Oil-Dri of America
Annual Report 2015

Plain-text annual report

ANNUAL REPORT 2015 LETTER TO STAKEHOLDERS & FORM 10-K LETTER TO STAKEHOLDERS In memory of the late Yogi Berra, let me repeat one of his quips, “It Ain’t Over ‘Til It’s Over.” This is relevant to our fiscal year. We started the year slowly, but turned it on at the end and delivered a record fourth quarter, giving us positive momentum as we head into Fiscal 2016. I encourage you to scrutinize our Statement of Cash Flows. You will see what a great year we really had. Our business has been and continues to be a strong generator of cash. As evidenced by that fact, we have increased our dividend every year since 2002, all while investing heavily back in our business. During that time span, we have paid out $46 million in dividends, invested $134 million in capital expenditures, invested $29 million in research and development and reduced our long-term debt from $31 million to just under $19 million! IT AIN’T OVER ‘TIL IT’S OVER. Yogi also said, “If you don’t know where you are going, you might wind up someplace else.” Our mission, to Create Value from Sorbent Minerals, keeps us focused on our goal of delivering to our customers the best products at the best all-in value. This process starts with our investment in research and new product development. Our team of scientists and business professionals at the Nick Jaffee Center for Innovation in Vernon Hills, Illinois are an important reason why we have been able to deliver on our mission. We promoted from within when our long-time Innovation Center leader, Dr. Bob Goss, announced his retirement. Dr. Marc Herpfer has taken over the helm and with his team we have exciting growth initiatives in every area of the company. CAT LITTER PRODUCTS Lightweight cat litter is all the rage in the United States! As you know, Oil-Dri invented and launched lightweight litters a full two years before the competition caught on to what a revolutionary consumer benefit this is. We are the #2 branded player in lightweight and the #1 supplier of lightweight private label products. Lightweight is the fastest growing segment in the entire category. Lightweight litters now account for 18% of scoopable sales while heavy scoopable litters are on the decline for the first time since 1991 (according to third party market data). Oil-Dri owns the largest quantity and quality of lightweight reserves and we are very well positioned to continue taking advantage of this trend, both with our Cat’s Pride® branded litters and the private label litters we manufacture for our retail partners. AMLAN INTERNATIONAL Dr. Ron Cravens and his team have transformed Oil-Dri from a manufacturer of mineral toxin binders to a global marketer of non-antibiotic, intestinal health products that enhance animal performance. We have spent millions of dollars on clinical research proving the efficacy of our unique products. We are very excited about the launch of our two newest intestinal health products, Varium™ and NeoPrime™. In addition, this year marked the first full year of operation of our Amlan China subsidiary where we have expanded the local sales team, increased local promotion, and increased market share. The business is well positioned for continued growth. FLUIDS PURIFICATION PRODUCTS Bruce Patsey and his team have us well-positioned for years to come. A growing global population, rising income levels, and the recognition of the health benefits of palm oil bode well for Oil-Dri. Our products provide the best value for purifying palm and other edible oils. We are just completing a $13 million capital project that will increase our capacity in this profitable, growing business segment. INDUSTRIAL AND SPORTS PRODUCTS Curtis Wellborn and his team have not only been able to solidify the margins of our original product line, Oil-Dri® Industrial Absorbents, but have also launched Snow & Go™ and have secured distribution at Walmart and Menards for this winter season. Another one of Yogi’s quips is, “You can observe a lot by watching,” so I encourage you to check out our infomercial at: www.youtube.com/watch?v=fu31MIhXo2E AGRICULTURAL AND HORTICULTURAL PRODUCTS Yasmith Bernal and her team are executing our strategy of providing a full range of agricultural carriers (Good, Better, Best). From our traditional carrier, Agsorb®, to our reduced dust Agsorb® Plus to our premium, highly uniform, low dust Verge™ engineered granules, we have the perfect products to fit our customers’ specific needs. At the tail end of Fiscal 2016, we will be celebrating Oil-Dri’s 75th Anniversary! As amazing as that is, we are more excited about our future than we are our past. Things have never looked brighter thanks to the incredible Oil-Dri Team who truly cares about growing our business over the long term. Once again, my family increased its ownership in the company during this fiscal year. We are confident the next 75 years will be as good or better than the past 75. We believe it will be, deja vu all over again! Daniel S. Jaffee President & Chief Executive Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2015 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____ to ________________________________ Commission File Number 001-12622OIL-DRI CORPORATION OF AMERICA Delaware36-2048898(State or other jurisdiction of(IRS. Employer Identification No.)incorporation or organization) 410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213(312) 321-1515 Securities registered pursuant to Section 12(b) of the Act: Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock, par value $0.10 per shareNew York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes o No ý Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act: Yes o No ý Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days: Yes ý No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required tosubmit and post such files). Yes ý No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: Large accelerated filero Accelerated filerý Non-accelerated filero Smaller reporting companyo(Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No ý The aggregate market value of Oil-Dri’s Common Stock owned by non-affiliates as of January 31, 2015 was $150,082,000. Number of shares of each class of Oil-Dri’s capital stock outstanding as of September 30, 2015: Common Stock – 5,028,047 shares Class B Stock – 2,190,994 shares Class A Common Stock – 0 shares DOCUMENTS INCORPORATED BY REFERENCE The following documents are incorporated by reference: Oil-Dri’s Proxy Statement for its 2015 Annual Meeting of Stockholders (“Proxy Statement”), whichwill be filed with the Securities and Exchange Commission (“SEC”) not later than November 28, 2015 (120 days after the end of Oil-Dri’s fiscal year endedJuly 31, 2015), is incorporated into Part III of this Annual Report on Form 10-K, as indicated herein. CONTENTSItem PagePART I 1 Business 5 1A. Risk Factors 11 1B. Unresolved Staff Comments 17 2 Properties 18 3 Legal Proceedings 21 4 Mine Safety Disclosure 21 PART II 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities 22 6 Selected Financial Data 25 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 26 7A. Quantitative and Qualitative Disclosures About Market Risk 35 8 Financial Statements and Supplementary Data 37 Management's Report on Internal Control Over Financial Reporting 67 Report of Independent Registered Public Accounting Firm 68 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 70 9A. Controls and Procedures 70 9B. Other Information 70 PART III 10 Directors, Executive Officers and Corporate Governance 71 11 Executive Compensation 71 12 Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 71 13 Certain Relationships and Related Transactions, and Director Independence 71 14 Principal Accountant Fees and Services 713 CONTENTS (CONTINUED)Item PagePART IV 15 Exhibits and Financial Statement Schedule 72 Signatures 77 Schedule II - Valuation and Qualifying Accounts 79 Exhibit Index 80FORWARD-LOOKING STATEMENTS Certain statements in this report, including those under the heading “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and those statements elsewhere in this report and other documents we file with the SEC, contain forward-looking statements that are based oncurrent expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. Inaddition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussionswith investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Words such as “expect,”“outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,”variations of such words and similar expressions are intended to identify such forward-looking statements, which are made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially, including thosedescribed in Item 1A “Risk Factors” below and other documents we file with the SEC. Should one or more of these or other risks or uncertainties materialize,or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, intended, expected, believed, estimated,projected or planned. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Exceptto the extent required by law, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of thisreport, whether as a result of new information, future events, changes in assumptions or otherwise. TRADEMARK NOTICE Agsorb, Amlan, Calibrin, Cat’s Pride, ConditionAde, Flo-Fre, Fresh & Light, Jonny Cat, KatKit, Oil-Dri, Pel-Unite, Perform, Pro Mound, Pro's ChoiceSports Field Products, Pure-Flo, Rapid Dry, Select, Terra-Green, Ultra-Clear and Verge are all U.S. registered trademarks of Oil-Dri Corporation of America orof its subsidiaries. Saular is a Canadian registered trademark of Oil-Dri Corporation of America. Fresh & Light Ultimate Care, MD-09 and Snow & Go aretrademarks of Oil-Dri Corporation of America. Fresh Step is a registered trademark of The Clorox Company (“Clorox”).4PART IITEM 1 – BUSINESSIn 1969, Oil-Dri Corporation of America was incorporated in Delaware as the successor to an Illinois corporation incorporated in 1946; the Illinoiscorporation was the successor to a partnership that commenced business in 1941. Except as otherwise indicated herein or as the context otherwise requires,references to “Oil-Dri,” the “Company,” “we,” “us” or “our” refer to Oil-Dri Corporation of America and its subsidiaries.GENERAL BUSINESS DEVELOPMENTSFiscal year 2015 provided both opportunities and challenges that resulted in net income growth despite reduced net sales. We benefited fromreduced costs for advertising, freight and natural gas throughout the year. Packaging costs also trended lower at year end. Our private label cat litterexperienced sales growth as we continued to build our presence in this market after the acquisition of MFM Industries, Inc. (“MFM”) during fiscal year 2014and with the introduction of a new private label lightweight scoopable product in fiscal 2015. Sales also improved from the prior year for our animal healthand nutrition, and agricultural chemical carrier products, while our branded cat litter sales were hindered by intense competition. Foreign sales were alsonegatively impacted by currency fluctuations and our fluids purification products contended with unfavorable edible oil crop characteristics. We devotedresources at our manufacturing facilities to introduce new branded and private label lightweight scoopable products in the second half of fiscal year 2015,which we believe will position us well in this expanding segment of the cat litter market.We believe our balance sheet remains strong at the end of fiscal year 2015 with higher cash and cash equivalents, lower inventory and reduced debt.During the year we continued to invest in capital at our plants and to increase dividend payments. Our cash requirements are subject to change as businessconditions warrant and opportunities arise. PRINCIPAL PRODUCTSWe are a leader in developing, manufacturing and/or marketing sorbent products. Our sorbent products are principally produced from clay minerals,primarily consisting of montmorillonite and attapulgite and, to a lesser extent, other clay-like sorbent materials, such as Antelope shale, which we refer tocollectively as our “clay” or our “minerals.” Our sorbent technologies include absorbent and adsorbent products. Absorbents, like sponges, draw liquids upinto their many pores. Examples of our absorbent clay products are Cat’s Pride and Jonny Cat branded premium cat litter, as well as other private label catlitters. We also produce Oil-Dri branded floor absorbents, Agsorb and Verge agricultural chemical carriers and ConditionAde and Calibrin enterosorbentsused in animal feed. Adsorbent products attract impurities in liquids, such as metals and surfactants, and form low-level chemical bonds. Examples of ouradsorbent products are Oil-Dri synthetic sorbents, which are used for industrial cleanup, and Pure-Flo, Perform and Select bleaching clay products, which actas a filtration media for edible oils, fats and tallows. Also, our Ultra-Clear product serves as a purification aid for petroleum-based oils and by-products. Ourabsorbent and adsorbent products are described in more detail below.Agricultural and Horticultural ProductsWe produce a wide range of granular and powdered mineral absorbent products that are used for crop protection chemical carriers, drying agents,bulk processing aids, growing media components and seed enhancement media. Our brands include: Agsorb, an agricultural chemical carrier and dryingagent; Verge, an engineered granule agricultural chemical carrier; Flo-Fre, a highly absorbent microgranule flowability aid; Terra-Green, a growing mediasupplement; and Pel-Unite, an animal feed binder.Agsorb and Verge carriers are used as an alternative to agricultural sprays. The clay granules absorb active ingredients and are then delivereddirectly into, or on top of, the ground providing a more precise application than chemical sprays. Verge carriers are spherical, uniform-sized granules withvery low dust. Agsorb drying agent is blended into fertilizer-pesticide blends applied by farmers to absorb moisture and improve flowability. Agsorb also actsas a flowability aid for fertilizers and chemicals used in the lawn and garden market. Flo-Fre microgranules are used by grain processors and other largehandlers of bulk products to soak up excess moisture, which prevents caking. We employ technical sales people to market these products in the United States.5Animal Health and Nutrition ProductsWe produce, or use contract processors to produce, several products used in the livestock feed industry. Many of these products are sold under theAmlan trademark. Our various Calibrin and ConditionAde products are used in animal feed and each has different attributes that improve animal health anddevelopment, such as adsorbing naturally occurring mycotoxins or managing intestinal bacterial and fungal biotoxins. Our MD-09 moisture manager productis another feed additive for the reduction of wet droppings in poultry. Pel-Unite and Pel-Unite Plus products are specialized animal feed pellet binders. Theseproducts are sold through a network of feed products distributors in the United States and/or through agreements with animal health and nutrition productsdistributors in Latin America, Africa, the Middle East and Asia. Beginning in fiscal year 2014, these products were also sold by sales people employed by oursubsidiary located in China, as further described in Foreign Operations below.Bleaching Clay and Purification Aid ProductsWe produce an array of bleaching, purification and filtration applications used by edible oil, jet fuel and other petroleum-based product processorsaround the world. Bleaching clays are used by edible oil processors to adsorb soluble contaminants that create oxidation problems. Our Pure-Flo and Performbleaching clays remove impurities, such as trace metals, chlorophyll and color bodies, in various types of edible oils. Perform products provide increasedactivity for hard-to-bleach oils. Our Select adsorbents are used to remove contaminants in vegetable oil processing and can be used to prepare oil prior to thecreation of biodiesel fuel. Our Ultra-Clear product is used as a filtration and purification medium for jet fuel and other petroleum-based products. Theseproducts are marketed in the United States and in international markets. The products are supported by our team of technical sales employees as well as byagent representatives and the services of our research and development group.Cat Litter ProductsBranded products. We produce two types of mineral-based cat litter products, traditional coarse and scoopable, both of which have absorbent andodor controlling characteristics. Scoopable litters have the additional characteristic of clumping when exposed to moisture, allowing the consumer toselectively dispose of the used portion of the litter. Our coarse and scoopable products are sold under our Cat’s Pride and Jonny Cat brand names. Our Cat'sPride Fresh & Light product line introduced a scoopable lightweight litter to the industry that offers superior performance with the added convenience ofbeing lighter to carry and pour. In addition, we offer our coarse litter in a pre-packaged, disposable tray under the Cat’s Pride KatKit and Jonny Cat brands.Moreover, we offer litter box liners under the Cat's Pride and Jonny Cat product lines.Private label products. We also produce private label cat litters for other customers that are sold through both independent food brokers and oursales force to major grocery, drug, dollar store, mass-merchandiser and pet outlets. During fiscal 2015 we began producing scoopable lightweight privatelabel cat litters.Co-packaged products. We have two long-term supply arrangements (one of which is material to our business) under which we manufacture brandedtraditional litters for other marketers. Under these co-manufacturing relationships, the marketer controls all aspects of sales, marketing, and distribution, aswell as the odor control formula, and we are responsible for manufacturing. The long-term supply agreement that is material to our business is with Clorox,under which we have the exclusive right to supply Clorox’s requirements for Fresh Step coarse cat litter up to certain levels.Industrial and Automotive ProductsWe manufacture and/or sell products made from clay, polypropylene and recycled cotton materials that absorb oil, grease, water and other types ofspills. These products are used in industrial, home and automotive environments. Our clay-based sorbent products, such as Oil-Dri branded floor absorbent,are used for floor maintenance in industrial applications to provide a non-slip and non-flammable surface for workers. These floor absorbents are also used inautomotive repair facilities, car dealerships and other industrial applications, as well as for home use in garages and driveways. Our Oil-Dri brandedpolypropylene-based and cotton-based products are sold in various forms, such as pads, rolls, socks, booms and spill kits. In fiscal year 2015 we introduced anew product called Snow & Go, with a combination of clay and salt to serve as a unique winter traction aid that melts snow and ice and then absorbs themelted water before it can re-freeze.Industrial and automotive sorbent products are sold through a distribution network that includes industrial, auto parts, safety, sanitary supply,chemical and paper distributors. These products are also sold through environmental service companies, mass merchandisers, catalogs and the Internet.6Sports ProductsPro’s Choice Sports Field Products are used on baseball, softball, football and soccer fields. Pro’s Choice soil conditioners are used in fieldconstruction or as top dressing to absorb moisture, suppress dust and improve field performance. Pro Mound packing clay is used to construct pitcher’smounds and batter’s boxes. Rapid Dry drying agent is used to dry up puddles and slick spots after rain. Sports products are used at all levels of play,including professional, college and high school and on municipal fields. These products are sold through a network of distributors specializing in sports turfproducts.BUSINESS SEGMENTSWe have two reportable operating segments for financial reporting derived from the different characteristics of our two major customer groups:Retail and Wholesale Products Group and Business to Business Products Group. The Retail and Wholesale Products Group customers include massmerchandisers, wholesale clubs, drugstore chains, pet specialty retail outlets, dollar stores, retail grocery stores, distributors of industrial cleanup andautomotive products, environmental service companies and sports field product users. The Business to Business Products Group customers include:processors and refiners of edible oils, petroleum-based oils and biodiesel fuel; manufacturers of animal feed and agricultural chemicals; distributors of animalhealth and nutrition products; and marketers of consumer products. Certain financial information on both segments is contained in Note 3 of the Notes to theConsolidated Financial Statements and is incorporated herein by reference. We do not manage our business, allocate resources or generate revenue data by product line. Any of our products may be sold in one or both of ouroperating segments. Information concerning total revenue of classes of similar products accounting for more than 10% of consolidated revenues in any of thelast three fiscal years is not separately provided because it would be impracticable to do so.FOREIGN OPERATIONSOur wholly-owned subsidiary, Amlan Trading (Shenzhen) Company, Ltd., located in Shenzhen, China, is dedicated to animal health and providesnatural disease management solutions for livestock. This subsidiary primarily sells animal health and nutrition products under our Amlan brand name.Our wholly-owned subsidiary, Oil-Dri Canada ULC, is a manufacturer, distributor and marketer of branded and private label cat litter in theCanadian marketplace. Among its leading brands are Saular, Cat’s Pride and Jonny Cat. Our Canadian business also manufactures or purchases and sellsindustrial granule floor absorbents, synthetic polypropylene sorbent materials and agricultural chemical carriers.Our wholly-owned subsidiary, Oil-Dri (U.K.) Limited, is a manufacturer, distributor and marketer of industrial floor absorbents, bleaching earth andcat litter. These products are marketed in the United Kingdom and Western Europe. Oil-Dri (U.K.) Limited also sells synthetic polypropylene sorbentmaterials, filtration units and plastic containment products.Our wholly-owned subsidiary, Oil-Dri SARL, is a Swiss company that performs various management, customer service and administrative functionsfor the international business of our domestic operations.Our foreign operations are subject to the normal risks of doing business overseas, such as currency fluctuations, restrictions on the transfer of fundsand import/export duties. Foreign currency fluctuations negatively affected our operating results in fiscal year 2015; however, we were not materiallyimpacted by these foreign currency fluctuations in any of our last three fiscal years. See Item 7A “Quantitative and Qualitative Disclosures About MarketRisk” for further information about our foreign markets risks. Certain financial information about our foreign operations is contained in Note 3 of the Notes tothe Consolidated Financial Statements and is incorporated herein by reference.CUSTOMERSSales to Wal-Mart Stores, Inc. (“Walmart”) and its affiliates accounted for approximately 18%, 19% and 20% of our total net sales for fiscal years2015, 2014 and 2013, respectively. Walmart is a customer in our Retail and Wholesale Products Group segment. There are no customers in the Business toBusiness Products Group with sales equal to or greater than 10% of our total sales; however, sales to Clorox (a customer in our Business to Business ProductsGroup) and its affiliates accounted for approximately 6% of total net sales for each of fiscal years 2015 and 2014, and 7% of total net sales for fiscal year2013. The degree of margin contribution of our significant customers in the Business to Business Products Group varies, with certain customers7having a greater effect on our operating results. The loss of any customer other than those described in this paragraph would not be expected to have amaterial adverse effect on our business.COMPETITIONPrice, customer service, marketing, technical support, product quality and distribution resources are the principal methods of competition in ourmarkets and competition historically has been very vigorous. Some of our competitors, particularly in the sale of cat litter (the largest product in our Retailand Wholesale Products Group), have substantially greater financial resources or market presence than we do and have established brands.In our Retail and Wholesale Products Group, we have five principal competitors, including one which is also our customer. The overall cat littermarket has been stable in recent years as household cat ownership has remained relatively constant. Scoopable products have a majority of the cat littermarket share followed by traditional coarse products. Growth in the scoopable cat litter segment has been driven by the introduction of lightweight products,while coarse cat litter continues to decline. The overwhelming majority of all cat litter is mineral based; however, cat litters based on alternative strata such aspaper, various agricultural waste products and silica gels have niche positions. There is significant competition to attract consumers of cat litter across multi-outlet channels, including grocery, mass-merchandisers, dollar, pet and drug stores. We differentiate ourselves through product innovation, our operationswith a nation-wide distribution network, strong customer service and world class sales, marketing and research and development teams, which gives us apotential advantage over smaller and regional manufacturers.In the Business to Business Products Group, we have ten principal competitors. Our agricultural chemical carrier products have experiencedcompetition from new engineered granular technologies in the agricultural and horticultural markets. Our bleaching clay and fluids purification products aresold in a highly cost competitive global marketplace. Performance is a primary competitive factor for these products. The animal health portion of thissegment also operates in a global marketplace with price and performance competition from multi-national and local competitors.PATENTSWe have obtained or applied for patents for certain of our processes and products sold to customers in both the Retail and Wholesale Products Groupand the Business to Business Products Group. These patents expire at various times, including in fiscal year 2016. We expect no material impact on ourbusiness from the expiration of patents in the upcoming year.BACKLOG; SEASONALITYAs of July 31, 2015, 2014 and 2013, our backlog of orders were valued at approximately $9,617,000, $7,401,000 and $8,503,000, respectively. Thevalue of backlog orders was determined by the number of tons on backlog order and the net selling prices. All backlog orders are expected to be filled withinthe next 12 months. We consider our business, taken as a whole, to be moderately seasonal; however, business activities of certain customers (such asagricultural chemical manufacturers) are subject to such seasonal factors as crop acreage planted, product formulation cycles and weather conditions.EFFECTS OF INFLATIONInflation generally affects us by increasing the cost of employee wages and benefits, transportation, processing equipment, purchased raw materialsand packaging, energy and borrowings under our credit facility. See Item 7 “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and Item 7A “Quantitative and Qualitative Disclosures About Market Risk” below.RESERVESWe mine our clay on leased or owned land near our manufacturing facilities in Mississippi, Georgia, Illinois and California; we also have reserves inNevada, Oregon and Tennessee. We estimate that our proven mineral reserves at July 31, 2015 are approximately 146,906,000 tons in aggregate and ourprobable reserves are approximately 135,072,000 tons in aggregate, for a total of 281,978,000 tons of mineral reserves. Based on our rate of consumptionduring fiscal year 2015, and without regard to any of our reserves in Nevada, Oregon and Tennessee, we consider our proven reserves adequate to supply ourneeds for over 40 years. Although we consider these reserves to be extremely valuable to our business, only a small portion of the reserves, those which wereacquired in acquisitions, was reflected at cost on our balance sheet. It is our policy to attempt to add to reserves in most years, but not necessarily in every year, an amount at least equal to the amount of reservesconsumed in that year. We have a program of exploration for additional reserves and, although reserves8have been acquired, we cannot assure that additional reserves will continue to become available. Our use of these reserves, and our ability to explore foradditional reserves, are subject to compliance with existing and future federal and state statutes and regulations regarding mining and environmentalcompliance. During the fiscal year 2015, we utilized these reserves to produce a majority of the sorbent products that we sold.Proven reserves are those reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; gradeand/or quality are computed from results of detailed sampling, and (b) the sites for inspection, sampling and measurement are spaced so closely and thegeologic character is so well defined that size, shape, depth and mineral content of reserves are well established. Probable reserves are computed frominformation similar to that used for proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequatelyspaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. Weemploy geologists and mineral specialists who estimate and evaluate existing and potential reserves in terms of quality, quantity and availability.MINING OPERATIONSWe have conducted mining operations in Ripley, Mississippi since 1963, in Ochlocknee, Georgia since 1968, in Blue Mountain, Mississippi since1989, in Mounds, Illinois since 1998 and in Taft, California since 2002. Our clay is surface mined on a year-round basis, generally using large earth movingscrapers, bulldozers, or excavators and off-road trucks to remove overburden (non-usable material), and then loaded into dump trucks with backhoes or frontend loaders for movement to the processing facilities. The mining and hauling of our clay is performed by us and by independent contractors. Our currentoperating mines range