Item 9A. Controls and Procedures
ITEM 9A – CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-K. The controls evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting is set forth in Part II, Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
The Company has made enhancements to the functionality of our existing ERP system so as to upgrade our technology and improve our financial and operational information. The Company has appropriately considered these functionality enhancements in its design of and testing for effectiveness of internal controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, that the ongoing enhancement of the ERP system has not materially changed the effectiveness of its internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that many of our employees are working remotely due to COVID-19. We are continually monitoring and assessing the effects of COVID-19 on our internal controls to minimize the impact to their design and operating effectiveness.
There were no changes, other than those described herein, in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including the CEO and CFO, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
ITEM 9B – OTHER INFORMATION
None.
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PART III
ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item (except as set forth below) is contained in Oil-Dri’s Proxy Statement for its 2020 annual meeting of stockholders under the captions “1. Election of Directors,” “Executive Officers,” “Director Nominations,” “Board of Directors Committee Membership and Meetings,” “Audit Committee” and “Corporate Governance Matters” and is incorporated herein by this reference.
The Company has adopted a Code of Ethics and Business Conduct (the “Code”) which applies to all of its directors, officers (including the Company’s Chief Executive Officer and senior financial officers) and employees. The Code imposes significant responsibilities on the Chief Executive Officer and the senior financial officers of the Company. The Code, the Company’s Corporate Governance Guidelines and the charter of its Audit Committee may be viewed on the Company’s website at www.oildri.com and are available in print to any person upon request to Investor Relations, Oil-Dri Corporation of America, 410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone (312) 321-1515 or e-mail to info@oildri.com. Any amendment to, or waiver of, a provision of the Code which applies to the Company’s Chief Executive Officer or senior financial officers and relates to the elements of a “code of ethics” as defined by the SEC will also be posted on the Company’s website. As allowed by the “controlled company” exemption to certain NYSE rules, the Company does not have a nominating/corporate governance committee and its compensation committee does not have a charter.
ITEM 11 – EXECUTIVE COMPENSATION
The information required by this Item is contained in Oil-Dri ’ s Proxy Statement for its 2020 annual meeting of stockholders under the captions “Executive Compensation,” “Director Compensation,” “Board of Directors Committee Membership and Meetings,”and “Compensation Committee” and is incorporated herein by reference.
ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Except as set forth herein, t he information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2020 annual meeting of stockholders under the captions “Principal Stockholders” and “Security Ownership of Management” and is incorporated herein by reference.
Equity Compensation Plan Information. The following table presents information about compensation plans under which our equity securities are authorized for issuance. There are no outstanding stock options as of July 31, 2020 . See Note 7 of the Notes to the Consolidated Financial Statements for further information about these stock-based compensation plans.
Equity Compensation Plan Information As Of July 31, 2020
Plan Category
Number of securities to be issued upon exercise of outstanding options (in thousands)
(a)
Weighted-average exercise price of outstanding options
(b)
Number of securities remaining available for further issuance under equity compensation plans (excluding securities reflected in column (a)) (in thousands)
(c)
Equity compensation plans approved by stockholders
—
$—
371
The number of securities remaining in column (c) above includes, in accordance with the terms of the plan, shares that were: 1) not vested or exercised in full due to expiration or termination, or 2) tendered or withheld for payment of the exercise price or to satisfy tax withholding amounts.
ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2020 annual meeting of stockholders under the captions “Certain Relationships and Related Party Transactions” and “Director Independence” and is incorporated herein by reference.
69
ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2020 annual meeting of stockholders under the caption “Other Matters Relating to the Independent Auditor - Auditor Fees” and is incorporated herein by reference.
70
PART IV
ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a)(1)
The following consolidated financial statements are contained herein.
Consolidated Balance Sheets as of July 31, 2020 and July 31, 2019.
Consolidated Statements of Operations for the fiscal years ended July 31, 2020 and July 31, 2019.
Consolidated Statements of Comprehensive Income for the fiscal years ended July 31, 2020 and July 31, 2019.
Consolidated Statements of Stockholders’ Equity for the fiscal years ended July 31, 2020 and July 31, 2019.
Consolidated Statements of Cash Flows for the fiscal years ended July 31, 2020 and July 31, 2019.
