jonny Cat Scoop products and slower demand for
agricultural carriers.
"Most significantly, in the fourth quarter we announced a settlement and
dismissal of a patent infringement lawsuit. Under the terms of the settlement,
the plaintiff has granted Oil-Dri paid-up licenses of the two patents involved
in the litigation as well as for a third patent owned by the plaintiff. We were
satisfied with the terms of the settlement and are pleased that these costs will
not impact future earnings."
YEAR-END BUSINESS REVIEW
Sales in the CONSUMER PRODUCTS GROUP were flat for the quarter and up 9% for the
year. While both grocery and non-grocery outlets were strong for the year with
the addition of Jonny Cat scoopable products, some of the growth on the West
Coast was hampered by grocery strikes that began late last year and continued
into early 2004. Though the grocery business is still recovering, Jonny Cat
products are gaining expansion into non-grocery markets where they had been
underrepresented.
Strong sales and profit contribution from the Canadian operation were up both
for the quarter and year. This helped to offset reduced sales from the company's
co-packaging business and the second quarter sale of its dog treats business.
CROP PRODUCTION AND HORTICULTURAL PRODUCTS GROUP sales were down 31% in the
quarter and 4% for the year. While Agsorb(R) agricultural carriers enjoyed
strong sales early in the fiscal year, shipments leveled off in the second half,
as anticipated. Sports turf sales were also down slightly overall for fiscal
2004.
The INDUSTRIAL AND AUTOMOTIVE PRODUCTS GROUP sales were up 4% for the quarter
and 8% for the year. Strong synthetic sorbent sales continue to drive growth in
both industrial and automotive markets. Distributor relationships have
successfully contributed to this year's sales and profitability growth, as well
as our expanded West Coast and nation-wide sales efforts.
Sales were up 21% in the quarter for the SPECIALTY PRODUCTS GROUP and 11% for
the fiscal year. All specialty products have outpaced last year's performance.
Particularly strong for the Specialty Products Group has been sales of its
animal health and nutrition product lines, including ConditionAde(R) 200 HPC
mycotoxin binder and Poultry Guard(R) litter amendment. Expansion of these
products into new markets and efforts to revitalize existing business has paid
off, especially internationally. The bleaching clay business was also strong in
the fourth quarter.
FINANCIAL REVIEW
On June 8, 2004, Oil-Dri's Board of Directors declared a regular quarterly cash
dividend of $0.10 per share on Common Stock. The dividend was paid on September
10, 2004 to stockholders of record at the close of business on August 6, 2004.
At the July 31, 2004 closing price of $16.39 and assuming cash dividends
continue at the same rate, the annual yield on the company's Common Stock is
2.4%.
During the fiscal year, the company repurchased 119,506 shares of stock, at an
average price of $15.27 per share. The company has 182,504 shares remaining
under its current repurchase authorization. Cash, cash equivalents and
short-term investments at July 31, 2004, totaled $23,069,000. Operating cash
flow was $18,285,000 for the fiscal year. Capital expenditures for the fiscal
year totaled $6,067,000, which was $1,990,000 less than the depreciation and
amortization of $8,057,000. Debt repayments for the year totaled $4,000,000.
The company's effective tax rate was 27.4% of pre-tax income for the fiscal year
versus 29.0% for fiscal 2003. The decrease in the effective tax rate for fiscal
2004 was due mostly to a change in estimate in calculating the company's
depletion deduction. It is expected that the company will benefit from lower
rates throughout fiscal 2005.
LOOKING FORWARD
Jaffee commented, "We are moving in the right direction with our business
strategy and goals. We have increased cash, cash equivalents, and short-term
investments by $6,399,000, and paid off $4,000,000 in debt this fiscal year.
"We have invested in our consumer brands of Cat's Pride and Jonny Cat litters
this year and look forward to positive feedback from our consumer market in
fiscal 2005. Our Specialty Products Group has made great strides in expanding
their scope into international markets. The prospects for further development
are hopeful in the coming fiscal year. Our focus remains on new product
development.