in distance from immediately adjacent to approximately 13 miles from the related processing plants. Processing facilities are generallyaccessed from the mining areas by private roads and in some instances by public highways. Each of our processing facilities maintains inventories ofunprocessed clay of approximately one week of production requirements. See Item 2 “Properties” below for additional information regarding our miningproperties and operations.The following schedule summarizes the net book value of land and other plant and equipment for each of our manufacturing facilities at July 31,2015 (in thousands): Land & MineralRights Plant andEquipmentOchlocknee, Georgia $8,721 $32,695Ripley, Mississippi $1,804 $9,975Mounds, Illinois $1,574 $1,706Blue Mountain, Mississippi $908 $11,108Taft, California $1,506 $3,972EMPLOYEESDuring fiscal year 2015 we employed approximately 797 persons, 46 of whom were employed by our foreign subsidiaries. We believe our corporateoffices, research and development center and manufacturing facilities are adequately staffed and no material labor shortages are anticipated. Approximately49 of our employees in the U.S. and approximately 18 of our employees in Canada are represented by labor unions, with whom we have entered into separatecollective bargaining agreements. We consider our employee relations to be satisfactory.ENVIRONMENTAL COMPLIANCEOur mining and manufacturing operations and facilities in Georgia, Mississippi, California and Illinois are required to comply with state surfacemining and environmental protection statutes. These domestic locations and our Canadian operations are subject to various federal, state and local statutes,regulations and ordinances which govern the discharge of materials, water and waste into the environment or otherwise regulate our operations. In recentyears, environmental regulation has grown increasingly stringent, a trend that we expect will continue. We endeavor to be in compliance at all times and inall material respects with all applicable environmental controls and regulations. As a result, expenditures relating to environmental compliance haveincreased over the years; however, these expenditures have not been material. As part of our ongoing environmental compliance activities, we incur expensesin connection with reclaiming mining sites. Historically, reclamation expenses have not had a material effect on our cost of sales.9In addition to the environmental requirements related to our mining and manufacturing operations and facilities, there has been increased federaland state regulation with respect to the content, labeling, use, and disposal after use of various products that we sell. We endeavor to be in compliance at alltimes and in all material respects with those regulations and to assist our customers in that compliance.We cannot assure that, despite all commercially reasonable efforts, we will always be in compliance in all material respects with all applicableenvironmental regulations or with requirements regarding the content, labeling, use, and disposal after use of our products; nor can we assure that from timeto time enforcement of such requirements will not have a material adverse effect on our business. See Item 1A “Risk Factors” below for a discussion of theseand other risks to our business.ENERGYWe primarily used natural gas in the processing of our clay products during fiscal year 2015. We have the ability to switch among various energysources, including natural gas, recycled oil and coal as permitted. See Item 7A “Quantitative and Qualitative Disclosures About Market Risk” below for moreinformation about commodity risk with respect to our energy use.RESEARCH AND DEVELOPMENTAt our research and development facility in Vernon Hills, Illinois, we develop new products and applications and improve existing products. Thefacility’s staff (and various consultants they engage from time to time) may consist of geologists, mineralogists, chemists and doctors of veterinary medicine.In the past several years, our research efforts have resulted in a number of new sorbent products and processes. The facility produces prototype samples andtests new products for customer trial and evaluation. No significant research and development was customer sponsored, and all research and developmentcosts are expensed in the period in which incurred. See Note 1 of the Notes to the Consolidated Financial Statements for further information about researchand development expenses.AVAILABLE INFORMATIONThis Annual Report on Form 10-K, as well as our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to all of theforegoing reports, are made available free of charge on or through the “Investor Information” section of our website at www.oildri.com as soon as reasonablypracticable after such reports are electronically filed with or furnished to the SEC.Information related to corporate governance at Oil-Dri, including its Code of Ethics and Business Conduct, information concerning executiveofficers, directors and Board committees, and transactions in Oil-Dri securities by directors and executive officers, is available free of charge on or through the“Investor Information” section of our website at www.oildri.com. The information on our website in not included as a part of, nor incorporated by referenceinto, this Annual Report on Form 10-K.10ITEM 1A – RISK FACTORS We seek to identify, manage and mitigate risks to our business, but risk and uncertainty cannot be eliminated or necessarily predicted. You shouldconsider the following factors carefully, in addition to other information contained in this Annual Report on Form 10-K, before making an investmentdecision with respect to our securities. Risks Related to our Business Our future growth and financial performance depend in large part on successful new product introductions. A significant portion of our net sales comes from the sale of products in mature categories, some of which have had little or no volume growth orhave had volume declines in recent fiscal years. Our future growth and financial performance will require that we successfully introduce new products orextend existing product offerings to meet emerging customer needs, technological trends and product market opportunities. We cannot be certain that we willachieve these goals. The development and introduction of new products generally require substantial and effective research, development and marketingexpenditures, some or all of which may be unrecoverable if the new products do not gain market acceptance. New product development itself is inherentlyrisky, as research failures, competitive barriers arising out of the intellectual property rights of others, launch and production difficulties, customer rejectionand unexpectedly short product life cycles may occur even after substantial effort and expense on our part. Even in the case of a successful launch of a newproduct, the ultimate benefit we realize may be uncertain if the new product “cannibalizes” sales of our existing products beyond expected levels. We face intense competition in our markets. Our markets are highly competitive and we expect that both direct and indirect competition will increase in the future. Our overall competitiveposition depends on a number of factors including price, customer service, marketing, technical support, product quality and delivery. Some of ourcompetitors, particularly in the sale of cat litter (the largest product in our Retail and Wholesale Products Group), have substantially greater financialresources or market presence and have established brands. The competition in the future may, in some cases, result in price reductions, reduced margins orloss of market share or product distribution, any of which could materially and adversely affect our business, operating results and financial condition. If wefail to compete successfully based on these or other factors, our business, financial condition and future financial results could be materially and adverselyaffected. Our periodic results may be volatile. Our operating results have varied on a quarterly basis during our operating history and are likely to fluctuate significantly in the future. Our expenselevels are based, in part, on our expectations regarding future net sales, and many of our expenses are fixed, particularly in the short term. We may be unableto adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Any significant shortfall of net sales in relation to ourexpectations could negatively affect our quarterly operating results. Our operating results may be below the expectations of our investors as a result of avariety of factors, many of which are outside our control. Factors that may affect our quarterly operating results include:•fluctuating demand for our products and services;•size and timing of sales of our products and services;•the mix of products with varying profitability sold in a given quarter;•changes in our operating costs including raw materials, energy, transportation, packaging, overburden removal, trade spending and marketing, wagesand other employee-related expenses such as health care costs, and other costs;•our ability to anticipate and adapt to rapidly changing conditions;•introduction of new products and services by us or our competitors;•our ability to successfully implement price increases and surcharges, as well as other changes in our pricing policies or those of our competitors;•variations in purchasing patterns by our customers, including due to weather conditions;•the ability of major customers and other debtors to meet their obligations to us as they come due;•our ability to successfully manage regulatory, intellectual property, tax and legal matters;•adverse litigation judgments, settlements, or other litigation-related costs;•the overall tax rate of our business, which may be affected by a number of factors, including the use of tax attributes, such as AMT tax credits, thefinancial results of our international subsidiaries and the timing, size and integration of acquisitions we may make from time to time;•the incurrence of restructuring, impairment or other charges; and11•general economic conditions and specific economic conditions in our industry and the industries of our customers.Accordingly, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Investors should not rely on the results ofone quarter as an indication of our future performance. Acquisitions involve a number of risks, any of which could cause us not to realize the anticipated benefits. We intend from time to time to strategically explore potential opportunities to expand our operations and reserves through acquisitions.Identification of good acquisition candidates is difficult and highly competitive. If we are unable to identify attractive acquisition candidates, completeacquisitions, and successfully integrate the companies, businesses or properties that we acquire, our profitability may decline and we could experience amaterial adverse effect on our business, financial condition, or operating results. Acquisitions involve a number of inherent risks, including:•uncertainties in assessing the value, strengths, and potential profitability of acquisition candidates, and in identifying the extent of all weaknesses,risks, contingent and other liabilities (including environmental, legacy product or mining safety liabilities) of those candidates;•the potential loss of key customers, management and employees of an acquired business;•the ability to achieve identified operating and financial synergies anticipated to result from an acquisition;•problems that could arise from the integration of the acquired business; and•unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying our rationale for pursuing theacquisition.Any one or more of these factors could cause us not to realize the benefits we anticipate to result from an acquisition. Moreover, acquisition opportunities wepursue could materially affect our liquidity and capital resources and may require us to incur indebtedness, seek equity capital or both. In addition, futureacquisitions could result in our assuming more long-term liabilities relative to the value of the acquired assets than we have assumed in our previousacquisitions. We depend on a limited number of customers for a large portion of our net sales. A limited number of customers account for a large percentage of our net sales, as described in Item 1 “Business” above. The loss of, or a substantialdecrease in the volume of, purchases by Walmart, Clorox or any of our other top customers would harm our sales and profitability. In addition, an adversechange in the terms of our dealings with, or in the financial wherewithal or viability of, one or more of our significant customers could harm our business,financial condition and results of operations. We expect that a significant portion of our net sales will continue to be derived from a small number of customers and that the percentage of netsales represented by these customers may increase. As a result, changes in the strategies of our largest customers may reduce our net sales. These strategicchanges may include a reduction in the number of brands or variety of products they carry or a shift of shelf space to private label products or increased use ofglobal or centralized procurement initiatives. In addition, our business is based primarily upon individual sales orders placed by customers rather thancontracts with a fixed duration. Accordingly, most of our customers could reduce their purchasing levels or cease buying products from us on relatively shortnotice. While we do have long-term contracts with certain of our customers, including Clorox, even these agreements are subject to termination in certaincircumstances. In addition, the degree of profit margin contribution of our significant customers varies. If a significant customer with a more favorable profitmargin was to terminate its relationship with us or shift its mix of product purchases to lower-margin products, it would have a disproportionately adverseimpact on our results of operations.Price or trade concessions, or the failure to make them to retain customers, could adversely affect our sales and profitability. The products we sell are subject to significant price competition. From time to time, we may need to reduce the prices for some of our products torespond to competitive and customer pressures and to maintain market share. These pressures are often exacerbated during an economic downturn. Anyreduction in prices to respond to these pressures would reduce our profit margins. In addition, if our sales volumes fail to grow sufficiently to offset anyreduction in margins, our results of operations would suffer. Because of the competitive environment facing many of our customers, particularly our high-volume mass merchandiser customers, these customers have increasingly sought to obtain price reductions, specialized packaging or other concessions fromproduct suppliers. These business demands may relate to inventory practices, logistics or other aspects of the customer-supplier relationship. To the extent weprovide these concessions, our profit margins are reduced. Further, if we are unable to maintain terms that are acceptable to our customers, these customerscould reduce purchases of our products and increase purchases of products from our competitors, which would harm our sales and profitability. 12Increases in energy and other commodity prices would increase our operating costs, and we may be unable to pass all these increases on to our customersin the form of higher prices and surcharges. If our energy costs increase disproportionately to our net sales, our earnings could be significantly reduced. Increases in our operating costs mayreduce our profitability if we are unable to pass all the increases in energy and other commodity prices on to our customers through price increases orsurcharges. Sustained price increases or surcharges in turn may lead to declines in volume, and while we seek to project tradeoffs between price increases andsurcharges, on the one hand, and volume, on the other, there can be no assurance that our projections will prove to be accurate. We are subject to volatility in the price and availability of natural gas, as well as other sources of energy. We have the ability, as we have from timeto time in the past, to reallocate a portion of our energy needs among different sources of energy due to seasonal supply limitations and the higher cost of oneparticular fuel relative to other fuels; however, there can be no assurance that we will be able to effectively reallocate among different fuels in the future. Fromtime to time, we may use forward purchase contracts or financial instruments to hedge the volatility of a portion of our energy costs. The success or failure ofany such hedging transactions depends on a number of factors, including our ability to anticipate and manage volatility in energy prices, the general demandfor fuel by the manufacturing sector, seasonality and the weather patterns throughout the United States and the world. The prices of other commodities such as paper, plastic resins, synthetic rubber and steel significantly influence the costs of packaging, replacementparts and equipment we use in the manufacture of our products and the maintenance of our facilities. As a result, increases in the prices of these commoditiesgenerally increase the costs of the related materials we use. These increased materials costs present the same types of risks as described above with respect toincreased energy costs.Our business could be negatively affected by supply, capacity, information technology and logistics disruptions.Supply, capacity, information technology and logistics disruptions could adversely affect our ability to manufacture, package or transport ourproducts. Some of our products require raw materials that are provided by a limited number of suppliers, or are demanded by other industries or are simply notavailable at times. Also, some of our products are manufactured on equipment at or near its capacity thus limiting our ability to sell additional volumes ofsuch products until more capacity is obtained. Moreover, disruptions, failures, cyber-attacks or privacy breaches in the information technology or phonesystems of us or our customers could adversely affect our communications and business operations. In addition, an increase in truck or ocean freight costsmay reduce our profitability if we are unable to pass such increases on to our customers through price increases or surcharges, and a decrease in transportationavailability may affect our ability to deliver our products to our customers and consequently decrease customer satisfaction and future orders. Changes in inventory strategy by our customers as well as other external factors could adversely affect our sales and increase our inventory risk. From time to time, customers in both our Retail and Wholesale Products Group and our Business to Business Products Group have changedinventory levels as part of managing their working capital requirements. Any change in inventory levels by our customers would harm our operating resultsfor the financial periods affected by the reductions. In particular, continued consolidation within the retail industry could potentially reduce inventory levelsmaintained by our retail customers, which could adversely affect our results of operations for the financial periods affected by the reductions. The value of our inventory may decline as a result of surplus inventory, packaging changes driven by regulatory requirements or market refreshment,price reductions or obsolescence. We must identify the right product mix and maintain sufficient inventory on hand to meet customer orders. Failure to do socould adversely affect our revenue and operating results. If circumstances change (for example, an unexpected shift in market demand, pricing or customerdefaults) there could be a material impact on the net realizable value of our inventory. We maintain an inventory valuation reserve account againstdiminution in the value or saleability of our inventory; however, there is no guaranty that these arrangements will be sufficient to avoid write-offs in excessof our reserves. Environmental, health and safety matters create potential compliance and other liability risks. We are subject to a variety of federal, state, local and foreign laws and regulatory requirements relating to the environment and to health and safetymatters. For example, our mining operations are subject to extensive governmental regulation on matters such as permitting and licensing requirements,workplace safety, plant and wildlife protection, wetlands and other environmental protection, reclamation and restoration of mining properties after mining iscompleted, the discharge of materials into the environment, and the effects that mining has on air or groundwater quality and water availability. We believewe have obtained13all material permits and licenses required to conduct our present operations. We will, however, need additional permits and renewals of permits in the future. The expense, liabilities and requirements associated with environmental, health and safety laws and regulations are costly and time-consuming andmay delay commencement or continuation of exploration, mining or manufacturing operations. We have incurred, and will continue to incur, significantcapital and operating expenditures and other costs in complying with environmental, health and safety laws and regulations. In recent years, regulation ofenvironmental, health and safety matters has grown increasingly stringent, a trend that we expect will continue. Substantial penalties may be imposed if weviolate certain of these laws and regulations even if the violation was inadvertent or unintentional. Failure to maintain or achieve compliance with these lawsand regulations or with the permits required for our operations could result in substantial operating costs and capital expenditures, in addition to fines andadministrative, civil or criminal sanctions, third-party claims for property damage or personal injury, cleanup and site restoration costs and liens, the issuanceof injunctions to limit or cease operations, the suspension or revocation of permits and other enforcement measures that could have the effect of limiting ouroperations. Under the “joint and several” liability principle of certain environmental laws, we may be held liable for all remediation costs at a particular siteand the amount of that liability could be material. In addition, future environmental laws and regulations could restrict our ability to expand our facilities orextract our existing reserves or could require us to acquire costly equipment or to incur other significant expenses in connection with our business. There canbe no assurance that future events, including changes in any environmental requirements and the costs associated with complying with such requirements,will not have a material adverse effect on us. Government regulation imposes significant costs on us, and future regulatory changes (or related customer responses to regulatory changes) couldincrease those costs or limit our ability to produce and sell our products. In addition to the regulatory matters described above, our operations are subject to various federal, state, local and foreign laws and regulationsrelating to the manufacture, packaging, labeling, content, storage, distribution and advertising of our products and the conduct of our business operations.For example, in the United States, some of our products are regulated by the Food and Drug Administration, the Consumer Product Safety Commission andthe Environmental Protection Agency and our product claims and advertising are regulated by the Federal Trade Commission. Most states have agencies thatregulate in parallel to these federal agencies. In addition, our international sales and operations are subject to regulation in each of the foreign jurisdictions inwhich we manufacture, distribute or sell our products. There is increasing federal and state regulation with respect to the content, labeling, use, and disposalafter use of various products we sell. Throughout the world, but particularly in the United States and Europe, there is also increasing government scrutiny andregulation of the food chain and products entering or affecting the food chain.If we are found to be out of compliance with applicable laws and regulations in these or other areas, we could be subject to loss of customers and tocivil remedies, including fines, injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effecton our business. Loss of or failure to obtain necessary permits and registrations could delay or prevent us from meeting product demand, introducing newproducts, building new facilities or acquiring new businesses and could adversely affect operating results. If these laws or regulations are changed orinterpreted differently in the future, it may become more difficult or expensive for us to comply. In addition, investigations or evaluations of our products bygovernment agencies may require us to adopt additional labeling, safety measures or other precautions, or may effectively limit or eliminate our ability tomarket and sell these products. Accordingly, there can be no assurance that current or future governmental regulation will not have a material adverse effecton our business or that we will be able to obtain or renew required governmental permits and registrations in the future. We are also experiencing increasing customer scrutiny of the content and manufacturing of our products, particularly our products entering oraffecting the food chain, in parallel with the increasing government regulation discussed above. Our customers may impose product specifications or otherrequirements that are different from, and more onerous than, applicable laws and regulations. As a result, the failure of our products to meet these additionalrequirements may result in loss of customers and decreased sales of our products even in the absence of any actual failure to comply with applicable laws andregulations. There can be no assurance that future customer requirements concerning the content or manufacturing of our products will not have a materialadverse effect on our business. We depend on our mining operations for a majority of our supply of sorbent minerals. Most of our principal raw materials are sorbent minerals mined by us or independent contractors on land that we own or lease. While our miningoperations are conducted in surface mines, which do not present many of the risks associated with deep underground mining, our mining operations arenevertheless subject to many conditions beyond our control. Our mining operations are affected by weather and natural disasters, such as earthquakes,tornadoes, hurricanes, heavy rains and flooding, equipment failures and other unexpected maintenance problems, variations in the amount of rock and soiloverlying our reserves, variations14in geological conditions, fires and other accidents, fluctuations in the price or availability of supplies and other matters. Any of these risks could result insignificant damage to our mining properties or processing facilities, personal injury to our employees, environmental damage, delays in mining orprocessing, losses or possible legal liability. We cannot predict whether or the extent to which we will suffer the impact of these and other conditions in thefuture. We may not be successful in acquiring adequate additional reserves in the future. We have an ongoing program of exploration for additional reserves on existing properties as well as through the potential acquisition of new ownedor leased properties; however, there can be no assurance that our attempts to acquire additional reserves in the future will be successful. Our ability to acquireadditional reserves in the future could be limited by competition from other companies for attractive properties, the lack of suitable properties that can beacquired on terms acceptable to us or restrictions under our existing or future debt facilities. We may not be able to negotiate new leases or obtain miningcontracts for properties containing additional reserves or renew our leasehold interests in properties on which operations are not commenced during the termof the lease. Also, requirements for environmental compliance may restrict exploration or use of lands that might otherwise be utilized as a source of reserves.Failure to effectively utilize or successfully assert intellectual property rights, and the loss or expiration of such rights, could materially adversely affectour competitiveness. Infringement of third-party intellectual property rights could result in costly litigation and/or the modification or discontinuance ofour products.We rely on intellectual property rights based on trademark, trade secret, patent and copyright laws to protect our brands, products and packaging forour products. We cannot be certain that these intellectual property rights will be maximized or that they can be successfully asserted. There is a risk that wewill not be able to obtain and perfect our own intellectual property rights or, where appropriate, license intellectual property rights necessary to support newproduct introductions. We cannot be certain that these rights, if obtained, will not later be invalidated, circumvented or challenged, and we could incursignificant costs in connection with legal actions to assert our intellectual property rights or to defend those rights from assertions of invalidity. In addition,even if such rights are obtained in the United States, the laws of some of the other countries in which our products are or may be sold may not protectintellectual property rights to the same extent as the laws of the United States. If other parties infringe our intellectual property rights, they may dilute thevalue of our brands in the marketplace, which could diminish the value that consumers associate with our brands and harm our sales. The failure to perfect orsuccessfully assert our intellectual property rights could make us less competitive and could have a material adverse effect on our business, operating results,and financial condition.In addition, if our products are found to infringe intellectual property rights of others, the owners of those rights could bring legal actions against usclaiming substantial damages for past infringement and seeking to enjoin manufacturing and marketing of the affected products. If these legal actions aresuccessful, in addition to any potential liability for damages from past infringement, we could be required to obtain a license in order to continue tomanufacture or market the affected products, potentially adding significant costs. We may not prevail in any action brought against us or we may beunsuccessful in securing any license for continued use and therefore have to discontinue the marketing and sale of a product. This could make us lesscompetitive and could have a material adverse impact on our business, operating results and financial condition.The loss of any key member of our senior management team may impede the implementation of our business plans in a timely manner.The execution of our business plans depends in part upon the continued service of our senior management team, who possess unique and extensiveindustry knowledge and experience. The loss or other unavailability of one or more of the key members of our senior management team couldadversely impact our ability to manage our operations effectively and/or pursue our business strategy. No company-owned life insurance coverage has beenobtained on these team members.We face risks as a result of our international sales and business operations. We derived approximately 21% of our consolidated net sales from sales outside of the United States in fiscal year 2015. Our ability to sell ourproducts and conduct our operations outside of the United States is subject to a number of risks. Local economic, political and labor conditions in eachcountry could adversely affect demand for our products or disrupt our operations in these markets, particularly when local political and economic conditionsare unstable. In addition, international sales and operations are subject to currency exchange fluctuations, fund transfer and trade restrictions andimport/export duties, and international operations are subject to foreign regulatory requirements and issues, including with respect to environmental matters.Any of these matters could result in sudden, and potentially prolonged, changes in demand for our products. Also, we may have difficulty enforcingagreements and collecting accounts receivable through a foreign country’s legal system.15 We may incur adverse safety events or product liability claims that may be costly, create adverse publicity and may add further governmental regulation. If any of the products that we sell cause, or appear to cause, harm to any of our customers or to consumers, we could be exposed to product liabilitylawsuits, heightened regulatory scrutiny, requirements for additional labeling, withdrawal of products from the market, imposition of fines or criminalpenalties or other governmental actions. Any of these actions could result in material write-offs of inventory, material impairments of intangible assets,goodwill and fixed assets, material restructuring charges and other adverse impacts on our business operations. We cannot predict with certainty the eventualoutcome of any pending or future litigation, and we could be required to pay substantial judgments or settlements against us or change our productformulations in response to governmental action. Further, lawsuits can be expensive to defend, whether or not they have merit, and the defense of theseactions may divert the attention of our management and other resources that would otherwise be engaged in managing our business and our reputation couldsuffer, any of which could harm our business. Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, operating results and stockprice. Section 404 of the Sarbanes-Oxley Act and related SEC rules require that we perform an annual management assessment of the design andeffectiveness of our internal control over financial reporting and obtain an opinion from our independent registered public accounting firm on our internalcontrol over financial reporting. Our assessment concluded that our internal control over financial reporting was effective as of July 31, 2015 and weobtained from our independent registered public accounting firm an unqualified opinion on our internal control over financial reporting; however, there canbe no assurance that we will be able to maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplementedor amended from time to time in future periods. Accordingly, we cannot assure that we will be able to conclude on an ongoing basis that we have effectiveinternal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal control is necessary for us toproduce reliable financial reports and is important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, ourbusiness and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our CommonStock could drop significantly. Risks Related to Our Common Stock Our principal stockholders have the ability to control matters requiring a stockholder vote and could delay, deter or prevent a change in control of ourcompany.Under our Certificate of Incorporation, the holders of our Common Stock are entitled to one vote per share and the holders of our Class B Stock areentitled to ten votes per share; the two classes generally vote together without regard to class (except that any amendment to our Certificate of Incorporationchanging the number of authorized shares or adversely affecting the rights of Common Stock or Class B Stock requires the separate approval of the class soaffected as well as the approval of both classes voting together). As a result, the holders of our Class B Stock exert control over us and thus limit the ability ofother stockholders to influence corporate matters. Beneficial ownership of Common Stock and Class B Stock by Jaffee Investment Partnership, L.P. and itsaffiliates (including Richard M. Jaffee, our Chairman, and Daniel S. Jaffee, his son and our President and Chief Executive Officer) provides them with theability to control the election of our Board of Directors and the outcome of most matters requiring the approval of our stockholders, including the amendmentof certain provisions of our Certificate of Incorporation and By-Laws, the approval of any equity-based employee compensation plans and the approval offundamental corporate transactions, including mergers and substantial asset sales. Through their concentration of voting power, our principal stockholdersmay be able to delay, deter or prevent a change in control of our company or other business combinations that might otherwise be beneficial to our otherstockholders.We are a “controlled company” within the meaning of the New York Stock Exchange (“NYSE”) rules and, as a result, qualify for, and intend to rely on,exemptions from certain corporate governance requirements.We are a “controlled company” under the New York Stock Exchange Corporate Governance Standards. As a controlled company, we may rely onexemptions from certain NYSE corporate governance requirements that otherwise would be applicable, including the requirements:•that a majority of the board of directors consists of independent directors;•that we have a nominating and governance committee comprised entirely of independent directors with a written charter addressing the committee’spurpose and responsibilities;16•that we have a compensation committee comprised entirely of independent directors with a written charter addressing the committee’s purpose andresponsibilities;•that we include in our proxy statements certain information regarding compensation consultants and related conflicts of interest; and•that we conduct an annual performance evaluation of the nominating and corporate governance and compensation committees.We have previously relied on these exemptions, and we intend to continue to rely on them in the future. As a result, you may not have the same benefits andinformation available to stockholders of NYSE-listed companies that are subject to all of the NYSE corporate governance requirements. The market price for our Common Stock may be volatile. In recent periods, there has been volatility in the market price for our Common Stock. Furthermore, the market price of our Common Stock couldfluctuate substantially in the future in response to a number of factors, including the following:•fluctuations in our quarterly operating results or the operating results of our competitors;•changes in general conditions in the economy, the financial markets, or the industries in which we operate;•announcements of significant acquisitions, strategic alliances or joint ventures by us, our customers or our competitors;•introduction of new products or services;•increases in the price of energy sources and other raw materials; and•other developments affecting us, our industries, customers or competitors.In addition, in recent years the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the marketprices of securities issued by many companies for reasons unrelated to their operating performance. These broad market fluctuations may materially adverselyaffect our Common Stock price, regardless of our operating results. Given its relatively small public float, number of shareholders and average daily tradingvolume, our Common Stock may be relatively more susceptible to volatility arising from any of these factors. There can be no assurance that the price of ourCommon Stock will increase in the future or be maintained at its recent levels. Future sales of our Common Stock could depress its market price. Future sales of shares of our Common Stock could adversely affect its prevailing market price. If our officers, directors or significant stockholderssell a large number of shares, or if we issue a large number of shares, the market price of our Common Stock could significantly decline. Moreover, theperception in the public market that stockholders might sell shares of Common Stock could depress the market for our Common Stock. Our Common Stock’srelatively small public float and average daily trading volume may make it relatively more susceptible to these risks.ITEM 1B – UNRESOLVED STAFF COMMENTS None.17ITEM 2 – PROPERTIES Real Property Holdings and Mineral Reserves LandOwned LandLeased LandUnpatentedClaims Total EstimatedProvenReserves EstimatedProbableReserves Total (acres) (thousands of tons)California 795 — 1,030 1,825 4,263 11,226 15,489Georgia 3,846 1,597 — 5,443 34,510 24,592 59,102Illinois 82 508 — 590 3,365 — 3,365Mississippi 2,156 999 — 3,155 78,452 93,253 171,705Nevada 535 — — 535 23,316 2,976 26,292Oregon 340 — — 340 — 25 25Tennessee 178 — — 178 3,000 3,000 6,000 7,932 3,104 1,030 12,066 146,906 135,072 281,978The Mississippi, Georgia, Tennessee, Nevada, California and Illinois properties are primarily mineral in nature, except our research and developmentfacility which is included in the Illinois owned land. We mine sorbent minerals primarily consisting of montmorillonite and attapulgite and, to a lesserextent, other clay-like sorbent materials, such as Antelope shale. We employ geologists and mineral specialists who prepared the estimated reserves of theseminerals in the table above. See also Item 1 “Business” above for further information about our reserves. The locations in the table above collectivelyproduced approximately 808,000 tons of finished product in fiscal year 2015, 857,000 tons in fiscal year 2014 and 794,000 tons in fiscal year 2013. Parcelsof such land are also sites of manufacturing facilities operated by us. We own approximately one acre of land in Laval, Quebec, Canada, which is the site ofthe processing, packaging and distribution facility for our Canadian subsidiary. MINING PROPERTIES Our mining operations are conducted on land that we own or lease. The Georgia, Illinois and Mississippi mining leases generally require that we paya minimum monthly rent to continue the lease term. The rental payments are typically applied against a stated royalty related to the number of unprocessed,or in some cases processed, tons of minerals extracted from the leased property. Many of our mining leases have no stated expiration dates. Some of ourleases, however, do have expiration dates ranging from 2023 to 2097. We would not experience a material adverse effect from the expiration or termination ofany of these leases. We have a variety of access arrangements, some of which are styled as leases, for manufacturing at facilities that are not contiguous withthe related mines. We would not experience a material adverse effect from the expiration or termination of any of these arrangements. See also Item 1“Business” above for further information on our reserves. Certain of our land holdings in California are represented by unpatented mining claims we lease from the Bureau of Land Management. These leasesgenerally give us the contractual right to conduct mining or processing activities on the land covered by the claims. The validity of title to unpatentedclaims, however, is dependent upon numerous factual matters. We believe the unpatented claims we lease are in compliance with all applicable federal, stateand local mining laws, rules and regulations. Future amendments to existing federal mining laws, however, could have a prospective effect on miningoperations on federal lands and include, among other changes, the imposition of royalty fees on the mining of unpatented claims, the elimination orrestructuring of the patent system and an increase in fees for the maintenance of unpatented claims. To the extent that future proposals may result in theimposition of royalty fees on unpatented lands, the mining of our unpatented claims may become economically unfavorable. We cannot predict the form thatany such amendments might take or whether or when such amendments might be adopted. In addition, the construction and operation of processing facilitieson these sites would require the approval of federal, state and local regulatory authorities. See Item 1A “Risk Factors” above for a discussion of other risks toour business related to our mining properties.18MINING AND MANUFACTURING METHODS Mining and Hauling We mine clay in open-pit mines in Georgia, Mississippi, Illinois and California. The mining and hauling operations are similar throughout the Oil-Dri locations, with the exception of California. The land to be mined is first stripped. The stripping process involves removing the overburden and preparingthe site to allow the excavators to reach the desired clay. When stripping is completed, the excavators dig out and load the clay onto dump trucks. The truckshaul the clay directly to our processing plants where it is dumped in a clay yard and segregated by clay type if necessary. Generally, the mine sites are inclose proximity to the processing plants; however, the maximum distance the clay is currently hauled to a plant is approximately 13 miles. At our California mines the clay is excavated and hauled to a hopper. An initial crushing and screening operation is performed at the mine sitebefore the trucks are loaded for delivery to the processing plant. Processing The processing of our clay varies depending on the level of moisture desired in the clay after the drying process. The moisture level is referred to asregular volatile moisture (“RVM”) or low volatile moisture (“LVM”). RVM Clay: A front end loader is used to load the clay from the clay yard into the primary crusher. The primary crusher reduces the clay chunks to2.0 inches in diameter or smaller. From the crusher, the clay is transported via a belt conveyor into the clay shed. A clay shed loader feeds the clay into adisintegrator which reduces the clay to particles 0.5 inches in diameter or smaller. The clay then feeds directly into the RVM kiln. The RVM kiln reduces theclay’s moisture content. From the RVM kiln, the clay moves through a series of mills and screens which further size and separate the clay into the desiredparticle sizes. The sized clay is then conveyed into storage tanks. The RVM processed clay can then be packaged or processed into LVM material. LVM Clay: RVM clay is fed from storage tanks into the LVM kiln where the moisture content is further reduced. The clay then proceeds into arotary cooler, then on to a screening circuit which separates the clay into the desired particle sizes.In addition, certain other products may go through further processing or the application of fragrances and additives. For example, certain fluidpurification and animal health products are processed into a powder form. We also use a proprietary process for our engineered granules to create spherical,uniform-sized granules. Packaging Once the clay has been dried to the desired level it will be sized and packaged. Our products have package sizes ranging from bags, boxes and jugsof cat litter to railcars of agricultural products. We also package some of our products into bulk (approximately one ton) bags or into bulk trucks. The size anddelivery configuration of our finished products is determined by customer requirements.19FACILITIES We operate clay manufacturing and non-clay production facilities on property owned or leased by us as shown on the map below: Oil-Dri Corporation of America Plant Site LocationsLocationOwned/LeasedFunctionAlpharetta, GeorgiaLeasedNon-clay manufacturing and packaging, sales, customer serviceBentonville, ArkansasLeasedSales officeBlue Mountain, MississippiOwnedManufacturing and packagingChicago, IllinoisLeasedPrincipal executive officeCoppet, SwitzerlandLeasedCustomer service officeLaval, Quebec, CanadaOwnedNon-clay manufacturing and clay and non-clay packaging, salesMounds, IllinoisOwnedManufacturing and packagingOchlocknee, GeorgiaOwnedManufacturing and packagingRipley, MississippiOwnedManufacturing and packagingShenzhen, ChinaLeasedSales office, customer serviceTaft, CaliforniaOwnedManufacturing and packagingVernon Hills, IllinoisOwnedResearch and developmentWisbech, United KingdomLeasedNon-clay manufacturing and clay and non-clay packaging, sales, customer serviceWe have no mortgages on the real property we own. The lease for the Bentonville, Arkansas office lease expires in 2016. The leases for theAlpharetta, Georgia facility and the Shenzhen, China office all expire in 2018. The Wisbech, United Kingdom facility lease expires in 2032 and the Chicago,Illinois corporate office lease expires in 2033. The lease for the Coppet, Switzerland office is on a year-to-year basis. We consider that our properties aregenerally in good condition, well maintained and suitable and adequate to carry on our business.20ITEM 3 – LEGAL PROCEEDINGS We are party to various legal actions from time to time that are ordinary in nature and incidental to the operation of our business. While it is notpossible at this time to determine with certainty the ultimate outcome of these lawsuits, we believe that none of the pending proceedings will have a materialadverse effect on our business or financial condition.ITEM 4 – MINE SAFETY DISCLOSUREOur mining operations are subject to regulation by the Mine Safety and Health Administration under authority of the Federal Mine Safety andHealth Act of 1977, as amended. Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-FrankWall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report on Form 10-K.21PART IIITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES Our Common Stock is traded on the NYSE under the symbol ODC. There is no established trading market for our Class B Stock. There are no sharesof Class A Common Stock currently outstanding. See Note 7 of the Notes to the Consolidated Financial Statements for a description of our Common Stock,Class B Stock and Class A Common Stock. The number of holders of record of Common Stock and Class B Stock on September 30, 2015 were 620 and 29,respectively, as reported by our transfer agent. In the last three years, we have not sold any securities which were not registered under the Securities Act of1933. The following table sets forth, for the periods indicated, the high and low sales price for our Common Stock listed on the NYSE and dividends pershare declared on our Common Stock and Class B Stock. Common StockPrice Range Cash DividendsPer Share Low High CommonStock Class BStockFiscal Year 2015 First Quarter $24.02 $31.30 $0.2000 $0.1500Second Quarter $26.60 $32.93 0.2000 0.1500Third Quarter $28.30 $34.19 0.2000 0.1500Fourth Quarter $25.92 $33.44 0.2100 0.1575Total $0.8100 $0.6075 Fiscal Year 2014: First Quarter $30.35 $36.80 $0.1900 $0.1425Second Quarter $32.90 $41.74 0.1900 0.1425Third Quarter $31.24 $36.27 0.1900 0.1425Fourth Quarter $28.71 $34.90 0.2000 0.1500Total $0.7700 $0.5775Dividends. Our Board of Directors determines the timing and amount of any dividends. Our Board of Directors may change its dividend practice atany time. The declaration and payment of future dividends, if any, will depend upon, among other things, our future earnings, capital requirements, financialcondition, legal requirements, contractual restrictions and other factors that our Board of Directors deems relevant. Our Credit Agreement with BMO HarrisBank N.A. (“BMO Harris”) and our 2005 Note Agreement require that certain minimum net worth and tangible net worth levels are to be maintained. To theextent that these balances are not attained, our ability to pay dividends may be impaired. See Note 4 of the Notes to the Consolidated Financial Statementsfor further information about our note agreements. Issuer Repurchase of Equity Securities. Our Board of Directors authorized the repurchase of 250,000 shares of Common Stock on March 11, 2011and authorized the repurchase of an additional 250,000 shares on June 14, 2012. These authorizations do not have a stated expiration date. As of July 31,2015, a total of 305,968 shares of Common Stock may yet be repurchased under these authorizations. We do not have any current authorization from ourBoard of Directors to repurchase shares of Class B Stock.22Equity Compensation Plan Information. The following table presents information about compensation plans under which our equity securities areauthorized for issuance. See Note 8 of the Notes to the Consolidated Financial Statements for further information about these stock-based compensationplans.Equity Compensation Plan Information As OfJuly 31, 2015 Number of securities tobe issued upon exercise ofoutstanding options (inthousands) Weighted-average exerciseprice of outstandingoptions Number of securitiesremaining available forfurther issuance underequity compensation plans(excluding securitiesreflected in column (a)) (inthousands)Plan category (a) (b) (c)Equity compensation plans approved by stockholders 41 $15.43 54223PERFORMANCE GRAPH The following graph shows the annual cumulative total stockholders’ return for the five years ending July 31, 2015 on an assumed investment of$100 on July 31, 2010 in our Common Stock, the Russell Microcap Index and the Russell 2000-Material and Processing Economic Sector Index. OurCommon Stock is included in the Russell Microcap Index and we consider the Russell 2000-Material and Processing Economic Sector Index to be our peergroup. The graph assumes all dividends were reinvested. The historical stock price performance of our Common Stock is not necessarily indicative of futurestock performance. Comparative Five-Year Total ReturnsOil-Dri Corporation of America, Russell Microcap Index , Russell 2000-Materials & Processing Index(Performance results through July 31, 2015) 201020112012201320142015Oil-Dri Corporation$100.00$97.56$107.01$160.36$150.15$138.73Russell Microcap$100.00$121.91$122.95$168.58$182.52$204.98Russell 2000-Materials & Processing$100.00$130.11$122.13$165.77$182.92$179.51This performance graph and accompanying disclosure is not soliciting material, is not deemed filed with the SEC, and is not incorporated byreference in any of our filings under the Securities Act or the Exchange Act, whether made on, before or after the date of this filing and irrespective of anygeneral incorporation language in such filing.24ITEM 6 – SELECTED FINANCIAL DATAFIVE YEAR SUMMARY OF FINANCIAL DATA(In thousands, except for per share amounts and ratios) Fiscal Year Ended July 31, 2015 2014 2013 2012 2011Summary of Operations Net Sales $261,402 $266,313 $250,583 $240,681 $226,755Cost of Sales (201,245) (206,663) (184,084) (181,676) (176,715)Gross Profit 60,157 59,650 66,499 59,005 50,040Selling, General and Administrative Expenses (45,004) (47,232) (47,558) (47,303) (36,331)Capacity Rationalization Charges (1) — — (70) (1,623) —Income from Operations 15,153 12,418 18,871 10,079 13,709Other Income (Expense) Interest Income 13 23 34 31 61 Interest Expense (1,327) (1,569) (1,773) (2,060) (2,053) Foreign Exchange (Losses) Gains (349) 35 (56) (196) (22) Other, Net 679 430 423 507 446 Total Other Expense, Net (984) (1,081) (1,372) (1,718) (1,568)Income before Income Taxes 14,169 11,337 17,499 8,361 12,141Income Taxes (2,801) (2,981) (2,913) (2,263) (3,090)Net Income $11,368 $8,356 $14,586 $6,098 $9,051Average Shares Outstanding Diluted 7,037 7,004 6,927 7,062 7,103Net Income per Share Basic Common $1.73 $1.27 $2.25 $0.92 $1.36 Basic Class B Common $1.30 $0.96 $1.69 $0.70 $1.06 Diluted $1.59 $1.17 $2.07 $0.85 $1.26Important Highlights Total Assets $190,031 $186,204 $183,559 $174,267 $173,393 Long-Term Debt $15,417 $18,900 $22,400 $25,900 $29,700 Working Capital $53,755 $54,016 $71,925 $66,080 $65,336 Working Capital Ratio 2.9 2.8 3.3 3.3 3.5 Book Value per Share $15.85 $14.94 $14.96 $12.19 $13.63 Dividends Declared $5,312 $5,040 $4,712 $4,511 $4,305 Dividends Declared per Common Share $0.8100 $0.7700 $0.7300 $0.6900 $0.6500 Dividends Declared per Class B Common Share $0.6075 $0.5775 $0.5475 $0.5175 $0.4875 Capital Expenditures $15,859 $18,566 $9,795 $6,960 $13,806 Depreciation and Amortization $11,994 $10,396 $8,946 $9,272 $8,473 Net Income as a Percent of Net Sales 4.3% 3.1% 5.8% 2.5% 4.0% Return on Average Stockholders' Equity 10.6% 8.1% 15.5% 6.8% 9.7% Gross Profit as a Percent of Net Sales 23.0% 22.4% 26.5% 24.5% 22.1% Operating Expenses as a Percent of Net Sales 17.2% 17.7% 19.0% 20.3% 16.0%(1) In fiscal years 2012 and 2013, one-time charges were incurred for the relocation of production of our industrial floor absorbent and cat litter products fromour facility located in Mounds, Illinois to our plants located in Mississippi.25ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis of our financial condition and results of operations should be read together with the ConsolidatedFinancial Statements and the related notes included elsewhere herein. This discussion contains forward-looking statements that involve risks anduncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause a differenceinclude those discussed under “Forward-Looking Statements” and in Item 1A “Risk Factors” in this Annual Report on Form 10-K.OVERVIEWWe develop, mine, manufacture and market sorbent products principally produced from clay minerals, primarily consisting of montmorillonite andattapulgite and, to a lesser extent, other clay-like sorbent materials, such as Antelope shale. Our principal products include agricultural and horticulturalchemical carriers, animal health and nutrition products, cat litter, fluids purification and filtration bleaching clays, industrial and automotive floor absorbentsand sports field products. Our products are sold to two primary customer groups, including customers who resell our products as originally produced to theend consumer and other customers who use our products as part of their production process or use them as an ingredient in their final finished product. Wehave two reportable operating segments based on the different characteristics of our two primary customer groups: Retail and Wholesale Products Group andBusiness to Business Products Group. Each operating segment is discussed individually below. Additional detailed descriptions of the operating segmentsare included in Item 1 “Business” above.Consolidated net income was $11,368,000, or $1.59 per diluted share, for the fiscal year ended July 31, 2015, a 36% increase from net income of$8,356,000, or $1.17 per diluted share, for the fiscal year ended July 31, 2014. Fiscal year 2015 provided both opportunities and challenges that resulted innet income growth despite reduced net sales. We benefited from reduced costs for advertising, freight and natural gas throughout the year. Packaging costsalso trended lower at year end. Our private label cat litter experienced sales growth as we continued to build our presence in this market after the acquisitionof MFM during fiscal year 2014 and with the introduction of a new private label lightweight scoopable product in fiscal year 2015. Sales also improved fromthe prior year for both our animal health and nutrition products and our agricultural chemical carrier products, while our branded cat litter sales were hinderedby intense competition. Foreign sales were also negatively impacted by currency fluctuations and our fluids purification products contended withunfavorable edible oil crop characteristics. We devoted resources at our manufacturing facilities to introduce new branded and private label lightweightscoopable products in the second half of fiscal year 2015, which we believe will position us well in this expanding segment of the cat litter market.We believe our balance sheet remains strong at the end of fiscal year 2015 with higher cash and cash equivalents, lower inventory and reduced debt.During the year we continued to invest in capital at our plants and to increase dividend payments. Our cash requirements are subject to change as businessconditions warrant and opportunities arise.RESULTS OF OPERATIONSFISCAL YEAR 2015 COMPARED TO FISCAL YEAR 2014CONSOLIDATED RESULTSConsolidated net sales in fiscal 2015 were $261,402,000, a 2% decrease from net sales of $266,313,000 in fiscal year 2014. Net sales in our Retailand Wholesale Products Group declined as lower branded cat litter sales were partially offset by increased sales of private label cat litter and industrial floorabsorbents. Net sales in our Business to Business Products Groups decreased as lower sales of fluids purification products outweighed higher sales of animalhealth and agricultural chemical carrier products. See below for further discussion of these sales fluctuations by operating segment.Consolidated gross profit as a percentage of net sales in fiscal year 2015 increased to 23% from 22% in fiscal year 2014. Gross profit increased dueprimarily to reduced freight costs and approximately a 26% decrease in the cost of natural gas used to operate kilns that dry our clay during processing.Freight costs declined due to lower diesel prices, better weather conditions and some relief from unfavorable industry regulations. Partially offsetting thesecost declines were higher non-fuel manufacturing and packaging costs per ton. An approximate 5% increase in manufacturing costs per ton was driven byreduced fixed cost absorption due to fewer tons produced, as well as increased labor and depreciation costs. Depreciation costs increased as we continue toinvest in machinery and equipment at our plants. A significant amount of our packaging purchases are subject to contractual price adjustments throughoutthe year based on related commodity prices, particularly for resin. Resin market price declines positively impacted our results in fiscal year 2015, particularlyin the fourth quarter, but for the full year overall packaging costs per ton remained higher than fiscal year 2014, particularly for our Retail and WholesaleProducts Group.26Total selling, general and administrative expenses were lower in fiscal year 2015 compared to fiscal year 2014. Selling, general and administrativeexpenses as a percentage of net sales were 17% in fiscal year 2015 compared to 18% in fiscal year 2014. The discussions of each segment's operating incomebelow describe the changes in selling, general and administrative expenses that were allocated to the operating segments. The remaining unallocatedcorporate expenses in fiscal year 2015 included a higher estimated annual discretionary incentive plan bonus accrual as compared to the prior year. Theincentive bonus expense was based on actual financial results achieved for the fiscal year and discretion by our Chief Executive Officer, in accordance withthe bonus plan's provisions.Our effective tax rate was 19.8% of pre-tax income in fiscal year 2015 compared to 26.3% in fiscal year 2014. During fiscal year 2015 we utilizeddomestic AMT credits and correspondingly decreased the related valuation allowance that had been established in prior years for the full amount of thedeferred tax benefit related to the AMT credits used, which resulted in a lower federal income tax rate. In fiscal year 2014 we incurred additional AMTexpense, which resulted in a higher comparable effective tax rate. See Note 6 of the Notes to the Consolidated Financial Statements for additionalinformation about our income taxes.BUSINESS TO BUSINESS PRODUCTS GROUPNet sales of the Business to Business Products Group for fiscal year 2015 were $92,326,000, a decrease of $1,960,000, or 2%, from net sales of$94,286,000 in fiscal year 2014. Net sales of fluid purification products and co-packaged coarse cat litter decreased, while net sales of animal health andagricultural and horticultural products increased. Net sales and tons sold for fluid purification products were both down approximately 10% compared tofiscal year 2014. Usage of our product by edible oil producers declined due to natural variations in the quality and other characteristics of certain seed andbean crops. In addition, sales in foreign markets suffered due to the strength of the U.S. Dollar relative to various foreign currencies, which effectivelyincreased the price of our product compared to foreign competitors' products. Our co-packaged coarse cat litter net sales decrease of approximately 7%reflected the continued decline in the coarse litter market. Partially offsetting these declines was an increase in net sales of approximately 18% for animalhealth and nutrition products, which was primarily attributed to sales by our subsidiary in China (Amlan Trading (Shenzhen) Company, Ltd.) thatcommenced operations in the fourth quarter of fiscal year 2014. In addition, sales increased approximately 12% for our agricultural and horticulturalproducts. Sales increased for our agricultural chemical carrier products sold to producers of crop protection chemicals. Sales also increased for our engineeredgranule product used in the professional pesticides and agricultural markets.The Business to Business Products Group’s selling, general and administrative expenses in fiscal year 2015 decreased approximately 7% comparedto fiscal year 2014. Lower sales of fluid purification products reduced commissions paid to outside distributors. Our subsidiary in China, which was fullyoperational during fiscal year 2015, incurred additional internal sales personnel costs but accordingly reduced external distributor commissions. One-timestart up costs for the China subsidiary were incurred in fiscal year 2014.The Business to Business Products Group’s operating income was $29,406,000 in fiscal year 2015, an increase of $2,752,000, or 10%, fromoperating income of $26,654,000 in fiscal year 2014. Operating income was positively impacted by a reduced cost per manufactured ton for natural gas usedto operate kilns that dry our clay, as well as by lower selling general and administrative, freight and packaging costs. Increased non-fuel manufacturing costsnegatively impacted the Group's operating income to a lesser extent. See further discussion of manufacturing, freight and packaging costs in “ConsolidatedResults” above.RETAIL AND WHOLESALE PRODUCTS GROUPNet sales of the Retail and Wholesale Products Group for fiscal year 2015 were $169,076,000, a decrease of $2,951,000, or 2%, from net sales of$172,027,000 in fiscal year 2014. Net sales declined for our cat litter products, but increased for industrial absorbent products. Net sales of our foreignsubsidiaries in Canada and the United Kingdom also declined, as described under “Foreign Operations” below. Overall cat litter net sales and tons sold weredown compared to the prior year. Our branded cat litter net sales decrease of approximately 11% was attributed primarily to our competitors' introduction ofnew products, which were accompanied by increased advertising and aggressive price discounts. Our new Cat's Pride Fresh & Light Ultimate Care productwas introduced in the second half of fiscal year 2015. Private label cat litter sales increased approximately 10%, due in part to the acquisition of MFM infiscal year 2014 (additional MFM-related sales are included in the full fiscal year 2015 but in only three quarters of fiscal year 2014). See Note 2 of the Notesto the Consolidated Financial Statements for more information about the MFM acquisition. In addition, private label cat litter sales in fiscal year 2015included new customers and our new lightweight private label product, which launched in the second half of fiscal year 2015. Branded and generic floorabsorbent sales increased approximately 7% due primarily to increased volume.27Selling, general and administrative expenses for the Retail and Wholesale Products Group decreased approximately 15% compared to fiscal year2014 due primarily to lower advertising expenses, which were partially offset by higher amortization expense for intangible assets related to the MFMacquisition.The Retail and Wholesale Products Group’s segment operating income for fiscal year 2015 was $5,206,000, an increase of $1,638,000, or 46%, fromoperating income of $3,568,000 in fiscal year 2014. Operating income was positively impacted by a reduced cost per manufactured ton for natural gas usedto operate kilns that dry our clay, as well as by lower selling general and administrative and freight costs. Increased non-fuel manufacturing costs negativelyimpacted the Group's operating income to a lesser extent. See further discussion of manufacturing and freight costs in “Consolidated Results” above. FOREIGN SUBSIDIARIESForeign operations include our subsidiaries in Canada and the United Kingdom, which is included in the Retail and Wholesale Products Group, andour subsidiary in China, which is included in the Business to Business Products Group. Net sales by our foreign subsidiaries during fiscal year 2015 were$11,025,000, a decrease of $221,000, or 2%, from net sales of $11,246,000 during fiscal year 2014. Net sales by our foreign subsidiaries represented 4% ofour consolidated net sales during fiscal year 2015. Lower sales for our Canada and the United Kingdom subsidiaries were substantially offset by higher salesfor China subsidiary. Strong competition and loss of a private label customer contributed to lower sales of cat litter by our subsidiary in Canada. Unfavorablecurrency exchange rates contributed to lower demand for industrial absorbents in export markets of our United Kingdom subsidiary. Our China subsidiarywas operational for the full year of fiscal 2015, with sales reported only in the fourth quarter of fiscal year 2014.For fiscal year 2015, our foreign subsidiaries reported a net loss of $1,261,000, compared to a net loss of $708,000 in fiscal year 2014. The net lossincreased due primarily to a greater reported loss at our new subsidiary in China, which is still growing its share in the China market, and foreign currencyexchange losses upon translation of financial results to reported U.S. Dollars. In addition, both our United Kingdom and Canadian subsidiaries incurredhigher costs for items purchased from the United States due to the weakness of their respective local currencies compared to the U.S. Dollar. A reduction inselling, general and administrative expense for our Canadian subsidiary helped moderate the increase in net losses.Identifiable assets of our foreign subsidiaries as of July 31, 2015 were $7,762,000 compared to $8,143,000 as of July 31, 2014. The decrease wasprimarily due to lower fixed assets and cash, which were partially offset by higher inventories.RESULTS OF OPERATIONSFISCAL YEAR 2014 COMPARED TO FISCAL YEAR 2013CONSOLIDATED RESULTSConsolidated net sales in fiscal 2014 were $266,313,000, a 6% increase from net sales of $250,583,000 in fiscal year 2013. Net sales in our Retailand Wholesale Products Group increased due to more tons sold, including additional sales after the acquisition of MFM, and net sales in our Business toBusiness Products Group increased due to higher net selling prices and a favorable product sales mix (defined as a greater proportion of sales from higherpriced products).Consolidated gross profit as a percentage of net sales in fiscal year 2014 decreased to 22% from 27% in fiscal year 2013. Gross profit declined dueprimarily to the increased costs of packaging and freight, as described by operating segment below, and due to higher material costs per ton, which included a21% increase in the cost of natural gas used to operate kilns that dry our clay during processing. Material costs also included a 4% increase in non-fuelmanufacturing cost per ton, which was attributed to higher purchased material costs, including purchased additives, fragrances and other materials requiredfor the production of scoopable cat litters, as well as higher costs for labor and increased mining and hauling activity. We continued to pursue operationalefficiencies as we integrated the additional volume gained through the acquisition of MFM. Our mining and hauling operations were impacted by theincreased volume and by extraction of clay reserves that required more overburden removal. In addition, gross profit was impacted by increased sales ofprivate label cat litter, which generally has a lower gross profit margin than branded cat litter.Selling, general and administrative expenses as a percentage of net sales were 18% in fiscal year 2014, compared to 19% in fiscal year 2013. Thediscussions of each segment's operating income below describe the changes in selling, general and administrative expenses that were allocated to theoperating segments. The remaining unallocated corporate expenses in fiscal year 2014 included a lower estimated annual discretionary incentive plan bonusaccrual and lower pension expense, which were partially offset by an increase in expense for the supplemental employee retirement plan (“SERP”). Theincentive bonus expense was based on performance targets that are established for each fiscal year and discretionary authority by our Chief Executive28Officer. See Notes 9 and 10 of the Notes to the Consolidated Financial Statements for additional information about the pension plan and the SERP,respectively.Our effective tax rate was 26.3% of pre-tax income in fiscal year 2014 compared to 16.6% in fiscal year 2013. Our tax rate in fiscal year 2014 wasconsistent with the three years preceding fiscal year 2013. During fiscal year 2013 we utilized domestic AMT credits, which resulted in a lower federalincome tax rate; however, in fiscal year 2014 we incurred additional AMT expense. See Note 6 of the Notes to the Consolidated Financial Statements foradditional information about our income taxes.Consolidated net income for fiscal year 2014 was $8,356,000, a 43% decrease from net income of $14,586,000 in fiscal year 2013. The decrease innet income was attributed primarily to increased costs for materials, packaging, freight and advertising, which more than offset the impact of increased salesand lower overall non-advertising selling, general and administrative costs. Segment operating income was lower for both our Business to Business andRetail and Wholesale Products Groups as discussed below.BUSINESS TO BUSINESS PRODUCTS GROUPNet sales of the Business to Business Products Group for fiscal year 2014 were $94,286,000, an increase of $1,317,000, or 1%, from net sales of$92,969,000 in fiscal year 2013. Net sales of both fluid purification and animal health products increased, while net sales of co-packaged cat litter andagricultural and horticultural products decreased. Net sales of fluid purification products were approximately 7% greater than in fiscal year 2013 with a 4%increase in tons sold. Sales increased primarily to edible oil processors in both foreign and domestic markets driven by continued global growth in thedemand for edible oil. Net sales of animal health and nutrition products increased slightly in both domestic and foreign markets due primarily to a favorableproduct sales mix, which offset the impact of 13% fewer tons sold. A sales decline of approximately 9% for our agricultural and horticultural productsresulted primarily from 10% fewer tons sold. Sales decreased for our agricultural chemical carrier products used by producers of corn rootworm pesticides andother crop protection chemicals. Partially offsetting this decline was improved sales for our engineered granule product used in the professional pesticidesand agricultural markets. A small decrease in sales of our co-packaged traditional coarse cat litter net sales was attributed primarily to 2% fewer tons sold.The Business to Business Products Group’s selling, general and administrative expenses in fiscal year 2014 increased approximately 18% comparedto fiscal year 2013 due primarily to additional personnel and other costs incurred to expand sales of our animal health and nutrition products in foreignmarkets.The Business to Business Products Group’s operating income was $26,654,000 in fiscal year 2014, a decrease of $4,085,000, or 13%, from operatingincome of $30,739,000 in fiscal year 2013. A combined 8% increase in materials, packaging and freight costs per ton more than offset the higher salesdescribed above. Material costs rose due primarily to a higher price paid for natural gas used to operate kilns that dry our clay and increases in other non-fuelmanufacturing costs. See further discussion of manufacturing costs in “Consolidated Results” above. Packaging costs rose as the result of supplier priceincreases and the mix of products sold. Freight costs increases were driven primarily by more shipments to foreign countries and cost increases in the freightindustry attributed to recent trends and regulations.RETAIL AND WHOLESALE PRODUCTS GROUPNet sales of the Retail and Wholesale Products Group for fiscal year 2014 were $172,027,000, an increase of $14,413,000, or 9%, from net sales of$157,614,000 in fiscal year 2013. Net sales increased significantly for cat litter products and increased slightly for both industrial absorbent and sportsproducts; however, net sales decreased for our foreign subsidiaries. Our foreign subsidiaries' net sales are described under “Foreign Operations” below.Overall cat litter net sales increased approximately 13%. The benefits of higher sales volume was partially offset by higher trade spending (trade spending isdeducted from net sales and includes coupons, slotting and cooperative marketing programs). Our branded cat litter net sales increased approximately 10%due primarily to more tons sold and higher selling prices that outweighed increased trade spending. Net sales of our Cat's Pride Fresh & Light scoopableproducts increased approximately 33% and sales also improved for our other Cat's Pride scoopable cat litters. These increases were partially offset by lowersales for our branded coarse litter products. Private label cat litter net sales increased approximately 24% due in part to additional sales from the acquisitionof MFM. (See Note 2 of the Notes to the Consolidated Financial Statements for more information about the MFM acquisition.)Selling, general and administrative expenses for the Retail and Wholesale Products Group increased approximately 15% compared to fiscal year2013 due primarily to increased advertising expense, amortization of intangible assets acquired in the MFM acquisition and higher sales commissions.29The Retail and Wholesale Products Group’s segment operating income for fiscal year 2014 was $3,568,000, a decrease of $6,993,000, or 66%, fromoperating income of $10,561,000 in fiscal year 2013. A combined cost increase of approximately 4% per ton for packaging, freight and materials and higherselling, general and administrative expenses, as discussed below, more than offset the benefits of higher sales described above. Packaging costs were up dueto the mix of products produced and commodity price increases, including resin used in cat litter jugs and pails. The increase in freight costs were drivenprimarily by our service level enhancement efforts and cost increases in the freight industry attributed to recent trends and regulations. Material costs rosedue primarily to a higher price paid for natural gas used to operate kilns that dry our clay and increases in other non-fuel manufacturing costs. See furtherdiscussion of manufacturing costs in “Consolidated Results” above.FOREIGN SUBSIDIARIESNet sales by our foreign subsidiaries during fiscal year 2014 were $11,246,000, a decrease of $682,000, or 6%, from net sales of $11,928,000 duringfiscal year 2013. Net sales by our foreign subsidiaries represented 4% of our consolidated net sales during fiscal year 2014. Net sales declined for ourCanadian subsidiary, but increased for our United Kingdom subsidiary. In addition, our new China subsidiary reported initial sales in the fourth quarter offiscal year 2014. Our Canadian subsidiary continued to face strong competition for branded cat litter sales. Sales of fluids purification products providedhigher sales for our United Kingdom subsidiary.For fiscal year 2014, our foreign subsidiaries reported a net loss of $708,000, compared to a net loss of $176,000 in fiscal year 2013. The increase inthe net loss was primarily the result of lower sales and expenditures to commence operations for the China subsidiary.Identifiable assets of our foreign subsidiaries as of July 31, 2014 were $8,143,000 compared to $8,298,000 as of July 31, 2013. The decrease wasprimarily due to lower lower accounts receivable and net fixed assets, which were partially offset by higher deferred income taxes.LIQUIDITY AND CAPITAL RESOURCESOur principal capital requirements include funding working capital needs, purchasing and upgrading equipment, facilities and real estate, investingin infrastructure and acquisitions. We have principally used cash generated from operations and, to the extent needed, issuance of debt securities andborrowings under our credit facilities to fund these requirements. Cash and cash equivalents totaled $20,138,000, $16,230,000 and $24,035,000 at July 31,2015, 2014 and 2013, respectively.The following table sets forth certain elements of our Consolidated Statements of Cash Flows for the fiscal year (in thousands): 2015 2014 2013Net cash provided by operating activities $26,976 $16,296 $23,366Net cash used in investing activities (14,246) (15,570) (19,018)Net cash used in financing activities (8,743) (8,372) (7,450)Effect of exchange rate changes on cash and cash equivalents (79) (159) 44Net increase (decrease) in cash and cash equivalents $3,908 $(7,805) $(3,058)Net cash provided by operating activitiesNet cash provided by operations was $26,976,000 for fiscal year 2015 compared to $16,296,000 for fiscal year 2014. In addition to net income, asadjusted for depreciation and amortization and other non-cash operating activities, the primary sources and uses of operating cash flows for fiscal years 2015and 2014 were as follows:Accounts receivable, less allowance for doubtful accounts, were $469,000 higher at fiscal year-end 2015 compared to fiscal year-end 2014.Accounts receivable, less allowance for doubtful accounts and cash discounts, were $151,000 lower at fiscal year-end 2014 compared to fiscal year-end 2013.These moderate fluctuations in accounts receivable balances were attributed to timing of both sales and collections, as well as the payment terms provided tovarious customers.30Inventories were $3,114,000 lower at fiscal year-end 2015 compared to fiscal year-end 2014. The decrease is primarily attributed to concerted effortsto better manage finished goods and packaging inventory levels relative to sales requirements and efforts to reduce costs. Inventories were $2,966,000 higherat fiscal year-end 2014 compared to fiscal year-end 2013. Increased finished goods and packaging inventory at fiscal year-end 2014 were the result of bothhigher costs and increased quantities on hand.Prepaid expenses were $2,455,000 lower at fiscal year-end 2015 compared to fiscal year-end 2014 due primarily to a decrease in prepaid incometaxes and a reclassification of prepaid rents and royalties to other long-term assets. Prepaid expenses were $1,988,000 higher at fiscal year-end 2014compared to fiscal year-end 2013 due primarily to an increase in prepaid income taxes and new plant assets with a short-term expected life.Other assets were $1,287,000 higher at fiscal year-end 2015 compared to fiscal year-end 2014. The increase was due primarily to the reclassificationof prepaid rents and royalties from current prepaid expenses, which was partially offset by a decrease in the cash surrender value of life insurance on keyemployees due to the closing of two policies. Other assets were $817,000 higher at fiscal year-end 2014 compared to fiscal year-end 2013. The increase wasdue to higher cash surrender value of life insurance on former key employees and a long-term warranty obtained on certain leased plant assets.Accounts payable were $571,000 higher at fiscal year-end 2015 compared to fiscal year-end 2014 due primarily to higher income taxes payable,which was partially offset by lower trade and freight payables. Accounts payable were $187,000 higher at fiscal year-end 2014 compared to fiscal year-end2013 due primarily to increased costs of purchased materials, which was partially offset by lower income taxes payable. Changes in trade accounts payable inall periods are subject to normal fluctuations in the timing of payments.Accrued expenses were $697,000 lower at fiscal year-end 2015 compared to fiscal year-end 2014. Accrued expenses for fiscal year 2015 declineddue primarily to payments on leased equipment at our plants and lower accrued freight and other expenses, which were partially offset by a higherdiscretionary annual bonus accrual. In addition, the trade promotions and advertising accrual was higher at fiscal year-end 2015. Accrued expenses were$2,586,000 lower at fiscal year-end 2014 compared to fiscal year-end 2013. Accrued expenses for fiscal year 2014 declined due primarily to the lowerdiscretionary annual bonus accrual. In addition, the trade promotions and advertising accrual was lower at fiscal year-end 2014. These decreases werepartially offset by a new lease obligation for assets at our plants. Changes in other accrued expenses in all periods related to ongoing operations are alsosubject to normal fluctuations in the timing of payments.Deferred compensation was $251,000 higher at fiscal year-end 2015 compared to fiscal year-end 2014 and was $698,000 higher at fiscal year-end2014 compared to fiscal year-end 2013. Employee deferrals and interest on accumulated deferred compensation balances exceeded payouts in both years.The SERP accrual also increased in both years. See Note 10 of the Notes to the Consolidated Financial Statements for more information regarding ourdeferred compensation plans.Pension and other postretirement liabilities, net of the adjustment recorded in stockholders' equity, were $814,000 higher at fiscal year-end 2015compared to fiscal year-end 2014 and were $2,887,000 higher at fiscal year-end 2014 compared to fiscal year-end 2013. An updated mortality table and aslightly lower discount rate required for the actuarial calculation of postretirement benefit obligations resulted in a higher liability at fiscal year-end 2015compared to fiscal year-end 2014. At fiscal year-end 2014, a significantly lower discount rate and the use of an updated mortality scale resulted in asignificantly higher liability compared to fiscal year-end 2013. See Note 9 of the Notes to the Consolidated Financial Statements for more informationregarding our postretirement benefit plans.Net cash used in investing activitiesCash used in investing activities was $14,246,000 in fiscal year 2015, $15,570,000 in fiscal year 2014 and $19,018,000 in fiscal year 2013. Duringfiscal year 2015, cash proceeds of $903,000 were received from the closing of two life insurance policies on former key employees. Capital expenditures of$15,859,000 in fiscal year 2015 included new processing and packaging equipment, as well as equipment replacement at our manufacturing facilities. Duringfiscal year 2014, $12,876,000 was used for the acquisition of certain assets of MFM, plus an additional $129,000 was classified as restricted cash held inescrow as of July 31, 2014. Capital expenditures in fiscal year 2014 of $18,566,000 included capacity expansion projects and mining equipment at ourmanufacturing facilities. Also in fiscal 2014, cash provided by dispositions of short-term investments exceeded purchases by $15,821,000. During fiscal year2013, capital expenditures of $9,795,000 included new machinery and equipment replacement at our manufacturing facilities. In addition, in fiscal year 2013cash used for purchases of short-term investments exceeded dispositions by $9,289,000. Purchases and dispositions of investment securities in all periods aresubject to variations in the timing of investment maturities.31Net cash used in financing activitiesCash used in financing activities was $8,743,000 in fiscal year 2015, $8,372,000 in fiscal year 2014 and $7,450,000 in fiscal year 2013. The primaryuses of cash in all periods were payments on long-term debt and dividend payments, which increased each year. In addition, cash was received from issuanceof Common Stock and treasury stock related to stock option exercises in each year.OtherTotal cash and investment balances held by our foreign subsidiaries at July 31, 2015, 2014 and 2013 were $1,150,000, $1,481,000 and $1,413,000,respectively. Cash and investment balances fluctuated due to normal business operations. See further discussion in the “Foreign Operations” section above.On December 4, 2014, we signed a fourth amendment to our credit agreement with BMO Harris, to extend the term to December 4, 2019. The newagreement provides for a $25,000,000 unsecured revolving credit agreement, including a maximum of $5,000,000 for foreign letters of credit. The remainingterms are substantially unchanged from our previous agreement with BMO Harris, including the provision that we may select a variable rate based on eitherthe BMO Harris prime rate or a LIBOR-based rate, plus a margin which varies depending on our debt to earnings ratio, or a fixed rate as agreed between usand BMO Harris. At July 31, 2015, the variable rates would have been 3.25% for BMO Harris’ prime-based rate or 1.29% for LIBOR-based rate. The creditagreement contains restrictive covenants that, among other things and under various conditions, limit our ability to incur additional indebtedness or todispose of assets. The agreement also requires us to maintain a minimum fixed coverage ratio and a minimum consolidated net worth. As of July 31, 2015 and2014, there were no outstanding borrowings under this credit facility and we were in compliance with its covenants.See Note 4 of the Notes to the Consolidated Financial Statements for information about our outstanding debt.We believe that cash flow from operations, availability under our revolving credit facility, current cash and investment balances and our ability toobtain other financing, if necessary, will provide adequate cash funds for foreseeable working capital needs, capital expenditures at existing facilities,dividend payments and debt service obligations for at least the next 12 months. Our cash requirements are subject to change as business conditions warrantand opportunities arise. We continually evaluate our liquidity position and anticipated cash needs, as well as the financing options available to obtainadditional cash reserves. Our ability to fund operations, to make planned capital expenditures, to make scheduled debt payments and to remain incompliance with all of the financial covenants under debt agreements, including, but not limited to, the current credit agreement, depends on our futureoperating performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors. The timing and size of anynew business ventures or acquisitions that we complete may also impact our cash requirements.CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTSOur capital requirements are subject to change as business conditions warrant and opportunities arise. The following tables summarize oursignificant contractual obligations and commercial commitments as of July 31, 2015 and the effect such obligations are expected to have on liquidity andcash flows in future periods: Payments Due by PeriodContractual Obligations Total Less Than 1Year 1 – 3 Years 4 – 5 Years After 5 YearsLong-Term Debt $18,900,000 $3,483,000 $6,167,000 $6,167,000 $3,083,000Interest on Long-Term Debt 2,220,000 683,000 987,000 489,000 61,000Operating Leases 4,993,000 1,402,000 2,495,000 593,000 503,000Total Contractual Cash Obligations $26,113,000 $5,568,000 $9,649,000 $7,249,000 $3,647,000During fiscal year 2015, we made contributions of approximately $1,790,000 to our defined benefit pension plan. We have not presented thisobligation for future years in the table above because the funding requirement can vary from year to year based on changes in the fair value of plan assets,actuarial assumptions and regulations. See Item 7A “Quantitative and Qualitative Disclosures About Market Risk” below for certain information regardingthe potential impact of financial market fluctuations on pension plan assets and future funding contributions.32 Amount of Commitment Expiration Per Period Total AmountsCommitted Less Than1 Year 1 – 3 Years 4 – 5 Years After 5YearsOther Commercial Commitments $29,827,000 $29,827,000 $— $— $—The obligations above are open purchase orders primarily for packaging and other ingredients used in our products. The expected timing ofpayments of these obligations was estimated based on current information. Timing of payments and actual amounts paid may be different, depending on thetime of receipt of goods or services, or changes to agreed-upon amounts for some obligations. OFF BALANCE SHEET ARRANGEMENTS We do not have any unconsolidated special purpose entities. As of July 31, 2015 we do not have any off-balance sheet arrangements that have or arereasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction,agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have: (i) any obligation arising under aguarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangementthat serves as credit, liquidity or market risk support for such assets. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management’s discussion and analysis of the financial condition and results of operations are based upon our Consolidated Financial Statements,which have been prepared in accordance with the generally accepted accounting principles of the United States. We review our financial reporting anddisclosure practices and accounting policies annually to ensure that our financial reporting and disclosures provide accurate and transparent informationrelative to current economic and business environment. We believe that of our significant accounting policies stated in Note 1 of the Notes to theConsolidated Financial Statements, the policies listed below involve a higher degree of judgment and/or complexity. The preparation of the financialstatements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reportedamount of assets and liabilities, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates include incometaxes, promotional programs, pension accounting and allowance for doubtful accounts. Actual results could differ from these estimates. Income Taxes. Our effective tax rate was based on expected income, statutory tax rates and tax planning opportunities available to us in variousjurisdictions in which we operate. Significant judgment was required in determining our effective tax rate and in evaluating our tax positions. We determine our current and deferred taxes in accordance with ASC 740 Income Taxes. The tax effect of the expected reversal of tax differences wasrecorded at rates currently enacted for each jurisdiction in which we operate. To the extent that temporary differences will result in future tax benefit, we mustestimate the timing of their reversal and whether taxable operating income in future periods will be sufficient to fully recognize any deferred tax assets.We maintain valuation allowances where it is likely that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowancesfrom period to period are included in the income tax provision in the period of change. In determining whether a valuation allowance is warranted, we takeinto account such factors as prior earnings history, expected future earnings and other factors that could affect the realization of deferred tax assets. Forexample, certain factors, such as depletion and the cost of fuel used in our manufacturing process, are difficult to predict and have a significant impact on ourability to use the deferred tax benefit related to our AMT credit carryforwards. We recorded valuation allowances for income taxes of $2,210,000 and$3,459,000 at July 31, 2015 and 2014, respectively, for the full amount of the deferred tax benefit related to our AMT credit and foreign net operating losscarryforwards since we believe it is more likely than not that the benefit of these tax attributes will not be realized.In addition to valuation allowances, we may provide for uncertain tax positions when such tax positions do not meet certain recognition thresholdsor measurement standards. Amounts for uncertain tax positions are adjusted when new information becomes available or when positions are effectivelysettled. We did not record a liability for unrecognized tax benefits at either July 31, 2015 or 2014. See Note 6 of the Notes to the Consolidated FinancialStatements for further discussion. 33Trade Promotions. We routinely commit to one-time or ongoing trade promotion programs in our Retail and Wholesale Products Group.Promotional reserves are provided for sales incentives made directly to consumers, such as coupons, and sales incentives made to customers, such as slotting,discounts based on sales volume, cooperative marketing programs and other arrangements. All such trade promotion costs are netted against sales.Promotional reserves are established based on our best estimate of the amounts necessary to settle future and existing claims on products sold as of thebalance sheet date. To estimate trade promotion reserves, we rely on our historical experience with trade spending patterns and that of the industry, currenttrends and forecasted data. While we believe our promotional reserves are reasonable and that appropriate judgments have been made, estimated amountscould differ from future obligations. We have accrued liabilities at the end of each period for the estimated trade spending programs. We recorded liabilitiesof approximately $2,427,000 and $2,044,000 for trade promotions at July 31, 2015 and 2014, respectively.Pension and Postretirement Benefit Costs. We calculate our pension and postretirement health benefit obligations and the related effects on resultsof operations using actuarial models. To measure the expense and obligations, we must make a variety of estimates including critical assumptions for thediscount rate used to value certain liabilities and the expected return on plan assets set aside to fund these costs. We evaluate these critical assumptions atleast annually. Other assumptions involving demographic factors, such as retirement age, mortality and turnover, are evaluated periodically and are updatedto reflect actual experience. As these assumptions change from period to period, recorded pension and postretirement health benefit amounts and fundingrequirements could also change. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The discount rate is the rate assumed to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debtinstruments, would provide the necessary future cash flows to pay the pension benefits when due. The discount rate is subject to change each year. We refer toan applicable index and the expected duration of the benefit payments to select a discount rate at which we believe the benefits could be effectively settled.The discount rate was the single equivalent rate that would yield the same present value as the plan’s expected cash flows discounted with spot rates on ayield curve of investment-grade corporate bonds. The yield curve used in both fiscal years 2015 and 2014 was the Citigroup Pension Discount Curve. Ourdetermination of pension expense or income is based on a market-related valuation of plan assets, which is the fair market value. Our expected rate of returnon plan assets is determined based on asset allocations and historical experience. The expected long-term rate of inflation and risk premiums for the variousasset categories are based on general historical returns and inflation rates. The target allocation of assets is used to develop a composite rate of returnassumption. See Note 9 of the Notes to the Consolidated Financial Statements for additional information.Trade Receivables. We recognize trade receivables when the risk of loss and title pass to the customer. We record an allowance for doubtfulaccounts based on our historical experience and a periodic review of our accounts receivable, including a review of the overall aging of accounts andanalysis of specific accounts. A customer account is determined to be uncollectible when we have completed our internal collection procedures, includingtermination of shipments, direct customer contact and formal demand of payment. We believe our allowance for doubtful accounts is reasonable; however,the unanticipated default by a customer with a material trade receivable could occur. We also record an estimated allowance for cash discounts offered in ourpayment terms to some customers. We recorded a total allowance for doubtful accounts and cash discounts of $761,000 and $707,000 at July 31, 2015 and2014, respectively. Inventories. We value inventories at the lower of cost (first-in, first-out) or market. Inventory costs include the cost of raw materials, packagingsupplies, labor and other overhead costs. We perform a detailed review of our inventory items to determine if an obsolescence reserve adjustment is necessary.The review surveys all of our operating facilities and sales divisions to ensure that both historical issues and new market trends are considered. Theobsolescence reserve not only considers specific items, but also takes into consideration the overall value of the inventory as of the balance sheet date. Theinventory obsolescence reserve values at July 31, 2015 and 2014 were $521,000 and $390,000, respectively.Reclamation. During the normal course of our mining process we remove overburden and perform on-going reclamation activities. As overburden isremoved from a mine site, it is hauled to a previously mined site and used to refill older sites. This process allows us to continuously reclaim older mine sitesand dispose of overburden simultaneously, therefore minimizing the costs associated with the reclamation process. On an annual basis we evaluate ourpotential reclamation liability in accordance with ASC 410, Asset Retirement and Environmental Obligations. As of July 31, 2015 and 2014, we haverecorded an estimated net reclamation asset of $813,000 and $677,000, respectively, and a corresponding estimated reclamation liability of $1,666,000 asJuly 31, 2015 and $1,429,000 as of July 31, 2014. These values represent the discounted present value of the estimated future mining reclamation costs at theproduction plants. The reclamation assets are depreciated over the estimated useful lives of the various mines. The reclamation liabilities are increased basedon a yearly accretion charge over the estimated useful lives of the mines.34Accounting for reclamation obligations requires that we make estimates unique to each mining operation of the future costs we will incur tocomplete the reclamation work required to comply with existing laws and regulations. Actual future costs incurred could significantly differ from estimatedamounts. Future changes to environmental laws could increase the extent of reclamation work required. Any such increases in future costs could materiallyimpact the amount incurred for reclamation costs.Impairment of goodwill, trademarks and other intangible assets. We review carrying values of goodwill, trademarks and other indefinite-livedintangible assets periodically for possible impairment in accordance ASC 350, Intangibles – Goodwill and Other. Our impairment review requires significantjudgment with respect to factors such as volume, revenue and expenses. Impairment occurs when the carrying value exceeds the fair value. Our impairmentanalysis is usually performed in the first quarter of the fiscal year and may be re-performed when deemed necessary due to indicators such as unexpectedadverse economic factors, unanticipated technological changes, competitive activities and acts by governments and courts. Our impairment analysisperformed in both the first and fourth quarters of fiscal year 2015 did not indicate any impairment. We continue to monitor events, circumstances or changesin the business that might imply a reduction in value and might lead to impairment.NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting StandardsThe tangible property regulations (“repair regulations”) released by the Internal Revenue Service in September 2013 under Sections 162(a) and263(a) of the Internal Revenue Code were effective for our tax year beginning August 1, 2014. The repair regulations provide guidance regarding the timingof deductions and the capitalization of amounts paid to acquire, produce or improve tangible property. We believe our accounting policies comply with therequirements of the repair regulations and there is no material impact on our Consolidated Financial Statements.Recently Issued Accounting Standards and RegulationsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance under the Accounting Standards Codification (“ASC”) 606,Revenue from Contract with Customers, which establishes a single comprehensive revenue recognition model for all contracts with customers and willsupersede most existing revenue guidance. This guidance requires entities to recognize revenue to depict the transfer of promised goods or services tocustomers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange. Transition options include either afull or modified retrospective approach and early adoption is permitted. The implementation date for this guidance was recently deferred and will now beeffective at the beginning of our first quarter of fiscal year 2019. We are currently evaluating the impact of the adoption of this requirement on ourConsolidated Financial Statements.In August 2014, the FASB issued guidance under ASC 205, Presentation of Financial Statements - Going Concern, which defines management'sresponsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnotedisclosures. This guidance will be effective for our fiscal year ending July 31, 2017. We are currently evaluating the impact of the adoption of thisrequirement on our Consolidated Financial Statements.In April 2015, the FASB issued guidance under ASC 835, Simplifying the Presentation of Debt Issuance Cost, which requires debt issuance costs tobe presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, rather than as an asset. This guidance iseffective for our first quarter of fiscal year 2017 and early adoption is permitted. The guidance must be applied on a retrospective basis. We are currentlyevaluating the impact of the adoption of this requirement on our Consolidated Financial Statements. In July 2015, the FASB issued guidance under ASC 330, Simplifying the Measurement of Inventory. The new guidance requires inventory to bemeasured at the lower of cost and net realizable value, which is defined as the estimated selling price in the ordinary course of business less reasonablypredictable costs of completion, disposal and transportation. This new guidance is effective for our first quarter of fiscal year 2018 and early adoption ispermitted. The guidance must be applied prospectively. We are currently evaluating the impact of the adoption of this requirement on our ConsolidatedFinancial Statements. ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to interest rate risk and employ policies and procedures to manage our exposure to changes in the market risk of our cashequivalents and short-term investments. We believe that the market risk arising from holdings of our financial instruments is not material. 35We are exposed to foreign currency fluctuation risk, primarily the U.S. Dollar relative to the British Pound, Euro, Canadian Dollar, Chinese YuanRenminbi and the Brazilian Real, as related to our foreign subsidiaries, to certain accounts receivable, and to our ability to sell in foreign markets. We aresubject to translation exposure of our foreign subsidiaries’ financial statements from local currencies to U.S. Dollars. In recent years, our foreign subsidiarieshave not generated a substantial portion of our consolidated net sales or net income. In addition, the portion of our consolidated accounts receivabledenominated in foreign currencies has not been significant. Finally, foreign sales of our products may be influenced by the relative strength of the U.S. dollarcompared to various other currencies, which makes our products relatively more or less expensive than our foreign competitors' products in localmarketplaces. Foreign currency fluctuations had some bearing on our operating results in fiscal year 2015; however, historically the overall foreign currencyfluctuation risk has not been material to our Consolidated Financial Statements. During fiscal year 2015, we did not enter into any hedge contracts in anattempt to offset any adverse effect of changes in currency exchange rates.We are exposed to market risk at it relates to the investments of plan assets under our defined benefit pension plan. The fair value of these assets issubject to change due to fluctuations in the financial markets. A lower asset value may increase our pension expense and may increase the amount andaccelerate the timing of future funding contributions. We are exposed to regulatory risk in the fluids purification, animal health and agricultural markets, principally as a result of the risk of increasingregulation of the food chain throughout the world, but particularly in the United States and Europe. We actively monitor developments in this area, bothdirectly and through trade organizations of which we are a member. We are exposed to commodity price risk with respect to fuel. Factors that could influence the cost of natural gas used in the kilns to dry our clayinclude the creditworthiness of our natural gas suppliers, the overall general economy, developments in world events, general supply and demand for naturalgas, seasonality and the weather patterns throughout the United States and the world. We monitor fuel market trends and we may contract for a portion of ouranticipated fuel needs using forward purchase contracts to mitigate the volatility of our kiln fuel prices. As of July 31, 2015, we have purchased no naturalgas contracts for our planned kiln fuel needs for fiscal year 2016. We continue to purchase natural gas at spot rates on a month to month basis. Please also see Item 1A “Risk Factors” above for a discussion of these and other risks and uncertainties we face in our business.36ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATACONSOLIDATED BALANCE SHEETS July 31, 2015 2014ASSETS (in thousands)Current Assets Cash and cash equivalents $20,138 $16,230Restricted cash — 129Short-term investments 2,190 2,640Accounts receivable, less allowance of $761 and $707 in 2015 and 2014, respectively 31,466 30,997Inventories 21,369 24,483Deferred income taxes 2,468 1,570Prepaid repairs expense 3,813 3,722Prepaid expenses and other assets 1,199 3,745Total Current Assets 82,643 83,516Property, Plant and Equipment Buildings and leasehold improvements 28,518 28,557Machinery and equipment 127,399 120,081Office furniture and equipment 10,689 10,244Vehicles 12,330 12,099Gross depreciable assets 178,936 170,981Less accumulated depreciation and amortization (129,929) (124,199)Net depreciable assets 49,007 46,782Construction in progress 14,188 11,759Land and mineral rights 16,460 16,355Total Property, Plant and Equipment, Net 79,655 74,896Other Assets Goodwill 9,034 9,034Trademarks and patents, net of accumulated amortization of $301 and $420 in 2015 and 2014, respectively 818 660Debt issuance costs, net of accumulated amortization of $133 and $522 in 2015 and 2014, respectively 146 243Licensing agreements and non-compete agreements, net of accumulated amortization of $1,145 in 2014 — 155Customer list, net of accumulated amortization of $2,094 and $764 in 2015 and 2014, respectively 5,691 7,020Deferred income taxes 6,031 4,448Other 6,013 6,232Total Other Assets 27,733 27,792Total Assets $190,031 $186,204The accompanying notes are an integral part of the Consolidated Financial Statements.37 July 31, 2015 2014LIABILITIES AND STOCKHOLDERS’ EQUITY (in thousands)Current Liabilities Current maturities of notes payable $3,483 $3,500Accounts payable 7,428 7,352Dividends payable 1,376 1,311Accrued expenses Salaries, wages and commissions 6,245 4,448 Trade promotions and advertising 2,721 2,182 Freight 1,874 2,504 Other 5,761 8,203Total Current Liabilities 28,888 29,500Noncurrent Liabilities Notes payable 15,417 18,900Deferred compensation 9,518 9,267Pension and postretirement benefits 23,429 22,273Other 2,251 1,956Total Noncurrent Liabilities 50,615 52,396Total Liabilities 79,503 81,896 Stockholders’ Equity Common Stock, par value $.10 per share, issued 7,936,343 shares in 2015 and 7,917,393 shares in 2014 794 792Class B Stock, convertible, par value $.10 per share, issued 2,389,735 shares in 2015 and 2,394,735 shares in2014 239 239Additional paid-in capital 33,563 33,130Restricted unearned stock compensation (931) (2,225)Retained earnings 142,095 136,039Accumulated Other Comprehensive (Loss) Income Unrealized gain on marketable securities — 114Pension and postretirement benefits (8,975) (8,632)Cumulative translation adjustment (270) 255Total Accumulated Other Comprehensive Loss (9,245) (8,263)Less treasury stock, at cost (2,932,796 Common and 324,741 Class B shares in 2015 and 2,915,651 Commonand 324,741 Class B shares in 2014) (55,987) (55,404)Total Stockholders’ Equity 110,528 104,308 Total Liabilities and Stockholders’ Equity $190,031 $186,204The accompanying notes are an integral part of the Consolidated Financial Statements.38CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended July 31, 2015 2014 2013 (in thousands, except for per share data) Net Sales $261,402 $266,313 $250,583Cost of Sales (201,245) (206,663) (184,084)Gross Profit 60,157 59,650 66,499Selling, General and Administrative Expenses (45,004) (47,232) (47,558)Capacity Rationalization Charges — — (70)Income from Operations 15,153 12,418 18,871Other Income (Expense) Interest income 13 23 34Interest expense (1,327) (1,569) (1,773)Foreign exchange (loss) gain (349) 35 (56)Other, net 679 430 423Total Other Expense, Net (984) (1,081) (1,372)Income Before Income Taxes 14,169 11,337 17,499Income Taxes (2,801) (2,981) (2,913)Net Income $11,368 $8,356 $14,586 Net Income Per Share Basic Common $1.73 $1.27 $2.25Basic Class B Common $1.30 $0.96 $1.69Diluted $1.59 $1.17 $2.07 Average Shares Outstanding Basic Common 4,955 4,981 4,909Basic Class B Common 2,019 2,001 1,970Diluted 7,037 7,004 6,927The accompanying notes are an integral part of the Consolidated Financial Statements.39CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended July 31, 2015 2014 2013 (in thousands) Net Income $11,368 $8,356 $14,586 Other Comprehensive (Loss) Income: Unrealized (loss) gain on marketable securities (114) 28 14Pension and postretirement benefits (net of tax) (343) (3,024) 5,983Cumulative translation adjustment (525) (232) (86)Other Comprehensive (Loss) Income (982) (3,228) 5,911Comprehensive Income $10,386 $5,128 $20,497The accompanying notes are an integral part of the Consolidated Financial Statements.40CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Number of Shares (in thousands) Common& Class BStock TreasuryStock Common& Class BStock AdditionalPaid-InCapital RetainedEarnings RestrictedUnearnedStockCompensation TreasuryStock AccumulatedOtherComprehensive(Loss) Income TotalStockholders’EquityBalance, July 31, 201210,161,100 (3,236,305) $1,016 $29,759 $122,901 $(2,214) $(55,208) $(10,946) $85,308Net Income — — 14,586 — — — 14,586Other Comprehensive (Loss)Income — — — — — 5,911 5,911Dividends Declared — — (4,712) — — — (4,712)Purchases of Treasury Stock (8,253) — — — — (175) — (175)Net Issuance of Stock UnderLong-Term Incentive Plans99,947 5,250 10 1,289 (25) (474) 87 — 887Share-based Compensation — 269 — — — — 269Amortization of Restricted Stock — — — 864 — — 864Balance, July 31, 201310,261,047 (3,239,308) $1,026 $31,317 $132,750 $(1,824) $(55,296) $(5,035) $102,938Net Income — — 8,356 — — — 8,356Other Comprehensive (Loss)Income — — — — — (3,228) (3,228)Dividends Declared — — (5,040) — — — (5,040)Purchases of Treasury Stock (2,584) — — — — (87) — (87)Net Issuance of Stock UnderLong-Term Incentive Plans51,081 1,500 5 1,727 (27) (1,590) (21) — 94Share-based Compensation — 86 — — — — 86Amortization of Restricted Stock — — — 1,189 — — 1,189Balance, July 31, 201410,312,128 (3,240,392) $1,031 $33,130 $136,039 $(2,225) $(55,404) $(8,263) $104,308Net Income — — 11,368 — — — 11,368Other Comprehensive (Loss)Income — — — — — (982) (982)Dividends Declared — — (5,312) — — — (5,312)Purchases of Treasury Stock (3,645) — — — — (122) — (122)Net Issuance of Stock UnderLong-Term Incentive Plans13,950 (13,500) 2 356 — 152 (461) — 49Share-based Compensation — 77 — — — — 77Amortization of Restricted Stock — — — 1,142 — — 1,142Balance, July 31, 201510,326,078 (3,257,537) $1,033 $33,563 $142,095 $(931) $(55,987) $(9,245) $110,528The accompanying notes are an integral part of the Consolidated Financial Statements.41CONSOLIDATED STATEMENTS OF CASH FLOWS Year-Ended July 31, 2015 2014 2013 (in thousands)Cash Flows from Operating Activities Net Income $11,368 $8,356 $14,586Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,994 10,396 8,946 Amortization of investment discounts (1) (2) (7) Non-cash stock compensation expense 1,142 1,189 864 Excess tax benefits for share-based payments (77) (86) (268) Deferred income taxes (2,450) 284 (398) Provision for bad debts and cash discounts 177 69 64 Loss on the sale of property, plant and equipment 191 452 8 Gain on sale of marketable securities (105) — — Life insurance benefits (117) — — Capacity rationalization charges — — 70 (Increase) decrease in: Accounts receivable (646) 82 (984) Inventories 3,114 (2,966) (1,050) Prepaid expenses 2,455 (1,988) 1,416 Other assets (1,287) (817) (1,025) Increase (decrease) in: Accounts payable 571 187 135 Accrued expenses (697) (2,586) 2,159 Deferred compensation 251 698 452 Pension and postretirement benefits 814 2,887 (1,896) Other liabilities 279 141 294Total Adjustments 15,608 7,940 8,780Net Cash Provided by Operating Activities 26,976 16,296 23,366Cash Flows from Investing Activities Capital expenditures (15,859) (18,566) (9,795) Proceeds from sale of property, plant and equipment 22 180 66 Acquisition of business — (12,876) — Restricted cash 129 (129) — Purchases of short-term investments (2,890) (10,391) (34,439) Dispositions of short-term investments 3,341 26,212 25,150 Proceeds from sale of marketable securities 108 — — Proceeds from life insurance 903 — —Net Cash Used in Investing Activities (14,246) (15,570) (19,018)Cash Flows from Financing Activities Principal payments on notes payable (3,500) (3,500) (3,800) Dividends paid (5,247) (4,965) (4,630) Purchase of treasury stock (122) (87) (175) Proceeds from issuance of treasury stock — 82 82 Proceeds from issuance of common stock 49 12 805 Excess tax benefits for share-based payments 77 86 268Net Cash Used in Financing Activities (8,743) (8,372) (7,450)Effect of exchange rate changes on cash and cash equivalents (79) (159) 44Net Increase (Decrease) in Cash and Cash Equivalents 3,908 (7,805) (3,058)Cash and Cash Equivalents, Beginning of Year 16,230 24,035 27,093Cash and Cash Equivalents, End of Year $20,138 $16,230 $24,03542CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED(in thousands) Year-Ended July 31, 2015 2014 2013 (in thousands)Supplemental disclosure: Cash paid for: Interest, net of amounts capitalized $826 $1,078 $1,351Income taxes $2,339 $3,022 $5,064Noncash investing and financing activities: Capital expenditures accrued, but not paid $223 $712 $529Cash dividends declared and accrued, but not paid $1,376 $1,311 $1,236The accompanying notes are an integral part of the Consolidated Financial Statements.43NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNATURE OF OPERATIONSWe are a leader in developing, manufacturing and/or marketing sorbent products. Our sorbent products are principally produced from clay minerals.Our absorbent clay products include cat litter, industrial floor absorbents, agricultural chemical carriers and enterosorbents used in animal feed. Our adsorbentproducts include synthetic sorbents, which are used for industrial cleanup, and bleaching clay products, which are used for filtration of edible oils and forpurification of petroleum-based oils.PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of Oil-Dri Corporation of America and its subsidiaries, all of which are wholly-owned.All significant intercompany balances and transactions have been eliminated from the Consolidated Financial Statements. MANAGEMENT USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities asof the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates. CASH AND CASH EQUIVALENTS Cash equivalents are highly liquid investments with maturities of three months or less when purchased. SHORT-TERM INVESTMENTS Short-term investments as of both July 31, 2015 and 2014 were comprised of certificates of deposits with maturities of one year or less. We intendand have the ability to hold these investments to maturity; therefore, these investments are reported at amortized cost.TRADE RECEIVABLES We recognize trade receivables when the risk of loss and title pass to the customer. We record an allowance for doubtful accounts based on ourhistorical experience and a periodic review of our accounts receivable, including a review of the overall aging of accounts and analysis of specific accounts.A customer account is determined to be uncollectible when we have completed our internal collection procedures, including termination of shipments, directcustomer contact and formal demand of payment. We retain outside collection agencies to facilitate our collection efforts. Past due status is determined basedon contractual terms and customer payment history.INVENTORIES We value inventories at the lower of cost (first-in, first-out) or market. We recorded inventory obsolescence reserves of approximately $521,000 and$390,000 as of July 31, 2015 and 2014, respectively. The composition of inventories was as follows as of July 31 (in thousands): 2015 2014Finished goods $12,117 $14,326Packaging 4,735 5,402Other 4,517 4,755Inventories $21,369 $24,48344TRANSLATION OF FOREIGN CURRENCIES Assets and liabilities of foreign subsidiaries, where the local currency is the functional currency, are translated to U.S. Dollars at the exchange ratesin effect at period end. Income statement items are translated at the average exchange rate on a monthly basis. Resulting translation adjustments are recordedas a separate component of stockholders’ equity. INTANGIBLE ASSETS AND GOODWILL We amortize most of our intangible assets on a straight-line basis over periods ranging from ten to 20 years. Our customer list intangible asset,related to the acquisition of certain assets of MFM, is amortized at an accelerated amortization rate in the earlier years to reflect the expected pattern ofdecline in the related benefits over time. Intangible amortization was $1,642,000 in fiscal year 2015 and $1,107,000 in fiscal year 2014. We have someintangible assets that were determined to have indefinite lives and are not amortized, specifically one acquired trademark recorded at $376,000. Our estimated intangible amortization expense for the next five fiscal years is as follows (in thousands):2016$1,4512017$1,2222018$1,0132019$8262020$656The weighted average amortization period of our intangible assets subject to amortization is as follows (in years): Weighted AverageAmortization PeriodTrademarks and patents3.9Debt issuance costs5.1Customer list8.3Total intangible assets subject to amortization8.1We periodically review indefinite-lived intangibles and goodwill to assess for impairment. Our review is based on cash flow considerations andother approaches that require significant judgment with respect to volume, revenue and expenses. Impairment occurs when the carrying value exceeds the fairvalue. Our impairment analysis is generally performed in the first quarter of the fiscal year and when indicators such as unexpected adverse economic factors,unanticipated technological changes, competitive activities and acts by governments and courts indicate that an asset may become impaired. There has beenno impairment from this analysis for fiscal years 2015, 2014 or 2013. OVERBURDEN REMOVAL AND MINING COSTS We mine sorbent materials on property that we either own or lease as part of our overall operations. A significant part of our overall mining cost isincurred during the process of removing the overburden from the mine site, thus exposing the sorbent material used in a majority of our production processes.These stripping costs are treated as a variable inventory production cost and are included in cost of sales in the period they are incurred. Stripping costsincluded in cost of sales were approximately $2,939,000, $4,179,000, and $2,187,000 for fiscal years 2015, 2014 and 2013, respectively. The increasedstripping costs in fiscal year 2014 reflected more tons mined and extraction of clay reserves that required more overburden removal. We defer and amortizethe pre-production overburden removal costs associated with opening a new mine. No pre-production overburden removal costs were deferred in the last twofiscal years. Additionally, it is our policy to capitalize the purchase cost of land and mineral rights, including associated legal fees, survey fees and real estatefees. The costs of obtaining mineral rights, including legal fees and drilling expenses, are also capitalized. The amount of land and mineral rights included inland on the Consolidated Balance Sheets were approximately $13,285,000 and $2,165,000, respectively, as of July 31, 2015 and $13,348,000 and$2,165,000, respectively, as of July 31, 2014. Pre-production development costs on new mines and any prepaid royalties that may be offset against futureroyalties due upon extraction of the mineral are also capitalized. Prepaid royalties included in current prepaid expenses and in non-current other assets on theConsolidated Balance Sheets were approximately $1,068,000 and $1,052,000 as of July 31, 2015 and 2014, respectively. No45capitalized pre-production development costs were recorded in the last two fiscal years. All exploration related costs are expensed as incurred.RECLAMATION We perform ongoing reclamation activities during the normal course of our overburden removal. As overburden is removed from a mine site, it ishauled to previously mined sites and is used to refill older sites. This process allows us to continuously reclaim older mine sites and dispose of overburdensimultaneously, therefore minimizing the costs associated with the reclamation process. On an annual basis we evaluate our potential reclamation liability in accordance with ASC 410, Asset Retirement and Environmental Obligations.The reclamation assets are depreciated over the estimated useful lives of the various mines. The reclamation liabilities are increased based on a yearlyaccretion charge over the estimated useful lives of the mines. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are generally depreciated using the straight-line method over their estimated useful lives which are listed below.Major improvements and betterments are capitalized, while maintenance and repairs that do not extend the useful life of the applicable assets are expensed asincurred. YearsBuildings and leasehold improvements3-39Machinery and equipment Packaging2-20Processing2-25Mining and Other3-15Office furniture, computers and equipment2-12Vehicles3-15Depreciation expense was $10,352,000, $9,289,000 and $8,603,000 in fiscal years 2015, 2014 and 2013, respectively.Property, plant and equipment are carried at cost on the Consolidated Balance Sheets and are reviewed for possible impairment on an annual basis.We take into consideration idle and underutilized equipment and review business plans for possible impairment. When impairment is indicated, animpairment charge is recorded for the difference between the carrying value of the asset and its fair market value. There was no impairment recorded in fiscalyears 2015, 2014 or 2013. TRADE PROMOTIONSWe routinely commit to one-time or ongoing trade promotion programs, primarily in our Retail and Wholesale Products Group. All such costs arenetted against sales. We have accrued liabilities at the end of each period for the estimated expenses incurred but not yet paid for these programs.Promotional reserves are provided for sales incentives made directly to consumers, such as coupons, and sales incentives made to customers, such as slotting,discounts based on sales volume, cooperative marketing programs and other arrangements. We use judgment for estimates to determine our trade spendingliabilities. We rely on our historical experience with trade spending patterns and that of the industry, current trends and forecast data.ADVERTISINGAdvertising costs for the development of printed materials, television commercials, web-based digital banners, web-based social media and salesvideos are deferred and expensed upon the first use of the materials, unless such amounts are immaterial. Costs paid for communicating advertising over aperiod of time, such as television air time, radio commercials and print media advertising space, are deferred and expensed on a pro-rata basis. All otheradvertising costs, including participation in industry conventions and shows and market research, are expensed when incurred. All advertising costs are partof selling, general and administrative expenses.Advertising expenses were approximately $5,154,000, $8,886,000, and $7,975,000 in fiscal years 2015, 2014 and 2013, respectively. Advertisingexpense was lower in fiscal year 2015 as we refocused our promotional efforts for our branded cat litter.46FAIR VALUE OF FINANCIAL INSTRUMENTS Non-derivative financial instruments included in the Consolidated Balance Sheets are cash and cash equivalents, short-term investments and notespayable. These instruments, except for notes payable, were carried at amounts approximating fair value as of July 31, 2015 and 2014. Short-term investmentswere certificates of deposits which we intend and have the ability to hold to maturity; therefore, these investments were reported at amortized cost, which wasapproximately equal to fair value. See Note 5 of the Notes to the Consolidated Financial Statements for additional information regarding the fair value ofnotes payable, as well as assets and liabilities recorded at fair value. REVENUE RECOGNITION We recognize revenue when risk of loss and title are transferred under the terms of our sales agreements with customers at a fixed and determinableprice and collection of payment is probable. Taxes collected from customers and remitted to governmental authorities are excluded from net sales. Salesreturns and allowances are not material. COST OF SALES Cost of sales consists of all manufacturing costs, including depreciation and amortization related to assets used in the manufacturing anddistribution process, inbound and outbound freight, inspection costs, purchasing costs associated with materials and packaging used in the productionprocess and warehouse and distribution costs. SHIPPING AND HANDLING COSTS Shipping and handling costs are included in cost of sales and were approximately $46,292,000, $49,456,000 and $45,002,000 for fiscal years 2015,2014 and 2013, respectively. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses include salaries, wages and benefits associated with staff outside the manufacturing and distributionfunctions, 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-distributionexpenses. RESEARCH AND DEVELOPMENT Research and development costs of approximately $2,809,000, $2,587,000 and $2,620,000 were charged to expense as incurred for fiscal years2015, 2014 and 2013, respectively. PENSION AND POSTRETIREMENT BENEFIT COSTS We provide a defined benefit pension plan for eligible salaried and hourly employees and we make contributions to fund the plan. We also provide apostretirement health benefit plan to domestic salaried employees who qualify under the plan’s provisions. The postretirement health benefit plan isunfunded. Our pension and postretirement health benefit plans are accounted for using actuarial valuations required by ASC 715, Compensation –Retirement Benefits. The funded status of our defined pension and postretirement health benefit plans are recognized on the Consolidated Balance Sheets.Changes in the funded status that arise during the period but are not recognized as components of net periodic benefit cost are recognized within othercomprehensive income, net of income tax. See Note 9 of the Notes to the Consolidated Financial Statements for additional information. STOCK-BASED COMPENSATION We account for stock options and restricted stock issued under our long term incentive plans in accordance with ASC 718, Compensation – StockCompensation. The fair value of stock-based compensation is determined at the grant date. The related compensation expense is recognized over theappropriate vesting period. See Note 8 of the Notes to the Consolidated Financial Statements for additional information.INCOME TAXES Deferred income tax assets and liabilities are recorded for the impact of temporary differences between the tax basis of assets and liabilities and theamounts recognized for financial reporting purposes. Deferred tax assets are reviewed and a valuation47allowance is established if management believes that it is more likely than not that some portion of our deferred tax assets will not be realized. Changes invaluation allowances from period to period are included in the tax provision in the period of change. In addition to existing valuation allowances, we provide for uncertain tax positions, if necessary, when such tax positions do not meet therecognition thresholds or measurement standards prescribed by ASC 740, Income Taxes. Amounts for uncertain tax positions are adjusted when newinformation becomes available or when positions are effectively settled. We recognize interest and penalties accrued related to uncertain tax positions inincome tax (benefit) expense. U.S. income tax expense and foreign withholding taxes are provided on remittances of foreign earnings and on unremitted foreign earnings that arenot indefinitely reinvested. Where unremitted foreign earnings are indefinitely reinvested, no provision for federal or state tax expense is recorded. Whencircumstances change and we determine that some or all of the undistributed earnings will be remitted in the foreseeable future, a corresponding expense isaccrued in the current period. See Note 6 of the Notes to the Consolidated Financial Statements for additional information about income taxes. NEW ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting StandardsThe repair regulations released by the Internal Revenue Service in September 2013 under Sections 162(a) and 263(a) of the Internal Revenue Codewere effective for our tax year beginning August 1, 2014. The repair regulations provide guidance regarding the timing of deductions and the capitalizationof amounts paid to acquire, produce or improve tangible property. We believe our accounting policies comply with the requirements of the repair regulationsand there is no material impact on our Consolidated Financial Statements.Recently Issued Accounting Standards and RegulationsIn May 2014, the FASB issued guidance under ASC 606, Revenue from Contract with Customers, which establishes a single comprehensive revenuerecognition model for all contracts with customers and will supersede most existing revenue guidance. This guidance requires entities to recognize revenueto depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled toreceive in exchange. Transition options include either a full or modified retrospective approach and early adoption is permitted. The implementation date forthis guidance was recently deferred and will now be effective at the beginning of our first quarter of fiscal year 2019. We are currently evaluating the impactof the adoption of this requirement on our Consolidated Financial Statements.In August 2014, the FASB issued guidance under ASC 205, Presentation of Financial Statements - Going Concern, which defines management'sresponsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnotedisclosures. This guidance will be effective for our fiscal year ending July 31, 2017. We are currently evaluating the impact of the adoption of thisrequirement on our Consolidated Financial Statements.In April 2015, the FASB issued guidance under ASC 835, Simplifying the Presentation of Debt Issuance Cost, which requires debt issuance costs tobe presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, rather than as an asset. This guidance iseffective for our first quarter of fiscal year 2017 and early adoption is permitted. The guidance must be applied on a retrospective basis. We are currentlyevaluating the impact of the adoption of this requirement on our Consolidated Financial Statements.In July 2015, the FASB issued guidance under ASC 330, Simplifying the Measurement of Inventory. The new guidance requires inventory to bemeasured at the lower of cost and net realizable value, which is defined as the estimated selling price in the ordinary course of business less reasonablypredictable costs of completion, disposal and transportation. This new guidance is effective for our first quarter of fiscal year 2018 and early adoption ispermitted. The guidance must be applied prospectively. We are currently evaluating the impact of the adoption of this requirement on our ConsolidatedFinancial Statements.48NOTE 2 – ACQUISITIONOn November 1, 2013, for $12,505,000 in cash we acquired certain assets of MFM, a company engaged in the manufacturing, marketing anddistribution of primarily private label cat litter. This transaction qualified as a business combination for accounting purposes, therefore the assets acquiredwere recorded at their respective estimated fair values at the date of acquisition. The purchase price was allocated to: goodwill, all of which is related to ourRetail and Wholesale Products Group segment and is deductible for tax purposes ($3,872,000); customer list intangible asset ($7,784,000); inventories($664,000); equipment ($300,000); and other current assets ($130,000). We also recorded a contingent liability of $500,000 for the amount deposited in anescrow account, which represented our maximum obligation for expenses to prepare and sell the real property retained by MFM. In addition, we recorded acontingent receivable of $255,000, which represented the estimated amount we would receive upon the sale of the real property retained by MFM. Duringfiscal year 2015, we recorded net expense of $113,000 upon settlement of both the contingent liability and receivable. This expense is included in selling,general and administrative expenses on the Consolidated Statements of Operations.The summarized proforma financial information below presents the combined results of operations as if the acquisition of MFM had occurred as ofAugust 1, 2012. MFM’s pre-acquisition results have been added to Oil-Dri’s historical results and include certain adjustments related to the acquisition, suchas amortization of intangible assets and depreciation expense. These proforma results do not include any anticipated cost synergies and do not reflect theactual results of operations that would have been achieved, nor are they indicative of future results of operations. The following proforma results arepresented for comparative purposes only (unaudited) (in thousands, except per share amounts): For the Twelve Months Ended July 31, 20142013Proforma net sales$271,279$271,453Proforma net income$7,834$13,387Proforma net income per share - Basic Common$1.19$2.06Proforma net income per share - Basic Class B$0.90$1.55Proforma net income per share - Diluted$1.11$1.90NOTE 3 – OPERATING SEGMENTSWe have two reportable operating segments: (1) Retail and Wholesale Products Group and (2) Business to Business Products Group. These operatingsegments are managed separately and each segment's major customers have different characteristics. The Retail and Wholesale Products Group customersinclude mass merchandisers, wholesale clubs, drugstore chains, pet specialty retail outlets, dollar stores, retail grocery stores, distributors of industrial cleanupand automotive products, environmental service companies and sports field product users. The Business to Business Products Group customers include:processors and refiners of edible oils, petroleum-based oils and biodiesel fuel; manufacturers of animal feed and agricultural chemicals; distributors of animalhealth and nutrition products; and marketers of consumer products.Sales to Walmart and its affiliates accounted for approximately 18%, 19% and 20% of our total net sales for fiscal years 2015, 2014 and 2013,respectively. Walmart is a customer in our Retail and Wholesale Products Group segment. There are no customers in the Business to Business Products Groupwith sales equal to or greater than 10% of our total sales; however, sales to Clorox (a customer in our Business to Business Products Group) and its affiliatesaccounted for approximately 6% of total net sales for each of fiscal years 2015 and 2014, and 7% of total net sales for fiscal year 2013.Net sales and operating income for each segment are provided below. Revenues by product line are not provided because it would be impracticableto do so. The accounting policies of the segments are the same as those described in the Note 1 of the Notes to the Consolidated Financial Statements.We do not rely on any operating segment asset allocations and we do not consider them meaningful because of the shared nature of our productionfacilities; however, we have estimated the segment asset allocations below for those assets for which we can reasonably determine. The unallocated assetcategory is the remainder of our total assets. The asset allocation is estimated and is not a measure used by our chief operating decision maker aboutallocating resources to the operating segments or in assessing their performance. The corporate expenses line represents certain unallocated expenses,including primarily salaries, wages and49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 annual incentive plan bonus accrual. July 31, Assets 2015 2014 2013 (in thousands)Business to Business Products $55,767 $53,823 $53,721Retail and Wholesale Products 96,043 95,712 76,376Unallocated Assets 38,221 36,669 53,462Total Assets $190,031 $186,204 $183,559 Year Ended July 31, Net Sales Income 2015 2014 2013 2015 2014 2013 (in thousands)Business to Business Products $92,326 $94,286 $92,969 $29,406 $26,654 $30,739Retail and Wholesale Products 169,076 172,027 157,614 5,206 3,568 10,561Total Sales $261,402 $266,313 $250,583 Corporate Expenses (19,459) (17,804) (22,359)Capacity Rationalization Charges — — (70)Income from Operations 15,153 12,418 18,871Total Other Expense, Net (984) (1,081) (1,372)Income before Income Taxes 14,169 11,337 17,499Income Taxes (2,801) (2,981) (2,913)Net Income $11,368 $8,356 $14,586The following is a summary by fiscal year of financial information by geographic region (in thousands): 2015 2014 2013 Sales to unaffiliated customers by: Domestic operations $250,377 $255,067 $238,655 Foreign subsidiaries $11,025 $11,246 $11,928 Sales or transfers between geographic areas: Domestic operations $5,606 $4,285 $4,624 Income (Loss) before income taxes: Domestic operations $15,389 $12,209 $17,744 Foreign subsidiaries $(1,220) $(872) $(245) Net Income (Loss): Domestic operations $12,629 $9,064 $14,762 Foreign subsidiaries $(1,261) $(708) $(176) Identifiable assets: Domestic operations $182,269 $178,061 $175,261 Foreign subsidiaries $7,762 $8,143 $8,298Our largest customer accounted for the following percentage of consolidated net sales and net accounts receivable: 2015 2014 2013Net sales for the years ended July 31 18% 19% 20%Net accounts receivable as of July 31 27% 28% 30%50NOTE 4 – NOTES PAYABLEThe composition of notes payable is as follows as of July 31 (in thousands): 2015 2014Senior notes payable in annual principal installments on August 1: $3,083 in each fiscal year 2016 through 2021.Interest is payable semiannually at an annual rate of 3.96% $18,500 $18,500Senior notes mature on October 15, 2015. Interest is payable semiannually at an annual rate of 5.89% 400 3,900Total notes payable 18,900 22,400Less current maturities of notes payable (3,483) (3,500)Noncurrent notes payable $15,417 $18,900We issued senior promissory notes in November 2010 for $18,500,000 and in December 2005 for $15,000,000. All note agreements provided thatthe proceeds could be used to fund future principal payments on debt, acquisitions, stock repurchases, and capital expenditures and for working capitalpurposes. Both note agreements contain certain covenants that restrict our ability and the ability of certain of our subsidiaries to, among other things, (i) incurliens, (ii) incur indebtedness, (iii) merge or consolidate, (iv) sell assets, (v) sell stock of those certain subsidiaries, (vi) engage in business that would changethe general nature of the business we are engaged in, and (vii) enter into transactions other than on “arm's length” terms with affiliates. The note agreementsalso require a minimum fixed coverage ratio and a minimum consolidated net worth to be maintained.On December 4, 2014, we signed a fourth amendment to our credit agreement with BMO Harris, to extend the term to December 4, 2019. The newagreement provides for a $25,000,000 unsecured revolving credit agreement, including a maximum of $5,000,000 for foreign letters of credit. The remainingterms are substantially unchanged from our previous agreement with BMO Harris, including the provision that we may select a variable rate based on eitherBMO Harris’ prime rate or a LIBOR-based rate, plus a margin which varies depending on our debt to earnings ratio, or a fixed rate as agreed between us andBMO Harris. At July 31, 2015, the variable rates would have been 3.25% for the BMO Harris’ prime-based rate or 1.29% for the LIBOR-based rate. The creditagreement contains restrictive covenants that, among other things and under various conditions, limit our ability to incur additional indebtedness or todispose of assets. The agreement also requires us to maintain a minimum fixed coverage ratio and a minimum consolidated net worth. As of July 31, 2015 and2014, there were no outstanding borrowings under this credit agreement.Our debt agreements also contain provisions such that if we default on one debt agreement, the others will automatically default. If we default onany guaranteed debt with a balance greater than $1,000,000, our unsecured revolving credit agreement with BMO Harris will be considered in default. If wedefault on any debt with a balance greater than $5,000,000 we will also be considered in default with the senior promissory notes.We were in compliance with all restrictive covenants and limitations at July 31, 2015.The following is a schedule by fiscal year of future maturities of notes payable as of July 31, 2015 (in thousands):2016$3,48320173,08320183,08420193,08320203,084Later years3,083 $18,90051NOTE 5 – FINANCIAL INSTRUMENTSFair ValueFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. The inputs used to measure fair value are prioritized into one of three categories based on the lowest level of input thatis significant to the fair value measurement. Categories in the hierarchy are as follows:Level 1: Financial assets and liabilities whose values are based on quoted market prices in active markets for identical assets or liabilities.Level 2: Financial assets and liabilities whose values are based on: 1) Quoted prices for similar assets or liabilities in active markets. 2) Quoted prices for identical or similar assets or liabilities in markets that are not active. 3) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.Level 3: Financial assets and liabilities whose values are based on valuation techniques that require inputs that are both unobservable and significant tothe overall fair value measurement. These inputs may reflect estimates of the assumptions that market participants would use in valuing thefinancial assets and liabilities.The following table summarizes our financial assets and liabilities that were reported at fair value by level within the fair value hierarchy (inthousands): Fair Valueat July 31,2015 Fair Valueat July 31,2014 1 Level 1 Level 1 Assets Cash equivalents $9,297 $5,728 Marketable equity securities $— $1171 We identified an error in the amounts previously disclosed for cash equivalents in this footnote in fiscal year 2014. The fiscal year 2014 amount reported ascash equivalents included the amount of unrestricted cash and was therefore overstated by $10,502,000. This amount has been revised in the table above.The disclosure error is considered immaterial, individually and in the aggregate, to the previously reported consolidated financial statements as of and for theyear ended July 31, 2014.Cash equivalents are classified as Level 1 of the fair value hierarchy because they were valued using quoted market prices in active markets. Thesecash instruments are primarily money market mutual funds. This amount is included in cash and cash equivalents on the Consolidated Balance Sheets.Marketable equity securities were valued using quoted market prices in active markets and as such are classified as Level 1 in the fair valuehierarchy. We owned stock in one publicly traded company at July 31, 2014, which was included in other noncurrent assets on the Consolidated BalanceSheets. The stock was sold during fiscal year 2015.Short-term investments on the Consolidated Balance Sheets include certificates of deposit. We intend and have the ability to hold our short-terminvestments to maturity; therefore, these investments were reported at amortized cost on the Consolidated Balance Sheets, which approximated fair value asof July 31, 2015 and 2014, and these balances are excluded from the above table.Accounts receivable and accounts payable balances on the Consolidated Balance Sheets approximate their fair values at July 31, 2015 and 2014due to the short maturity and nature of those balances; therefore, these balances are excluded from the above table.Notes payable on the Consolidated Balance Sheets are carried at the face amount of future maturities and are excluded from the above table. Theestimated fair value of notes payable was approximately $20,476,000 as of July 31, 2015 and $23,940,000 as of July 31, 2014. Our debt does not trade on adaily basis in an active market, therefore the fair value of notes payable was52estimated based on market observable borrowing rates currently available for debt with similar terms and average maturities and is classified as Level 2.Concentration of Credit RiskFinancial instruments which potentially subject us to concentrations of credit risk consist principally of cash, short-term investments and accountsreceivable. Our cash is held in banks which are covered by the Federal Deposit Insurance Corporation; however, our cash balances are in excess of themaximum amount that is insured. Our short-term investments are placed in government-backed instruments and with other high quality institutions.Concentrations of credit risk with respect to accounts receivable are subject to the financial condition of certain major customers, principally the customerreferred to in Note 3 of the Notes to the Consolidated Financial Statements. We generally do not require collateral to secure customer receivables; however,we require letters of credit for some foreign customers or we purchase insurance to reduce our risk.NOTE 6 – INCOME TAXESThe provision for income tax expense (benefit) by fiscal year consists of the following (in thousands): 2015 2014 2013Current Federal $4,296 $1,267 $5,446Foreign (40) 63 19State 1,081 308 578Current Income Tax Total 5,337 1,638 6,043Deferred Federal (2,242) 1,381 (2,984)Foreign 68 (215) (88)State (362) 177 (58)Deferred Income Tax Total (2,536) 1,343 (3,130)Total Income Tax Expense $2,801 $2,981 $2,913Principal reasons for variations between the statutory federal rate and the effective rates by fiscal year were as follows: 2015 2014 2013U.S. federal income tax rate 35.0 % 34.0 % 34.0 %Depletion deductions allowed for mining (9.5) (12.2) (9.7)State income tax expense, net of federal tax expense 3.4 2.8 2.9Difference in effective tax rate of foreign subsidiaries 2.2 0.9 (0.8)Empowerment zone credits — (0.5) (0.5)Valuation allowance (decrease) increase (11.7) 3.2 (7.8)Other 0.4 (1.9) (1.5)Effective income tax rate 19.8 % 26.3 % 16.6 %We utilized approximately $1,658,000 and $1,369,000 of our domestic AMT credit carryforwards in fiscal years 2015 and 2013, respectively, basedon the amount and composition of our taxable earnings and various tax attributes. We correspondingly decreased the related valuation allowance that hadbeen established in prior years for the full amount of the deferred tax benefit related to the AMT credits used, thereby significantly reducing our effectiveincome tax rate. In fiscal year 2014, we added approximately $693,000 to our domestic AMT credit carryforwards and correspondingly increased the relatedvaluation allowance.53The Consolidated Balance Sheets included the following tax effects of cumulative temporary differences as of July 31 (in thousands):` 2015 2014 Assets Liabilities Assets 1 Liabilities 1Depreciation $— $6,749 $— $7,332Deferred compensation 3,936 — 3,733 —Postretirement benefits 8,242 — 7,651 —Allowance for doubtful accounts 237 — 303 —Deferred marketing expenses — 19 — 10Other assets 41 — — 84Accrued expenses 1,949 — 1,289 —Tax credits 1,545 — 2,872 —Amortization 37 — — 229Inventories 512 — 453 —Depletion — 473 — 488Stock-based compensation 162 — 248 —Reclamation 283 — 141 —Other assets – foreign 1,006 — 930 —Valuation allowance (2,210) — (3,459) —Total deferred taxes $15,740 $7,241 $14,161 $8,1431 We identified an error in the amounts previously disclosed in this footnote in fiscal year 2014 related to domestic deferred taxes credits. Thefiscal year 2014 amounts reported as Tax credits and Valuation allowance were both overstated by $514,000 as previously reported and havebeen revised in the table above. The disclosure error is considered immaterial, individually and in the aggregate, to the previously reportedconsolidated financial statements as of and for the year ended July 31, 2014.As of July 31, 2015, we had a total of approximately $2,210,000 of AMT credit and foreign net operating loss carryforwards, which can be carriedforward indefinitely or until utilized. A number of factors determine whether or not we will be able to utilize these tax attributes. For example, certain factors,such as depletion and the cost of fuel used in our manufacturing process, have a significant impact on our ability to use the deferred tax benefit related to ourAMT credit carryforwards. In determining whether a valuation allowance is warranted, we take into account such factors as prior earnings history, expectedfuture earnings and other factors that could affect the realization of deferred tax assets. We believe it is more likely than not that we will not realize a benefitfrom the carryforwards; therefore, a valuation allowance has been established for the full amount of the deferred tax benefit related to the AMT credits and theforeign net operating loss.Our foreign subsidiary in the United Kingdom has not generated any untaxed foreign income, therefore we have not provided for any related incometaxes.As of July 31, 2015, we had no liability for unrecognized tax benefits (“UTBs”) based on tax positions related to the current and prior fiscal years.Reconciliations of the beginning and ending amount of UTBs by fiscal year were as follows (in thousands): 2015 2014 2013Gross balance – beginning of year $— $273 $273Gross decreases - tax positions from prior years — (273) —Gross balance – end of year $— $— $273We classify interest and penalty accruals related to UTBs as income tax expense. During fiscal year 2015, we recognized no interest and penaltiesand we had accrued no accrual for the payment of interest and penalties.54We are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. Our federal income tax returns for thefiscal years 2010 through 2014 remain open for examination. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from three tofive years. The state impact of any federal income tax changes remains subject to examination by various states for a period of up to one year after formalnotification to the states. There are no material open or unsettled state, local or foreign income tax audits. We believe our accrual for tax liabilities isadequate for all open audit years.NOTE 7 – STOCKHOLDERS’ EQUITYCommon Stock Our authorized capital stock at July 31, 2015 and 2014 consisted of 15,000,000 shares of Common Stock, 7,000,000 shares of Class B Stock and30,000,000 shares of Class A Common Stock, each with a par value of $.10 per share. There are no Class A Common Stock shares currently outstanding.The Common Stock and Class B Stock are equal, on a per share basis, in all respects except as to voting rights, conversion rights, cash dividends andstock splits or stock dividends. The Class A Common Stock is equal, on a per share basis, in all respects, to the Common Stock except as to voting rights andstock splits or stock dividends. In the case of voting rights, Common Stock is entitled to one vote per share and Class B Stock is entitled to ten votes pershare, while Class A Common Stock generally has no voting rights. Common Stock and Class A Common Stock have no conversion rights. Class B Stock isconvertible on a share-by-share basis into Common Stock at any time and is subject to mandatory conversion under certain circumstances.Common Stock is entitled to cash dividends, as and when declared or paid, equal to at least 133.33% on a per share basis of the cash dividend paidon Class B Stock. Class A Common Stock is entitled to cash dividends on a per share basis equal to the cash dividend on Common Stock. Additionally, whileshares of Common Stock, Class A Common Stock and Class B Stock are outstanding, the sum of the per share cash dividend paid on shares of Common Stockand Class A Common Stock, must be equal to at least 133.33% of the sum of the per share cash dividend paid on Class B Stock and Class A Common Stock.See Note 4 of the Notes to the Consolidated Financial Statements regarding dividend restrictions provided in our debt agreements.Shares of Common Stock, Class A Common Stock and Class B Stock are equal in respect of all rights to dividends (other than cash) and distributionsin the form of stock or other property (including stock dividends and split-ups) in each case in the same ratio except in the case of a Special Stock Dividend.A Special Stock Dividend, which can be issued only once, is either a dividend of one share of Class A Common Stock for each share of Common Stock andClass B Stock outstanding or a recapitalization, in which half of each outstanding share of Common Stock and Class B Stock would be converted into a halfshare of Class A Common Stock.Our Board of Directors has authorized in the aggregate the repurchase of 3,666,771 shares of the Company stock since fiscal year 1991. As ofJuly 31, 2015, 3,018,562 shares of Common Stock and 342,241 shares of Class B Stock have been repurchased under the Board approved repurchaseauthorizations. Common Stock was repurchased by other transactions authorized by management prior to the adoption of the Board’s repurchaseauthorizations.55Accumulated Other Comprehensive (Loss) IncomeThe following table summarizes the changes in accumulated other comprehensive income by component (in thousands): Unrealized Gain onMarketableSecurities Pension andPostretirementHealth Benefits CumulativeTranslationAdjustment Total AccumulatedOtherComprehensive(Loss) IncomeBalance as of July 31, 2013$86 $(5,608) $487 (5,035)Other comprehensive income (loss) beforereclassifications, net of tax28 (3,266) (232) (3,470)Amounts reclassified from accumulated othercomprehensive income, net of tax— 242b)— 242Net current-period other comprehensive income(loss), net of tax28 (3,024) (232) (3,228)Balance as of July 31, 2014$114 $(8,632) $255 $(8,263)Other comprehensive income (loss) beforereclassifications, net of tax(9) (730) (525) (1,264)Amounts reclassified from accumulated othercomprehensive income, net of tax(105)a)387b)— 282Net current-period other comprehensive income(loss), net of tax(114) (343) (525) (982)Balance as of July 31, 2015$— $(8,975) $(270) $(9,245)a)Amount is included in the Consolidated Statements of Operations on the Other, net line item. The cost of the related securities was based on specificidentification.b)Amounts are net of tax expense of $239,000 and $148,000 in fiscal years 2015 and 2014, respectively. Amounts are included in the components of netperiodic benefit cost for the pension and postretirement health plans. See Note 9 of the Notes to the Consolidated Financial Statements for furtherinformation.NOTE 8 – STOCK-BASED COMPENSATIONWe determined the fair value of stock options and restricted stock issued under our long term incentive plans as of the grant date. The fair value ofrestricted stock was determined by the closing market price of our Common Stock on the date of grant multiplied by the number of shares granted. The fairvalue of the stock options was estimated on the date of the grant using a Black-Scholes option valuation model that used various assumptions. The risk freeinterest rate was based on the U.S. Treasury yield curve in effect at the time of grant. Expected life (estimated period of time outstanding) of a grant wasdetermined by reference to the vesting schedule, past exercise behavior and comparison with other reporting companies. The dividend rate at the date ofgrant was used as the best estimate of future dividends. Expected volatility was determined by calculating the standard deviation of our stock price for thefive years immediately prior to the grant date. This period of time closely resembles the expected term. All stock options issued under our plans have anexercise price equal to the closing market price of our Common Stock on the date of grant. All options currently outstanding have a term of ten years.STOCK OPTIONSThe Oil-Dri Corporation of America 2006 Long Term Incentive Plan (“2006 Plan”) permits the grant of stock options, stock appreciation rights,restricted stock, restricted stock units, performance awards and other stock-based and cash-based awards. Our employees and outside directors are eligible toreceive grants under the 2006 Plan. The total number of shares of stock subject to grants under the 2006 Plan may not exceed 937,500. Stock options havebeen granted to our outside directors with a vesting period of one year and stock options granted to employees generally vest 25% two years after the grantdate and in each of the three following anniversaries of the grant date. In addition, shares of restricted stock have been issued under the 2006 Plan asdescribed in the restricted stock section below. As of July 31, 2015, there were 541,604 shares available for future grants under this plan.56Our 1995 Long Term Incentive Plan (“1995 Plan”) provided for grants of both incentive and non-qualified stock options and restricted stock. Stockoptions granted under the 1995 Plan generally vest 25% two years after the grant date and in each of the three following anniversaries of the grant date. Allshares of stock issued upon option exercises under this plan were from authorized but unissued stock; all shares of restricted stock issued were from treasurystock. All remaining outstanding options were exercised during fiscal year 2014 and there were no shares available for future grants under this plan as ofJuly 31, 2015.The Oil-Dri Corporation of America Outside Director Stock Plan (the “Directors’ Plan”) provided for grants of stock options to directors. Stockoptions have been granted to our directors with a one year vesting period. All remaining outstanding options were exercised during fiscal year 2014 and therewere no shares available for future grants under this plan as of July 31, 2015. All shares of stock issued under the Directors’ Plan were from treasury stock.A summary of stock option transactions under the plans is shown below. Number ofShares(in thousands) WeightedAverageExercisePrice WeightedAverageRemainingContractualTerm(Years) AggregateIntrinsicValue(in thousands)Options outstanding and exercisable at July 31, 2012 147 $11.89 2.2 $1,473Exercised (87) $10.25 $1,385Options outstanding and exercisable at July 31, 2013 60 $14.25 2.3 $1,059Exercised (8) $12.47 $151Forfeited (8) $9.43 Options outstanding and exercisable at July 31, 2014 44 $15.43 1.9 $611Exercised (3) $15.37 $45Options outstanding and exercisable at July 31, 2015 41 $15.43 0.9 $447The amount of cash received from the exercise of options during fiscal year 2015 was $50,000 and the related tax benefit was $9,000. The amount ofcash received from the exercise of options during fiscal year 2014 was $93,000 and the related tax benefit was $39,000. The amount of cash received from theexercise of options during fiscal year 2013 was $2,271,000 and the related tax benefit was $613,000.The following table summarizes information related to stock options outstanding and exercisable at July 31, 2015. All outstanding stock optionswere exercisable as of July 31, 2015.Options Outstanding and Exercisable by Price Range as of July 31, 2015Range of Exercise Prices Outstanding andExercisable (inthousands) Weighted AverageRemaining ContractualLife (Years) Weighted AverageExercise Price$13.51-$15.00 25 0.9 $14.82$15.01-$16.50 6 0.6 $15.37$16.51-$17.00 10 1.3 $17.00$13.51-$17.00 41 0.9 $15.43We recognized the related compensation expense over the period from the date of grant to the date when the award is no longer contingent on theemployee providing additional service to us. We recognized no stock-based compensation expense related to stock options during fiscal years 2015, 2014and 2013.As of July 31, 2015, 2014 and 2013 we had no unamortized expense associated with outstanding stock options.57RESTRICTED STOCK All of our non-vested restricted stock as of July 31, 2015 was issued under the 2006 Plan with vesting periods from two to five years. A summary of restricted stock transactions under the plans is shown below. Number ofShares(in thousands) WeightedAverageGrant DateFair Value WeightedAverageRemainingContractualTerm(Years) UnamortizedExpense(in thousands)Non-vested restricted stock outstanding at July 31, 2012132 $21.68 3.1 $2,214Granted20 $25.03 Vested(34) $21.75 Forfeited(1) $20.60 Non-vested restricted stock outstanding at July 31, 2013117 $22.24 2.1 $1,824Granted51 $34.18 Vested(40) $21.50 Forfeited(6) $25.41 Non-vested restricted stock outstanding at July 31, 2014122 $27.31 2.4 $2,226Granted11 $28.68 Vested(45) $23.16 Forfeited(14) $34.05 Non-vested restricted stock outstanding at July 31, 201574 $28.83 2.1 $931We recognized stock-based compensation related to restricted stock of $916,000, $880,000 and $631,000, net of related tax effect, in fiscal years2015, 2014 and 2013, respectively. The total restricted stock compensation related tax benefit was $226,000, $309,000 and $233,000 in fiscal years 2015,2014 and 2013, respectively.NOTE 9 – PENSION AND OTHER POSTRETIREMENT BENEFITSThe Oil-Dri Corporation of American Pension Plan (“Pension Plan”) is a defined benefit pension plan for eligible salaried and hourly employees.Pension benefits are based on a formula of years of credited service and levels of compensation or stated amounts for each year of credited service.We also provide a postretirement health benefits plan to domestic salaried employees who meet specific age, participation and length of servicerequirements at the time of retirement. Eligible employees may elect to continue their health care coverage under the Oil-Dri Corporation of AmericaEmployee Benefits Plan until the date certain criteria are met, including attaining the age of Medicare eligibility. We have the right to modify or terminatethe postretirement health benefit plan at any time.We also maintain a 401(k) savings plan under which we match a portion of employee contributions. This plan is available to essentially all domesticemployees following a specific number of days of employment. Our contributions to this plan, and to similar plans maintained by our foreign subsidiaries,were $683,000, $814,000 and $708,000 for fiscal years 2015, 2014 and 2013, respectively.58Obligations and Funded StatusThe following tables provide a reconciliation of changes in the plans’ benefit obligations, assets’ fair values and funded status by fiscal year (inthousands): Pension Benefits Postretirement Health Benefits 2015 2014 2015 2014Change in benefit obligation: Benefit obligation, beginning of year $44,367 $36,866 $2,770 $2,441Service cost 1,606 1,425 133 111Interest cost 1,855 1,761 106 110Actuarial loss (gain) 96 5,379 (622) 114Benefits paid (1,175) (1,064) (25) (6)Benefit obligation, end of year 46,749 44,367 2,362 2,770 Change in plan assets: Fair value of plan assets, beginning of year 24,804 22,887 — —Actual return on plan assets 174 1,938 — —Employer contribution 1,790 1,043 25 6Benefits paid (1,175) (1,064) (25) (6)Fair value of plan assets, end of year 25,593 24,804 — —Funded status, recorded in Consolidated Balance Sheets $(21,156) $(19,563) $(2,362) $(2,770)The accumulated benefit obligation for the Pension Plan was $41,501,000 as of July 31, 2015 and $37,813,000 as of July 31, 2014. The following table shows amounts recognized in the Consolidated Balance Sheets as of July 31 (in thousands): Pension Benefits Postretirement HealthBenefits 2015 2014 2015 2014Deferred income taxes $7,376 $6,634 $866 $1,017Other current liabilities $— $— $(89) $(60)Other noncurrent liabilities $(21,156) $(19,563) $(2,273) $(2,710)Accumulated other comprehensive income –net of tax: Net actuarial loss $8,909 $8,156 $92 $500Prior service cost (income) $9 $15 $(35) $(39)59Benefit Costs and Amortizations The following table shows the components of the net periodic pension and postretirement health benefit costs by fiscal year (in thousands): Pension Cost Postretirement Health Benefit Cost 2015 2014 2013 2015 2014 2013Service cost $1,606 $1,425 $1,751 $133 $111 $136Interest cost 1,855 1,761 1,544 106 110 96Expected return on plan assets (1,877) (1,715) (1,510) — — —Amortization of: Net transition obligation — — — 1 16 15Prior service costs (income) 10 13 15 (6) (6) —Other actuarial loss 584 343 884 37 24 53Net periodic benefit cost $2,178 $1,827 $2,684 $271 $255 $300The following table shows amounts, net of tax, that are recognized in other comprehensive income by fiscal year (in thousands): Pension Benefits Postretirement HealthBenefits 2015 2014 2015 2014Net actuarial loss (gain) $1,115 $3,196 $(385) $70Amortization of: Prior service (cost) income (6) (8) 4 4Net transition obligation — — (1) (10)Amortization of actuarial loss (361) (213) (23) (15)Total recognized in other comprehensive loss (income) $748 $2,975 $(405) $49The following table shows amortization amounts, net of tax, expected to be recognized in fiscal year 2016 in accumulated other comprehensiveincome (in thousands):Amortization of: Pension Benefits Postretirement HealthBenefitsNet actuarial loss $637 $—Prior service cost (income) 5 (4) Total to be recognized as other comprehensive loss (income) $642 $(4)Cash Flows We have funded the Pension Plan based upon actuarially determined contributions that take into account the amount deductible for income taxpurposes, the normal cost and the minimum contribution required and the maximum contribution allowed under applicable regulations. We expect tocontribute approximately $1,422,000 in fiscal year 2016.The postretirement health plan is an unfunded plan. Our policy is to pay insurance premiums and claims from our assets.60The following table shows the estimated future benefit payments by fiscal year (in thousands): PensionBenefits PostretirementHealth Benefits2016 $1,302 $892017 $1,359 $1082018 $1,484 $1172019 $1,569 $1392020 $1,592 $1762021-25 $9,373 $1,025Assumptions Our pension benefit and postretirement health benefit obligations and the related effects on operations are calculated using actuarial models. Criticalassumptions that are important elements of plan expenses and asset/liability measurements include discount rate and expected return on assets for thePension Plan and health care cost trend for the postretirement health plan. We evaluate these critical assumptions at least annually. Other assumptionsinvolving demographic factors such as retirement age, mortality and turnover are evaluated periodically and are updated to reflect our experience and to meetregulatory requirements. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The assumptionsused in the previous calculations by fiscal year were as follows: Pension Benefits Postretirement Health Benefits 2015 2014 2015 2014Discount rate for net periodic benefit costs 4.28% 4.80% 3.87% 4.80%Discount rate for year-end obligations 4.22% 4.28% 3.51% 3.87%Rate of increase in compensation levels for net periodic benefit costs 3.50% 3.50% — —Rate of increase in compensation levels for year-end obligations 3.50% 3.50% — —Long-term expected rate of return on assets 7.50% 7.50% — —The discount rate was based on the Citigroup Pension Discount Curve (“CPDC”) to determine separately for the Pension Plan and the postretirementhealth plan, the single equivalent rate that would yield the same present value as the specific plan’s expected cash flows.Our expected rate of return on Pension Plan assets is determined by our asset allocation, our historical long-term investment performance, ourestimate of future long-term returns by asset class (using input from our actuaries, investment managers and investment advisors), and long-term inflationassumptions.For fiscal year 2015, the medical cost trend assumption used for the postretirement health benefit cost was 7.5%. The graded trend rate is expected todecrease to an ultimate rate of 5.0% in fiscal year 2024.The following table reflects the effect on postretirement health costs and accruals in fiscal year 2015 of a one-percentage point change in theassumed health care cost trend (in thousands): One-Percentage PointIncrease One-PercentagePoint DecreaseEffect on total service and interest cost $37 $(33)Effect on accumulated postretirement benefit obligation $265 $(312)61Pension Plan Assets The investment objective for the Pension Plan assets is to optimize long-term return at a moderate level of risk in order to secure the benefitobligations to participants at a reasonable cost. To reach this goal, our investment structure includes various asset classes, asset allocations and investmentmanagement styles that, in total, have a reasonable likelihood of producing a sufficient level of overall diversification that balances expected return withexpected risk over the long-term. The Pension Plan does not invest directly in Company stock.We measure and monitor the plan’s asset investment performance and the allocation of assets through quarterly investment portfolio reviews.Investment performance is measured by absolute returns, returns relative to benchmark indices and any other appropriate basis of comparison. The targetedallocation percentages of plan assets is shown below for fiscal year 2016 and the actual allocation as of July 31:Asset Allocation Target fiscal2016 2015 2014 Cash and accrued income 2% 12% 5% Fixed income 38% 29% 27% Equity 60% 59% 67%The following table sets forth by level, within the fair value hierarchy, the Pension Plan's assets carried at fair value (in thousands): Fair Value At July 31, 2015 Total QuotedPrices inActiveMarkets forIdenticalAssets(Level 1) SignificantObservableInputs(Level 2) Asset Class Cash and Cash Equivalents(a) $2,678 $2,678 $— Equity securities(b): U.S. companies 9,141 9,119 22International companies 3,178 3,178 — Equity securities - international mutual funds: Developed market(c) 1,289 — 1,289 Emerging markets(d) 331 — 331 Commodities(e) 267 — 267 Fixed Income: U.S. Treasuries 3,923 — 3,923 Corporate bonds(f) 1,751 — 1,751 Floating rate debt(g) 855 — 855 Government sponsored entities(h) 292 — 292 Multi-strategy bond fund(i) 895 — 895 Other(j) 993 — 993 Total $25,593 $14,975 $10,618 62 Fair Value At July 31, 2014 Total QuotedPrices inActiveMarkets forIdenticalAssets(Level 1) SignificantObservableInputs(Level 2) Asset Class Cash and Cash Equivalents(a) $1,123 $1,123 $— Equity securities(b): U.S. companies 10,168 10,168 —International companies 2,698 2,698 — Equity securities - international mutual funds: Developed market(c) 2,005 — 2,005 Emerging markets(d) 351 — 351 Commodities(e) 383 — 383 Fixed Income: U.S. Treasuries 3,020 — 3,020 Corporate bonds(f) 1,911 — 1,911 Floating rate debt(g) 838 — 838 Government sponsored entities(h) 376 — 376 Multi-strategy bond fund(i) 856 — 856 Other(j) 1,075 — 1,075 Total $24,804 $13,989 $10,815(a)Cash and cash equivalents consists of highly liquid investments which are traded in active markets.(b)This class represents equities traded on regulated exchanges, as well as funds that invest in a portfolio of such stocks.(c)These mutual funds seek long-term capital growth by investing no less than 80% of their assets in stocks of non- U.S. companies that are primarily indeveloped markets, but also may invest in emerging and less developed markets.(d)These mutual funds seek long-term capital growth by investing at least 80% of their assets in stocks of companies located in Asia, excluding Japan.(e)The majority of the investments in this class seek maximum real return by investing primarily in commodity-linked derivative instruments. Assetsnot invested in commodity-linked instruments may be invested in inflation-indexed securities and other fixed income instruments.(f)This class includes bonds of U.S. and non-U.S. issuers from diverse industries.(g)This fund invests at least 80% of its net assets in first- and second-lien senior floating rate debt securities that are generally rated below investmentgrade. The fund may invest up to 20% of its net assets in debt securities that are lower than a senior claim on collateral and up to 20% of its netassets in senior loans made to non-U.S. borrowers. The fund may also include derivative instruments.(h)This class represents a beneficial ownership interest in a pool of single-family residential mortgage loans. These investments are not backed by thefull faith and credit of the United States government.(i)This class invests at least 80% of its net assets in bonds and other fixed income instruments issued by governmental or private-sector entities. Morethan 50% of its net assets are invested in mortgage-backed securities. The fund may invest up to 33 1/3% of its net assets in high-yield bonds, bankloans and assignments and credit default swaps.(j)This class seek long-term positive returns by employing a number of arbitrage and alternative investment strategies. The portfolio of instrumentsmay include equities, convertible securities, debt securities, warrants, options, swaps, future contracts, forwards or other types of derivativeinstruments.63NOTE 10 – DEFERRED COMPENSATION Oil-Dri's deferred compensation plans permit directors and certain management employees to defer portions of their compensation and to earninterest on the deferred amounts. Participants have deferred $318,000 and $542,000 into these plans in fiscal years 2015 and 2014, respectively. We recorded$428,000 and $431,000 of interest expense associated with these plans in fiscal years 2015 and 2014, respectively. Payments to participants were $450,000and $418,000 in fiscal years 2015 and 2014, respectively, and the total liability recorded for deferred compensation was $8,623,000 and $8,161,000 atJuly 31, 2015 and 2014, respectively.The Oil-Dri Corporation of America Annual Incentive Plan provides certain executives with the opportunity to receive a deferred executive bonusaward if certain financial goals are met. Financial targets under the provisions of the plan were not achieved to merit an award for the fiscal years 2015 and2014.Both of the above deferred compensation plans are unfunded. We fund these benefits when payments are made, and the timing and amount of thepayments are determined according to the plans' provisions and, for certain plans, according to individual employee agreements.The Oil-Dri Corporation of America SERP provides certain retired participants in the Pension Plan with the amount of benefits that would have beenprovided under the Pension Plan but for: (1) the limitations on benefits imposed by Section 415 of the Internal Revenue Code (“Code”), and/or (2) thelimitation on compensation for purposes of calculating benefits under the Pension Plan imposed by Section 401(a)(17) of the Code. The SERP liability isactuarially determined at the end of each fiscal year using assumptions similar to those used for the Pension Plan, see Note 9 of the Notes to the ConsolidatedFinancial Statements. The SERP liability recorded at July 31, 2015 was $1,433,000, which was higher than the $1,255,000 liability recorded at July 31, 2014due primarily to a decrease in the discount rate and updated mortality assumptions used to actuarially value the obligation at July 31, 2015. We recordedexpense related to the SERP of $178,000 in fiscal year 2015 and $215,000 in fiscal year 2014. The SERP is unfunded and we will fund benefits whenpayments are made.NOTE 11 – OTHER CONTINGENCIES We are party to various legal actions from time to time that are ordinary in nature and incidental to the operation of our business. While it is notpossible at this time to determine with certainty the ultimate outcome of these or other lawsuits, we believe that none of the pending proceedings will have amaterial adverse effect on our business or financial condition.NOTE 12 – LEASES Our mining operations are conducted on property we lease or own. These leases generally provide us with the right to mine as long as we continue topay a minimum monthly rental, which is typically applied against the per ton royalty when the property is mined. We also lease certain offices andproduction facilities. In addition, we may lease vehicles, railcars, mining property and equipment, warehouse space, data processing equipment, and officeequipment. In most cases, we expect that, in the normal course of business, leases will be renewed or replaced by other leases. The following is a schedule by fiscal year of future minimum rent requirements under operating leases that have initial or remaining non-cancelablelease terms in excess of one year as of July 31, 2015 (in thousands):2016$1,4022017$1,3562018$1,1392019$3682020$225Later years$50364The following schedule shows the composition of total rent expense by fiscal year for all operating leases, including those with terms of one monthor less which were not renewed (in thousands): 2015 2014 2013Vehicles and Railcars $1,559 $1,818 $1,885Office facilities 928 890 844Warehouse facilities 311 235 229Mining properties: Minimum 123 292 320Contingent 239 162 120Other 46 108 133 $3,206 $3,505 $3,531Contingent mining royalty payments are determined based on the tons of raw clay mined.As of July 31, 2014, we had a capital lease for three pieces of equipment used at our manufacturing facilities. All scheduled lease payments had beenmade as of the 2014 fiscal year-end and the remaining obligation of $1,330,000, which was included in other accrued expenses on the Consolidated BalanceSheets, represented the purchase option price to obtain title to the equipment, which we paid in fiscal year 2015. As of July 31, 2014, the assets under capitallease were included on the Consolidated Balance Sheets in machinery and equipment for $1,523,000, and in accumulated depreciation and amortization for$32,000. Depreciation expense related to these assets was included in cost of sales on the fiscal year 2014 Consolidated Statements of Operations. There wereno capital leases during fiscal year 2015.65NOTE 13 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) A summary of selected information for fiscal years 2015 and 2014 is as follows (in thousands, except for per share amounts): Fiscal Year 2015 Quarter Ended October 31 January 31 April 30 July 31 Fiscal 2015Net Sales $66,044 $64,643 $65,196 $65,519 $261,402Gross Profit $13,769 $15,233 $14,433 $16,722 $60,157Net Income $2,120 $2,797 $1,385 $5,066 $11,368Net Income Per Share Basic Common $0.32 $0.43 $0.21 $0.77 $1.73Basic Class B Common $0.24 $0.32 $0.16 $0.58 $1.30Diluted $0.30 $0.39 $0.19 $0.71 $1.59Dividends Per Share Common $0.2000 $0.2000 $0.2000 $0.2100 $0.8100Class B $0.1500 $0.1500 $0.1500 $0.1575 $0.6075Common Stock Price Range High $31.30 $32.93 $34.19 $33.44 Low $24.02 $26.60 $28.30 $25.92 Fiscal Year 2014 Quarter Ended October 31 January 31 April 30 July 31 Fiscal 2014Net Sales $63,546 $69,305 $67,417 $66,045 $266,313Gross Profit $16,500 $16,893 $13,884 $12,373 $59,650Net Income $2,887 $4,281 $722 $466 $8,356Net Income Per Share Basic Common $0.44 $0.65 $0.11 $0.07 $1.27Basic Class B Common $0.33 $0.49 $0.08 $0.05 $0.96Diluted $0.41 $0.60 $0.10 $0.07 $1.17Dividends Per Share Common $0.1900 $0.1900 $0.1900 $0.2000 $0.7700Class B $0.1425 $0.1425 $0.1425 $0.1500 $0.5775Common Stock Price Range High $36.80 $41.74 $36.27 $34.90 Low $30.35 $32.90 $31.24 $28.71 NOTE 14 – SUBSEQUENT EVENTS Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation no events haveoccurred that would require recognition in the Consolidated Financial Statements or disclosure in the Notes to the Consolidated Financial Statements. 66MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined inExchange Act Rules 13a-15f. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in theUnited States of America. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weconducted an assessment of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - IntegratedFramework (2013 framework) issued by the Committee Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, ourmanagement concluded that our internal control over financial reporting was effective as of July 31, 2015. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate. Our internal controls over financial reporting as of July 31, 2015 have been audited by Grant Thornton LLP, an independent registered publicaccounting firm, as stated in their report which appears on the next page of this Annual Report on Form 10-K.67REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and StockholdersOil-Dri Corporation of AmericaWe have audited the accompanying consolidated balance sheets of Oil-Dri Corporation of America (a Delaware corporation) and subsidiaries (the“Company”) as of July 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cashflows for each of the two years in the period ended July 31, 2015. Our audits of the basic consolidated financial statements included the financial statementschedules listed in the index appearing under Item 15(a)(2). We also have audited the Company’s internal control over financial reporting as of July 31,2015, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedules, for maintainingeffective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in theaccompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statementsand an opinion on the Company’s internal control over financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effectiveinternal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessaryin the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oil-Dri Corporation ofAmerica and subsidiaries as of July 31, 2015 and 2014, and the results of its operations and its cash flows for each of the two years in the period ended July31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of July 31, 2015, based on criteria established in the 2013 Internal Control-IntegratedFramework issued by COSO./s/ GRANT THORNTON LLPChicago, IllinoisOctober 9, 201568REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Stockholders of Oil-Dri Corporation of America:In our opinion, the consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the year ended July 31, 2013present fairly, in all material respects, the results of the operations and cash flows of Oil-Dri Corporation of America and its subsidiaries for the year endedJuly 31, 2013, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financialstatement schedule for the year ended July 31, 2013 presents fairly, in all material respects, the information set forth therein when read in conjunction withthe related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company'smanagement. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conductedour audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion./s/ PricewaterhouseCoopers LLPChicago, IllinoisOctober 11, 201369ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.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 theperiod covered by this Form 10-K. The controls evaluation was conducted under the supervision and with the participation of management, including ourChief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon the controls evaluation, our CEO and CFO have concluded that, as of theend of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to bedisclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and that suchinformation is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding requireddisclosure. 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 There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that havematerially 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 financialreporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, notabsolute, 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, andthe benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controlscan 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 theCompany have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns canoccur 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 bymanagement override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, andthere can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation ofcontrols effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration inthe degree of compliance with policies or procedures.ITEM 9B – OTHER INFORMATION None.70PART IIIITEM 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 2015 annual meeting ofstockholders under the captions “1. Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “DirectorNominations,” “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 theCompany’s Chief Executive Officer and senior financial officers) and employees. The Code imposes significant responsibilities on the Chief ExecutiveOfficer and the senior financial officers of the Company. The Code, the Company’s Corporate Governance Guidelines and the charter of its Audit Committeemay 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 Corporationof America, 410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone (312) 321-1515 or e-mail to info@oildri.com. Any amendmentto, 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 NYSErules, 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 2015 annual meeting of stockholders under the captions“Executive Compensation,” “Report of the Compensation Committee of the Board of Directors,” “Director Compensation,” “Compensation Committee” and“Compensation Committee Interlocks and Insider Participation” and is incorporated herein by reference.ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2015 annual meeting of stockholders under the captions“Principal Stockholders,” “Security Ownership of Management” and “Equity Compensation Plans” and is incorporated herein by reference.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 2015 annual meeting of stockholders under the captions“Certain Relationships and Related Party Transactions” and “Director Independence” and is incorporated herein by reference.ITEM 14 – PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2015 annual meeting of stockholders under the caption“Auditor Fees” and is incorporated herein by reference.71PART IVITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULE (a)(1) The following consolidated financial statements are contained herein. Consolidated Balance Sheets as of July 31, 2015 and July 31, 2014. Consolidated Statements of Operations for the fiscal years ended July 31, 2015, July 31, 2014 and July 31, 2013. Consolidated Statements of Comprehensive Income for the fiscal years ended July 31, 2015, July 31, 2014 and July 31, 2013. Consolidated Statements of Stockholders’ Equity for the fiscal years ended July 31, 2015, July 31, 2014 and July 31, 2013. Consolidated Statements of Cash Flows for the fiscal years ended July 31, 2015, July 31, 2014 and July 31, 2013. Notes to 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, 2015, July 31, 2014 and July 31, 2013. All other schedules are omitted because they are inapplicable, not required under the instructions or the information is included in theconsolidated financial statements or notes thereto. (a)(3) The following documents are exhibits to this Report: Exhibit No. Description SEC Document Reference3.1 Certificate of Incorporation of Oil-Dri, as amended. Incorporated by reference to Exhibit 4.1 to Oil-Dri’s RegistrationStatement on Form S-8 (Registration No. 333-57625), filed on June24, 1998. 3.2 By-Laws of Oil-Dri Corporation of America, as Amended andRestated on December 5, 2006. Incorporated by reference to Exhibit 3.1 to Oil-Dri’s (file No. 001-12622) Current Report on Form 8-K filed on December 11, 2006. 10.1 Memorandum of Agreement #1450 “Fresh Step“™dated as ofMarch 12, 2001 between A&M Products ManufacturingCompany and Oil-Dri (confidential treatment of certain portionsof 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. 10.2 First Amendment, dated as of December 13, 2002, toMemorandum of Agreement #1450 “Fresh Step”™dated as ofMarch 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 31,2007.72Exhibit No. Description SEC Document Reference10.3 Second Amendment, dated as of October 15, 2007, toMemorandum of Agreement #1450 “Fresh Step”™ dated as ofMarch 12, 2001. 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 30,2008. 10.4 Exclusive Supply Agreement dated May 19, 1999 betweenChurch & Dwight Co., Inc. and Oil-Dri (confidential treatmentof 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. 10.5 $15,000,000 Credit Agreement, dated January 27, 2006 amongthe Company, certain subsidiaries of the Company and HarrisN.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. 10.6 First Amendment, dated as of December 19, 2008 to CreditAgreement 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 January31, 2009. 10.7 Second Amendment, dated as of December 21, 2011 to CreditAgreement 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. 10.8 Third Amendment, dated as of June 21, 2012 to CreditAgreement 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. 10.9 Fourth Amendment, dated as of December 4, 2014 to CreditAgreement 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 October31, 2014. 10.10 $15,000,000 Note Agreement dated as of December 16, 2005among the Company, The Prudential Insurance Company ofAmerica and Prudential Retirement Insurance and AnnuityCompany. Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on December 22, 2005. 10.11 First Amendment, dated as of July 12, 2006 to Note Agreementdated as of December 16, 2005. Incorporated by reference to Exhibit 10.9 to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31,2006. 10.12 $18,500,000 Note Agreement dated as of November 12, 2010among Oil-Dri Corporation of America, The PrudentialInsurance Company of America, Prudential RetirementInsurance and Annuity Company, Forethought Life InsuranceCompany, Physicians Mutual Insurance Company andBCBSM, Inc. dba Blue Cross and Blue Shield of Minnesota. 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 October31, 2010. 10.13 Description of 1987 Executive Deferred CompensationProgram.* 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. 10.14 Salary Continuation Agreement dated August 1, l989 betweenRichard M. Jaffee and Oil-Dri (“1989 Agreement”).* Incorporated by reference to Exhibit (10)(g) to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31,1989.73Exhibit No. Description SEC Document Reference10.15 Extension and Amendment, dated October 9, 1998, to the 1989Agreement.* 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 31,2006. 10.16 Second Amendment, effective October 31, 2000, to the 1989Agreement.* Incorporated by reference to Exhibit 99.1 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on November 13, 2000. 10.17 Third Amendment, dated as of January 31, 2006, to the 1989Agreement.* Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on February 13, 2006. 10.18 Fourth Amendment, dated as of October 14, 2010, to the 1989Agreement.* Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File No. 001-12622) Current Report on Form 8-K filed on October 14, 2010. 10.19 Oil-Dri Corporation of America Deferred Compensation Plan, asamended 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 endedApril 30, 2003. 10.20 First Amendment, effective as of January 1, 2007, to Oil-DriCorporation of America Deferred Compensation Plan, asamended 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 January31, 2008. 10.21 Second Amendment, effective as of January 1, 2008, to Oil-DriCorporation of America Deferred Compensation Plan, asamended 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 January31, 2008. 10.22 Oil-Dri Corporation of America 1995 Long-Term IncentivePlan as amended and restated effective June 9, 2000.* Incorporated by reference to Exhibit (10)(k) to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31,2000. 10.23 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. 10.24 Oil-Dri Corporation of America Outside Director Stock Plan asamended and restated effective October 16, 1999.* Incorporated by reference to Exhibit (10)(n) to Oil-Dri’s (File No. 001-12622) Annual Report on Form 10-K for the fiscal year ended July 31,2000. 10.25 Oil-Dri Corporation of America Annual Incentive Plan (asamended 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 January31, 2008. 10.26 Oil-Dri Corporation of America 2005 Deferred CompensationPlan (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 January31, 2008.74Exhibit No. Description SEC Document Reference10.27 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 onNovember 3, 2006. 10.28 First Amendment, effective as of January 1, 2008, to Oil-DriCorporation of America 2006 Long Term Incentive Plan (asamended 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 January31, 2008. 10.29 Form of Oil-Dri Corporation of America 2006 Long TermIncentive Plan Employee Stock Option Agreement for Class ACommon 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 TermIncentive Plan Employee Stock Option Agreement for CommonStock.* 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 TermIncentive Plan Employee Stock Option Agreement for Class BStock.* 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 TermIncentive Plan Director Stock Option Agreement for CommonStock.* 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 TermIncentive Plan Restricted Stock Agreement for Class ACommon 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 TermIncentive Plan Restricted Stock Agreement for CommonStock.* 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 TermIncentive 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 Letter Agreement, dated as of April 23, 2015, between Oil-DriCorporation of America and Paul D. Ziemnisky, Jr.* 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 30,2015. 11.1 Statement re: Computation of Net Income Per Share. Filed herewith. 14.1 Code of Ethics Available at Oil-Dri’s website at www.oildri.com or in print uponrequest to Investor Relations, Oil-Dri Corporation of America, 410North 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. Filed herewith. 75Exhibit No. Description SEC Document Reference23.1 Consents of Independent Registered Public Accounting Firms Filed herewith. 31.1 Certifications pursuant to Rule 13a – 14(a). Filed herewith. 32.1 Certifications pursuant to Section 1350 of the Sarbanes-OxleyAct of 2002. Furnished herewith. 95 Mine Safety Disclosure Filed herewith. 101.INS XBRL Taxonomy Instance Document Furnished herewith. 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. 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.76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 behalfby the undersigned, thereunto duly authorized. OIL-DRI CORPORATION OF AMERICA (Registrant) By /s/ Daniel S. Jaffee Daniel S. Jaffee President and Chief Executive Officer, DirectorDated: October 9, 2015 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 andin the capacities and on the dates indicated:/s/ Richard M. Jaffee October 9, 2015Richard M. Jaffee Chairman of the Board of Directors /s/ Daniel S. Jaffee October 9, 2015Daniel S. Jaffee President and Chief Executive Officer, Director (Principal Executive Officer) /s/ Daniel T. Smith October 9, 2015Daniel T. Smith Vice President, Chief Financial Officer (Principal Financial Officer) /s/ Paula J. Krystopolski October 9, 2015Paula J. Krystopolski Corporate Controller (Controller) /s/ J. Steven Cole October 9, 2015J. Steven Cole Director /s/ Joseph C. Miller October 9, 2015Joseph C. Miller Vice Chairman of the Board of Directors 77 /s/ Michael A. Nemeroff October 9, 2015Michael A. Nemeroff Director /s/ Allan H. Selig October 9, 2015Allan H. Selig Director /s/ Paul E. Suckow October 9, 2015Paul E. Suckow Director /s/ Lawrence E. Washow October 9, 2015Lawrence E. Washow Director 78SCHEDULE II OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Year Ended July 31, 2015 2014 2013 (in thousands)Allowance for doubtful accounts and cash discounts: Balance, beginning of year $707 $641 $626Additions 169 69 62Deductions* (115) (3) (47)Balance, end of year $761 $707 $641 * Net of recoveries. Valuation reserve for income taxes 1: Balance, beginning of year $3,459 $3,205 $4,061Additions charged to expense (1,514) 254 (856)Balance, end of year $1,945 $3,459 $3,2051 See Note 6 of the Notes to the Consolidated Financial Statements for further discussion of the valuation reserve for income taxes and the reclassification offiscal 2014 amounts to properly reflect our domestic deferred tax credits.79EXHIBITSExhibit No. Description11.1 Statement Re: Computation of Net Income Per Share 21.1 Subsidiaries of Oil-Dri 23.1 Consents of Independent Registered Public Accounting Firms 31.1 Certifications by Daniel S. Jaffee, President and Chief Executive Officer and Daniel T. Smith, Vice President and 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 Taxonomy Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Labels Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Note: Stockholders may receive copies of the above listed exhibits, without fee, by written request to Investor Relations, Oil-Dri Corporation ofAmerica, 410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone (312) 321-1515 or e-mail to info@oildri.com.80EXHIBIT 11.1:OIL-DRI CORPORATION OF AMERICAComputation of Net Income Per Share(in thousands except for per share amounts) Year Ended July 31, 2015 2014 2013Net income available to stockholders$11,368 $8,356 $14,586Less: Distributed and undistributed earnings allocated to nonvested restricted stock(147) (128) (216)Earnings available to common shareholders$11,221 $8,228 $14,370 Shares Calculation Average shares outstanding - Basic Common4,955 4,981 4,909Average shares outstanding - Basic Class B Common2,019 2,001 1,970Potential Common Stock relating to stock options and non-vested restricted stock63 22 48Average shares outstanding - Assuming dilution7,037 7,004 6,927 Net Income Per Share: Basic Common$1.73 $1.27 $2.25Net Income Per Share: Basic Class B Common$1.30 $0.96 $1.69Net Income Per Share: Diluted$1.59 $1.17 $2.07EXHIBIT 21.1:SUBSIDIARIES OF OIL-DRISubsidiary State or Countryof OrganizationAmlan Trading (Shenzhen) Company, Ltd. ChinaBlue Mountain Production Company MississippiMounds Management, Inc. DelawareMounds Production Company, LLC IllinoisODC Acquisition Corp. IllinoisOil-Dri Canada ULC CanadaOil-Dri Corporation of Georgia GeorgiaAmlan International NevadaOil-Dri Production Company MississippiOil-Dri SARL SwitzerlandOil-Dri (U.K.) Limited United KingdomTaft Production Company DelawareEXHIBIT 23.1:CONSENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSWe have issued our report dated October 9, 2015, with respect to the consolidated financial statements, schedule, and internal control over financialreporting included in the Annual Report of Oil-Dri Corporation of America on Form 10-K for the year ended July 31, 2015. We hereby consent to theincorporation by reference of said report in the Registration Statements of Oil-Dri Corporation of America on Form S-8 (File No. 333-139550)./s/ GRANT THORNTON LLPChicago, IllinoisOctober 9, 2015EXHIBIT 23.1 (CONTINUED):CONSENTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSWe hereby consent to the incorporation by reference in the Registration Statement on Form S‑8 (No. 333-139550) of Oil-Dri Corporation of Americaof our report dated October 11, 2013 relating to the consolidated financial statements and financial statement schedule which appears in this Form 10‑K. /s/ PricewaterhouseCoopers LLPChicago, IllinoisOctober 9, 2015EXHIBIT 31.1: CERTIFICATIONS PURSUANT TO RULE 13A -14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDEDCertification of Principal Executive Officer(Section 302 of the Sarbanes-Oxley Act of 2002) I, Daniel S. Jaffee, certify that:1.I have reviewed this Annual Report on Form 10-K of Oil-Dri Corporation of America (the “registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered bythis report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. Date:October 9, 2015By:/s/ Daniel S. Jaffee Daniel S. JaffeePresident and Chief Executive OfficerEXHIBIT 31.1 (CONTINUED):Certification of a Principal Financial Officer(Section 302 of the Sarbanes-Oxley Act of 2002) I, Daniel T. Smith, certify that:1.I have reviewed this Annual Report on Form 10-K of Oil-Dri Corporation of America (the “registrant”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered bythis report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this report is being prepared;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likelyto materially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting. Date:October 9, 2015By:/s/ Daniel T. Smith Daniel T. SmithVice President, Chief Financial OfficerEXHIBIT 32.1: CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TOTHE SARBANES-OXLEY ACT OF 2002 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Oil-Dri Corporation of America (the “Company”) hereby certifies that to the best of myknowledge the Company's Annual Report on Form 10-K for the year ended July 31, 2015 (the “Report”) fully complies with the requirements of Section13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects,the financial condition and results of operation of the Company.Dated:October 9, 2015/s/ Daniel S. JaffeeName: Daniel S. JaffeeTitle: President and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Oil-Dri Corporation of America and will be retained by Oil-DriCorporation of America and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350, Chapter 63 of Title 18,United States Code) and is not being filed as part of the Report or as a separate disclosure document. Certification Pursuant to 18 U.S.C. Section 1350, the undersigned officer of Oil-Dri Corporation of America (the “Company”) hereby certifies that to the best of myknowledge the Company's Annual Report on Form 10-K for the year ended July 31, 2015 (the “Report”) fully complies with the requirements of Section13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects,the financial condition and results of operation of the Company.Dated:October 9, 2015/s/ Daniel T. SmithName: Daniel T. SmithTitle: Vice President, Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to Oil-Dri Corporation of America and will be retained by Oil-DriCorporation of America and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350, Chapter 63 of Title 18,United States Code) and is not being filed as part of the Report or as a separate disclosure document.EXHIBIT 95:MINE SAFETY DISCLOSUREUnder section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K, each operator of a coal or othermine is required to include certain mine safety information in its periodic reports filed with the SEC. The table below includes this mine safety informationfor each mine facility owned and operated by Oil-Dri Corporation of America, or its subsidiaries, for the year ended July 31, 2015. Due to timing and otherfactors, our data may not agree with the mine data retrieval system maintained by the Mine Safety and Health Administration (“MSHA”). The columns in thetable represent the total number of, and the proposed dollar assessment for, violations, citations and orders issued by MSHA during the period upon periodicinspection of our mine facilities in accordance with the referenced sections of the Federal Mine Safety and Health Act of 1977, as amended (the “Mine Act”),described as follows:Section 104 Significant and Substantial Violations: Total number of violations of mandatory health or safety standards that could significantly andsubstantially contribute to the cause and effect of a coal or other mine safety or health hazard.Section 104(b) Orders: Total number of orders issued due to a failure to totally abate, within the time period prescribed by MSHA, a violation previouslycited under section 104, which results in the issuance of an order requiring the mine operator to immediately withdraw all persons from the mine.Section 104(d) Citations and Orders: Total number of citations and orders issued for unwarrantable failure of the mine operator to comply with mandatoryhealth and safety standards. The violation could significantly and substantially contribute to the cause and effect of a safety and health hazard, but theconditions do not cause imminent danger.Section 110(b)(2) Flagrant Violations: Total number of flagrant violations defined as a reckless or repeated failure to make reasonable efforts to eliminate aknown violation of a mandatory health or safety standard that substantially and proximately caused, or reasonably could have been expected to cause,death or serious bodily injury.Section 107(a) Imminent Danger Orders: Total number of orders issued when an imminent danger is identified which requires all persons to be withdrawnfrom area(s) in the mine until the imminent danger and the conditions that caused it cease to exist.Total Dollar Value of Proposed MSHA Assessments: Each issuance of a citation or order by MSHA results in the assessment of a monetary penalty. The totaldollar value presented includes any contested penalties.Legal Actions Pending, Initiated or Resolved: Total number of cases pending legal action before the Federal Mine Safety and Health Review Commissionas of the last day of the reporting period or the number of such cases initiated or resolved during the reporting period. Legal ActionsMine locationSection 104“Significant andSubstantial”ViolationsSection104(b)OrdersSection104(d)Citationsand OrdersSection 110(b)(2)FlagrantViolationsSection107(a)ImminentDangerOrders Total DollarValue ofProposed MSHAAssessments Pending as ofLast Day ofPeriodInitiatedDuringPeriod ResolvedDuringPeriod (#)(#)(#)(#)(#)($)(#)(#)(#)Ochlocknee, Georgia2————2,532—16Ripley, Mississippi10—2——53,174521Mounds, Illinois1————5,320—11Blue Mountain,Mississippi3————4,824——3Taft, California—————1,849—13We had no mining-related fatalities at any of our facilities during the twelve months ended July 31, 2015. During this period we also received no writtennotices from MSHA under section 104(e) of the Mine Act of (i) a pattern of violations of mandatory health or safety standards that are of such nature as couldhave significantly and substantially contributed to the cause and effect of coal or other mine health or safety hazards; or (ii) the potential to have such apattern. All legal actions pending and initiated during the period were contests of proposed penalties.BOARD OF DIRECTORS EXECUTIVE OFFICERS INVESTOR INQUIRIES Richard M. Jaffee Chairman Daniel S. Jaffee President & Chief Executive Officer NYSE: ODC Daniel S. Jaffee President & Chief Executive Officer Joseph C. Miller Vice Chairman, Independent Consultant J. Steven Cole President, Cole & Associates Michael A. Nemeroff President & Chief Executive Officer, Vedder Price P.C. Allan H. Selig Commissioner Emeritus of Major League Baseball; President & Chairman, Selig Leasing Company Inc. Paul E. Suckow Business Fellow & Adjunct Professor, Finance & Economics, Villanova University Lawrence E. Washow Chairman, First Bauxite Corporation Board Member & Partner, Eudora Global, LLC Thomas F. Cofsky Vice President, Manufacturing - Industrial Douglas A. Graham Vice President, General Counsel & Secretary Mark E. Lewry Chief Operating Officer Daniel T. Smith Vice President, Chief Financial Officer ANNUAL MEETING On Tuesday, December 8, 2015 at 9:30 am CT, Oil-Dri Corporation of America will hold its 2015 Annual Meeting of Stockholders. Please join us: The Standard Club 320 South Plymouth Court Chicago, Illinois 60604 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Grant Thornton LLP Please direct all investor relations inquiries to: Reagan B. Culbertson Investor Relations Manager (312) 321-1515 info@oildri.com Oil-Dri Corporation of America Attention: Investor Relations 410 North Michigan Avenue Suite 400 Chicago, Illinois 60611-4213 www.oildri.com Stockholders with inquiries regarding stock transfers, change of ownership, change of address or dividend payments should contact the company’s registrar and transfer agent: Computershare Investor Services 2 North LaSalle Street Chicago, Illinois 60602-3711 (312) 360-5257 FORWARD-LOOKING STATEMENTS This document contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. See page 4 for cautionary language regarding such statements. “Oil-Dri,” “Cat’s Pride,” “Agsorb” and “Verge” are a registered trademarks of Oil-Dri Corporation of America. “Snow & Go,” “Varium” and “NeoPrime” are trademarks of Oil-Dri Corporation of America. ©2015 OIL-DRI CORPORATION OF AMERICA OIL-DRI CORPORATION OF AMERICA 410 North Michigan Avenue, Suite 400 Chicago, Illinois 60611 

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