Notes to the Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm.
(a)(2)
The following financial statement schedule is contained herein:
Schedule to Financial Statements, as follows:
Schedule II - Valuation and Qualifying Accounts, years ended July 31, 2020 and July 31, 2019.
All other schedules are omitted because they are inapplicable, not required under the instructions or the information is included in the consolidated financial statements or notes thereto.
(a)(3)
The following documents are exhibits to this Report:
Exhibit
No.
Description
SEC Document Reference
3.1
Certificate of Incorporation of Oil-Dri, as amended.
Incorporated by reference to Exhibit 4.1 to Oil-Dri’s Registration Statement on Form S-8 (Registration No. 333-57625), filed on June 24, 1998.
3.2
By-Laws of Oil-Dri Corporation of America, as Amended and Restated on December 12, 2017.
Incorporated by reference to Exhibit 3 to Oil-Dri’s (file No. 001-12622) Quarterly Report on Form 10-Q filed on March 9, 2018.
4.1
Description of Capital Stock
Filed herewith
10.1
Memorandum of Agreement #1450 “Fresh Step“ ® dated as of March 12, 2001 between A&M Products Manufacturing Company and Oil-Dri (confidential treatment of certain portions of this exhibit has been granted).
Incorporated by reference to Exhibit 10(s) to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on May 1, 2001.
71
Exhibit
No.
Description
SEC Document Reference
10.2
First Amendment, dated as of December 13, 2002, to Memorandum of Agreement #1450 “Fresh Step” ® dated as of March 12, 2001.
Incorporated by reference to Exhibit 10.2 to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31, 2007.
10.3
Second Amendment, dated as of October 15, 2007, to Memorandum of Agreement #1450 “Fresh Step” ® dated as of March 12, 2001 (confidential treatment of certain portions of this exhibit has been granted).
Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended October 31, 2007.
10.4
Third Amendment, dated as of May 27, 2016, to Memorandum of Agreement #1450 “Fresh Step” ® dated as of March 12, 2001 (confidential treatment of certain portions of this exhibit have been requested).
Incorporated by reference to Exhibit 10.4 to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31, 2016.
10.5
Exclusive Supply Agreement dated May 19, 1999 between Church & Dwight Co., Inc. and Oil-Dri (confidential treatment of certain portions of this exhibit has been granted).
Incorporated by reference to Exhibit (10)(r) to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31, 1999.
10.6
Credit Agreement, dated January 27, 2006 among the Company, certain subsidiaries of the Company and Harris N.A.
Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on February 1, 2006.
10.7
First Amendment, dated as of December 19, 2008 to Credit Agreement dated as of January 27, 2006.
Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2009.
10.8
Second Amendment, dated as of December 21, 2011 to Credit Agreement dated as of January 27, 2006.
Incorporated by reference to Exhibit 10 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on December 28, 2011.
10.9
Third Amendment, dated as of June 21, 2012 to Credit Agreement dated as of January 27, 2006.
Incorporated by reference to Exhibit 10.12 to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31, 2012.
10.10
Fourth Amendment, dated as of December 4, 2014 to Credit Agreement dated as of January 27, 2006.
Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended October 31, 2014.
10.11
Fifth Amendment, dated as of January 31, 2019 to Credit Agreement dated as of January 27, 2006.
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.
10.12
Annex A to the Fifth Amendment to Credit Agreement dated as of January 27, 2006.
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.
10.13
$18,500,000 Note Agreement dated as of November 12, 2010 among Oil-Dri Corporation of America, The Prudential Insurance Company of America, Prudential Retirement Insurance and Annuity Company, Forethought Life Insurance Company, Physicians Mutual Insurance Company and BCBSM, Inc. dba Blue Cross and Blue Shield of Minnesota.
Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on November 16, 2010.
72
Exhibit
No.
Description
SEC Document Reference
10.14
Amended and Restated Note Purchase and Private Shelf Agreement, dated as of May 15, 2020, among Oil-Dri Corporation of America, PGIM, Inc. and existing noteholders and purchasers named therein.
Incorporated by reference to Exhibit 10.1 to Oil-Dri's (file No. 001-12622) Current Report on Form 8-K filed on May 21, 2020.