"In light of all the developments that are coming from both existing business
and new products, fiscal year 2005 looks promising. We are therefore estimating
earnings per share for fiscal 2005 in the range of $1.20 - $1.30. We feel this
strikes a good blend between delivering increased profitability to our
stockholders and allowing us to invest significant resources behind
opportunities that will, we hope, bear fruit in upcoming years.
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THE COMPANY WILL OFFER A LIVE WEB CAST OF THE FOURTH QUARTER EARNINGS
TELECONFERENCE ON THURSDAY, SEPTEMBER 23, 2004 AT 10:00AM CST. TO
LISTEN TO THE CALL VIA THE WEB, PLEASE VISIT WWW.STREETEVENTS.COM OR
WWW.OILDRI.COM. AN ARCHIVED RECORDING OF THE CALL WILL BE AVAILABLE
FOR APPROXIMATELY 30 DAYS AFTER THE CALL AND WRITTEN TRANSCRIPTS OF
ALL TELECONFERENCES ARE POSTED ON THE OIL-DRI WEB SITE.
=======================================================================
OIL-DRI CORPORATION OF AMERICA IS THE WORLD'S LARGEST MANUFACTURER OF
CAT LITTER AND A LEADING SUPPLIER OF SPECIALTY SORBENT PRODUCTS FOR
INDUSTRIAL, AUTOMOTIVE, AGRICULTURAL, HORTICULTURAL AND SPECIALTY
MARKETS.
THIS RELEASE CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS REGARDING
THE COMPANY'S EXPECTED PERFORMANCE FOR FUTURE PERIODS, AND ACTUAL
RESULTS FOR SUCH PERIODS MIGHT MATERIALLY DIFFER. SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO UNCERTAINTIES WHICH
INCLUDE, BUT ARE NOT LIMITED TO, COMPETITIVE FACTORS IN THE CONSUMER
MARKET; THE LEVEL OF SUCCESS IN IMPLEMENTATION OF PRICE INCREASES AND
SURCHARGES; CHANGES IN OVERALL AGRICULTURAL DEMAND; INCREASING
REGULATION OF THE FOOD CHAIN; CHANGES IN THE MARKET CONDITIONS, THE
OVERALL ECONOMY, ENERGY PRICES, AND OTHER FACTORS DETAILED FROM TIME
TO TIME IN THE COMPANY'S ANNUAL REPORT AND OTHER REPORTS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
OIL-DRI(R), POULTRY GUARD(R), CAT'S PRIDE(R), JONNY CAT(R),
AGSORB(R), PRO'S CHOICE(R), FLO-FRE(R), CONDITIONADE(R) AND
PURE-FLO(R) ARE ALL REGISTERED TRADEMARKS OF OIL-DRI CORPORATION OF
AMERICA.
O I L - D R I C O R P O R A T I O N O F A M E R I C A
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share amounts)
(unaudited)
FOURTH QUARTER ENDED JULY 31,
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% OF % OF
2004 SALES 2003 SALES
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NET SALES $44,803 100.0% $44,730 100.0%
COST OF SALES 34,794 77.7% 36,393 81.4%
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GROSS PROFIT 10,009 22.3% 8,337 18.6%
OTHER CONTRACTUAL INCOME AND
NONRECURRING CHARGES (1,250) -2.8% -- --
OPERATING EXPENSES (8,523) -19.0% (7,263) -16.2%
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OPERATING INCOME 236 0.5% 1,074 2.4%
INTEREST EXPENSE (490) -1.1% (408) -0.9%
OTHER INCOME (EXPENSE) 101 0.3% (155) -0.3%
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INCOME BEFORE INCOME TAXES (153) -0.3% 511 1.2%
INCOME TAXES 84 0.2% 35 0.1%
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NET (LOSS) INCOME $(237) -0.5% $476 1.1%
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NET (LOSS) INCOME PER SHARE:
BASIC COMMON $(0.04) $0.09
BASIC CLASS B COMMON $(0.04) $0.07
DILUTED $(0.04) $0.08
AVERAGE SHARES OUTSTANDING:
