What changed in this filing

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Item 1. Financial Statements

2021-03-11 compared with 2020-12-07 · 186 added, 82 removed, 439 unchanged (38% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

ASSETS October 31,

ASSETS January 31,

2021 July 31,

2 unchanged sentences

Accounts receivable, less allowance of

$1,036 and $1,078 at October 31, 2020 and July 31, 2020, respectively 39,212 34,911

$1,062 and $1,078 at January 31, 2021 and July 31, 2020, respectively 38,896 34,911

Inventories 23,655 23,893

8 unchanged sentences

Other intangibles, net of accumulated amortization

of $483 and $457 at October 31, 2020 and July 31, 2020, respectively 1,625 1,566

of $518 and $457 at January 31, 2021 and July 31, 2020, respectively 1,683 1,566

Customer list, net of accumulated amortization

of $6,995 and $6,887 at October 31, 2020 and July 31, 2020, respectively 790 898

of $7,104 and $6,887 at January 31, 2021 and July 31, 2020, respectively 681 898

Deferred income taxes 6,554 7,302

7 unchanged sentences

(in thousands, except share and per share amounts)

LIABILITIES & STOCKHOLDERS’ EQUITY October 31,

LIABILITIES & STOCKHOLDERS’ EQUITY January 31,

2021 July 31,

8 unchanged sentences

Notes payable, net of unamortized debt issuance costs

of $143 and $150 at October 31, 2020 and July 31, 2020, respectively 8,857 8,848

of $136 and $150 at January 31, 2021 and July 31, 2020, respectively 8,864 8,848

Deferred compensation 5,725 5,140

5 unchanged sentences

Stockholders’ Equity

Common Stock, par value $.10 per share, issued 8,506,476 shares at October 31, 2020

Common Stock, par value $.10 per share, issued 8,524,476 shares at January 31, 2021

and 8,449,003 shares at July 31, 2020 853 845

Class B Stock, par value $.10 per share, issued 2,413,141 shares at October 31, 2020

Class B Stock, par value $.10 per share, issued 2,413,141 shares at January 31, 2021

and 2,437,402 shares at July 31, 2020 241 244

7 unchanged sentences

Less Treasury Stock, at cost (3,161,292 Common and 346,491 Class B shares at

October 31, 2020 and 3,090,230 Common and 335,816 Class B shares at July 31, 2020) ( 63,253 ) ( 62,269 )

January 31, 2021 and 3,090,230 Common and 335,816 Class B shares at July 31, 2020) ( 65,071 ) ( 62,269 )

Total Stockholders’ Equity 152,441 147,964

4 unchanged sentences

(in thousands, except for per share amounts)

For the Three Months Ended October 31,

For the Six Months Ended January 31,

Net Sales $ 150,597 $ 142,127

3 unchanged sentences

Income from Operations 9,421 9,994

Other (Expense) Income

Other Income (Expense)

Interest expense ( 356 ) ( 206 )

1 unchanged sentence

Other, net 807 ( 143 )

Total Other Expense, Net ( 422 ) ( 44 )

Total Other Income (Expense), Net 491 ( 159 )

Income Before Income Taxes 9,912 9,835

16 unchanged sentences

Basic Class B Common $ 0.3900 $ 0.3750

(1) Our Form 10-Q for three months ended October 31, 2020 and 2019 reflects a change in presentation for net income per share.

(1) Our Form 10-Q for the six months ended January 31, 2021 and 2020 reflects a change in presentation for net income per share.

We have historically disclosed net income per share for our diluted Common and Class B Common shares in total.

4 unchanged sentences

(in thousands of dollars)

For the Three Months Ended October 31,

For the Six Months Ended January 31,

Net Income Attributable to Oil-Dri $ 8,283 $ 8,366

6 unchanged sentences

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Income

(in thousands, except for per share amounts)

For the Three Months Ended January 31,

Net Sales $ 74,500 $ 71,005

Cost of Sales ( 56,328 ) ( 52,047 )

Gross Profit 18,172 18,958

Selling, General and Administrative Expenses ( 13,928 ) ( 13,085 )

Income from Operations 4,244 5,873

Other Income (Expense)

Interest expense ( 164 ) ( 103 )

Interest income 15 92

Other, net 1,062 ( 104 )