10.15
Description of 1987 Executive Deferred Compensation Program.*
Incorporated by reference to Exhibit (10)(f) to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31, 1988.
10.16
Oil-Dri Corporation of America Deferred Compensation Plan, as amended and restated effective April 1, 2003.*
Incorporated by reference to Exhibit (10)(j)(1) to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended April 30, 2003.
10.17
First Amendment, effective as of January 1, 2007, to Oil-Dri Corporation of America Deferred Compensation Plan, as amended and restated effective April 1, 2003.*
Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2008.
10.18
Second Amendment, effective as of January 1, 2008, to Oil-Dri Corporation of America Deferred Compensation Plan, as amended and restated effective April 1, 2003.*
Incorporated by reference to Exhibit 10.2 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2008.
10.19
Supplemental Executive Retirement Plan dated April 1, 2003.*
Incorporated by reference to Exhibit (10)(1) to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended April 30, 2003.
10.20
First Amendment, effective March 1, 2020, to the Oil-Dri Corporation of America Supplemental Executive Retirement Plan dated April 1, 2003.*
Incorporated by reference to Exhibit 10.1 to Oil-Dri's (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2020.
10.21
Second Amendment, effective June 30, 2020, to the Oil-Dri Corporation of America Supplemental Executive Retirement Plan dated April 1, 2003.*
Filed herewith
10.22
Oil-Dri Corporation of America Annual Incentive Plan (as amended and restated effective January 1, 2008).*
Incorporated by reference to Exhibit 10.4 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2008.
10.23
Oil-Dri Corporation of America 2005 Deferred Compensation Plan (as amended and restated effective January 1, 2008)*
Incorporated by reference to Exhibit 10.3 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2008.
10.24
First Amendment, effective July 1, 2020, to the Oil-Dri Corporation of America 2005 Deferred Compensation Plan (as amended and restated effective January 1, 2008).*
Filed herewith
10.25
Oil-Dri Corporation of America 2006 Long Term Incentive Plan (as amended and restated effective July 28, 2006)*
Incorporated by reference to Appendix A to Oil-Dri’s (File No. 001-12622) Definitive Proxy Statement on Schedule 14A filed on November 3, 2006.
73
Exhibit
No.
Description
SEC Document Reference
10.26
First Amendment, effective as of January 1, 2008, to Oil-Dri Corporation of America 2006 Long Term Incentive Plan (as amended and restated effective July 28, 2006)*
Incorporated by reference to Exhibit 10.5 to Oil-Dri’s (File No. 001-12622) Quarterly Report on Form 10-Q for the quarter ended January 31, 2008.
10.27
Second Amendment, effective as of October 15, 2015, to Oil-Dri Corporation of America 2006 Long Term Incentive Plan (as previously amended and restated effective July 28, 2006)*
Incorporated by reference to Appendix A to Oil-Dri’s (File No. 001-12622) Definitive Proxy Statement on Schedule 14A filed on October 28, 2015.
10.28
Third Amendment to Oil-Dri Corporation of America 2006 Long Term Incentive Plan*
Incorporated by reference to Appendix A of Oil-Dri's (File No. 001-12622) Definitive Proxy Statement on Schedule 14A filed on October 30, 2019
10.29
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Employee Stock Option Agreement for Class A Common Stock.*
Incorporated by reference to Exhibit 10.2 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.30
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Employee Stock Option Agreement for Common Stock.*
Incorporated by reference to Exhibit 10.3 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.31
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Employee Stock Option Agreement for Class B Stock.*
Incorporated by reference to Exhibit 10.4 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.32
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Director Stock Option Agreement for Common Stock.*
Incorporated by reference to Exhibit 10.5 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.33
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Restricted Stock Agreement for Class A Common Stock.*
Incorporated by reference to Exhibit 10.6 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.34
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Restricted Stock Agreement for Common Stock.*
Incorporated by reference to Exhibit 10.7 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.35
Form of Oil-Dri Corporation of America 2006 Long Term Incentive Plan Restricted Stock Agreement for Class B Stock.*
Incorporated by reference to Exhibit 10.8 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006.
