What changed in this filing

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Item 1. Financial Statements

2022-03-11 compared with 2021-12-07 · 201 added, 83 removed, 449 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

ASSETS October 31,

ASSETS January 31,

2022 July 31,

2 unchanged sentences

Accounts receivable, less allowance of

$ 1,262 and $ 1,174 at October 31, 2021 and July 31, 2021, respectively

$ 1,093 and $ 1,174 at January 31, 2022 and July 31, 2021, respectively

45,970 40,923

Inventories 29,797 23,598

Prepaid repairs expense 5,964 6,088

Prepaid repairs 6,454 6,088

Prepaid expenses and other assets 5,524 6,742

6 unchanged sentences

Other intangibles, net of accumulated amortization

of $ 421 and $ 385 at October 31, 2021 and July 31, 2021, respectively

of $ 471 and $ 385 at January 31, 2022 and July 31, 2021, respectively

Customer list, net of accumulated amortization

of $ 7,392 and $ 7,321 at October 31, 2021 and July 31, 2021, respectively

of $ 7,464 and $ 7,321 at January 31, 2022 and July 31, 2021, respectively

Deferred income taxes 2,066 2,096

7 unchanged sentences

(in thousands, except share and per share amounts)

LIABILITIES & STOCKHOLDERS’ EQUITY October 31,

LIABILITIES & STOCKHOLDERS’ EQUITY January 31,

2022 July 31,

8 unchanged sentences

Notes payable, net of unamortized debt issuance costs

of $ 116 and $ 122 at October 31, 2021 and July 31, 2021, respectively

of $ 222 and $ 122 at January 31, 2022 and July 31, 2021, respectively

Deferred compensation 5,060 4,370

5 unchanged sentences

Stockholders’ Equity

Common Stock, par value $ .10 per share, issued 8,635,968 shares at October 31, 2021

Common Stock, par value $ .10 per share, issued 8,667,968 shares at January 31, 2022

and 8,561,311 shares at July 31, 2021

Class B Stock, par value $ .10 per share, issued 2,397,056 shares at October 31, 2021

Class B Stock, par value $ .10 per share, issued 2,397,056 shares at January 31, 2022

and 2,397,056 shares at July 31, 2021

7 unchanged sentences

Less Treasury Stock, at cost ( 3,380,955 Common and 351,641 Class B shares at

October 31, 2021 and 3,192,702 Common and 346,491 Class B shares at July 31, 2021)

January 31, 2022 and 3,192,702 Common and 346,491 Class B shares at July 31, 2021)

( 72,862 ) ( 66,154 )

5 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 $ 169,670 $ 150,597

7 unchanged sentences

Other, net 1,190 807

Total Other Income (Expense), Net 265 ( 422 )

Total Other Income, Net 717 491

Income Before Income Taxes 3,080 9,912

1 unchanged sentence

Net Income 2,556 8,237

Net Income (Loss) Attributable to Noncontrolling Interest 10 ( 35 )

Net Loss Attributable to Noncontrolling Interest ( 31 ) ( 46 )

Net Income Attributable to Oil-Dri $ 2,587 $ 8,283

17 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 $ 2,587 $ 8,283

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 $ 87,210 $ 74,500

Cost of Sales (1) ( 71,624 ) ( 57,811 )

Gross Profit 15,586 16,689

Selling, General and Administrative Expenses (1) ( 13,668 ) ( 12,445 )

Income from Operations 1,918 4,244

Other Income (Expense)

Interest expense ( 313 ) ( 164 )

Interest income 8 15

Other, net 757 1,062

Total Other Income, Net 452 913

Income Before Income Taxes 2,370 5,157

Income Tax Expense ( 409 ) ( 869 )

Net Income 1,961 4,288

Net Loss Attributable to Noncontrolling Interest ( 41 ) ( 11 )

Net Income Attributable to Oil-Dri $ 2,002 $ 4,299

Net Income Per Share

Basic Common $ 0.29 $ 0.62

Basic Class B Common $ 0.22 $ 0.47

Diluted Common $ 0.28 $ 0.61

Diluted Class B Common $ 0.22 $ 0.46

Average Shares Outstanding

Basic Common 5,077 5,150

Basic Class B Common 1,939 1,934

Diluted Common 5,186 5,253

Diluted Class B Common 1,965 1,967

Dividends Declared Per Share

Basic Common $ 0.2700 $ 0.2600

Basic Class B Common $ 0.2025 $ 0.1950

(1) See Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements for further information about amounts included in this line item.