Total Other Income (Expense), Net 913 ( 115 )

Income Before Income Taxes 5,157 5,758

Income Tax Expense ( 869 ) ( 1,009 )

Net Income 4,288 4,749

Net Loss Attributable to Noncontrolling Interest ( 11 ) ( 81 )

Net Income Attributable to Oil-Dri 4,299 4,830

Net Income Per Share (1)

Basic Common $ 0.62 $ 0.68

Basic Class B Common $ 0.47 $ 0.51

Diluted Common $ 0.61 $ 0.67

Diluted Class B Common $ 0.46 $ 0.51

Average Shares Outstanding

Basic Common 5,150 5,181

Basic Class B Common 1,934 2,039

Diluted Common 5,253 5,277

Diluted Class B Common 1,967 2,067

Dividends Declared Per Share

Basic Common $ 0.2600 $ 0.2500

Basic Class B Common $ 0.1950 $ 0.1875

(1) Our Form 10-Q for the three months ended January 31, 2021 and 2020 reflects a change in presentation for net income per share.

We have historically disclosed net income per share for our diluted Common and Class B Common shares in total.

As we have two classes of common shares, we have elected to change our net income per share presentation to reflect net income per share for both of our classes of common shares - our diluted Common shares and our diluted Class B Common shares.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

OIL-DRI CORPORATION OF AMERICA

Condensed Consolidated Statements of Comprehensive Income

(in thousands of dollars)

For the Three Months Ended January 31,

Net Income Attributable to Oil-Dri $ 4,299 $ 4,830

Other Comprehensive Income:

Pension and postretirement benefits (net of tax) 201 5,277

Cumulative translation adjustment 136 ( 54 )

Other Comprehensive Income 337 5,223

Total Comprehensive Income $ 4,636 $ 10,053

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

OIL-DRI CORPORATION OF AMERICA

Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)

For the Three Months Ended October 31

For the Three Months Ended January 31

Number of Shares

7 unchanged sentences

Stockholders’

Balance, July 31, 2019 10,860,678 ( 3,251,288 ) $ 1,086 $ 41,300 $ 164,756 $ ( 56,543 ) $ ( 15,039 ) $ ( 14 ) $ 135,546

Balance, October 31, 2019 10,879,655 ( 3,268,057 ) $ 1,088 $ 42,327 $ 166,526 $ ( 57,103 ) $ ( 14,812 ) $ ( 90 ) $ 137,936

Net Income (Loss) — — — — 4,830 — — ( 81 ) 4,749

4 unchanged sentences

Amortization of Restricted Stock — — — 810 — — — — 810

Balance, January 31, 2020 10,881,155 ( 3,269,059 ) $ 1,088 $ 43,149 $ 169,590 $ ( 57,138 ) $ ( 9,589 ) $ ( 171 ) $ 146,929

Balance, October 31, 2020 10,919,617 ( 3,453,239 ) $ 1,092 $ 45,779 $ 178,761 $ ( 63,253 ) $ ( 11,854 ) $ ( 209 ) $ 150,316

Net Income (Loss) — — — — 4,299 — — ( 11 ) 4,288

Other Comprehensive Income — — — — — — 337 — 337

Dividends Declared — — — — ( 1,795 ) — — — ( 1,795 )

Purchases of Treasury Stock — ( 33,594 ) — — — ( 1,211 ) — — ( 1,211 )

Net issuance of stock under long-term incentive plans 18,000 ( 20,950 ) 2 605 — ( 607 ) — — —

Amortization of Restricted Stock — — — 506 — — — — 506

Balance, January 31, 2021 10,937,617 ( 3,507,783 ) 1,094 46,890 181,265 ( 65,071 ) ( 11,517 ) ( 220 ) 152,441

For the Six Months Ended January 31, 2021

Number of Shares

Common & Class B Stock Treasury Stock Common & Class B Stock Additional Paid-In Capital Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Non-controlling Interest Total Stockholders' Equity

Balance, July 31, 2019 10,860,678 ( 3,251,288 ) $ 1,086 $ 41,300 $ 164,756 $ ( 56,543 ) $ ( 15,039 ) $ ( 14 ) $ 135,546