10.36
Form of 2018 Restricted Stock Agreement for Class B Stock under the Oil-Dri Corporation of America 2006 Long Term Incentive Plan.*
Incorporated by reference to Exhibit 10.29 to Oil-Dri's (file No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31, 2018 .
11.1
Statement re: Computation of Net Income Per Share.
Filed herewith.
74
Exhibit
No.
Description
SEC Document Reference
14.1
Code of Ethics
Available at Oil-Dri’s website at www.oildri.com or in print upon request to Investor Relations, Oil-Dri Corporation of America, 410 North Michigan Avenue, Suite 400, Chicago, IL 60611-4213, telephone (312) 321-1515 or e-mail to info@oildri.com.
21.1
Subsidiaries of Oil-Dri Corporation of America
Filed herewith.
23.1
Consent of Independent Registered Public Accounting Firm
Filed herewith.
31.1
Certifications pursuant to Rule 13a – 14(a).
Filed herewith.
32.1
Certifications pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002.
Furnished herewith.
95
Mine Safety Disclosure
Filed herewith.
101.INS
XBRL Taxonomy Instance Document
The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
XBRL Taxonomy Extension Schema Document
Furnished herewith.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
Furnished herewith.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
Furnished herewith.
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
Furnished herewith
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
Furnished herewith.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
Furnished herewith.
*
Management contract or compensatory plan or arrangement.
75
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Oil-Dri has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OIL-DRI CORPORATION OF AMERICA
(Registrant)
By
/s/ Daniel S. Jaffee
Daniel S. Jaffee
President and Chief Executive Officer, Director
Dated: October 13, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Oil-Dri and in the capacities and on the dates indicated:
/s/ Daniel S. Jaffee
October 13, 2020
Daniel S. Jaffee
President and Chief Executive Officer,
Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Susan M. Kreh
October 13, 2020
Susan M. Kreh
Chief Financial Officer
(Principal Financial Officer)
/s/ Paula J. Krystopolski
October 13, 2020
Paula J. Krystopolski
Vice President, Corporate Controller
(Controller)
/s/ Ellen-Blair Chube
October 13, 2020
Ellen-Blair Chube
Director
/s/ Paul M. Hindsley
October 13, 2020
Paul M. Hindsley
Director
76
/s/ Michael A. Nemeroff
October 13, 2020
Michael A. Nemeroff
Director
/s/ George C. Roeth
October 13, 2020
George C. Roeth
Director
/s/ Allan H. Selig
October 13, 2020
Allan H. Selig
Director
/s/ Paul E. Suckow
October 13, 2020
Paul E. Suckow
Director
/s/ Lawrence E. Washow
October 13, 2020
Lawrence E. Washow
Director
77
SCHEDULE II
OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Year Ended July 31,
2020
2019
(in thousands )
Allowance for doubtful accounts and cash discounts:
Balance, beginning of year
$
644
$
817
Addition (Reduction)
421
(181
)
Net recovery
13
8
Balance, end of year
$
1,078
$
644
Valuation reserve for income taxes:
Balance, beginning of year
$
732
$
789
Change
191
(57
)
Balance, end of year
$
923
$
732
78
EXHIBITS
Exhibit No.
Description
4.1
Description of Capital Stock
10.21
Second Amendment, effective June 30, 2020, to the Oil-Dri Corporation of America Supplemental Executive Retirement Plan dated April 1, 2003.
10.24
First Amendment, effective July 1, 2020, to the Oil-Dri Corporation of America 2005 Deferred Compensation Plan (as amended and restated effective January 1, 2008).
11.1
Statement Re: Computation of Net Income Per Share
21.1
Subsidiaries of Oil-Dri Corporation of America
23.1
Consent of Independent Registered Public Accounting Firm
31.1
Certifications by Daniel S. Jaffee, President and Chief Executive Officer and Susan M. Kreh, Chief Financial Officer, required by Rule 13a-14(a)
32.1
Certifications pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002
95
Mine Safety Disclosure
101.INS
XBRL 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
Note:
Stockholders may receive copies of the above listed exhibits, without fee, by written request to Investor Relations, Oil-Dri Corporation of America, 410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone (312) 321-1515 or e-mail to info@oildri.com.
79