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 $ 2,002 $ 4,299

Other Comprehensive (Loss) Income:

Pension and postretirement benefits (net of tax) 26 201

Cumulative translation adjustment ( 60 ) 136

Other Comprehensive (Loss) Income ( 34 ) 337

Total Comprehensive Income $ 1,968 $ 4,636

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

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

Stock Treasury

Stock Additional

Capital Retained

Earnings Treasury

Stock Accumulated

Comprehensive

Loss Non-Controlling Interest Total

Stockholders’

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

4 unchanged sentences

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

Balance, October 31, 2021 11,033,024 ( 3,618,510 ) $ 1,103 $ 49,377 $ 179,164 $ ( 68,922 ) $ ( 4,124 ) $ ( 297 ) $ 156,301

Net Income (Loss) — — — — 2,002 — — ( 41 ) 1,961

Other Comprehensive Loss — — — — — — ( 34 ) — ( 34 )

Dividends Declared — — — — ( 1,844 ) — — — ( 1,844 )

Purchases of Treasury Stock — ( 113,236 ) — — — ( 3,910 ) — — ( 3,910 )

Net issuance of stock under long-term incentive plans 32,000 ( 850 ) 4 26 — ( 30 ) — — —

Amortization of Restricted Stock — — — 817 — — — — 817

Balance, January 31, 2022 11,065,024 ( 3,732,596 ) $ 1,107 $ 50,220 $ 179,322 $ ( 72,862 ) $ ( 4,158 ) $ ( 338 ) $ 153,291

For the Six Months Ended January 31

Number of Shares

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

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 — — — — 585 — — 10 595

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

Balance, July 31, 2021 10,958,367 ( 3,539,193 ) $ 1,096 $ 48,271 $ 180,443 $ ( 66,154 ) $ ( 4,117 ) $ ( 307 ) $ 159,232

Net Income (Loss) — — — — 2,587 — — ( 31 ) 2,556

Other Comprehensive Loss — — — — — — ( 41 ) — ( 41 )

3 unchanged sentences

Amortization of Restricted Stock — — — 1,453 — — — — 1,453

Balance, October 31, 2021 11,033,024 ( 3,618,510 ) $ 1,103 $ 49,377 $ 179,164 $ ( 68,922 ) $ ( 4,124 ) $ ( 297 ) $ 156,301

Balance, January 31, 2022 11,065,024 ( 3,732,596 ) $ 1,107 $ 50,220 $ 179,322 $ ( 72,862 ) $ ( 4,158 ) $ ( 338 ) $ 153,291

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 2022 2021

5 unchanged sentences

Provision for bad debts and cash discounts ( 59 ) ( 38 )

Loss (Gain) on the disposals of property, plant and equipment 34 ( 1 )

Loss on the disposals of property, plant and equipment 265 12

(Increase) Decrease in assets:

10 unchanged sentences

Total Adjustments ( 2,495 ) ( 5,152 )

Net Cash Used in Operating Activities ( 596 ) ( 3,435 )

Net Cash Provided by Operating Activities 61 3,085

CASH FLOWS FROM INVESTING ACTIVITIES

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of notes payable 25,000 —

Payment of debt issuance costs ( 114 ) —

Dividends paid ( 3,728 ) ( 3,606 )

Purchases of treasury stock ( 6,201 ) ( 2,189 )

Net Cash Used in Financing Activities ( 4,156 ) ( 2,781 )

Net Cash Provided by (Used in) Financing Activities 14,957 ( 5,795 )

Effect of exchange rate changes on Cash and Cash Equivalents ( 26 ) 123

Net Decrease in Cash and Cash Equivalents ( 11,536 ) ( 9,599 )

Net Increase (Decrease) in Cash and Cash Equivalents 4,418 ( 10,182 )

Cash and Cash Equivalents, Beginning of Period 24,591 40,890

3 unchanged sentences

(in thousands)

For the Three Months Ended October 31,

Supplemental disclosure of non-cash investing and financing activities:

For the Six Months Ended January 31,

Supplemental disclosures:

Interest payments, net of amounts capitalized $ 178 $ 198

Income tax payments $ 155 $ 5,478

Non-cash investing and financing activities:

Capital expenditures accrued, but not paid $ 835 $ 829

14 unchanged sentences

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.