BASIC COMMON 4,050 4,076
BASIC CLASS B COMMON 1,450 1,423
DILUTED 5,500 5,710
TWELVE MONTHS ENDED JULY 31,
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% OF % OF
2004 SALES 2003 SALES
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NET SALES $185,511 100.0% $173,041 100.0%
COST OF SALES 142,263 76.7% 137,413 79.4%
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GROSS PROFIT 43,248 23.3% 35,628 20.6%
OTHER CONTRACTUAL INCOME AND
NONRECURRING CHARGES (1,250) -0.7% 675 0.4%
LOSS ON IMPAIRED LONG-LIVED ASSETS (464) -0.2% -- --
OPERATING EXPENSES (32,975) -17.8% (29,686) -17.2%
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OPERATING INCOME 8,559 4.6% 6,617 3.8%
INTEREST EXPENSE (2,079) -1.1% (2,361) -1.4%
GAIN ON THE SALE OF MINERAL RIGHTS -- -- 139 0.1%
OTHER INCOME 451 0.2% (53) 0.0%
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INCOME BEFORE INCOME TAXES 6,931 3.7% 4,342 2.5%
INCOME TAXES 1,898 1.0% 1,259 0.7%
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NET INCOME $5,033 2.7% $3,083 1.8%
=====================================
NET INCOME PER SHARE:
BASIC COMMON $0.98 $0.59
BASIC CLASS B COMMON $0.74 $0.44
DILUTED $0.84 $0.54
AVERAGE SHARES OUTSTANDING:
BASIC COMMON 4,040 4,151
BASIC CLASS B COMMON 1,437 1,423
DILUTED 5,962 5,708
NET INCOME PER SHARE AND AVERAGE SHARES OUTSTANDING ARE PRESENTED CONSISTENT
WITH EITF 03-06 WHICH PERTAINS TO COMPANIES WITH PARTICIPATING SECURITIES AS
DEFINED BY THE EITF. FOR THE PERIODS PRESENTED ABOVE, THE DILUTED NET INCOME
PER SHARE AND DILUTED AVERAGE SHARES OUTSTANDING ARE UNAFFECTED BY THE NEW
CALCULATION.
O I L - D R I C O R P O R A T I O N O F A M E R I C A
CONSOLIDATED BALANCE SHEETS
(in thousands, except for per share amounts)
(unaudited)
AS OF JULY 31,
---------------------------
2004 2003
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CURRENT ASSETS
CASH, CASH EQUIVALENTS AND INVESTMENTS $23,069 $16,670
ACCOUNTS RECEIVABLE, NET 24,169 23,768
INVENTORIES 12,399 12,819
PREPAID EXPENSES 8,344 7,373
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TOTAL CURRENT ASSETS 60,630 67,981
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PROPERTY, PLANT AND EQUIPMENT 47,802 49,026
OTHER ASSETS 13,092 17,167
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TOTAL ASSETS $128,875 $126,823
===========================
CURRENT LIABILITIES
CURRENT MATURITIES OF NOTES PAYABLE $4,080 $4,000
ACCOUNTS PAYABLE 5,701 6,856
DIVIDENDS PAYABLE 513 461
ACCRUED EXPENSES 16,742 13,917
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TOTAL CURRENT LIABILITIES 27,036 25,234
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LONG-TERM LIABILITIES
NOTES PAYABLE 23,320 27,400
OTHER NONCURRENT LIABILITIES 6,261 5,175
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TOTAL LONG-TERM LIABILITIES 29,581 32,575
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STOCKHOLDERS' EQUITY 72,258 69,014
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $128,875 $126,823
===========================
BOOK VALUE PER SHARE OUTSTANDING $13.19 $12.38
ADDITIONS TO AND ACQUISITIONS OF
PROPERTY, PLANT AND EQUIPMENT FOURTH QUARTER $2,345 $2,225
YEAR TO DATE $6,067 $9,476
DEPRECIATION AND AMORTIZATION
CHARGES FOURTH QUARTER $1,948 $1,865
YEAR TO DATE $8,057 $8,534