5 unchanged sentences

Amortization of Restricted Stock — — — 1,779 — — — — 1,779

Balance, October 31, 2020 10,919,617 ( 3,453,239 ) $ 1,092 $ 45,779 $ 178,761 $ ( 63,253 ) $ ( 11,854 ) $ ( 209 ) $ 150,316

Balance, January 31, 2020 10,881,155 ( 3,269,059 ) $ 1,088 $ 43,149 $ 169,590 $ ( 57,138 ) $ ( 9,589 ) $ ( 171 ) $ 146,929

Balance, July 31, 2020 10,886,405 ( 3,426,046 ) $ 1,089 $ 44,993 $ 176,579 $ ( 62,269 ) $ ( 12,254 ) $ ( 174 ) $ 147,964

Net Income (Loss) — — — — 8,283 — — ( 46 ) 8,237

Other Comprehensive Income — — — — — — 737 — 737

Dividends Declared — — — — ( 3,597 ) — — — ( 3,597 )

Purchases of Treasury Stock — ( 60,587 ) — — — ( 2,189 ) — — ( 2,189 )

Net issuance of stock under long-term incentive plans 51,212 ( 21,150 ) 5 607 — ( 613 ) — — ( 1 )

Amortization of Restricted Stock — — — 1,290 — — — — 1,290

Balance, January 31, 2021 10,937,617 ( 3,507,783 ) $ 1,094 $ 46,890 $ 181,265 $ ( 65,071 ) $ ( 11,517 ) $ ( 220 ) $ 152,441

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

For the Three Months Ended October 31,

For the Six Months Ended January 31,

CASH FLOWS FROM OPERATING ACTIVITIES 2021 2020

Net Income $ 8,237 $ 8,209

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 7,065 6,929

2 unchanged sentences

Provision for bad debts and cash discounts ( 38 ) 221

(Gain) Loss on the sale of fixed assets ( 1 ) 40

Loss on the sale of fixed assets 12 116

Curtailment gain on SERP Plan — ( 1,296 )

(Increase) Decrease in assets:

10 unchanged sentences

Total Adjustments ( 5,152 ) 6,061

Net Cash (Used in) Provided by Operating Activities ( 3,435 ) 6,692

Net Cash Provided by Operating Activities 3,085 14,270

CASH FLOWS FROM INVESTING ACTIVITIES

5 unchanged sentences

Dividends paid ( 3,606 ) ( 3,527 )

Purchase of treasury stock ( 978 ) ( 500 )

Purchases of treasury stock ( 2,189 ) ( 523 )

Net Cash Used in Financing Activities ( 5,795 ) ( 7,133 )

6 unchanged sentences

(in thousands)

For the Three Months Ended October 31,

For the Six Months Ended January 31,

Supplemental disclosure of non-cash investing and financing activities:

16 unchanged sentences

In addition, certain prior year reclassifications were made to conform to the current year presentation.

Operating results for the three months ended October 31, 2020 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2021.

Operating results for the three and six months ended January 31, 2021 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2021.

In March 2020, the World Health Organization declared the recent novel coronavirus outbreak (“the coronavirus” or “COVID-19”) a pandemic.

Despite its continued spread and the adverse effects of COVID-19 on the overall economy and certain of the industries we serve, we have not experienced a significant decline in customer orders and sales in the first quarter of fiscal year 2021.

However, the effects of COVID-19 are unprecedented, and therefore we are unable to ascertain the effects on our sales and net earnings for the balance of fiscal year 2021.

25 unchanged sentences

This process allows us to continuously reclaim older mine sites and dispose of overburden simultaneously, therefore minimizing the costs associated with the reclamation process.

ASC 842 provides that a contract is, or contains, a lease if it conveys the right to control the use of an identified asset and, accordingly, a lease liability and a related right-of-use (“ROU”) asset is recognized at the commencement date on our consolidated balance sheet.

ASC 842, Leases , provides that a contract is, or contains, a lease if it conveys the right to control the use of an identified asset and, accordingly, a lease liability and a related right-of-use (“ROU”) asset is recognized at the commencement date on our consolidated balance sheet.

As provided in ASC 842, we have elected not to apply these measurement and recognition requirements to short-term leases (i.e., leases with a term of 12 months or less).

21 unchanged sentences

We may require certain customers to provide payment in advance of product shipment.