Operating results for the three months ended October 31, 2021 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2022.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

These immaterial reclassifications had no effect on the previously reported net income.

Operating results for the three and six months ended January 31, 2022 are not necessarily an indication of the results that may be expected for the fiscal year ending July 31, 2022.

Immaterial Correction of an Error in Previously Issued Financial Statements

6 unchanged sentences

The effects of the corrections to each of the individual affected line items in our unaudited Condensed Consolidated Statements of Income were as follows (in thousands):

For the Three Months Ended October 31, 2020

For the Three Months Ended January 31, 2021

As Previously Reported Corrections As Corrected

1 unchanged sentence

Selling, General and Administrative Expenses $ ( 13,928 ) $ 1,483 $ ( 12,445 )

For the Six Months Ended January 31, 2021

As Previously Reported Corrections As Corrected

Cost of Sales $ ( 112,121 ) $ ( 3,007 ) $ ( 115,128 )

Selling, General and Administrative Expenses $ ( 29,055 ) $ 3,007 $ ( 26,048 )

The related impacts to Inventory in our unaudited Condensed Consolidated Balance Sheet were not considered material and hence, were not adjusted.

The effects of the corrections to our Notes to the unaudited Condensed Consolidated Financial Statements for Operating Segments were as follows (in thousands):

For the Three Months Ended October 31, 2020

As Previously Reported

Corrections As Corrected

For the Three Months Ended January 31, 2021

As Previously Reported Corrections As Corrected

Business to Business Products $ 7,663 $ ( 550 ) $ 7,113

1 unchanged sentence

Corporate Expenses $ ( 7,530 ) $ 1,483 $ ( 6,047 )

For the Six Months Ended January 31, 2021

As Previously Reported Corrections As Corrected

Business to Business Products $ 15,859 $ ( 1,146 ) $ 14,713

Retail and Wholesale Products $ 8,589 $ ( 1,861 ) $ 6,728

Corporate Expenses $ ( 15,027 ) $ 3,007 $ ( 12,020 )

Management Use of Estimates

1 unchanged sentence

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.

Estimates and assumptions about future events cannot be made with certainty, including the potential impacts and duration of the novel coronavirus pandemic (“the coronavirus” or “COVID-19”) and its aftermath.

All of our estimates and assumptions are revised periodically.

25 unchanged sentences

To determine the present value of the lease liability, we used an incremental borrowing rate, which is defined as the rate of interest we 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.

The ROU asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments

and lease incentives received.

The ROU asset is based on the corresponding lease liability adjusted for certain costs such as initial direct costs, prepaid lease payments and lease incentives received.

Both operating and finance lease ROU assets are reviewed for impairment, consistent with other long-lived assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

17 unchanged sentences

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

We recorded a liability for these advance payments of $ 539,000 and $ 256,000 as of October 31, 2021 and July 31, 2021, respectively.

We recorded a liability for these advance payments of $ 523,000 and $ 256,000 as of January 31, 2022 and July 31, 2021, respectively.

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

Revenue recognized during the three months ended October 31, 2021 that was included in the liability for advance payments at the beginning of the period was $ 157,000 .

Revenue recognized during the six months ended January 31, 2022 that was included in the liability for advance payments at the beginning of the period was $ 155,000 .

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.

4 unchanged sentences

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.

and amortization related to assets outside the manufacturing and distribution process and all other non-manufacturing and non-distribution expenses.

Other Current and Noncurrent Liabilities.

2 unchanged sentences

As permitted by the CARES Act, we deferred 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;

$ 1,150,000 in 2021 and $ 1,150,000 in 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.

$ 1,150,000 of the $ 2,300,000 was paid in the fourth quarter of calendar year 2021 and $ 1,150,000 will be paid in the fourth quarter of calendar year 2022.

The remaining $ 1,150,000 accrual for these payroll taxes is included in Other within Accrued Expenses on the unaudited Condensed Consolidated Balance Sheet.

NEW ACCOUNTING PRONOUNCEMENTS AND REGULATIONS

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued guidance under ASC 740, Income Taxes , which simplifies the accounting for income taxes.

The guidance removes several specific exceptions to the general principles in ASC 740 and clarifies and makes amendments to improve consistent application of and simplify existing accounting for other areas in ASC 740.

The adoption of this guidance on August 1, 2021 was not material to our unaudited Condensed Consolidated Financial Statements.

Recently Issued Pronouncements

18 unchanged sentences

Inventory costs include the cost of raw materials, packaging supplies, labor and other overhead costs.

The inventory obsolescence reserve values at October 31, 2021 and July 31, 2021 were $ 621,000 and $ 641,000 , respectively.

The inventory obsolescence reserve values at January 31, 2022 and July 31, 2021 were $ 541,000 and $ 641,000 , respectively.

Inventories, in all categories, have increased due to a combination of rising costs and building inventory levels for anticipated demand.

7 unchanged sentences

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

We had no cash equivalents as of October 31, 2021 and July 31, 2021.

Balances of accounts receivable and accounts payable approximated their fair values at October 31, 2021 and July 31, 2021 due to the short maturity and nature of those balances.

We had no cash equivalents as of January 31, 2022 and July 31, 2021.

Balances of accounts receivable and accounts payable approximated their fair values at January 31, 2022 and July 31, 2021 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 $ 10,266,000 and $ 10,231,000 as of October 31, 2021 and July 31, 2021, respectively, and are classified as Level 2.

The estimated fair value of notes payable, including current maturities, was $ 36,985,000 and $ 10,231,000 as of January 31, 2022 and July 31, 2021, respectively, and are classified as Level 2.

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

4 unchanged sentences

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

Intangible amortization expense was $ 115,000 and $ 155,000 in the first three months of fiscal years 2022 and 2021, respectively.

Intangible amortization expense was $ 138,000 and $ 150,000 in the second quarter of fiscal years 2022 and 2021, respectively.

Intangible amortization expense was $ 253,000 and $ 305,000 in the first six months of fiscal years 2022 and 2021, respectively.

Estimated intangible amortization for the remainder of fiscal year 2022 is $ 233,000 .

14 unchanged sentences

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 2022.

The accrual for other is higher at October 31, 2021 than July 31, 2021 due to an increase in professional fees, accrual for rising natural gas costs and timing of certain plant accruals.

Changes in the accrual for trade promotions and advertising as well as real estate taxes differ due to timing.

The accrual for other is higher at January 31, 2022 than July 31, 2021 due to an increase in accrual for rising natural gas costs and timing of certain plant purchases and expenses.

OTHER CONTINGENCIES

4 unchanged sentences

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 in Other within Accrued expenses.

There have been no changes during fiscal 2021 or the three months ended October 31, 2021 that would have changed this estimate.

There have been no changes during fiscal 2021 or the three months ended January 31, 2022 that would have changed this estimate.

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

2 unchanged sentences

The actual outcome could differ materially from management’s estimates.

Effective December 16, 2021 (the “Effective Date”), we entered into Amendment No.

1 (the “Amendment”) to the Amended and Restated Note Purchase and Private Shelf Agreement (the “Note Agreement”) with PGIM, Inc.

(“Prudential”) and certain existing noteholders affiliated with Prudential named therein.

The Amendment provides that, among other things, an excess leverage fee will be applied to the interest rate applicable to the outstanding daily average principal amount of Notes issued on or after December 15, 2021 as follows:

(i) an additional 0.25% in the event the Net Leverage Ratio (as defined in the Amendment) is 2.00:1.00 or greater as of the last day of any fiscal quarter, or (ii) an additional 1.00% in the event that the Net Leverage Ratio is greater than 2.50:1.00 as of the last day of any fiscal quarter.