We recorded a liability for these advance payments of $ 317,000 and $ 247,000 as of October 31, 2020 and July 31, 2020, respectively.

This liability is reported in Other Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet.

Revenue recognized during the three months ended October 31, 2020 that was included in the liability for advance payments at the beginning of the period was $ 185,000 .

We recorded a liability for these advance payments of $ 406,000 and $ 247,000 as of January 31, 2021 and July 31, 2020, respectively.

This liability is reported in Other within Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet.

Revenue recognized during the six months ended January 31, 2021 that was included in the liability for advance payments at the beginning of the period was $ 197,000 .

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.

6 unchanged sentences

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.

Other Noncurrent Liabilities

Other Current and Noncurrent Liabilities

On March 27, 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into U.S.

The CARES Act provides for, among other things, deferral of the employer portion of social security taxes incurred through the end of calendar 2020.

As permitted by the CARES Act, we deferred approximately $ 1,800,000 in payroll taxes as of October 31, 2020 and expect to defer the payment of payroll taxes for the remainder of 2020 to be paid equally in the fourth quarters of calendar years 2021 and 2022 representing approximately $ 2,500,000 in payroll taxes.

The accrual for these payroll taxes is included in Other within Noncurrent Liabilities on the unaudited Condensed Consolidated Balance Sheet.

As permitted by the CARES Act, we deferred approximately $ 400,000 of payroll taxes for the quarter ended January 31, 2021 (through December 2020) for an aggregate amount of approximately $ 2,300,000 in payroll taxes in calendar year 2020.

The $ 2,300,000 will be paid equally in the fourth quarters of calendar years 2021 and 2022.

The current portion of the accrual for these payroll taxes is included in Other within Accrued Expenses and the noncurrent portion of the accrual is included in Other within Noncurrent Liabilities on the unaudited Condensed Consolidated Balance Sheet.

NEW ACCOUNTING PRONOUNCEMENTS AND REGULATIONS

3 unchanged sentences

The guidance is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

We have debt agreements that reference LIBOR and to the extent that those agreements are modified to replace LIBOR with another interest rate index, ASC 848 will allow us to account for the modification as a continuation of the existing contract without additional analysis.

We are currently evaluating the potential effects of the adoption of this guidance on our Consolidated Financial Statements.

20 unchanged sentences

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 October 31, 2020 and July 31, 2020 were $ 970,000 and $ 926,000 , respectively.

Other Inventories includes a variety of items including clay, additives, fragrances and other supplies.

Other inventory decreased due to increased production.

The inventory obsolescence reserve values at January 31, 2021 and July 31, 2020 were $ 772,000 and $ 926,000 , respectively.

The obsolescence reserve decreased due to better management of inventory.

Other inventories includes a variety of items including clay, additives, fragrances and other supplies and decreased from July 31, 2020 due to increased production.

Conversely, packaging inventories increased from July 31, 2020 due to anticipated sales demand.

FAIR VALUE MEASUREMENTS

6 unchanged sentences

Cash equivalents are primarily money market mutual funds classified as Level 1.

We had $ 6,000 of cash equivalents as of October 31, 2020 and July 31, 2020, respectively, which are included in Cash and cash equivalents on the unaudited Condensed Consolidated Balance Sheet.

Balances of accounts receivable and accounts payable approximated their fair values at October 31, 2020 and July 31, 2020 due to the short maturity and nature of those balances.

We had $ 6,000 of cash equivalents as of January 31, 2021 and July 31, 2020, respectively, which are included in Cash and cash equivalents on the unaudited Condensed Consolidated Balance Sheet.

Balances of accounts receivable and accounts payable approximated their fair values at January 31, 2021 and July 31, 2020 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 $ 11,690,000 and $ 11,631,000 as of October 31, 2020 and July 31, 2020, respectively, and are classified as Level 2.

The estimated fair value of notes payable, including current maturities, was $ 11,541,000 and $ 11,631,000 as of January 31, 2021 and July 31, 2020, respectively, and are classified as Level 2.

The fair value was estimated using the exit price notion of fair value.

1 unchanged sentence

(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.

See Note 5 of the Notes to the unaudited Condensed Consolidated Financial Statements for further information about goodwill and other intangible assets.

GOODWILL AND OTHER INTANGIBLE ASSETS

Intangible assets, other than goodwill, include trademarks, patents, customer lists and product registrations.

Intangible amortization expense was $ 155,000 and $ 167,000 in the first three months of fiscal years 2021 and 2020.

Intangible amortization expense was $ 150,000 and $ 249,000 in the second quarter of fiscal years 2021 and 2020, respectively.

Intangible amortization expense was $ 305,000 and $ 416,000 in the first six months of fiscal years 2021 and 2020.

Estimated intangible amortization for the remainder of fiscal year 2021 is $ 290,000 .

3 unchanged sentences

There have been no triggering events that would indicate a new impairment analysis is needed.

Although we have not identified any triggering events relating to goodwill or our intangibles, the ultimate effects of COVID-19 could change this assessment in the future.

A lthough we have not identified any triggering events relating to goodwill or our intangibles, the ultimate effects of COVID-19 could change this assessment in the future.

ACCRUED EXPENSES

Accrued expenses is as follows (in thousands):

2021 July 31,

Salaries, Wages, Commissions and Employee Benefits $ 8,825 $ 14,798

Trade promotions and advertising 1,537 2,349

Freight 2,714 1,313

Real Estate Tax 222 1,658

Other 9,513 8,582

$ 22,811 $ 28,700

The decrease in salaries, wages, commissions and employee benefits relates primarily to the payment of annual discretionary bonuses during the first quarter of fiscal year 2021.

The accrual for trade promotions and advertising is lower at January 31, 2021 than at July 31, 2020 due to a shift in timing of advertising programs and expense.

Freight rates increased during the six months ended January 31, 2021 resulting in a higher accrual at January 31, 2021.

Accrued real estate tax at January 31, 2021 is lower than at July 31, 2020 due to timing of payments as well as an adjustment to account for lower real estate taxes for one of our facilities.

OTHER CONTINGENCIES

3 unchanged sentences

Such party subsequently, in July 2020, filed a lawsuit seeking to require the Company to participate in binding mediation regarding this matter.

Although we believe this claim to be without merit, as of July 31, 2020, we have determined a reasonable estimate of this liability within a range, with no amount within that range being a better estimate than any other amount, and have therefore recorded that estimate within Other accrued expenses.

There have been no changes during the three months ended October 31, 2020 that would have changed this estimate.

There have been no changes during the six months ended January 31, 2021 that would have changed this estimate.

We believe that any loss related to this matter is unlikely to be material.

5 unchanged sentences

To determine the present value of the lease liability, we use an incremental borrowing rate, which is defined as the rate of interest that the Company would have to pay to borrow (on a collateralized basis over a similar term) an amount equal to the lease payments in similar economic environments.

Further information about our accounting policy for leases is included in Note 1 of the Notes to unaudited Condensed Consolidated Financial Statements.

We have no material finance leases, and variable costs for operating leases are immaterial for the first quarter of fiscal year 2021.

Further information about our accounting policy for leases is included in Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements.

We have no material finance leases, and variable costs for operating leases are immaterial for the second quarter of fiscal year 2021.

Operating lease costs are included in Cost of Sales or SG&A expenses based on the nature of the lease.

The following table summarizes total lease costs for our operating leases (in thousands):

For the Three Months Ended

For the Three Months Ended January 31, For the Six Months Ended January 31,

2021 2020 2021 2020

Operating Lease Cost

2 unchanged sentences

Supplemental cash flow information related to leases was as follows (in thousands):

For the Three Months Ended

For the Three Months Ended January 31, For the Six Months Ended January 31,

2021 2020 2021 2020

Other Information

3 unchanged sentences

Other supplemental balance sheet information related to leases was as follows:

October 31, 2020 July 31, 2020

January 31, 2021 July 31, 2020

Weighted-average remaining lease term - operating leases 9.5 years 9.4 years

Weighted-average discount rate - operating leases 3.93 % 3.87 %

The following table summarizes scheduled minimum future lease payments due within twelve months for operating leases with terms longer than one year for which cash flows are fixed and determinable as of October 31, (in thousands):

Thereafter 6,140

1 unchanged sentence

Net lease obligation $ 10,208

ACCRUED EXPENSES

Accrued expenses is as follows (in thousands):

2020 July 31,

Salaries, Wages, Commissions and Employee Benefits $ 5,810 $ 14,798

Trade promotions and advertising 1,572 2,349

Freight 2,094 1,313

Real Estate Tax 1,488 1,658

Other 8,888 8,582

$ 19,852 $ 28,700

The decrease in salaries, wages, commissions and employee benefits relates primarily to the payment of annual discretionary bonuses during the three months ended October 31, 2020.