Concurrent with entering into the Amendment, we issued $ 25,000,000 in aggregate principal amount of Series C Senior Notes (the “Series C Notes”).

The Series C Notes bear interest at an annual rate of 3.25 % (subject to the application of the excess leverage fee in the event the Net Leverage Ratio exceeds certain thresholds as described above) and will mature on December 16, 2031 .

Annual principal payments of $ 5,000,000 are due December 16 of each fiscal year beginning in 2027 and ending in 2031.

Interest is payable semi-annually beginning June 16, 2022.

We have operating leases primarily for real estate properties, including corporate headquarters, customer service and sales offices, manufacturing and packaging facilities, warehouses, and research and development facilities, as well as for rail tracks, railcars and office equipment.

2 unchanged sentences

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 first quarter of fiscal year 2022.

We have no material finance leases, and variable costs for operating leases are immaterial for the three and six months ended January 31, 2022.

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 October 31,

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

2022 2021 2022 2021

Operating Lease Cost

2 unchanged sentences

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

For the Three Months Ended October 31,

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

2022 2021 2022 2021

Other Information

3 unchanged sentences

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

October 31, 2021 July 31, 2021

January 31, 2022 July 31, 2021

Weighted-average remaining lease term - operating leases 8.8 years 9.1 years

Weighted-average discount rate - operating leases 3.86 % 3.88 %

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 5,665

11 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,

2022 2021 2022 2021

Interest cost $ 266 $ 583 $ 534 $ 583

5 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,

2022 2021 2022 2021

Service cost $ 28 $ 34 $ 61 $ 69

1 unchanged sentence

Amortization of:

Other actuarial loss — 2 — 2

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

2 unchanged sentences

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 no t voluntarily make, a contribution to the Pension Plan during the first three months of fiscal year 2022.

We were not required to make, and did no t voluntarily make, a contribution to the Pension Plan during the first six months of fiscal year 2022.

We have no minimum funding requirements for the remainder of fiscal year 2022.

3 unchanged sentences

Pension Benefits Postretirement Health Benefits

For the Three Months Ended October 31,

For the Three and Six Months Ended January 31,

2022 2021 2022 2021

35 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 2022 2021 2022 2021

5 unchanged sentences

Net Sales $ 61,553 $ 53,805 108,117 $ 96,792

Net sales for our principal products by segment are as follows (in thousands):

Business to Business Products Group Retail and Wholesale Products Group

For the Three Months Ended January 31,

Product 2022 2021 2022 2021

Cat Litter $ 4,691 $ 3,736 $ 45,246 $ 41,085

Industrial and Sports — — 8,820 6,710

Agricultural and Horticultural 7,311 5,046 — —

Bleaching Clay and Fluids Purification 15,035 12,765 520 422

Animal Health and Nutrition 5,587 4,736 — —

Net Sales $ 32,624 $ 26,283 $ 54,586 $ 48,217

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, 2021 July 31, 2021

January 31, 2022 July 31, 2021

(in thousands)

5 unchanged sentences

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.

In addition, Income from our Business to Business and Retail and Wholesale Products as well as Corporate Expenses for the three months ended October 31, 2020 were adjusted for an immaterial correction of an error.

Corporate expenses also include the estimated annual incentive plan bonus accrual for employees dedicated to corporate operations.

In addition, Income from our Business to Business and Retail and Wholesale Products as well as Corporate Expenses for the three and six months ended January 31, 2021 were adjusted for an immaterial correction of an error.

See Note 1 of the Notes to the unaudited Condensed Consolidated Financial Statements.