The accrual for trade promotions and advertising is lower for the three months ended October 31, 2020 than the prior fiscal year due to a shift in timing of advertising programs and expense.

Freight rates increased during the three months ended October 31, 2020 resulting in a higher accrual.

PENSION AND OTHER POSTRETIREMENT BENEFITS

7 unchanged sentences

(in thousands)

For the Three Months Ended October 31,

For the Three Months Ended January 31, For the Six Months Ended January 31,

2021 2020 2021 2020

Service cost $ — $ 363 $ — $ 851

6 unchanged sentences

(in thousands)

For the Three Months Ended October 31,

For the Three Months Ended January 31, For the Six Months Ended January 31,

2021 2020 2021 2020

Service cost $ 34 $ 28 $ 69 $ 58

2 unchanged sentences

Prior service costs ( 2 ) ( 2 ) ( 3 ) ( 3 )

Other actuarial loss 2 — 2 —

Net periodic benefit cost $ 46 $ 46 $ 93 $ 96

1 unchanged sentence

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 voluntary contribution to the Pension Plan during the first quarter of fiscal year 2021.

We were not required to make, and did not voluntarily make, a contribution to the Pension Plan during the first six months of fiscal year 2021.

We have no minimum funding requirements for the remainder of fiscal year 2021.

3 unchanged sentences

Pension Benefits Postretirement Health Benefits

For the Three Months Ended October 31,

For the Three and Six Months Ended January 31,

2021 2020 2021 2020

37 unchanged sentences

Business to Business Products Group Retail and Wholesale Products Group

For the Three Months Ended October 31,

For the Six Months Ended January 31,

Product 2021 2020 2021 2020

5 unchanged sentences

Net Sales $ 53,805 $ 50,949 $ 96,792 $ 91,178

Business to Business Products Group Retail and Wholesale Products Group

For the Three Months Ended January 31,

Product 2021 2020 2021 2020

Cat Litter $ 3,736 $ 3,550 $ 41,085 $ 38,591

Industrial and Sports — — 6,710 7,412

Agricultural and Horticultural 5,046 4,577 — —

Bleaching Clay and Fluids Purification 12,765 12,382 422 531

Animal Health and Nutrition 4,736 3,962 — —

Net Sales $ 26,283 $ 24,471 $ 48,217 $ 46,534

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;

2 unchanged sentences

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.

October 31, 2020 July 31, 2020

January 31, 2021 July 31, 2020

(in thousands)

6 unchanged sentences

Corporate expenses also include the estimated annual incentive plan bonus accrual.

For the Three Months Ended October 31,

For the Six Months Ended January 31,

Net Sales Income

6 unchanged sentences

Income from Operations 9,421 9,994

Total Other Expense, Net ( 422 ) ( 44 )

Total Other Income (Expense), Net 491 ( 159 )

Income before Income Taxes 9,912 9,835

3 unchanged sentences

Net Income Attributable to Oil-Dri $ 8,283 $ 8,366

For the Three Months Ended January 31,

Net Sales Income

2021 2020 2021 2020

(in thousands)

Business to Business Products Group $ 26,283 $ 24,471 $ 7,663 $ 7,552

Retail and Wholesale Products Group 48,217 46,534 4,111 5,608

Net Sales $ 74,500 $ 71,005

Corporate Expenses ( 7,530 ) ( 7,287 )

Income from Operations 4,244 5,873

Total Other Income (Expense), Net 913 ( 115 )

Income before Income Taxes 5,157 5,758

Income Tax Expense ( 869 ) ( 1,009 )

Net Income 4,288 4,749

Net Loss Attributable to Noncontrolling Interest ( 11 ) ( 81 )

Net Income Attributable to Oil-Dri $ 4,299 $ 4,830

STOCK-BASED COMPENSATION

2 unchanged sentences

The total number of shares of stock subject to grants under the 2006 Plan may not exceed 1,219,500 .