For the Three Months Ended October 31,

For the Six Months Ended January 31,

Net Sales Income

6 unchanged sentences

Income from Operations 2,363 9,421

Total Other Income (Expense), Net 265 ( 422 )

Total Other Income, Net 717 491

Income before Income Taxes 3,080 9,912

1 unchanged sentence

Net Income 2,556 8,237

Net Income (Loss) Attributable to Noncontrolling Interest 10 ( 35 )

Net Loss Attributable to Noncontrolling Interest ( 31 ) ( 46 )

Net Income Attributable to Oil-Dri $ 2,587 $ 8,283

For the Three Months Ended January 31,

Net Sales Income

2022 2021 2022 2021

(in thousands)

Business to Business Products Group $ 32,624 $ 26,283 $ 7,590 $ 7,113

Retail and Wholesale Products Group 54,586 48,217 926 3,178

Net Sales $ 87,210 $ 74,500

Corporate Expenses ( 6,598 ) ( 6,047 )

Income from Operations 1,918 4,244

Total Other Income, Net 452 913

Income before Income Taxes 2,370 5,157

Income Tax Expense ( 409 ) ( 869 )

Net Income 1,961 4,288

Net Loss Attributable to Noncontrolling Interest ( 41 ) ( 11 )

Net Income Attributable to Oil-Dri $ 2,002 $ 4,299

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, 2021, there were 305,855 shares available for future grants under this plan.

As of January 31, 2022, there were 260,356 shares available for future grants under this plan.

Restricted Stock

All of our non-vested restricted stock as of October 31, 2021 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, 2022 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 75,000 and 33,000 restricted shares of Common Stock granted during the first quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 636,000 and $ 784,000 for the first quarter of fiscal years 2022 and 2021, respectively.

There were 32,000 and 18,000 restricted shares of Common Stock granted during the second quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 817,000 and $ 506,000 for the second quarter of fiscal years 2022 and 2021, respectively.

Stock-based compensation expense was $ 1,453,000 and $ 1,290,000 for the first six months of fiscal years 2022 and 2021, respectively.

A summary of restricted stock transactions is shown below:

5 unchanged sentences

Forfeitures ( 14 ) $ 35.20

Non-vested restricted stock outstanding at October 31, 2021 389 $ 33.88

Non-vested restricted stock outstanding at January 31, 2022 407 $ 33.90

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

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

The following table summarizes the changes in accumulated other comprehensive (loss) income by component as of January 31, 2022 (in thousands):

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

Balance as of July 31, 2021 $ ( 4,428 ) $ 311 $ ( 4,117 )

Other comprehensive income before reclassifications, net of tax — ( 34 ) ( 34 )

Other comprehensive loss before reclassifications, net of tax — ( 94 ) ( 94 )

Amounts reclassified from accumulated other comprehensive income, net of tax 53 (a) — 53

Net current-period other comprehensive income, net of tax 27 ( 34 ) ( 7 )

Balance as of October 31, 2021 $ ( 4,401 ) $ 277 $ ( 4,124 )

Net current-period other comprehensive income (loss), net of tax 53 ( 94 ) ( 41 )

Balance as of January 31, 2022 $ ( 4,375 ) $ 217 $ ( 4,158 )

(a) Amount is net of tax expense of $ 16,620 .

3 unchanged sentences

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 $ 75,000 and $ 110,000 for the first three months of fiscal years 2022 and 2021, respectively.

Outstanding accounts receivable from that customer, and its subsidiaries, were $ 39,000 as of October 31, 2021 and $ 4,000 as of July 31, 2021.

Total net sales to that customer, including sales to subsidiaries of that customer, were $ 81,000 and $ 71,000 for the second quarter of fiscal years 2022 and 2021, respectively and were $ 156,000 and $ 181,000 for the first six months of fiscal years 2022 and 2021, respectively.

Outstanding accounts receivable from that customer, and its subsidiaries, were $ 14,000 as of January 31, 2022 and $ 4,000 as of July 31, 2021.

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 $ 215,000 and $ 92,000 for the first three months of fiscal years 2022 and 2021, respectively.

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

Total payments to this vendor for fees and cost reimbursements were $ 350,000 and $ 109,000 for the second quarter of fiscal years 2022 and 2021, respectively and were $ 565,000 and $ 201,000 for the first six months of fiscal years 2022 and 2021, respectively.

There were no outstanding accounts payable to that vendor as of January 31, 2022 or July 31, 2021.

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