As of October 31, 2020, there were 354,146 shares available for future grants under this plan.

As of January 31, 2021, there were 357,096 shares available for future grants under this plan.

Restricted Stock

All of our non-vested restricted stock as of October 31, 2020 was issued under the 2006 Plan with vesting periods generally between one and five years .

All of our non-vested restricted stock as of January 31, 2021 was issued under the 2006 Plan with vesting periods generally between one 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 33,000 and 19,000 restricted shares of Common Stock granted during the first quarter of fiscal years 2021 and 2020, respectively.

Stock-based compensation expense was $ 784,000 and $ 969,000 for the first quarter of fiscal years 2021 and 2020, respectively.

There were 18,000 and 1,500 restricted shares of Common Stock granted during the second quarter of fiscal years 2021 and 2020, respectively.

Stock-based compensation expense was $ 506,000 and $ 810,000 for the second quarter of fiscal years 2021 and 2020, respectively.

Stock-based compensation expense was $ 1,290,000 and $ 1,779,000 for the first six months of fiscal years 2021 and 2020, respectively.

A summary of restricted stock transactions is shown below:

4 unchanged sentences

Vested ( 60 ) $ 33.05

Non-vested restricted stock outstanding at October 31, 2020 375 $ 33.40

Forfeitures ( 21 ) $ 28.96

Non-vested restricted stock outstanding at January 31, 2021 360 $ 33.83

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of October 31, 2020 (in thousands):

The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of January 31, 2021 (in thousands):

Pension and Postretirement Health Benefits Cumulative Translation Adjustment Total Accumulated Other Comprehensive (Loss) Income

Balance as of July 31, 2020 $ ( 11,994 ) $ ( 260 ) $ ( 12,254 )

Other comprehensive loss before reclassifications, net of tax — 272 272

Other comprehensive income before reclassifications, net of tax — 408 408

Amounts reclassified from accumulated other comprehensive income, net of tax 329 (a) — 329

Net current-period other comprehensive income, net of tax 329 408 737

Balance as of October 31, 2020 $ ( 11,866 ) $ 12 $ ( 11,854 )

Balance as of January 31, 2021 $ ( 11,665 ) $ 148 $ ( 11,517 )

(a) Amount is net of tax expense of $ 104,060 .

Amount is included in the components of net periodic benefit cost for the pension and postretirement health plans.

See Note 9 of the Notes to unaudited Condensed Consolidated Financial Statements for further information.

See Note 9 of the Notes to the unaudited Condensed Consolidated Financial Statements for further information.

RELATED PARTY TRANSACTIONS

One member of our Board of Directors (the “Board”) retired from the role of President and Chief Executive Officer of a customer of ours in September 2019 and is currently party to a post-employment agreement with the customer.

Total net sales to that customer, including sales to subsidiaries of that customer, were $ 110,000 and $ 111,000 for the first quarter of fiscal years 2021 and 2020, respectively.

Outstanding accounts receivable from that customer, and its subsidiaries, were $ 5,000 and $ 0 at October 31, 2020 and July 31, 2020, respectively.

Total net sales to that customer, including sales to subsidiaries of that customer, were $ 71,000 and $ 49,000 for the second quarter of fiscal years 2021 and 2020, respectively and were $ 181,000 and $ 160,000 for the first six months of fiscal years 2021 and 2020, respectively.

Outstanding accounts receivable from that customer, and its subsidiaries, were $ 21,000 at January 31, 2021.

There were no outstanding accounts receivable from that customer, and its subsidiaries, as of July 31, 2020.

One member of our Board is currently the President and Chief Executive Officer of a vendor of ours.

Total payments to this vendor for fees and cost reimbursements were $ 92,000 and $ 38,000 for the first quarter of fiscal years 2021 and 2020, respectively.

There were no outstanding accounts payable to that vendor as of October 31, 2020 or July 31, 2020.

Total payments to this vendor for fees and cost reimbursements were $ 109,000 and $ 25,000 for the second quarter of fiscal years 2021 and 2020, respectively and were $ 201,000 and $ 63,000 for the first six months of fiscal years 2021 and 2020, respectively.

There were no outstanding accounts payable to that vendor as of January 31, 2021 or July 31, 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements