Oil-Dri Corporation of America Annual Report 2019

FY2019 Annual Report · Oil-Dri Corporation of America

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2019
ANNUAL REPORT

LETTER TO STAKEHOLDERS & FORM 10-K

CENTER FOR APPLIED
MICROBIOLOGY

The Oil-Dri Life Sciences team is focused on further enhancing our mineral’s
ability to manage microorganisms to meet our customers’ needs. Our goal is
to develop functional mineral solutions for the animal health, agricultural and
cat litter markets.

Our new facility includes a
state-of-the-art laboratory
as well as conference
and work space.

LETTER TO STAKEHOLDERS

Dear Stakeholders,

Our 2019 fiscal year was a very challenging year for Oil-Dri, but an incredibly important one in our never-ending effort
to CREATE VALUE FROM SORBENT MINERALS. We started the fiscal year with the launch our new Enterprise
Resource Planning (ERP) software system on August 1, 2018. Although the “Go Live” event was very challenging,
the new platform will help us create value in the long term by increasing the efficiency of our processes and improving
productivity and reporting capabilities. I am so appreciative of all of the extra time and effort that Oil-Dri teammates
put in to make this transition as seamless to our customers as possible. The first few months were very difficult,
but I am happy to report that by fiscal year’s end, the new system was working well and providing us with the
foundation necessary to support future growth.

We made several very significant strategic moves during the year that will
benefit the company for years to come. In August, Flemming Mahs joined
the company as President of Amlan International, our wholly-owned animal
health subsidiary. He is heading up our efforts to grow our animal health
business by promoting the use of our mineral as a natural alternative to manage
disease in livestock. In December, Susan Kreh joined us as our Chief Financial
Officer. She is leading our Finance, Accounting and Information Systems teams
and will help leverage our new ERP system to improve productivity.
In February, Jessica Moskowitz was promoted to Vice President and General
Manager of our Consumer Products Division. She is focused on growing our
Cat’s Pride® and Jonny Cat® brands through continuous quality improvements
and innovation. In April, Molly VandenHeuvel joined Oil-Dri as our
Chief Operating Officer. She is leading our entire supply chain
(Manufacturing, Logistics, Procurement and Customer Service) and our product
development team at our Nick Jaffee Center for Innovation. Her major area of focus is to implement
Sales & Operations Planning/Integrated Business Planning. This is a first for Oil-Dri and became
possible with the implementation of our ERP system. I would also like to recognize our other
valuable teammates, many of whom we are lucky to have as long tenured employees.
They continue to provide immeasurable support to our company.

WE NOW HAVE THE
INFRASTRUCTURE,
PEOPLE AND
RESOURCES IN
PLACE TO SUPPORT
FUTURE GROWTH.

In conjunction with these investments, we also completed the second phase
of the Richard M. Jaffee Center for Applied Microbiology. This new facility
enables us to broaden the scope of our research capabilities as well as
provide our customers with improved technical support.

We now have the infrastructure, people and resources in place to support
future growth. Additionally, we have virtually no long-term debt and have
an untapped $45 million revolver, so we are well positioned to capitalize
on growth opportunities as they arise.

The team and I are proud that we were able to raise our dividend for the
16th consecutive year. We very much appreciate the support of our long
time stockholders and look forward to executing our growth strategies
in our Consumer and B2B business units.

DANIEL S. JAFFEE
President & Chief Executive Officer

Look for our new
Cat’s Pride package
design on shelves now!

FINANCIAL HIGHLIGHTS

Fiscal Years End July 31, Dollar Amounts in Thousands (except Per Share Data)

KEY METRICS

Return on Average Total Assets

Return on Average Stockholders’ Equity

Long Term Debt to Equity

INCOME STATEMENT DATA

Net Sales

Net Income Attributable to Oil-Dri

2019

2018

2017

6.3%

9.4%

2.3%

4.0%

6.4%

4.4%

5.2%

8.9%

7.3%

$277,025

$266,000

$262,307

$12,611

$8,240

$10,792

NET SALES

$277,025

$266,000

$262,307

$280,000

$272,000

$264,000

$256,000

$248,000

$240,000

NET INCOME
ATTRIBUTABLE TO OIL-DRI

$12,611

$10,792

$8,240

$15,000

$13,000

$11,000

$9,000

$7,000

$5,000

2019

2018

2017

2019

2018

2017

BALANCE SHEET DATA

Working Capital

Total Assets

Notes Payable

PER SHARE DATA

Net Income per Diluted Share

Book Value per Share

Common Stock Price at July 31,

$56,670

$52,065

$61,276

$205,227

$194,682

$212,575

$6,135

$9,190

$12,244

$1.67

$1.11

$1.47

$18.88

$18.49

$17.75

$35.43

$42.36

$41.36

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2019

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 001-12622

OIL-DRI CORPORATION OF AMERICA
36-2048898
(IRS. Employer Identification No.)
60611-4213
(Zip code)

Delaware
(State or other jurisdiction of incorporation or organization)
410 North Michigan Avenue, Suite 400, Chicago, Illinois
(Address of principal executive offices)

Registrant's telephone number, including area code (312) 321-1515

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, par value $0.10 per
share

Trading Symbol(s)
ODC

Name of Each Exchange on Which
Registered
New York Stock Exchange

Securities 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

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

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 1934 during 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 filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non-accelerated filer

Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

The aggregate market value of Oil-Dri’s Common Stock owned by non-affiliates as of January 31, 2019 was $135,930,000.

Number of shares of each class of Oil-Dri’s capital stock outstanding as of September 30, 2019:
Common Stock – 5,356,902 shares

Class B Stock – 2,251,738 shares

Class A Common Stock – 0 shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Oil-Dri’s Proxy Statement for its 2019 Annual Meeting of Stockholders (“Proxy Statement”), which will be filed with
the Securities and Exchange Commission (“SEC”) not later than November 28, 2019 (120 days after the end of Oil-Dri’s fiscal
year ended July 31, 2019), are incorporated into Part III of this Annual Report on Form 10-K, as indicated herein.

Item

1A.

1B.

9A.

9B.

CONTENTS

PART I

Page

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosure

PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

Management's Discussion and Analysis of Financial Condition and Results of
Operations

Financial Statements and Supplementary Data

Management's Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

Controls and Procedures

Other Information

PART III

Directors, Executive Officers and Corporate Governance

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accountant Fees and Services

CONTENTS (CONTINUED)

Item

Page

PART IV

Exhibits and Financial Statement Schedule

Signatures

Schedule II - Valuation and Qualifying Accounts

Exhibit Index

FORWARD-LOOKING STATEMENTS

Certain statements in this report, including those under the heading “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and those statements elsewhere in this report and other documents we file with the SEC,
contain 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. In addition, we, or others on our behalf, may make
forward-looking statements in press releases or written statements, or in our communications and discussions with 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 harbor provisions 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 those described 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. Except to the extent required
by law, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this
report, 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, MD-09, Oil-Dri, Pel-
Unite, Perform, Pro Mound, Pro's Choice Sports Field Products, Pure-Flo, Rapid Dry, Select, Terra-Green, Ultra-Clear, Varium
and Verge are all U.S. registered trademarks of Oil-Dri Corporation of America or of its subsidiaries. Saular is a Canadian registered
trademark of Oil-Dri Corporation of America. Fresh Step is a registered trademark of The Clorox Company (“Clorox”).

ITEM 1 – BUSINESS

OVERVIEW OF BUSINESS

PART I

In 1969, Oil-Dri Corporation of America was incorporated in Delaware as the successor to an Illinois corporation
incorporated in 1946; the Illinois corporation 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.

Oil-Dri is a leader in developing, manufacturing and/or marketing sorbent products. Our sorbent products are principally
produced from hydrated aluminosilicate minerals, primarily consisting of calcium bentonite, attapulgite and diatomaceous shale,
which we refer to collectively as our “clay” or our “minerals.” We surface mine our clay on leased or owned land near our
manufacturing facilities in Mississippi, Georgia, Illinois and California. We produce both absorbent and adsorbent products from
our clay. Absorbents, like sponges, draw liquids up into 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 cat litters. Additional examples are our Oil-Dri branded
floor absorbents, Amlan branded animal health and nutrition solutions for livestock, and Agsorb and Verge agricultural chemical
carriers. Adsorbent products attract impurities in liquids, such as metals and surfactants, and form low-level chemical bonds.
Examples of our adsorbent products are Pure-Flo, Perform and Select bleaching clay products, which act as 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.
We also sell nonclay-based products, such as our Oil-Dri synthetic sorbents used for industrial cleanup and plastic cat litter box
liners. Our principal products are described in more detail below.

For additional information on recent business developments, see “Management’s Discussion and Analysis of Financial

Condition and Results of Operations,” in Part II, Item 7, incorporated herein by reference.

PRINCIPAL PRODUCTS

Agricultural and Horticultural Products

We produce a wide range of granules and powders used to enhance agricultural and horticultural products. Our mineral-
based absorbent products serve as chemical carriers, drying agents, and growing media. Our brands include: Agsorb, an agricultural
and horticultural chemical carrier and drying agent; Verge, an engineered granule chemical carrier; Flo-Fre, a highly absorbent
microgranule flowability aid; and Terra-Green, a growing media supplement.

Agsorb and Verge carriers are used in products that are alternatives to chemical sprays. The clay granules absorb active
ingredients and are then delivered directly into, or on top of, the ground providing a more precise application than chemical sprays.
Verge carriers are spherical, uniform-sized granules with very low dust. Agsorb drying agent is blended into fertilizer-pesticide
blends applied to absorb moisture and improve flowability. Agsorb is also used as a flowability aid for fertilizers and chemicals
in the lawn and garden market. Flo-Fre microgranules are used by grain processors and other large handlers of bulk products to
soak up excess moisture, which prevents caking. These products are sold primarily in the United States by our technical sales
force.

Animal Health and Nutrition Products

We produce, or use contract processors to produce, Amlan brand name and private label products that manage the health
and improve productivity of species in livestock industries. For example, our products provide a number of solutions to health
challenges of swine, poultry and dairy cattle. Our Calibrin and ConditionAde products are used in animal feed to help animals
defend against a broad spectrum of biotoxins. Our Varium product promotes intestinal health in poultry. Our MD-09 moisture
manager product is another feed additive for the reduction of wet droppings in poultry. In addition, our Pel-Unite and Pel-Unite
Plus products are specialized animal feed pellet binders.

Our animal health and nutrition products are sold primarily through a network of distributors to livestock producers, feed
mill operators, nutritionists and veterinarians in the United States, Latin America, Africa, the Middle East and Asia. The sales
force for our subsidiary located in Shenzhen, China also sells these products, as further described in Foreign Operations below.

Bleaching Clay and Purification Aid Products

We produce an array of products for bleaching, purification and filtration applications that are used around the world by
edible oil processors, as well as by refiners of jet fuel and other petroleum-based products. Bleaching clays are used by edible oil
processors to adsorb soluble contaminants that create oxidation problems. Our Pure-Flo and Perform bleaching clays remove
impurities, such as trace metals, chlorophyll and color bodies, in various types of edible oils. Perform products provide increased
activity for hard-to-bleach oils. Our Select adsorbents are used to remove contaminants in vegetable oil processing and can also
be used to prepare oil prior to the creation of biodiesel fuel. Our Ultra-Clear product is used as a purification and filtration medium
for jet fuel and other petroleum-based products. These products are sold in the United States and in international markets by our
team of technical sales employees, distributors and sales agents.

Cat Litter Products

We produce two types of mineral-based cat litter products, scoopable and traditional coarse non-clumping litters, both
of which have absorbent and odor controlling characteristics. Scoopable litters have the additional characteristic of clumping when
exposed to moisture, allowing the consumer to selectively dispose of the used portion of the litter. Scoopable litter products are
further differentiated between lightweight and heavyweight. Lightweight scoopable litters offer superior performance with the
added convenience of being lighter to carry and pour.

Branded products. Our scoopable and non-clumping litters are sold under our Cat’s Pride and Jonny Cat brand names.
Our Cat's Pride Fresh & Light litters created the lightweight segment of the scoopable litter market. In addition, we offer our non-
clumping 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. These products are sold through independent food brokers and by
our sales force to major grocery, drug, dollar store, mass-merchandiser and pet outlets, as well as through e-commerce.

Private label products. We produce private label scoopable and non-clumping cat litters. Our lightweight scoopable litters

lead our private label cat litter offerings.

Co-packaged products. We have two long-term supply arrangements (one of which is material to our business) under
which we manufacture branded non-clumping litters for other marketers. Under these co-manufacturing relationships, the marketer
controls all aspects of sales, marketing, and distribution, as well 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 Products

We manufacture and/or sell products made from clay, polypropylene and recycled cotton materials that absorb oil, acid,
paint, ink, water and other liquids. These products have industrial, automotive and home applications. Our clay-based sorbent
products, such as Oil-Dri branded and private label floor absorbents, 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 in automotive repair facilities,
car dealerships and other industrial applications, as well as for home use in garages and driveways. Our Oil-Dri branded
polypropylene-based and cotton-based products are sold in various forms, such as pads, rolls, socks, booms and spill kits.

Industrial and automotive sorbent products are sold through distribution networks 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 through e-commerce.

Sports Products

We manufacture and sell both branded and private label sports products. Pro’s Choice Sports Field Products are used on
baseball, softball, football and soccer fields. Pro’s Choice soil conditioners are used in field construction or as top dressing to
improve drainage, suppress dust and improve field performance. Pro Mound packing clay is used to construct pitcher’s mounds,
catcher's stations and batter’s boxes. Rapid Dry drying agent is used to wick away excess water from the infield. 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 turf products.

BUSINESS SEGMENTS

We 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 mass merchandisers, wholesale clubs, drugstore chains, pet specialty retail outlets, dollar stores,
retail grocery stores, direct customers through e-commerce, distributors of industrial cleanup and 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 animal health and nutrition products; and marketers of consumer products. Certain financial information
on both segments is contained in Note 2 of the Notes to the Consolidated Financial Statements and is incorporated herein by
reference.

FOREIGN OPERATIONS

Our foreign operations are located in Canada and the United Kingdom, which are included in the Retail and Wholesale
Products Group, and China, Switzerland, Mexico and Indonesia, which are included in the Business to Business Products Group.

Our wholly-owned subsidiary, Oil-Dri Canada ULC, is a manufacturer, distributor and marketer of branded and private
label cat litter in the Canadian marketplace. Among its leading brands are Saular, Cat’s Pride and Jonny Cat. Our Canadian business
also manufactures or purchases and sells industrial 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 and cat litter. These products are marketed in the United Kingdom and Western Europe. Oil-Dri (U.K.)
Limited also sells synthetic polypropylene sorbent materials and plastic containment products.

Our wholly-owned subsidiary, Amlan Trading (Shenzhen) Company, Ltd., located in Shenzhen, China, is dedicated to
animal health and provides natural disease management solutions for livestock. This subsidiary sells animal health and nutrition
products under our Amlan brand name and under private label arrangements.

Our wholly-owned subsidiary, Oil-Dri SARL, is a Swiss company that performs various management, customer service

and administrative functions for some of the international customers of our domestic operations.

We own a 52% interest in a distributor in Mexico. This distributor sells, among other products, our animal health and
nutrition products. In December 2018, a new wholly-owned subsidiary in Indonesia started operations to distribute our animal
health and nutrition products. Neither of these subsidiaries meet the definition of a significant subsidiary.

Our foreign operations are subject to the normal risks of doing business in non-U.S. countries, such as currency fluctuations,
restrictions on the transfer of funds and import/export duties; however, historically our operating results have not been materially
impacted by these factors. Incorporated herein by reference are Item 1A. Risk Factors, which describes other risks that could
impact our foreign operations, and Note 2 of the Notes to the Consolidated Financial Statements, which contains certain financial
information about our foreign operations.

CUSTOMERS

Sales to Wal-Mart Stores, Inc. (“Walmart”) and its affiliates accounted for approximately 20% and 18% of our total net
sales for fiscal years 2019 and 2018, respectively. Walmart is a customer in our Retail and Wholesale Products Group. There are
no customers in the Business to Business 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 Products Group) and its affiliates accounted for approximately 5% of total net
sales for both fiscal years 2019 and 2018. The degree of margin contribution of our significant customers in the Business to
Business Products Group varies, with certain customers 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 a material adverse effect on our business.

COMPETITION

Product performance, price, brand recognition, customer service, technical support, and distribution resources are the
principal methods of competition in our markets and competition historically has been very vigorous. Advertising, promotion,
merchandising and packaging also have a significant impact on retail consumer purchasing decisions, which primarily affects our
Retail and Wholesale Products Group. Most of the principal competitors for our Retail and Wholesale Products Group have
substantially greater financial resources or market presence than we do and have established brands. These competitors may be
able to spend more aggressively on advertising and promotional activities, introduce competing products more quickly and respond
more effectively to changing business and economic conditions than us.

We have four principal competitors in our Retail and Wholesale Products Group, including one which is also our customer.
The overall cat litter market has been relatively stable in recent years. The overwhelming majority of all cat litter is mineral based,
including both scoopable and coarse non-clumping litters. Cat litters based on alternative strata such as paper, various agricultural
waste products and silica gels have niche positions. Scoopable products have a majority of the cat litter market share followed by
coarse non-clumping litters. The market share for scoopable cat litter has been growing, while the coarse non-clumping litter share
has remained stable.

There is significant competition to attract cat litter consumers across multi-outlet channels, including grocery, mass-
merchandiser, dollar, pet and drug stores, as well as through e-commerce. Competition for the scoopable litter market has been
particularly intense with new product offerings and increased advertising and promotions by our competitors and by us. We provide
our customers with product innovation, a nation-wide distribution network and strong customer service. Our exceptional sales
and research and development teams give us a further advantage over smaller and regional manufacturers.

We have six principal competitors in our Business to Business Products Group. Our bleaching clay and fluid purification
products are sold in a highly cost competitive global marketplace. Performance is a primary competitive factor for these products.
The animal health portion of this segment also operates in a global marketplace with price and performance competition from
multi-national and local competitors. Competition for our crop protection products is primarily based on price, but competitor
differentiation also exists in the ability to meet customer product specifications and enhancements in engineered granule
technologies.

PATENTS

U.S. patents are currently granted for a term of 20 years from the date the patent application is filed. We have obtained
or applied for patents for certain of our processes and products sold to customers in both the Retail and Wholesale Products Group
and the Business to Business Products Group. Our patents are highly important to our business and we vigorously protect them
from apparent infringement, although no single patent is considered material to the business as a whole. See Item 3 “Legal
Proceedings” for more information about specific legal matters related to our patents.

BACKLOG; SEASONALITY

As of July 31, 2019 and 2018, the value of our backlog of orders were approximately $11,680,000 and $10,338,000,
respectively. This value was determined by the number of tons on backlog order and the net selling prices. All backlog orders are
expected to be filled within the next 12 months. We consider our business, taken as a whole, to be moderately seasonal; however,
business activities of certain customers (such as agricultural chemical manufacturers) are subject to such seasonal factors as crop
acreage planted, product formulation cycles and weather conditions.

EFFECTS OF INFLATION

Inflation generally affects us by increasing the cost of employee wages and benefits, transportation, processing equipment,
purchased raw materials and packaging, energy and borrowings under our credit facility. See Item 7 “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” for further discussion of these costs.

RESERVES

We mine our clay on leased or owned land near our manufacturing facilities in Mississippi, Georgia, Illinois and California;
we also have reserves in Nevada, Oregon and Tennessee. We estimate that our proven mineral reserves as of July 31, 2019 were
approximately 102,220,000 tons in aggregate and our probable reserves were approximately 171,441,000 tons in aggregate, for
a total of 273,661,000 tons of mineral reserves. Based on our rate of consumption during fiscal year 2019, and without regard to
any of our reserves in Nevada, Oregon and Tennessee, we consider our proven reserves adequate to supply our needs 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 were acquired in acquisitions, are 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 reserves consumed in that year. We have a program of exploration for additional reserves and, although reserves
have been acquired, we cannot assure that additional reserves will continue to become available. Our use of these reserves, and
our ability to explore for additional reserves, are subject to compliance with existing and future federal and state statutes and
regulations regarding mining and environmental compliance. During fiscal year 2019, we utilized these reserves to produce
substantially all 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; grade and/or quality are computed from results of detailed sampling, and (b) the sites for inspection,
sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral
content of reserves are well established. Probable reserves are computed from information similar to that used for proven reserves,
but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of
assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. We
use geologists and mineral specialists who estimate and evaluate existing and potential reserves in terms of quality, quantity and
availability.

MINING OPERATIONS

We have conducted mining operations in Ripley, Mississippi since 1963, in Ochlocknee, Georgia since 1968, in Blue
Mountain, Mississippi since 1989, 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 moving scrapers, bulldozers, or excavators and off-road trucks to remove
overburden (non-usable material), and then loaded into dump trucks with backhoes or front end loaders for movement to the
processing facilities. The mining and hauling of our clay is performed by us and by independent contractors. Our current operating
mines range in distance from immediately adjacent to approximately 13 miles from the related processing plants. Processing
facilities are generally accessed from the mining areas by private roads and in some instances by public highways. Each of our
processing facilities maintains inventories of unprocessed clay of approximately one week of production requirements. See Item
2 “Properties” below for additional information regarding our mining properties and operations.

The following schedule summarizes the net book value of land and other plant and equipment for each of our manufacturing

facilities as of July 31, 2019 (in thousands):

Ochlocknee, Georgia

Ripley, Mississippi

Mounds, Illinois

Blue Mountain, Mississippi

Taft, California

Land &
Mineral
Rights

Plant and
Equipment

8,873

2,006

1,637

908

1,747

31,241

14,013

2,903

10,323

5,263

EMPLOYEES

During fiscal year 2019, we had approximately 801 employees, who we refer to as our teammates, 43 of whom were
employed by our foreign subsidiaries. We believe our corporate offices, research and development center and manufacturing
facilities are adequately staffed and no material labor shortages are anticipated. Approximately 52 of our teammates in the U.S.
and approximately 18 of our teammates in Canada are represented by labor unions, with whom we have entered into separate
collective bargaining agreements. We consider our employee relations to be satisfactory.

ENVIRONMENTAL COMPLIANCE

Our mining and manufacturing operations and facilities in Georgia, Mississippi, California and Illinois are required to
comply with state surface mining 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 recent years, environmental regulation has grown
increasingly stringent, a trend that we expect will continue. We endeavor to be in compliance at all times and in all material respects
with all applicable environmental controls and regulations. As a result, expenditures relating to environmental compliance have
increased over the years; however, these expenditures have not been material. As part of our ongoing environmental compliance
activities, we incur expenses in connection with reclaiming mining sites. Historically, reclamation expenses have not had a material
effect on our cost of sales.

In addition to the environmental requirements related to our mining and manufacturing operations and facilities, there
has been increased federal and 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 all times 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 applicable environmental regulations or with requirements regarding the content, labeling, use, and disposal after use of
our products; nor can we assure that from time to 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 these and other risks to our business.

ENERGY

We primarily used natural gas in the processing kilns to dry our clay products during fiscal year 2019. We monitor gas
market trends and we may contract for a portion of our anticipated fuel needs using forward purchase contracts to mitigate the
volatility of our kiln fuel prices. All such contracts are related to the normal course of business and no contracts are entered into
for speculative purposes; therefore, they do not qualify as hedges for financial reporting.

RESEARCH AND DEVELOPMENT

We develop new products and applications and improve existing products at our research and development center in
Vernon Hills, Illinois. The facility includes a pilot plant that simulates the production processes of our customers and our
manufacturing plants. We expanded our microbiology lab dedicated to development of our animal health products in fiscal year
2019. Our staff (and various consultants they engage from time to time) have experience in disciplines such as biology, microbiology,
chemistry, physics, mathematics, geological and earth science, material science, geochemistry, physical catalysis, animal nutrition,
animal science, oncological nutrition and transitional 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 and tests new products for customer trial
and evaluation. No significant research and development was customer sponsored, and all research and development costs are
expensed in the period in which incurred. See Note 1 of the Notes to the Consolidated Financial Statements for further information
about research and development expenses.

AVAILABLE INFORMATION

This 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 the foregoing reports, are made available free of charge on or through the “Investor Information” section
of our website at www.oildri.com as soon as reasonably practicable 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 executive officers, 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 reference into, this Annual Report on Form 10-K.

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 should consider the following factors carefully, in addition to other information contained in this Annual Report
on Form 10-K, before making an investment decision 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 or have had volume declines in recent fiscal years. A significant part of our future growth and financial
performance will require that we successfully introduce new products or extend existing product offerings to meet emerging
customer needs, technological trends and product market opportunities. We cannot be certain that we will achieve these goals.
The development and introduction of new products generally require substantial and effective research, development and marketing
expenditures, some or all of which may be unrecoverable if the new products do not gain market acceptance. New product
development itself is inherently risky, as research failures, competitive barriers arising out of the intellectual property rights of
others, launch and production difficulties, customer rejection and 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 new product, 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 competitive position depends on a number of factors including price, customer service, marketing, advertising and
trade spending, technical support, product quality and delivery. Some of our competitors, particularly in the sale of cat litter (the
largest product in our Retail and Wholesale Products Group), have substantially greater financial resources and market presence
with established brands. The competition in the future may, in some cases, lead to price reductions, increased promotional spending,
or loss of market share or product distribution, any of which could materially and adversely affect our operating results and financial
condition.

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 expense levels 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 unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. Any significant shortfall of net sales in relation to our expectations could negatively affect our quarterly operating
results. Our operating results may be below the expectations of our investors as a result of a variety 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, wages and 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;
• litigation and regulatory judgments and charges, settlements, or other litigation and regulatory-related costs;
• the overall tax rate of our business, which may be affected by a number of factors, including the use of tax attributes, the
financial 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; and
• general economic conditions and specific economic conditions in our industry and the industries of our customers.
11

Accordingly, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Investors
should not rely on the results of one 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, complete acquisitions, and successfully integrate the companies, businesses or properties that we acquire,
our profitability may decline and we could experience a material 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 the acquisition.

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 we pursue could materially affect our liquidity and capital resources and may require us to incur
indebtedness, seek equity capital or both. In addition, future acquisitions could result in our assuming more long-term liabilities
relative to the value of the acquired assets than we have assumed in our previous acquisitions.

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 substantial decrease in the volume of, purchases by Walmart, Clorox or any of our other top customers could
harm our sales and profitability. In addition, an adverse change 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 net sales represented by these customers may increase. As a result, changes in the strategies of our largest
customers may reduce our net sales. These strategic changes 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 of global or centralized procurement initiatives. In
addition, our business is based primarily upon individual sales orders placed by customers rather than contracts with a fixed
duration. Accordingly, most of our customers could reduce their purchasing levels or cease buying products from us on relatively
short notice. While we do have long-term contracts with certain of our customers, including Clorox, even these agreements are
subject to termination in certain circumstances. In addition, the degree of profit margin contribution of our significant customers
varies. If a significant customer with a more favorable profit margin was to terminate its relationship with us or shift its mix of
product purchases to lower-margin products, it would have a disproportionately adverse impact 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 to respond to competitive and customer pressures and to maintain market share. These pressures are
often exacerbated during an economic downturn. Any reduction in prices to respond to these pressures would reduce our profit
margins. In addition, if our sales volumes fail to grow sufficiently to offset any reduction 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 from product suppliers. These business demands may relate to inventory practices, logistics or other aspects of the
customer-supplier relationship. To the extent we provide these concessions, our profit margins are reduced. Further, if we are
unable to maintain terms that are acceptable to our customers, these customers could reduce purchases of our products and increase
purchases of products from our competitors, which would harm our sales and profitability.

Increases in energy, commodity and transportation costs would increase our operating costs, and we may be unable to pass all
these increases on to our customers in the form of higher prices and surcharges.

If our energy, commodity and transportation costs increase disproportionately to our net sales, our earnings could be
significantly reduced. Increases in our operating costs may reduce our profitability if we are unable to pass all the increases on to
our customers through price increases or surcharges. Sustained price increases or surcharges in turn may lead to declines in volume,
and while we seek to project tradeoffs between price increases and surcharges, 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. From time to
time, we may use forward purchase contracts or financial instruments to moderate the volatility of a portion of our energy costs.
The success or failure of any such transactions depends on a number of factors, including our ability to anticipate and manage
volatility in energy prices, the general demand for 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, replacement parts and equipment we use in the manufacture of our products and the maintenance of our facilities.
Similarly, transportation prices impact our cost of packaging and raw materials we purchase, as well as our cost to deliver finished
products to our customers. As a result, increases in the prices of commodities and transportation may increase our cost of sales
and present the same types of risks as described above.

Our business could be negatively affected by supply, capacity, information technology and logistics disruptions or the costs
incurred to avoid these disruptions.

Supply, capacity, information technology and logistics disruptions (which may be caused by a variety of factors, including
weather conditions, governmental controls, tariffs, national emergencies, natural disasters or other force majeure events) could
adversely affect our ability to manufacture, package or transport our products. 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 not available at times. Also, some
of our products are manufactured on equipment at or near its capacity thus limiting our ability to sell additional volumes of such
products until more capacity is obtained. In addition, an increase in truck or ocean freight costs may reduce our profitability, and
a decrease in transportation availability may affect our ability to deliver our products to our customers and consequently decrease
customer satisfaction and future orders.

Technology failures or cyber security breaches could have an adverse effect on the Company's business and operations.

We rely on information technology systems to process, transmit, store, and protect electronic information. For example,
a significant portion of the communications between the Company's personnel, customers, and suppliers depends on information
technology and we rely on access to such information systems for our operations. We cannot guarantee that the security measures
in place will prevent disruptions, failures, cyber-attacks or privacy breaches in the information technology or phone systems of
the Company, our customers or third parties, which could adversely affect our communications and business operations. We may
not have the resources or technical sophistication to anticipate, prevent or detect rapidly-evolving types of cyber-attacks. Attacks
may be targeted at us, our customers and suppliers, or others who have entrusted us with information. While the Company has
policies and procedures in place, including system monitoring and data back-up processes to prevent or mitigate the effects of
these potential disruptions or breaches, security breaches and other disruptions to information technology systems could interfere
with our operations. Any failure to maintain, or disruption to, our information technology systems, whether as a result of
cybersecurity attacks or otherwise, could damage our reputation, subject the Company to legal claims and proceedings, and cause
us to incur substantial additional costs. There can be no assurance that existing or emerging threats will not have an adverse impact
on our systems or communications networks and, further, technological enhancements to prevent business interruptions could
require increased spending. Furthermore, security breaches pose a risk to confidential data and intellectual property, which could
result in damage to our competitiveness and reputation.

In fiscal year 2019 we implemented a new enterprise resource planning system (“ERP”). The ERP is designed to accurately
maintain our books and records and provide information important to the operation of our business. Any potential disruptions with
the ERP could affect our ability to process orders, ship product and send invoices. These difficulties could, in turn, negatively
impact our financial results including sales, earnings and cash flow. Further development and maintenance of the ERP will continue
to require investment of human and financial resources, which may cause increased costs and other difficulties.

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 changed inventory levels as part of managing their working capital requirements. Any change in inventory levels by
our customers would harm our operating results for the financial periods affected by the reductions. In particular, continued
consolidation within the retail industry could potentially reduce inventory levels maintained 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 so could adversely affect our revenue and operating results.
If circumstances change (for example, an unexpected shift in market demand, pricing or customer defaults) there could be a material
impact on the net realizable value of our inventory. We maintain an inventory valuation reserve account against diminution in the
value or saleability of our inventory; however, there is no guaranty that these arrangements will be sufficient to avoid write-offs
in excess of 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 safety matters. 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 is completed, the discharge, storage and disposal of
materials in the environment, and the effects that mining has on air or groundwater quality and water availability. We believe we
have obtained 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 and may delay commencement or continuation of exploration, mining or manufacturing operations. We have
incurred, and will continue to incur, significant capital and operating expenditures and other costs in complying with environmental,
health and safety laws and regulations. In recent years, regulation of environmental, health and safety matters has grown increasingly
stringent, a trend that we expect will continue. Substantial penalties may be imposed if we violate certain of these laws and
regulations even if the violation was inadvertent or unintentional. Failure to maintain or achieve compliance with these laws and
regulations or with the permits required for our operations could result in substantial operating costs and capital expenditures, in
addition to fines and administrative, civil or criminal sanctions, third-party claims for property damage or personal injury, cleanup
and site restoration costs and liens, the issuance of injunctions to limit or cease operations, the suspension or revocation of permits
and other enforcement measures that could have the effect of limiting our operations. Under the “joint and several” liability
principle of certain environmental laws, we may be held liable for all remediation costs at a particular site and the amount of that
liability could be material. In addition, future environmental laws and regulations could restrict our ability to expand our facilities
or extract our existing reserves or could require us to acquire costly equipment or to incur other significant expenses in connection
with our business. Furthermore, our reputation could be adversely impacted by the failure (or perceived failure) to maintain high
environmental, health and safety practices for operations or negative perceptions of these practices in our industry or for our
operations or products. There can be 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) could increase 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 regulations relating to the mining, 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, product claims,
labeling and advertising are regulated by the Food and Drug Administration, the Consumer Product Safety Commission, the
Occupational Health and Safety Administration, the Environmental Protection Agency and the Federal Trade Commission. Most
states have agencies that regulate in parallel to these federal agencies. In addition, our international sales and operations are subject
to regulation in each of the foreign jurisdictions in which we manufacture, distribute or sell our products. There is increasing
federal and state regulation with respect to the content, labeling, use, and disposal after use of various products we sell. Throughout
the world, but particularly in the United States and Europe, there is also increasing government scrutiny and regulation 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 to civil remedies, including fines, injunctions, recalls or asset seizures, as well as potential criminal
sanctions, any of which could have a material adverse effect on our business. Loss of or failure to obtain necessary permits and
registrations could delay or prevent us from meeting product demand, introducing new products, building new facilities or acquiring
new businesses and could adversely affect operating results. If these laws or regulations are changed or interpreted differently in
the future, it may become more difficult or expensive for us to comply. In addition, investigations or evaluations of our products
by government agencies may require us to adopt additional labeling, safety measures or other precautions, or may effectively limit
or eliminate our ability to market and sell these products. Accordingly, there can be no assurance that current or future governmental
regulation will not have a material adverse effect on 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 or affecting the food chain, in parallel with the increasing government regulation discussed above. Our customers
may impose product specifications, certifications or other requirements that are different from, and more onerous than, applicable
laws and regulations. As a result, the failure of our products to meet these additional requirements 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 and regulations. There
can be no assurance that future customer requirements concerning the content or manufacturing of our products will not have a
material adverse effect on our business.

Failure to maintain a level of corporate social responsibility could damage our reputation and could adversely affect our
business, financial condition or results of operations.

In light of evolving expectations around corporate social responsibility, our reputation or brand could be adversely
impacted by a failure (or perceived failure) to maintain a level of corporate responsibility. In today’s environment, an allegation
or perception regarding quality, safety, or corporate social responsibility can negatively impact our reputation. This may include,
without limitation: failure to maintain certain ethical, social and environmental practices for our operations and activities, or failure
to require our suppliers or other third parties to do so; our environmental impact, including our mining operations and their impact
on the environment; the practices of our employees, agents, customers, suppliers, or other third parties (including others in our
industry) with respect to any of the foregoing, actual or perceived; the failure to be perceived as appropriately addressing matters
of social responsibility; consumer perception of statements made by us, our employees and executives, agents, customers, suppliers,
or other third parties (including others in our industry); or our responses to any of the foregoing.

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 mining operations are conducted in surface mines, which do not present many of the risks associated with deep
underground mining, our mining operations are nevertheless 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), power outages,
equipment failures and other unexpected maintenance problems, variations in the amount of rock and soil overlying our reserves,
variations in geological conditions, fires and other accidents, fluctuations in the price or availability of supplies and other matters.
Any of these risks could result in significant damage to our mining properties or processing facilities, personal injury to our
employees, environmental damage, delays in mining or processing, 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 the future.

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 owned or leased properties; however, there can be no assurance that our attempts to acquire additional reserves
in the future will be successful. Our ability to acquire additional reserves in the future could be limited by competition from other
companies for attractive properties, the lack of suitable properties that can be acquired 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 mining contracts for properties
containing additional reserves or renew our leasehold interests in properties on which operations are not commenced during the
term of 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 affect our competitiveness. Infringement of third-party intellectual property rights could result in costly
litigation and/or the modification or discontinuance of our products.

We rely on intellectual property rights based on trademark, trade secret, patent and copyright laws to protect our brands,
products and packaging for our 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 we will not be able to obtain and perfect our own intellectual property rights
or, where appropriate, license intellectual property rights necessary to support new product introductions. We cannot be certain
that these rights, if obtained, will not later be invalidated, circumvented or challenged, and we could incur significant 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 or in other countries, the laws of some of the other countries in which
our products are or may be sold may not protect intellectual property rights to the same extent as the laws of the United States. If
other parties infringe our intellectual property rights, they may dilute the value 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 or successfully 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 us claiming substantial damages for past infringement and seeking to enjoin manufacturing and marketing
of the affected products. If these legal actions are successful, in addition to any potential liability for damages from past infringement,
we could be required to obtain a license in order to continue to manufacture or market the affected products, potentially adding
significant costs. We may not prevail in any action brought against us or we may be unsuccessful in securing any license for
continued use and therefore have to discontinue the marketing and sale of a product. This could make us less competitive and
could have a material adverse impact on our business, operating results and financial condition. See Item 3 “Legal Proceedings”
for more information about specific legal matters related to our patents.

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 extensive industry knowledge and experience. The loss or other unavailability of one or more of the key
members of our senior management team could adversely impact our ability to manage our operations effectively and/or pursue
our business strategy. No Company-owned life insurance coverage has been obtained on these team members.

We face risks to our domestic and international sales and business operations due to economic, political, regulatory and other
conditions.

Unstable economic, political, regulatory and other conditions could adversely affect demand for our products or disrupt
our operations in the United States and in international markets. International sales and operations are subject to currency exchange
fluctuations, fund transfer and trade restrictions and import/export duties. In some cases, we may have difficulty enforcing
agreements and collecting accounts receivable through a foreign country’s legal system. We derived approximately 21% of our
consolidated net sales from sales outside of the United States in fiscal year 2019. Both international and domestic operations are
also subject to regulatory requirements and issues, including with respect to environmental matters. Any of these matters could
result in sudden, and potentially prolonged, changes in domestic and international demand for our products. Further, ongoing
developments in the U.S. political climate have introduced greater uncertainty with respect to tax policies, trade relations, tariffs
and government regulations affecting trade between the U.S. and other countries. These developments, as well as the risks outlined
above, could have a material adverse effect on the Company’s business, financial condition and results of operations.

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 liability lawsuits, heightened regulatory scrutiny, requirements for additional labeling, withdrawal of products
from the market, indemnification obligations, imposition of fines or criminal penalties 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 eventual outcome
of any pending or future litigation, and we could be required to pay substantial judgments or settlements against us or change our
product formulations in response to governmental action. Further, lawsuits can be expensive to defend, whether or not they have

merit, and the defense of these actions may divert the attention of our management and other resources that would otherwise be
engaged in managing our business and our reputation could suffer, 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 stock price.

Section 404 of the Sarbanes-Oxley Act and related SEC rules require that we perform an annual management assessment
of the design and effectiveness of our internal control over financial reporting and obtain an opinion from our independent registered
public accounting firm on our internal control over financial reporting. Our assessment concluded that our internal control over
financial reporting was effective as of July 31, 2019 and we obtained from our independent registered public accounting firm an
unqualified opinion on our internal control over financial reporting; however, there can be no assurance that we will be able to
maintain the adequacy of our internal control over financial reporting, as such standards are modified, supplemented or 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 effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover,
effective internal control is necessary for us to produce reliable financial reports and is important to help prevent financial fraud.
If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors
could lose confidence in our reported financial information, and the trading price of our Common Stock 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 our company.

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 are entitled to ten votes per share; the two classes generally vote together without regard to class (except that
any amendment to our Certificate of Incorporation changing the number of authorized shares or adversely affecting the rights of
Common Stock or Class B Stock requires the separate approval of the class so affected as well as the approval of both classes
voting together). As a result, the holders of our Class B Stock exert control over the Company and thus limit the ability of other
stockholders to influence corporate matters. Beneficial ownership of Common Stock and Class B Stock by the Jaffee Investment
Partnership, L.P. and its affiliates (including Daniel S. Jaffee, our President, Chief Executive Officer and Chairman of the Board
of Directors) provides them with the ability to control the election of our Board of Directors and the outcome of most matters
requiring the approval of our stockholders, including the amendment of certain provisions of our Certificate of Incorporation and
By-Laws, the approval of any equity-based employee compensation plans and the approval of fundamental corporate transactions,
including mergers and substantial asset sales. Through their concentration of voting power, our principal stockholders may 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 other stockholders.

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 from time to time rely on exemptions 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’s purpose and responsibilities; and

• that we have a compensation committee comprised entirely of independent directors with a written charter addressing the

committee’s purpose and responsibilities.

We have previously relied on these exemptions (although we are not currently relying on the first exemption listed above), and
we intend to continue to rely on them in the future, as applicable. As a result, you may not have the same benefits and information
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.

The market price of our Common Stock could fluctuate 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, suppliers or 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, the stock market may experience extreme price and volume fluctuations that have a significant effect on the market
prices of securities issued by many companies for reasons unrelated to their operating performance. These broad market fluctuations
may materially adversely affect our Common Stock price, regardless of our operating results. Given its relatively small public
float, number of stockholders and average daily trading volume, 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 our Common 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 stockholders sell 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, the perception in the public market that stockholders might sell shares of Common
Stock could depress the market for our Common Stock. Our Common Stock’s relatively small public float and average daily
trading volume may make it relatively more susceptible to these risks.

Furthermore, in response to recent public focus on dual class capital structures, certain stock index providers are
implementing limitations on the inclusion of dual class share structures in their indices. If these restrictions increase, they may
impact who buys and holds our stock.

ITEM 1B – UNRESOLVED STAFF COMMENTS

None.

ITEM 2 – PROPERTIES

Real Property Holdings and Mineral Reserves

Land
Owned

Land
Leased

Land
Unpatented
Claims

(acres)

795

3,851

105

2,219

535

340

178

—

1,447

508

999

—

1,030

—

Total

1,825

5,298

613

3,218

535

340

178

California

Georgia

Illinois

Mississippi

Nevada

Oregon

Tennessee

Estimated
Proven
Reserves

Estimated
Probable
Reserves
(thousands of tons)

Total

15,032

55,702

4,247

11,226

22,640

1,596

129,978

166,363

2,976

26,292

3,000

6,000

3,806

33,062

2,651

36,385

23,316

—

3,000

8,023

2,954

1,030

12,007

102,220

171,441

273,661

The Mississippi, Georgia, Tennessee, Nevada, California and Illinois properties are primarily mineral in nature, except
our research and development facility which is included in the Illinois owned land. We mine sorbent minerals primarily consisting
of calcium bentonite, attapulgite and diatomaceous shale. We use geologists and mineral specialists who prepared the estimated
reserves of these minerals in the table above. See also Item 1 “Business” above for further information about our reserves. The
properties in Mississippi, Georgia, California and Illinois are currently in active production and collectively produced approximately
756,000 tons and 727,000 tons of finished product in fiscal years 2019 and 2018, respectively. Parcels of 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
of the 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 pay a 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 our leases, however, do have expiration dates ranging
from 2026 to 2097. We would not experience a material adverse effect from the expiration or termination of any 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
with the related mines. We would not experience a material adverse effect from the expiration or termination of any of these
arrangements.

Certain of our land holdings in California are represented by unpatented mining claims we lease from the Bureau of Land
Management. These leases generally give us the contractual right to conduct mining or processing activities on the land covered
by the claims. The validity of title to unpatented claims, however, is dependent upon numerous factual matters. We believe the
unpatented claims we lease are in compliance with all applicable federal, state and local mining laws, rules and regulations. Future
amendments to existing federal mining laws, however, could have a prospective effect on mining operations on federal lands and
include, among other changes, the imposition of royalty fees on the mining of unpatented claims, the elimination or restructuring
of the patent system and an increase in fees for the maintenance of unpatented claims. To the extent that future proposals may
result in the imposition of royalty fees on unpatented lands, the mining of our unpatented claims may become economically
unfavorable. We cannot predict the form that any such amendments might take or whether or when such amendments might be
adopted. In addition, the construction and operation of processing facilities on 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 to our business related to
our mining properties.

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 preparing the 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 trucks haul 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 in close 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 site before 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 as regular 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 to 2.0 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 a disintegrator 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 the clay’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 desired particle 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 a rotary 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 fluid purification 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 various package sizes
and types ranging from bags, boxes and jugs of 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 and delivery configuration of our finished products is determined
by customer requirements.

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 Plant Site Locations

Location
Alpharetta, Georgia
Blue Mountain, Mississippi
Chicago, Illinois
Coppet, Switzerland
Laval, Quebec, Canada
Mounds, Illinois
Ochlocknee, Georgia
Ripley, Mississippi
Shenzhen, China
Taft, California
Vernon Hills, Illinois

Owned/Leased
Leased
Owned
Leased
Leased
Owned
Owned
Owned
Owned
Leased
Owned

Function
Non-clay manufacturing and packaging, sales, customer service
Manufacturing and packaging
Principal executive office
Customer service office
Non-clay manufacturing and clay and non-clay packaging, sales
Manufacturing and packaging
Manufacturing and packaging
Manufacturing and packaging
Sales office, customer service
Manufacturing and packaging

Owned & Leased Research and development

Wisbech, United Kingdom

Leased

Non-clay manufacturing and clay and non-clay packaging, sales,
customer service

We have no mortgages on the real property we own. The leases for the locations listed above expire as follows: Shenzhen,
China and Alpharetta, Georgia both in 2020; Vernon Hills, Illinois in 2026; Wisbech, United Kingdom in 2032 and Chicago,
Illinois in 2033. The lease for the Coppet, Switzerland office is on a year-to-year basis. We consider that our properties are generally
in good condition, well maintained and suitable and adequate to carry on our business.

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 not possible at this time to determine with certainty the ultimate outcome of these lawsuits, we believe that
none of the pending proceedings will have a material adverse effect on our business, financial condition, results of operations or
cash flows; however, some proceedings, particularly the matters described below, could have a more significant impact than others.

On February 3, 2015, we brought suit in the United States District Court for the Northern District of Illinois, Eastern
Division, against Nestlé Purina PetCare Company (“Nestlé”) seeking monetary damages and injunctive relief based on Nestlé’s
alleged infringement of a patent held by us. The case was stayed for approximately two years, pending the Inter Partes Review
(“IPR”) discussed immediately below; the stay was lifted in March 2017, and fact discovery and expert discovery completed. The
Court provided the parties with a claim construction decision on September 5, 2018.

On February 14, 2015, Nestlé filed a petition for the IPR with the Patent Trial and Appeal Board (“PTAB”) of the United
States Patent and Trademark Office to challenge certain of the claims in our patent. The PTAB agreed to consider Nestlé’s petition,
but on June 20, 2016, issued an order stating that Nestlé had not shown by a preponderance of the evidence that any of the challenged
claims in our patent are unpatentable. In July 2016, Nestlé filed a motion for reconsideration of the PTAB’s decision, which was
denied in February 2017. Nestlé timely filed an appeal of the PTAB’s decision to the U.S. Court of Appeals for the Federal Circuit.
In November 2017, Nestlé filed a motion in that Court to remand the case to the PTAB for consideration of additional evidence
that it claims should have been provided to the PTAB. On June 11, 2018, the Federal Circuit remanded the case back to the Board
based on the agreement of the parties to consider an expanded record, as well as for the Board to consider the previously non-
instituted grounds set forth in Nestle’s IPR Petition.

The case was tried before a jury in the United States District Court for the Northern District of Illinois, Eastern Division
in March 2019. The jury returned a verdict in our favor on March 26, 2019 and the parties subsequently came to agreement on
the resolution of all post-trial motions including the IPR.

ITEM 4 – MINE SAFETY DISCLOSURE

Our mining operations are subject to regulation by the Mine Safety and Health Administration under authority of the
Federal Mine Safety and Health Act of 1977, as amended. Information concerning mine safety violations or other regulatory
matters required by section 1503(a) of the Dodd-Frank Wall 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.

PART II

ITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

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 shares of Class A Common Stock currently outstanding. See Exhibit 4.1 to this Annual Report on Form 10-
K 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, 2019 were 676 and 27, 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 of 1933.

Dividends

Our Board of Directors determines the timing and amount of any dividends. Our Board of Directors may change its
dividend practice at any time. The declaration and payment of future dividends, if any, will depend upon, among other things, our
future earnings, capital requirements, financial condition, legal requirements, contractual restrictions and other factors that our
Board of Directors deems relevant. Our Credit Agreement with BMO Harris Bank N.A. (“BMO Harris”) requires that certain
minimum net worth and tangible net worth levels are to be maintained. To the extent that these balances are not attained, our ability
to pay dividends may be impaired. See Note 3 of the Notes to the Consolidated Financial Statements for further information about
our note agreements.

Issuer Repurchase of Equity Securities

During the three months ended July 31, 2019, we did not sell any securities which were not registered under the Securities

Act of 1933. The following chart summarizes our Common Stock purchases during this period.

ISSUER PURCHASES OF EQUITY SECURITIES 1
(a)

(b)

Total Number of
Shares Purchased

Average Price Paid
per Share

—

173

$—

$35.43

—

(d)
Maximum Number
of Shares that may
yet be Purchased
Under Plans or
Programs2

1,046,090

1,045,917

For the Three
Months Ended
July 31, 2019

May, 1 2019 to
May 31, 2019

June 1, 2019 to
June 30, 2019

July 1, 2019 to
July 31, 2019

1 The table summarizes repurchases of (and remaining authority to repurchase) shares of our Common Stock. Our Board of Directors
authorized the repurchase of 300,000 shares of Class B Stock on March 21, 2018, however there have been no repurchases of
Class B Stock as of July 31, 2019, and the authorized Class B Stock is not included in the table above. No shares of our Class A
Common Stock are currently outstanding. Descriptions of our Common Stock, Class B Stock and Class A Common Stock are
contained in Exhibit 4.1 of this Annual Report on Form 10-K for the fiscal year ended July 31, 2019.

2 Our Board of Directors authorized repurchase of 250,000 shares of Common Stock on March 11, 2011, an additional 250,000
shares on June 14, 2012 and an additional 750,000 shares on March 11, 2019. These authorizations do not have a stated expiration
date. The share numbers in this column indicate the number of shares of Common Stock that may yet be repurchased under these
authorizations. Repurchases may be made on the open market (pursuant to Rule 10b5-1 plans or otherwise) or in negotiated
transactions. The timing and number of shares repurchased will be determined by our management.

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with
the Consolidated Financial Statements and the related notes included elsewhere herein. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-
looking statements. Factors that might cause a difference include those discussed under “Forward-Looking Statements” and in
Item 1A “Risk Factors” in this Annual Report on Form 10-K.

OVERVIEW

We develop, mine, manufacture and market sorbent products principally produced from clay minerals, primarily consisting
of calcium bentonite, attapulgite and diatomaceous shale. Our principal products include agricultural and horticultural chemical
carriers, animal health and nutrition products, cat litter, fluid purification and filtration bleaching clays, industrial and automotive
floor absorbents and sports field products. Our products are sold to two primary customer groups, including customers who resell
our products as originally produced to the end 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. We have two reportable operating segments based on the
different characteristics of our two primary customer groups: Retail and Wholesale Products Group and Business to Business
Products Group. Each operating segment is discussed individually below. Additional detailed descriptions of the operating segments
are included in Item 1 “Business” above.

Consolidated net income was $12,611,000, or $1.67 per diluted share, for the fiscal year ended July 31, 2019, a 53%
increase from net income of $8,240,000, or $1.11 per diluted share, for the fiscal year ended July 31, 2018. Net income in fiscal
year 2019 included net proceeds received upon resolution of legal proceedings. Net income in fiscal year 2018 was significantly
impacted by a $3,996,000 increase in tax expense to record the impact of the 2017 Tax Cuts and Jobs Act (the “2017 Act”) on
deferred income tax assets, which effectively reduced diluted net income per share by $0.54 per share.

Consolidated net sales were up about 4% in fiscal year 2019 compared to fiscal year 2018; however, income from
operations declined 34% due to higher cost of sales. Lower selling, general and administrative expenses partially offset the higher
cost of sales.

Our Consolidated Balance Sheets as of July 31, 2019 and our Consolidated Statements of Cash Flows for fiscal year
2019 show an increase in total cash, cash equivalents and short-term investments from fiscal year-end 2018, even while we continue
to invest in capital, repay debt and pay dividends.

RESULTS OF OPERATIONS
FISCAL YEAR 2019 COMPARED TO FISCAL YEAR 2018

CONSOLIDATED RESULTS

Consolidated net sales in fiscal year 2019 were $277,025,000, an increase of $11,025,000 from net sales of $266,000,000
in fiscal year 2018. Net sales in our Retail and Wholesale Products Group increased for our cat litter products, as well as for our
subsidiaries in Canada and the United Kingdom. Net sales in our Business to Business Products Group also increased, particularly
for products used in agricultural and fluids purification applications. Sales fluctuations by operating segment are further discussed
below.

Consolidated gross profit in fiscal year 2019 was $65,660,000, a decrease of $6,262,000 from gross profit of $71,922,000
in the prior year. Our gross margin (defined as gross profit as a percentage of net sales) in fiscal year 2019 decreased to 24% from
27% in fiscal year 2018. Gross profit decreased due primarily to higher freight, packaging and manufacturing costs. Freight costs
per ton increased approximately 10% compared to the prior fiscal year. A shortage of truck drivers that reduced truck availability
and further phase-in of government regulations in the trucking industry continued to result in higher freight costs in the first three
quarters of fiscal year 2019. Truck availability significantly improved in the fourth quarter of fiscal year 2019 and resulted in
lower costs that partially offset the increases earlier in the fiscal year. In addition, freight costs for the year were negatively impacted
by a greater number of product transfers between our plants and warehouses to support customer service during the implementation
of our new ERP system on August 1, 2018, and by disruptions due to Hurricane Michael in the first quarter of fiscal year 2019.
Our overall freight costs also vary depending on the mix of products sold and the geographic distribution of our customers.
Packaging costs per ton were approximately 10% higher compared to the prior fiscal year. Many of our contracts for packaging
purchases are subject to periodic price adjustments, which trail changes in underlying commodity prices. Costs in fiscal year 2019
24

for both our resin and paper-based packaging reflected higher prices in their respective commodity prices compared to the prior
year. In addition, during this period of higher costs in fiscal year 2019, we purchased more packaging in anticipation of increased
sales and for safety stock during the ERP implementation. Recent declines in commodity prices positively impacted packaging
costs for the fourth quarter of fiscal year 2019. In addition, non-fuel manufacturing costs per ton were up approximately 7%. An
increase in the number of tons produced contributed to higher costs for labor and mining-related costs. Repairs expense also
increased for routine and preventative equipment maintenance. Early in fiscal 2019, our plants incurred additional costs due to
processing interruptions during the ERP implementation and the hurricane mentioned above. Finally, the cost per manufactured
ton of natural gas used to operate kilns that dry our clay was approximately 5% higher; however, lower prices in the fourth quarter
moderated the year over year increase.

Total selling, general and administrative expenses were 1% lower in fiscal year 2019 compared to fiscal year 2018. The
discussions of each segment's operating income below describe the changes in selling, general and administrative expenses that
were allocated to that segment, particularly lower advertising expense in the Retail and Wholesale Products Group. The remaining
unallocated corporate expenses in fiscal year 2019 included a lower estimated annual incentive bonus accrual for fiscal year-end
2019 compared to fiscal year-end 2018. The incentive bonus accrual was based on actual financial results achieved for the fiscal
year and discretion by our Chief Executive Officer, in accordance with the incentive plan's provisions. The lower bonus expense
was partially offset by higher costs related to the new ERP system implementation and costs associated with executive personnel
changes.

Other income of $4,723,000 in fiscal year 2019 included net proceeds upon resolution of legal proceedings. The amount

received under a confidential agreement resolving these legal proceedings was material to our financial results for the period.

Tax expense for fiscal year 2019 was $1,933,000 compared to $6,644,000 in fiscal year 2018. Excluding the $3,996,000
tax adjustment discussed in the “Overview” above, the effective tax rate for fiscal year 2018 would have been 17.8%. The effective
tax rate for fiscal 2019 was lower at 13.3%, due primarily to the lower U.S. federal corporate tax rate under the 2017 Tax Act. See
Note 5 of the Notes to the Consolidated Financial Statements for additional information about our income taxes.

BUSINESS TO BUSINESS PRODUCTS GROUP

Net sales of the Business to Business Products Group for fiscal year 2019 were $105,877,000, an increase of $834,000,
or 1%, from net sales of $105,043,000 in fiscal year 2018. Net sales increased for our products used in fluids purification and
agricultural applications, as well as for our co-packaged cat litter; however, sales declined for our animal health products.

Sales of our fluids purification products increased approximately 4%. Sales to domestic edible oil processors increased
due to the characteristics of recent crops that required higher usage of our purification products. In contrast, the strength of the
U.S. Dollar created price competition in some foreign markets, which resulted in a loss of sales to local suppliers. Sales of our
agricultural and horticultural products were approximately 2% higher compared to the prior year, due primarily to improved sales
for our engineered granules. Sales of our co-packaged cat litter also increased approximately 3% due primarily to higher volume.
Net sales of animal health and nutrition products decreased approximately 12%. A swine virus outbreak that started in China in
August 2018 has spread to other countries in Asia. The virus resulted in a significant reduction in the number of swine raised in
these markets and has hurt sales of our animal health products targeted to pig producers, including sales by our subsidiary in China
discussed in “Foreign Operations” below. A delay in product registration further negatively impacted sales of animal health and
nutrition products to customers in Africa.

The Business to Business Products Group’s selling, general and administrative expenses in fiscal year 2019 were
approximately 4% lower compared to fiscal year 2018, including lower net compensation-related costs associated with employee
turnover and lower marketing costs.

The Business to Business Products Group’s operating income in fiscal year 2019 was $31,388,000, a decrease of
$3,732,000 from operating income of $35,120,000 in fiscal year 2018. Higher freight, packaging and manufacturing costs, as
discussed in “Consolidated Results” above, outweighed the higher sales and lower selling general and administrative expenses.

RETAIL AND WHOLESALE PRODUCTS GROUP

Net sales of the Retail and Wholesale Products Group for fiscal year 2019 were $171,148,000, an increase of $10,191,000,
or 6%, from net sales of $160,957,000 in fiscal year 2018. Net sales improved for our cat litter products and for our subsidiaries
in Canada and the United Kingdom. Our foreign subsidiaries' results are discussed further in “Foreign Operations” below. Partially
offsetting these increased sales were moderately lower sales of our industrial absorbent and sweeping compound products.

Total cat litter net sales were approximately 9% higher compared to the prior year due primarily to increased volume and
higher prices. Private label cat litter drove the sales growth, which included higher sales to customers who expanded their selection
of our private label scoopable products and ran store-sponsored promotions. Private label coarse litter sales to our largest customer
increased and new customers were added during fiscal year 2019. Branded litter sales, including our branded scoopable litter,
were up also up slightly.

Selling, general and administrative expenses for the Retail and Wholesale Products Group were approximately 19% lower
compared to fiscal year 2018. The decrease was driven by approximately $3,600,000 lower advertising expense due primarily to
a focus on targeted regional markets and increased use of digital media.

The Retail and Wholesale Products Group’s segment operating income for fiscal year 2019 was $8,683,000, an increase
of $1,708,000, from operating income of $6,975,000 in fiscal year 2018. The higher sales and reduction in advertising costs were
offset to a great extent by higher freight, packaging and manufacturing costs, as discussed in “Consolidated Results” above.

FOREIGN SUBSIDIARIES

Foreign operations include our subsidiaries in Canada and the United Kingdom, which are included in the Retail and
Wholesale Products Group, and our subsidiaries in China, Mexico and Indonesia, which are included in the Business to Business
Products Group. Net sales by our foreign subsidiaries during fiscal year 2019 were $12,549,000, an increase of $707,000, or 6%,
from net sales of $11,842,000 during fiscal year 2018. Sales for our Canada subsidiary increased due to a new private label cat
litter customer. In addition, sales by our subsidiary in the United Kingdom increased for fluids purification products sold to new
and existing customers. Our subsidiary in Mexico was acquired by the Company in the fourth quarter of fiscal year 2018 and
provided incremental sales for the full year of fiscal 2019. These sales increases were partially offset by approximately a 24%
decrease in sales by our subsidiary in China. The swine virus outbreak that started in China in August 2018 reduced the number
of swine raised in this market and hurt sales of our animal health products targeted to pig producers. Net sales by our foreign
subsidiaries represented 5% and 4% of our consolidated net sales during fiscal years 2019 and 2018, respectively.

For fiscal year 2019, our foreign subsidiaries reported net income of $155,000, compared to a net loss of $9,000 in fiscal
year 2018. Net income increased due to the higher sales discussed above, which was partially offset by the currency exchange
rate impact of the British Pound to the U.S. Dollar.

Identifiable assets of our foreign subsidiaries as of July 31, 2019 were $10,195,000 compared to $9,321,000 as of July 31,

2018. The increase was due primarily to higher cash and inventory balances.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements include: funding working capital needs; purchasing and upgrading equipment, facilities,
information systems, and real estate; supporting new product development; investing in infrastructure; paying dividends; making
pension contributions and business acquisitions. During fiscal year 2019, we primarily used cash generated from operations to
fund these requirements. During fiscal year 2018, we borrowed under our revolving credit agreement with BMO Harris to make
a voluntary contribution to our pension plan. This borrowing is described under “Other” below and the pension plan is discussed
in Note 8 of the Notes to the Consolidated Financial Statements. Cash and cash equivalents totaled $21,862,000 and $12,757,000
as of July 31, 2019 and 2018, respectively. We had no short term investments as of July 31, 2019 and held $7,124,000 as of July 31,
2018.

The following table sets forth certain elements of our Consolidated Statements of Cash Flows for the fiscal year (in

thousands):

Net cash provided by operating activities

Net cash (used in) provided by investing activities

Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents

2019

2018

$ 26,743
(7,888)
(9,886)
136
9,105

$ 10,612

2,572
(9,339)
(183)
3,662

Net cash provided by operating activities

In addition to net income, as adjusted for depreciation and amortization and other non-cash operating activities, the

primary sources and uses of operating cash flows for fiscal years 2019 and 2018 were as follows:

Non-cash stock compensation expense was $807,000 higher for fiscal 2019 compared to fiscal 2018 due to additional
grants of restricted stock. See Note 7 of the Notes to the Consolidated Financial Statements for further information about stock-
based compensation.

Deferred income taxes were $406,000 higher at fiscal year-end 2019 compared to fiscal year-end 2018, and were
$7,270,000 lower at fiscal year-end 2018 compared to fiscal year-end 2017. During fiscal year 2018, an adjustment to reflect the
lower U.S. federal corporate tax rate under the 2017 Tax Act reduced deferred taxes, particularly related to depreciation, deferred
compensation and postretirement benefits. See Note 5 of the Notes to the Consolidated Financial Statements for further information
about income taxes.

Accounts receivable, less allowance for doubtful accounts and cash discounts, were $1,908,000 higher at fiscal year-end
2019 compared to fiscal year-end 2018 due primarily to higher sales in the fourth quarter of fiscal year 2019 compared to the same
period in fiscal year 2018. The same measure of accounts receivable was $270,000 higher at fiscal year-end 2018 compared to
fiscal year-end 2017. Fluctuations in accounts receivable balances were impacted in all periods by the timing of both sales and
collections, as well as the payment terms provided to various customers.

Inventories were $1,693,000 higher at fiscal year-end 2019 compared to fiscal year-end 2018 due primarily to more on-
hand quantities of packaging and other materials purchased at higher costs. A lower reserve for discontinued, slow moving and
unsaleable inventory also contributed to the higher inventory value at fiscal year-end 2019. A higher reserve for unsalable inventory
drove a $225,000 decrease in inventory at fiscal year-end 2018 compared to fiscal year-end 2017. Furthermore, finished goods
and purchased materials inventories vary from year to year due to anticipated sales requirements and the mix of products expected
to be produced.

Accounts payable, including income taxes payable, were $590,000 higher at fiscal year-end 2019 compared to fiscal
year-end 2018. Accounts payable were $2,436,000 lower at fiscal year-end 2018 compared to fiscal year-end 2017. Changes in
trade accounts payable in all periods are subject to normal fluctuations in the timing of payments, the cost of goods and services
we purchased, production volume levels and vendor payment terms.

Accrued expenses were $589,000 lower at fiscal year-end 2019 compared to fiscal year-end 2018 due primarily to a lower
accrued annual discretionary bonus, which was partially offset by higher accruals for trade promotions, advertising and freight.
Accrued expenses were $771,000 higher at fiscal year-end 2018 compared to fiscal year-end 2017 due primarily to a higher accrual
for the annual bonus, which was partially offset by lower accruals for trade promotions and advertising. Changes in other accrued
expenses in all periods are subject to normal fluctuations in the timing of payments.

Deferred compensation balances at fiscal year-end 2019 were slightly lower compared to fiscal year-end 2018. A
significant payout under the terms of the deferred compensation plan in fiscal year 2018 contributed to $5,437,000 lower balances
at fiscal year-end 2018 compared to fiscal year-end 2017.

Pension and other postretirement liabilities, net of the adjustment recorded in stockholders' equity, were $3,307,000 higher
at fiscal year-end 2019 compared to fiscal year-end 2018 due primarily to continued accumulation of employee benefits and a
lower discount rate applied to the actuarial liability calculation. These liabilities were $11,048,000 lower at fiscal year-end 2018
compared to fiscal year-end 2017 due primarily to an $11,500,000 voluntary contribution to our pension plan in excess of the
minimum amount required. See Note 8 of the Notes to the Consolidated Financial Statements for more information regarding our
postretirement benefit plans.

Net cash (used in) provided by investing activities

Cash used in investing activities was $7,888,000 in fiscal year 2019 and cash provided by investing activities was
$2,572,000 in fiscal year 2018. During fiscal years 2019, dispositions of short-term investments provided cash in excess of purchases
by $7,134,000. No short-term investments were held at fiscal year-end 2019. In fiscal year 2018, dispositions of short-term
investments exceeded purchases by $16,581,000. The excess cash was used in part to fund the voluntary contribution to our pension
plan.

Capital expenditures of $15,029,000 in fiscal year 2019 were comparable to $15,074,000 in fiscal year 2018. Expenditures
in both periods included equipment additions and replacement at our manufacturing facilities. Expenditures in fiscal year 2018
also included significant spending for the ERP system implementation and related infrastructure improvements.

In addition, cash proceeds of $1,747,000 were received in fiscal year 2018 from the closing of a life insurance policy on

a former key employee.

Net cash used in financing activities

Cash used in financing activities was $9,886,000 in fiscal year 2019 and $9,339,000 in fiscal year 2018. The primary

uses of cash in all periods were for long-term debt and dividend payments.

Other

Total cash and investment balances held by our foreign subsidiaries as of July 31, 2019 and 2018 were $2,136,000,

$1,849,000, respectively. See further discussion in the “Foreign Operations” section above.

On January 31, 2019, we signed a fifth amendment to our credit agreement with BMO Harris , which expires on January 31,
2024. The new agreement provides for a $45,000,000 unsecured revolving credit agreement, including a maximum of $10,000,000
for foreign letters of credit. The remaining terms are substantially unchanged from our previous agreement with BMO Harris,
including the provision that we may select a variable rate based on either 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 us and BMO Harris. As of July 31,
2019, the variable rates would have been 5.75% for the BMO Harris’ prime-based rate or 3.52% for the LIBOR-based rate. The
credit agreement contains restrictive covenants that, among other things and under various conditions, limit our ability to incur
additional indebtedness or to dispose of assets. The agreement also requires us to maintain a minimum fixed coverage ratio and
a minimum consolidated net worth. As of July 31, 2019 and 2018, we were in compliance with its covenants.

As of July 31, 2019 and 2018, there were no outstanding borrowings under this credit agreement; however, there was a
total of $5,973,000 allocated for guarantees required by one of our insurance policies and state environmental regulations. During
the third quarter of fiscal year 2018 we borrowed $6,000,000 at a weighted average interest rate of 2.96% under the credit agreement
to fund a voluntary contribution to our pension plan. The amount borrowed was repaid in the fourth quarter of fiscal year 2018.
There were no other borrowings during either fiscal year 2019 or 2018.

See Note 3 of the Notes to the Consolidated Financial Statements for information about our outstanding notes payable.

We believe that cash flow from operations, availability under our revolving credit facility, current cash balances and our
ability to obtain 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. We spent
approximately $3,600,000 less for advertising in fiscal year 2019 compared to fiscal year 2018 to promote our cat litter. We expect
advertising expense in fiscal year 2020 to be higher than in fiscal year 2019. We also anticipate that our capital expenditures in
fiscal year 2020 will be higher than in fiscal year 2019 due primarily to planned spending at our manufacturing facilities. We do
not anticipate that these increased expenditures will dramatically impact our cash position; however, our cash requirements are
subject to change as business conditions warrant and opportunities arise. We continually evaluate our liquidity position and
anticipated cash needs, as well as the financing options available to obtain additional cash reserves. Our ability to fund operations,
to make planned capital expenditures, to make scheduled debt payments and to remain in compliance with all of the financial
covenants under debt agreements, including, but not limited to, the current credit agreement, depends on our future operating
performance, which, in turn, is subject to prevailing economic conditions and to financial, business and other factors. The timing
and size of any new business ventures or acquisitions that we complete may also impact our cash requirements.

OFF BALANCE SHEET ARRANGEMENTS

We do not have any unconsolidated special purpose entities. As of July 31, 2019 we do not have any off-balance sheet
arrangements that have or are reasonably 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 a guarantee contract,
derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar
arrangement that 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 (“U.S. GAAP”). We review our financial reporting and disclosure practices and accounting policies annually to ensure that
our financial reporting and disclosures provide accurate and transparent information relative to the current economic and business
environment. We believe that, of our significant accounting policies stated in Note 1 of the Notes to the Consolidated Financial
Statements, the policies listed below involve a higher degree of judgment and/or complexity. The preparation of the financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates
include income taxes, promotional programs, pension accounting and allowance for doubtful accounts. Actual results could differ
from these estimates.

Income Taxes. Our effective tax rate on earnings was based on expected income, statutory tax rates and tax planning
opportunities available to us in various jurisdictions 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 Accounting Standards Codification (“ASC”) 740 Income
Taxes. The tax effect of the expected reversal of tax differences was recorded at rates currently enacted for each jurisdiction in
which we operate. To the extent that temporary differences will result in future tax benefit, we must estimate 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 allowances from period to period are included in the income tax provision in the period of change. In determining
whether a valuation allowance is warranted, we take into account such factors as prior earnings history, expected future earnings
and other factors that could affect the realization of deferred tax assets.

We recorded valuation allowances of $732,000 and $789,000 for the amount of the deferred tax benefit related to our
foreign net operating loss carryforwards as of July 31, 2019 and 2018, respectively, because we believe it is unlikely we will
realize the benefit of these tax attributes in the future.

In addition to valuation allowances, we may provide for uncertain tax positions when such tax positions do not meet
certain recognition thresholds or measurement standards. Amounts for uncertain tax positions are adjusted when new information
becomes available or when positions are effectively settled. We did not record a liability for unrecognized tax benefits at either
July 31, 2019 or 2018. See Note 5 of the Notes to the Consolidated Financial Statements for further discussion.

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 the balance sheet date. To estimate
trade promotion reserves, we rely on our historical experience of trade spending patterns and that of the industry, current trends
and forecasted data. While we believe our promotional reserves are reasonable and that appropriate judgments have been made,
estimated amounts could differ from future obligations. We have accrued liabilities at the end of each period for the estimated
trade spending programs. We recorded liabilities of approximately $1,449,000 and $1,024,000 for trade promotions as of July 31,
2019 and 2018, respectively.

Pension and Postretirement Benefit Costs. We calculate our pension and postretirement health benefit obligations and
the related effects on results of operations using actuarial models. To measure the expense and obligations, we must make a variety
of estimates including critical assumptions for the discount rate used to value certain liabilities and the expected return on plan
assets set aside to fund these costs. We evaluate these critical assumptions at least annually. Other assumptions involving
demographic factors, such as retirement age, mortality and turnover, are evaluated periodically and are updated to reflect actual
experience. As these assumptions change from period to period, recorded pension and postretirement health benefit amounts and
funding requirements 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 debt instruments, 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 to an applicable index and the expected duration of the benefit payments to select a
29

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 a yield curve of investment-
grade corporate bonds. The yield curve used in both fiscal years 2019 and 2018 was the FTSE Pension Discount Curve (formally
called the Citi Pension Discount Curve.) Our determination 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 return on plan assets is determined based on asset allocations
and historical experience. The expected long-term rate of inflation and risk premiums for the various asset categories are based
on general historical returns and inflation rates. The target allocation of assets is used to develop a composite rate of return
assumption. See Note 8 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 doubtful accounts based on our historical experience and a periodic review of our accounts receivable, including a
review of the overall aging of accounts, consideration of customer credit risk and analysis of facts and circumstances about specific
accounts. A customer account is determined to be uncollectible when it is probable that a loss will be incurred after we have
completed our internal collection procedures, including termination 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 our payment terms to
some customers. We recorded a total allowance for doubtful accounts and cash discounts of $644,000 and $817,000 as of July 31,
2019 and 2018, respectively.

Revenue Recognition. We recognize revenue when performance obligations under the terms of the contracts with
customers are satisfied. Our performance obligation generally consists of the promise to sell finished products to wholesalers,
distributors and retailers or consumers and our obligations have an original duration of one year or less. Control of the finished
products are transferred upon shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract.
We have completed our performance obligation when control is transferred and we recognize revenue accordingly. Taxes collected
from customers and remitted to governmental authorities are excluded from net sales. Sales returns and allowances are not material.

Inventories. We value inventories at the lower of cost (first-in, first-out) or market. Inventory costs include the cost of
raw materials, packaging supplies, labor and other overhead costs. We perform a detailed review of our inventory to determine if
a reserve adjustment is necessary, giving consideration to obsolescence, inventory levels, product deterioration and other factors.
The review also surveys all of our operating facilities and sales divisions to give consideration to historic and new market trends.
The inventory reserve values as of July 31, 2019 and 2018 were $704,000 and $1,136,000, respectively.

Reclamation. During the normal course of our mining process we remove overburden and perform on-going reclamation
activities. As overburden is removed 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 sites and dispose of overburden simultaneously, 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. As of July 31, 2019 and 2018, we have recorded an estimated
net reclamation asset of $975,000 and $718,000, respectively, and a corresponding estimated reclamation liability of $2,410,000
as of July 31, 2019 and $2,000,000 as of July 31, 2018. These values represent the discounted present value of the estimated future
mining reclamation costs at the production plants. The reclamation assets are depreciated over the estimated useful lives of the
various mines. The reclamation liabilities are increased based on a yearly accretion charge over the estimated useful lives of the
mines.

Accounting for reclamation obligations requires that we make estimates unique to each mining operation of the future
costs we will incur to complete the reclamation work required to comply with existing laws and regulations. Actual future costs
incurred could significantly differ from estimated amounts. Future changes to environmental laws could increase the extent of
reclamation work required. Any such increases in future costs could materially impact the amount incurred for reclamation costs.

Impairment of goodwill, trademarks and other intangible assets. We review carrying values of goodwill, trademarks
and other indefinite-lived intangible assets periodically for possible impairment in accordance ASC 350, Intangibles – Goodwill
and Other. Our impairment review requires significant judgment with respect to factors such as volume, revenue and expenses.
Impairment occurs when the carrying value exceeds the fair value. Our impairment analysis is performed in the fourth quarter of
the fiscal year and may be re-performed during the year 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.
Our impairment analysis performed in the fourth quarters of both fiscal years 2019 and 2018 did not indicate any impairment. We
continue to monitor events, circumstances or changes in the business that might imply a reduction in value which could lead to
an impairment.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance under ASC 606, Revenue from
Contracts with Customers, and subsequently issued several amendments to further clarify the principles for recognizing revenue.
This guidance establishes a single comprehensive revenue recognition model for all contracts with customers and will supersede
most existing revenue guidance. The core principle of ASC 606 is that entities should recognize revenue to 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 to
receive in exchange.

Oil-Dri adopted the new guidance on a modified retrospective basis effective August 1, 2018. We applied the practical
expedient available under ASC 606 to disregard determining significant financing components if the good is transferred and
payment is received within one year. We also adopted the policy election to exclude from the transaction price all amounts collected
from customers for sales and other taxes. There was no material impact on our Consolidated Financial Statements from the adoption
of this guidance. Results for periods beginning on or after August 1, 2018 are recognized and presented in accordance with ASC
606, while prior period amounts have not been adjusted and continue to be reported in accordance with the prior account guidance
under ASC 605, Revenue Recognition.

In March 2017, the FASB issued guidance under ASC 715, Improving the Presentation of Net Periodic Pension Cost and
Net Periodic Postretirement Benefit Cost, which requires presenting the service cost component of net periodic benefit cost in the
same income statement line item(s) as other employee compensation costs arising from services rendered during the period. This
standard also requires that other components of the net periodic benefit cost be presented separately from the line items that
includes service costs and outside of any subtotal of operating income, if one is presented, on a retrospective basis. We adopted
this new guidance in the first quarter of fiscal 2019 and accordingly recorded the non-service cost components of net periodic
benefit cost in Other Income (Expense) in the line item Other, net on the Consolidated Statements of Operations. As such, the
adoption did not have a material impact on our Consolidated Financial Statements.

Recently Issued Accounting Standards

In February 2016, the FASB issued guidance under ASC 842, Leases, which provides that, for leases with a term greater
than 12 months, a lessee must recognize in the statement of financial position both a liability to make lease payments and a right-
of-use (“ROU”) asset. Other requirements describe expense recognition, as well as financial statement presentation and disclosure.
In July 2018, the FASB issued further guidance which provided alternative transition methods. The Company will adopt this
guidance for our first quarter of fiscal year 2020 on a modified retrospective transition approach, and will not restate prior
comparative periods presented in our financial statements. We expect to elect certain practical expedients, including the package
of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct
costs. We have substantially completed our plan for the adoption of this new standard, including implementing software to meet
the reporting and disclosure requirements of this standard. We anticipate the adoption of this new standard will result in the
recognition of additional ROU assets of approximately $9,222,000 and liabilities of approximately $10,784,000 with the difference
largely due to deferred rent that will be reclassified.

In June 2016, the FASB issued guidance under ASC 326, Financial Instruments-Credit Losses, which requires companies
to utilize an impairment model for most financial assets measured at amortized cost and certain other financial instruments, which
include trade and other receivables, loans and held-to-maturity debt securities, to record an allowance for credit risk based on
expected losses rather than incurred losses. In addition, this new guidance changes the recognition method for credit losses on
available-for-sale debt securities, which can occur as a result of market and credit risk, as well as additional disclosures. In general,
this guidance will require modified retrospective adoption for all outstanding instruments that fall under this guidance. This
guidance is effective for our first quarter of fiscal year 2021. We are currently evaluating the impact of the adoption of this
requirement on our Consolidated Financial Statements.

A summary of all recently adopted and issued accounting standards is contained in Note 1 of Notes to the Consolidated

Financial Statements.

ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS

ASSETS

Current Assets

Cash and cash equivalents

Short-term investments

Accounts receivable, less allowance of $644 and $817
in 2019 and 2018, respectively

Inventories, net

Prepaid repairs expense

Prepaid expenses and other assets

Total Current Assets

Property, Plant and Equipment

Buildings and leasehold improvements

Machinery and equipment

Office furniture and equipment

Vehicles

Gross depreciable assets

Less accumulated depreciation and amortization

Net depreciable assets

Construction in progress

Land and mineral rights

Total Property, Plant and Equipment, Net

Other Assets

Goodwill

Trademarks and patents, net of accumulated amortization
of $299 and $267 in 2019 and 2018, respectively

Customer list, net of accumulated amortization
of $6,297 and $5,540 in 2019 and 2018, respectively

Deferred income taxes

Other

Total Other Assets

Total Assets

July 31,

2019

2018

(in thousands)

21,862

12,757

—

35,459

24,163

4,708

3,084

89,276

38,852

145,402

20,569

15,375

220,198
(159,036)
61,162

12,519

17,117

90,798

9,262

1,599

1,488

7,755

5,049

7,124

33,602

22,521

4,111

2,899

83,014

38,534

141,530

11,089

14,151

205,304
(149,385)
55,919

13,985

16,802

86,706

9,262

1,220

2,245

7,349

4,886

25,153

24,962

205,227

194,682

OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS
(continued)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Current maturities of notes payable
Accounts payable
Dividends payable
Accrued expenses

Salaries, wages and commissions
Trade promotions and advertising
Freight
Other

Total Current Liabilities

Noncurrent Liabilities

Notes payable, net of unamortized debt issuance costs of $31 and $60 in 2019 and 2018,
respectively
Deferred compensation
Pension and postretirement benefits
Other

Total Noncurrent Liabilities

Total Liabilities

Stockholders’ Equity

July 31,

2019

2018

(in thousands)

3,083
8,092
1,761

6,740
1,588
2,635
8,707

3,083
6,543
1,627

8,974
1,280
1,767
7,675

32,606

30,949

3,052
6,014
23,721
4,288

37,075

69,681

6,107
6,100
15,906
3,735

31,848

62,797

Common Stock, par value $.10 per share, issued 8,284,199 shares in 2019 and
8,086,849 shares in 2018

828

809

Class B Stock, convertible, par value $.10 per share, issued 2,576,479 shares in 2019
and 2,468,979 shares in 2018
Additional paid-in capital
Retained earnings
Noncontrolling interest
Accumulated Other Comprehensive Loss
Pension and postretirement benefits

Cumulative translation adjustment

Total Accumulated Other Comprehensive Loss

Less treasury stock, at cost (2,926,547 Common and 324,741 Class B shares in 2019
and 2,914,092 Common and 324,741 Class B shares in 2018)

Total Stockholders’ Equity

258
41,300

164,756
(14)

(14,891)

(148)

(15,039)

(56,543)

135,546

247
38,473
158,935
(18)

(10,384)

(231)

(10,615)

(55,946)

131,885

Total Liabilities and Stockholders’ Equity

205,227

194,682

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

OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF OPERATIONS

Net Sales

Cost of Sales (1)

Gross Profit

Selling, General and Administrative Expenses (1)

Income from Operations

Other Income (Expense)

Interest income

Interest expense

Foreign exchange loss

Other, net (1) (2)

Total Other Income (Expense), Net

Income Before Income Taxes

Income Tax Expense

Net Income

Net Income (Loss) Attributable to Noncontrolling Interest

Net Income Attributable to Oil-Dri

Net Income Per Share

Basic Common

Basic Class B Common

Diluted Common

Average Shares Outstanding

Basic Common

Basic Class B Common

Diluted Common

Year Ended July 31,
2018
2019

(in thousands, except for per
share data)

277,025

266,000

(211,365)

(194,078)

65,660

(55,248)

10,412

250

(594)

(243)

4,723

4,136

14,548

(1,933)

71,922

(56,045)

15,877

259

(676)

—

(594)

(1,011)

14,866

(6,644)

12,615

8,222

12,611

(18)

8,240

1.82

1.36

1.67

5,112

2,068

7,251

1.22

0.91

1.11

5,036

2,097

7,222

(1) Prior year amounts have been retrospectively adjusted to conform to the current year presentation of the non-service cost
components of net periodic benefit cost required by new guidance under ASC 715, Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost. See Note 1 of the Notes to the Consolidated Financial Statements for
details.

(2) See Note 2 of the Notes to the Consolidated Financial Statements for further information about amounts included in this line
item.

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

OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended July 31,
2018
2019

(in thousands)

Net Income Attributable to Oil-Dri

12,611

8,240

Other Comprehensive (Loss) Income:

Pension and postretirement benefits (net of tax)

Cumulative translation adjustment
Other Comprehensive (Loss) Income

Comprehensive Income

(4,507)
83
(4,424)
8,187

2,207
(266)
1,941

10,181

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

OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Number of Shares

(in thousands)

Common
& Class B
Stock

Treasury
Stock

Common
& Class B
Stock

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Non-
Controlling
Interest

Total
Stockholders’
Equity

Balance, July 31, 2017

10,528,678

(3,232,111) $

1,053

36,242

$ 154,735

$ (55,701) $

(10,292) $

— $

126,037

Net income

Other comprehensive income

Reclassification upon adoption

of accounting standard

Dividends declared

Purchases of treasury stock

Net issuance of stock under
long-term incentive plans

Amortization of restricted
stock

(622)

27,150

(6,100)

—

456

1,775

8,240

—

2,264

(6,304)

—

(27)

(218)

—

1,941

(2,264)

—

(18)

—

8,222

1,941

—

(6,304)

(27)

241

1,775

Balance, July 31, 2018

10,555,828

(3,238,833) $

1,056

38,473

$ 158,935

$ (55,946) $

(10,615) $

(18) $

131,885

Net income

Other comprehensive loss

Dividends declared

Purchases of treasury stock

Net issuance of stock under
long-term incentive plans

Amortization of restricted
stock

(4,905)

304,850

(7,550)

—

419

2,408

12,611

—

(6,790)

—

(147)

(450)

—

(4,424)

—

12,615

(4,424)

(6,790)

(147)

(1)

2,408

Balance, July 31, 2019

10,860,678

(3,251,288) $

1,086

41,300

$ 164,756

$ (56,543) $

(15,039) $

(14) $

135,546

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

OIL-DRI CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of investment discounts
Non-cash stock compensation expense
Deferred income taxes
Provision for bad debts and cash discounts
Loss on the sale of property, plant and equipment
Life insurance benefits
(Increase) decrease in:
Accounts receivable
Inventories
Prepaid expenses
Other assets
Increase (decrease) in:
Accounts payable
Accrued expenses
Deferred compensation
Pension and postretirement benefits
Other liabilities

Total Adjustments

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities
Capital expenditures
Proceeds from sale of property, plant and equipment
Acquisition of business
Purchases of short-term investments
Dispositions of short-term investments
Proceeds from life insurance

Net Cash (Used in) Provided by Investing Activities

Cash Flows from Financing Activities
Principal payments on notes payable
Dividends paid
Purchase of treasury stock

Net Cash Used in Financing Activities

Effect of exchange rate changes on cash and cash equivalents
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
Cash and Cash Equivalents, End of Year

Year-Ended July 31,
2018
2019

(in thousands)

$ 12,615

8,222

13,330
(10)
2,407
(406)
(179)
6
—

(1,729)
(1,693)
(786)
(617)

590
(589)
(86)
3,307
583
14,128
26,743

(15,029)
7
—
(4,678)
11,812
—
(7,888)

12,756
(129)
1,600
7,270
252
84
(340)

(522)
225
(807)
134

(2,436)
771
(5,437)
(11,048)
17
2,390
10,612

(15,074)
48
(730)
(35,911)
52,492
1,747
2,572

(3,083)
(6,656)
(147)
(9,886)
136
9,105
12,757
$ 21,862

(3,083)
(6,230)
(26)
(9,339)
(183)
3,662
9,095
$ 12,757

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

Supplemental disclosure:

Other cash flows:

Interest payments, net of amounts capitalized

Income tax (refund) payments

Noncash investing and financing activities:

Capital expenditures accrued, but not paid

Cash dividends declared and accrued, but not paid

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

Year-Ended July 31,

2019

2018

(in thousands)

305
(713)

2,263

1,761

282

1,994

997

1,627

OIL-DRI CORPORATION OF AMERICA
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

We 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 animal feed additives. Our adsorbent products include bleaching clays, which are used for filtration of edible oils and
for purification of petroleum-based oils. We also sell synthetic sorbents, which are used for industrial cleanup.

PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements include the accounts of Oil-Dri Corporation of America and its subsidiaries. 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 U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our estimates and
assumptions are revised periodically. Actual results could differ from these estimates. For more information see Critical Accounting
Policies and Estimates in Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

CASH AND CASH EQUIVALENTS

Cash equivalents are highly liquid investments with maturities of three months or less.

SHORT-TERM INVESTMENTS

No short-term investments were held as of July 31, 2019 due to the low returns available on these investments. The

table below shows the composition of short-term investments as of July 31, 2018 (in thousands):

U.S. Treasury securities

Certificates of deposit

Short-term investments

2018

3,992

3,132

7,124

Short-term investments have maturities of one year or less. We intend and 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 our historical experience and a periodic review of our accounts receivable, including a review of the overall
aging of accounts, consideration of customer credit risk and analysis of facts and circumstances about specific accounts. A customer
account is determined to be uncollectible when it is probable that a loss will be incurred after we have completed our internal
collection procedures, including termination of shipments, direct customer contact and formal demand of payment. We retain
outside collection agencies to facilitate our collection efforts. Past due status is determined based on contractual terms and customer
payment history.

INVENTORIES

The composition of inventories was as follows as of July 31 (in thousands):

Finished goods

Packaging

Other

Inventories

2019

2018

$ 13,957

$ 14,223

5,681

4,525

5,349

2,949

$ 24,163

$ 22,521

Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Inventory costs include the cost of
raw materials, packaging supplies, labor and other overhead costs. We performed a detailed review of our inventory items to
determine if an obsolescence reserve adjustment was necessary. The review surveyed all of our operating facilities and sales groups
to ensure that both historical issues and new market trends were considered. The obsolescence reserve not only considered specific
items, but also took into consideration the overall value of the inventory as of the balance sheet date. We recorded inventory
obsolescence reserves of approximately $704,000 and $1,136,000 as of July 31, 2019 and 2018, respectively. The reserve decreased
due to lower levels of discontinued, slow moving and unsaleable finished goods inventory. Other inventories increased due to the
lower obsolescence reserve and increased levels of purchased materials.

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 rates in effect at period end. Income statement items are translated at the average exchange rate on a
monthly basis. Resulting translation adjustments are recorded as a separate component of stockholders’ equity.

INTANGIBLES AND GOODWILL

We amortize most of our intangibles on a straight-line basis over periods ranging from 10 to 20 years. Our customer list
intangible asset is amortized at an accelerated amortization rate in the earlier years to reflect the expected pattern of decline in the
related benefits over time. Intangible amortization was $862,000 in fiscal year 2019 and $1,017,000 in fiscal year 2018. Some
intangible assets 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):

2020

2021

2022

2023
2024

$
$

667

484

334

201
68

The weighted average amortization period of our intangibles subject to amortization is as follows (in years):

Trademarks and patents

Debt issuance costs

Customer list

Total intangible assets subject to amortization

Weighted Average
Amortization Period

15.2

1.1

4.3

6.5

We periodically review indefinite-lived intangibles and goodwill to assess for impairment. Our review is based on cash
flow considerations and other approaches that require significant judgment with respect to volume, revenue, expenses and
allocations. Impairment occurs when the carrying value exceeds the fair value. Much of our goodwill cannot be specifically
assigned to one of our operating segments because of the shared nature of our production facilities; however, for purposes of our

most recent impairment analysis we estimated the goodwill allocation and assigned $5,415,000 to the Retail and Wholesale Products
Group and $3,847,000 to the Business to Business Products Group.

We performed our annual impairment testing in the fourth quarter of fiscal years 2019 and 2018. We will continue to
consider the need to re-perform impairment testing throughout the year when circumstances 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 was no impairment required based on our analysis for fiscal years 2019 or 2018.

OVERBURDEN REMOVAL AND MINING COSTS

We surface mine sorbent minerals on property that we either own or lease as part of our overall operations. A significant
part of our overall mining cost is incurred 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 costs included in cost of sales were approximately
$2,430,000 and $2,849,000 for fiscal years 2019 and 2018, respectively. We defer and amortize the pre-production overburden
removal costs associated with opening a new mine. No pre-production overburden removal costs were deferred in the last two
fiscal years.

Additionally, it is our policy to capitalize the purchase cost of land and mineral rights, including associated legal fees,
survey fees and real estate fees. The costs of obtaining mineral rights, including legal fees and drilling expenses, are also capitalized.
The amount of land and mineral rights included in land on the Consolidated Balance Sheets were approximately $13,638,000 and
$2,165,000, respectively, as of July 31, 2019, and were $13,615,000 and $2,165,000, respectively, as of July 31, 2018. Pre-
production development costs on new mines and any prepaid royalties that may be offset against future royalties due upon extraction
of the mineral are also capitalized. No material capitalized pre-production development costs were recorded in fiscal years 2019
and 2018. Prepaid royalties included in current prepaid expenses and in non-current other assets on the Consolidated Balance
Sheets were approximately $1,184,000 and $1,167,000 as of July 31, 2019 and 2018, respectively.

RECLAMATION

We perform ongoing reclamation activities during the normal course of our overburden removal. As overburden is removed
from a mine site, it is hauled to previously mined sites and is used to refill older sites. This process allows us to continuously
reclaim older mine sites and dispose of overburden simultaneously, 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 yearly accretion 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. Depreciation expense was $12,468,000 and $11,739,000 in fiscal years 2019 and 2018, respectively. Major
improvements and betterments are capitalized, while maintenance and repairs that do not extend the useful life of the applicable
assets are expensed as incurred. Interest expense may also be capitalized for assets that require a period of time to get them ready
for their intended use. There was no capitalized interest in fiscal year 2019 and $176,000 in fiscal year and 2018.

Buildings and leasehold improvements

Machinery and equipment

Packaging

Processing

Mining and other

Office furniture and equipment

Vehicles

Years

Property, plant and equipment are carried at cost on the Consolidated Balance Sheets and are reviewed for possible
impairment on an annual basis or when circumstances indicate impairment that an asset may become impaired. We take into
consideration idle and underutilized equipment and review business plans for possible impairment. When impairment is indicated,
an impairment charge is recorded for the difference between the carrying value of the asset and its fair market value. No impairment
was recorded in either fiscal year 2019 or 2018.

TRADE PROMOTIONS

We routinely commit to one-time or ongoing trade promotion programs, primarily in our Retail and Wholesale Products
Group. All such costs are netted 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 spending liabilities. We rely on our
historical experience of trade spending patterns and that of the industry, current trends and forecast data.

ADVERTISING

Advertising costs for the development of printed materials, television commercials, web-based digital banners, web-
based social media and sales videos are deferred and expensed upon the first use of the materials, unless such amounts are
immaterial. Costs paid for communicating advertising over a period of time, such as television air time, radio commercials and
print media advertising space, are deferred and expensed on a pro-rata basis. All other advertising costs, including participation
in industry conventions and shows and market research, are expensed when incurred. All advertising costs are part of selling,
general and administrative expenses. Advertising expenses were approximately $6,909,000 and $10,551,000 in fiscal years 2019
and 2018, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Non-derivative financial instruments included in the Consolidated Balance Sheets are cash and cash equivalents, short-
term investments and notes payable. These instruments, except for notes payable, were carried at amounts approximating fair
value as of July 31, 2019 and 2018. Short-term investments were certificates of deposits and treasury securities. We intend and
have the ability to hold our short-term investments to maturity; therefore, these investments were reported at amortized cost on
the Consolidated Balance Sheets, which approximated fair value. See Note 4 of the Notes to the Consolidated Financial Statements
for additional information regarding the fair value of our financial instruments, including notes payable.

REVENUE RECOGNITION

We recognize revenue when performance obligations under the terms of the contracts with customers are satisfied. Our
performance obligation generally consists of the promise to sell finished products to wholesalers, distributors and retailers or
consumers and our obligations have an original duration of one year or less. Control of the finished products are transferred upon
shipment to, or receipt at, customers' locations, as determined by the specific terms of the contract. We have completed our
performance obligation when control is transferred and we recognize revenue accordingly. Taxes collected from customers and
remitted to governmental authorities are excluded from net sales. Sales returns and allowances are not material.

We have an unconditional right to consideration under the payment terms specified in the contract upon completion of
the performance obligation. We may require certain customers to provide payment in advance of product shipment. We recorded
a liability for these advance payments of $259,000 and $96,000 as of July 31, 2019 and July 31, 2018, respectively. This liability
is reported in Other Accrued Expenses on the Consolidated Balance Sheets. Revenue recognized during fiscal year 2019 that was
included in the liability for advance payments at the beginning of the year was $96,000.

COST OF SALES

Cost of sales consists of all manufacturing costs, including depreciation and amortization related to assets used in the
manufacturing and distribution process, inbound and outbound freight, inspection costs, purchasing costs associated with materials
and packaging used in the production process and warehouse and distribution costs.

SHIPPING AND HANDLING COSTS

Shipping and handling costs are included in cost of sales and were approximately $47,717,000 and $42,542,000 for fiscal

years 2019 and 2018, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses include salaries, wages and benefits associated with staff outside the
manufacturing and distribution functions, all marketing related costs, any miscellaneous trade spending expenses not required to
be included in net sales, research and development costs, depreciation and amortization related to assets outside the manufacturing
and distribution process and all other non-manufacturing and non-distribution expenses.

RESEARCH AND DEVELOPMENT

Research and development costs of approximately $3,202,000 and $3,430,000 were charged to expense as incurred for

fiscal years 2019 and 2018, respectively, and are recorded in selling, general and administrative expenses.

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 a postretirement health benefit plan to domestic salaried employees who qualify under the plan’s
provisions. The postretirement health benefit plan is unfunded. 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 other comprehensive
income, net of income tax. See Note 8 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 – Stock Compensation. The fair value of stock-based compensation is determined at the grant date. The related
compensation expense is recognized over the appropriate vesting period. See Note 7 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 the amounts recognized for financial reporting purposes. Deferred tax assets are reviewed and a valuation
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 in valuation 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 the recognition thresholds or measurement standards prescribed by ASC 740, Income Taxes. Amounts for uncertain
tax positions are adjusted when new information becomes available or when positions are effectively settled. We recognize interest
and penalties accrued related to uncertain tax positions in income tax expense.

U.S. income tax expense and foreign withholding taxes are provided on remittances of foreign earnings and on unremitted
foreign earnings that are not indefinitely reinvested. Where unremitted foreign earnings are indefinitely reinvested, no provision
for federal or state tax expense is recorded. When circumstances change and we determine that some or all of the undistributed
earnings will be remitted in the foreseeable future, a corresponding expense is accrued in the current period. See Note 5 of the
Notes to the Consolidated Financial Statements for additional information about income taxes.

NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued guidance under ASC 606, Revenue from Contracts with Customers, and subsequently
issued several amendments to further clarify the principles for recognizing revenue. This guidance establishes a single
comprehensive revenue recognition model for all contracts with customers and will supersede most existing revenue guidance.
The core principle of ASC 606 is that entities should recognize revenue to 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 to receive in exchange.

In January 2016, the FASB issued guidance under ASC 825, Recognition and Measurement of Financial Assets and
Financial Liabilities. This guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial
instruments. This guidance was effective for our first quarter of fiscal year 2019. The provisions relevant to us relate to fair value
disclosures for our notes payable, which are measured at amortized cost on the balance sheet. These provisions require the use of
the exit price notion when measuring the fair value of financial instruments for disclosure purposes, as well as eliminate the
requirement to disclose the method and significant assumptions used to estimate the fair value in such disclosure. This guidance
impacted our disclosures only on a prospective basis and did not have a material impact on our Consolidated Financial Statements.

In July 2019 the FASB updated the ASC to reflect the SEC's final rule to simplify certain disclosure requirements,
Disclosure Update and Simplification, which removed or modified certain disclosure requirements that require substantially similar
information in other SEC disclosure requirements or under U.S. GAAP, as well as information that has become outdated over
time. The amendments generally eliminate disclosures, but also include one expanded disclosure related to interim-period changes
in stockholders' equity, which we complied with accordingly in our Form 10-Q for the third quarter of fiscal year 2019.

Recently Issued Accounting Standards

In February 2016, the FASB issued guidance under ASC 842, Leases, which provides that, for leases with a term greater
than 12 months, a lessee must recognize in the statement of financial position both a liability to make lease payments and a ROU
asset. Other requirements describe expense recognition, as well as financial statement presentation and disclosure. In July 2018,
the FASB issued further guidance which provided alternative transition methods. The Company will adopt this guidance for our
first quarter of fiscal year 2020 on a modified retrospective transition approach, and will not restate prior comparative periods
presented in our financial statements. We expect to elect certain practical expedients, including the package of practical expedients
to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. We have
substantially completed our plan for the adoption of this new standard, including implementing software to meet the reporting
and disclosure requirements of this standard. We anticipate the adoption of this new standard will result in the recognition of
additional ROU assets of approximately $9,222,000 and liabilities of approximately $10,784,000 with the difference largely due
to deferred rent that will be reclassified.

available-for-sale debt securities, which can occur as a result of market and credit risk, as well as additional disclosures. In general,
this guidance will require modified retrospective adoption for all outstanding instruments that fall under this guidance. This
guidance is effective for our first quarter of fiscal year 2021. We are currently evaluating the impact of the adoption of this
requirement on our Consolidated Financial Statements.

There have been no other accounting pronouncements issued but not yet adopted by us which are expected to have a

material impact on our Consolidated Financial Statements.

NOTE 2 – OPERATING SEGMENTS

We have two reportable operating segments: (1) Retail and Wholesale Products Group and (2) Business to Business
Products Group. These operating segments are managed separately and each segment's major customers have different
characteristics. The Retail and Wholesale Products Group customers include mass merchandisers, wholesale clubs, drugstore
chains, pet specialty retail outlets, dollar stores, retail grocery stores, distributors of industrial cleanup and 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 animal health and nutrition products; and marketers of consumer products.

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

Business to Business
Products Group

Retail and Wholesale
Products Group

Product

2019

Year Ended July 31,
2019
2018

2018

Cat Litter

Industrial and Sports

Agricultural and Horticultural

Bleaching Clay and Fluids Purification

Animal Health and Nutrition

13,764

13,301

135,489

124,635

—

24,311

51,905

15,897

—

23,897

49,783

18,062

33,341

—

2,318

—

34,224

—

2,098

—

Net Sales

105,877

105,043

171,148

160,957

Net sales and operating income for each segment are provided below. 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 production facilities; however, we have estimated the segment asset allocations below for those assets for which we
can reasonably determine. The unallocated asset category is the remainder of our total assets. The asset allocation is estimated
and is not a measure used by our chief operating decision maker about allocating resources to the operating segments or in assessing
their performance.

The corporate expenses line in the table below represents certain unallocated expenses, including primarily salaries,
wages and benefits, purchased services, rent, utilities and depreciation and amortization associated with corporate functions such
as research and development, information systems, finance, legal, human resources and customer service. Corporate expenses
also include the annual incentive plan bonus accrual. Other income in fiscal year 2019 included net proceeds upon resolution of
legal proceedings. The amount received under a confidential agreement resolving these legal proceedings was material to our
financial results for the period.

Business to Business Products
Retail and Wholesale Products
Unallocated assets
Total Assets

Business to Business Products

Retail and Wholesale Products
Net Sales

Corporate Expenses
Income from Operations

Total Other Income (Expense), Net
Income Before Income Taxes

Income Tax Expense

Net Income

July 31,
Assets

2019

2018

(in thousands)

65,282
94,809
45,136
205,227

65,143
89,623
39,916
194,682

Year Ended July 31,

Net Sales

Income

2019

2018

2019

2018

105,877

171,148

277,025

(in thousands)

105,043

31,388

160,957

266,000

8,683

(29,659)
10,412

4,136

14,548
(1,933)
12,615

12,611

35,120

6,975

(26,218)
15,877
(1,011)
14,866
(6,644)
8,222
(18)
8,240

Net Income (Loss) Attributable to Noncontrolling Interest

Net Income Attributable to Oil-Dri

The following is a summary by fiscal year of financial information by geographic region (in thousands):

Sales to unaffiliated customers by:

Domestic operations

Foreign subsidiaries

Sales or transfers between geographic areas:

Domestic operations

Income before income taxes:

Domestic operations

Foreign subsidiaries

Net Income (Loss) attributable to Oil-Dri:

Domestic operations

Foreign subsidiaries

Identifiable assets:

Domestic operations

Foreign subsidiaries

2019

2018

264,476

12,549

5,097

14,280

268

12,456

155

195,032

10,195

254,158

11,842

5,570

14,742

124

8,249
(9)

185,361

9,321

Sales to Walmart, our largest customer, are included in our Retail and Wholesale Products Group. The percentage of

consolidated net sales and net accounts receivable attributed to Walmart are shown in the table below:

Net sales for the years ended July 31

Net accounts receivable as of July 31

2019

20%

26%

2018

18%

26%

There are no other customers with sales equal to or greater than 10% of our total sales.

NOTE 3 – DEBT

The composition of notes payable is as follows as of July 31 (in thousands):

Senior notes payable in annual principal installments on August 1: $3,083 in each fiscal year
2020 through 2021. Interest is payable semiannually at an annual rate of 3.96%

Less current maturities of notes payable

Less unamortized debt issuance costs
Noncurrent notes payable

2019

2018

$
$

6,167
(3,083)
(32)
3,052

$
$

9,250
(3,083)
(60)
6,107

We issued senior promissory notes in November 2010 for $18,500,000. The note agreement provides that the proceeds
could be used to fund future principal payments on debt, acquisitions, stock repurchases, capital expenditures and working capital
purposes. The note agreement contains restrictions against certain activities, among other things and under various conditions, as
well as financial covenants, including a minimum fixed charges coverage ratio and a minimum consolidated debt ratio.

We have a credit agreement with BMO Harris that expires on January 31, 2024. The agreement provides for a $45,000,000
unsecured revolving credit agreement, including a maximum of $10,000,000 for foreign letters of credit. Under the agreement we
may select a variable rate based on either 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 us and BMO Harris. As of July 31, 2019, the variable rates would
have been 5.75% for the BMO Harris’ prime-based rate or 3.52% for the LIBOR-based rate.

We borrowed $6,000,000 at a weighted average interest rate of 2.96% under the credit agreement during the third quarter
of fiscal year 2018. The amount borrowed was repaid in the fourth quarter of fiscal year 2018. The proceeds from the borrowing
were used to make a voluntary contribution to our pension plan. As of July 31, 2019 and 2018, there were no outstanding borrowings
under this credit agreement; however, there was a total of $5,973,000 allocated for guarantees required by one of our insurance
policies and state environmental regulations.

The credit agreement contains restrictive covenants that, among other things and under various conditions, limit our
ability to incur additional indebtedness or to dispose of assets. The agreement also requires us to maintain a minimum fixed
coverage ratio, a minimum consolidated net worth and a minimum consolidated debt ratio. Our debt agreements also contain
provisions such that if we default on one debt agreement, the others will automatically default. If we default on any guaranteed
debt with a balance greater than $1,000,000, our unsecured revolving credit agreement with BMO Harris will be considered in
default. If we default 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 as of July 31, 2019.

The following is a schedule by fiscal year of future principal maturities of notes payable as of July 31, 2019 (in thousands):

2020

2021

Total

3,083

3,084

6,167

NOTE 4 – FINANCIAL INSTRUMENTS

Fair Value

Fair 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 market participants 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 that is 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 to the overall fair value measurement. These inputs may reflect estimates of the
assumptions that market participants would use in valuing the financial assets and liabilities.

Cash equivalents are classified as Level 1 of the fair value hierarchy because they were valued using quoted market prices
in active markets. Cash equivalents were $26,000 and $9,920,000 as of July 31, 2019 and 2018, respectively. These cash instruments
are primarily money market funds and are included in cash and cash equivalents on the Consolidated Balance Sheets.

Short-term investments on the Consolidated Balance Sheets include certificates of deposit and treasury securities. We
had no short-term investments as of July 31, 2019 due to the low returns available on these investments. Short-term investment
held as of July 31, 2018 were reported at amortized cost on the Consolidated Balance Sheets, which approximated fair value, given
our intent and ability to hold them until maturity.

Accounts receivable and accounts payable balances on the Consolidated Balance Sheets approximate their fair values as

of July 31, 2019 and 2018 due to the short maturity and nature of those balances.

Notes payable on the Consolidated Balance Sheets are carried at the face amount of future maturities. The estimated fair
value of notes payable was approximately $6,357,000 as of July 31, 2019 and $9,553,000 as of July 31, 2018. Our debt does not
trade on a daily basis in an active market, therefore the fair value of notes payable was 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 Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash, short-term
investments and accounts receivable. Our cash is held in banks which are covered by the Federal Deposit Insurance Corporation;
however, our cash balances are in excess of the maximum 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 customer referred to in Note 2 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 5 – INCOME TAXES

The provision for income tax expense by fiscal year consists of the following (in thousands):

Current

Federal

Foreign

State

Current Income Tax Total

Deferred

Federal

Foreign

State

Deferred Income Tax Total

2019

2018

(529)

4,490

(5)

1,416

882

1,344

113

(406)

1,051

149

4,696

1,491

363

1,948

Total Income Tax Expense

1,933

6,644

On December 22, 2017, the U.S. government enacted the 2017 Tax Act. The 2017 Tax Act included a number of changes
to existing U.S. tax laws that impact us, most notably a reduction of the U.S. corporate income tax rate and acceleration of
depreciation for certain assets placed in service after September 27, 2017, as well as prospective changes, including repeal of the
domestic manufacturing deduction and capitalization of research and development expenditures. The 2017 Tax Act reduced the
U.S. federal corporate tax rate from 35.0% to 21.0% for all corporations effective January 1, 2018. For fiscal year companies, the
change in law requires the application of a blended rate for each quarter of the fiscal year of enactment. We applied a blended tax
rate of 26.9% for fiscal year 2018. For fiscal year 2019 and thereafter, the applicable statutory rate is 21.0%. In addition, during
fiscal year 2018 the change in the U.S. corporate income tax rate caused us to adjust our U.S. net deferred tax assets to the reduced
U.S. federal corporate tax rate and to record a provisional charge as a discrete item in the provision for income taxes. This transitional
impact resulted in a provisional net charge of approximately $3,996,000 in fiscal year 2018. Our analysis of the 2017 Tax Act
impact was finalized in fiscal 2019 and there were no adjustments to these provisional amounts.

Principal reasons for variations between the statutory federal rate and the effective rates by fiscal year were as follows:

U.S. federal income tax rate

Depletion deductions allowed for mining

State income tax expense, net of federal tax expense

Difference in effective tax rate of foreign subsidiaries

Prior year income taxes

Change in federal tax rate applied to deferred tax assets and liabilities

Deduction for domestic production activities

Other
Effective income tax rate

2019

2018

21.0%

(8.2)

2.5

0.2

(1.9)

—

(0.3)

13.3%

26.9%
(10.1)
2.5

0.1

0.2

26.8

(1.4)

(0.3)
44.7%

The Consolidated Balance Sheets included the following tax effects of cumulative temporary differences as of July 31

(in thousands):

Depreciation

Deferred compensation

Postretirement benefits

Allowance for doubtful accounts

Deferred marketing expenses

Other assets

Accrued expenses

Tax credits

Amortization

Inventories

Depletion
Stock-based compensation

Reclamation

Other assets – foreign

Valuation allowance
Total deferred taxes

2019

2018

Assets

Liabilities

Assets

Liabilities

— $

3,995

— $

3,284

2,121

6,100

—

390

2,076

250

166

264

—
556

392

585

(732)

—

326

—

173
—

—

12,249

4,494

2,057

4,164

118

—

374

2,131

683

200

570

—
367

309

755
(789)
10,939

—

293
—

—

3,590

The adjustment to reflect the reduced U.S. federal corporate tax rate under the 2017 Tax Act impacted the deferred tax
amounts for fiscal 2018 in the table above, particularly deferred taxes for depreciation, deferred compensation and postretirement
benefits. Deferred taxes for postretirement benefits were also affected by a voluntary contribution that significantly reduced our
pension liability. See Note 8 of the Notes to the Consolidated Financial Statements for further information about our postretirement
benefits.

We recorded a valuation allowance of $732,000 and $789,000 as of July 31, 2019 and July 31, 2018, respectively, for
the amount of the deferred tax benefit related to our foreign net operating loss carryforwards since we believe it is unlikely we
will realize the benefit of these tax attributes in the future. As of July 31, 2019, we have total net operating loss carryforwards
from state jurisdictions of approximately $4,000,000. No valuation allowance has been established for these carryforwards since
we expect our future profitability will allow us to fully realize these tax benefits.

Our foreign subsidiaries in the United Kingdom and China have not generated any untaxed foreign income, therefore we

have not provided for any related income taxes.

We had no material liability for unrecognized tax benefits based on tax positions related to the current and prior fiscal
years as of July 31, 2019 and 2018; correspondingly, no related interest and penalties were recognized as income tax expense and
there were no accruals for such items in either of these fiscal years.

We are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. We have no
income tax returns under examination as of July 31, 2019 and federal tax returns for fiscal years 2017 and 2018 remain open for
examination. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from three to five 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
formal notification to the states. There are a limited number of open state and local income tax audits in which no material issues
have been preliminarily identified. There are no material open or unsettled foreign income tax audits. We believe our accrual for
tax liabilities is adequate for all open audit years.

NOTE 6 – ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table summarizes the changes in accumulated other comprehensive income by component (in

thousands):

Pension and
Postretirement
Health
Benefits

Cumulative
Translation
Adjustment

Total
Accumulated
Other
Comprehensive
(Loss) Income

(10,292)

Balance as of July 31, 2017

(10,327)

Other comprehensive income (loss) before
reclassifications, net of tax

Amounts reclassified from accumulated other
comprehensive income, net of tax

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

Reclassification to retained earnings upon
adoption of accounting standard
Balance as of July 31, 2018
Other comprehensive (loss) income before
reclassifications, net of tax
Amounts reclassified from accumulated other
comprehensive income, net of tax
Net current-period other comprehensive (loss)
income, net of tax
Balance as of July 31, 2019

$
$

1,310 a)

897 b)

2,207

(2,264)
(10,384)

(5,089) a)

582 b)

(4,507)
(14,891)

$
$

(266)

—

(266)

— $
(231) $

—

83
(148) $

1,044

897

1,941

(2,264)
(10,615)

(5,006)

582

(4,424)
(15,039)

a) Amounts are net of taxes of $1,607,000 and $413,000 in fiscal years 2019 and 2018, respectively, and are included in Other

Comprehensive Loss.

b) Amounts are net of taxes of $185,000 and $373,000 in fiscal years 2019 and 2018, respectively. Amounts are included in the

components of net periodic benefit cost for the pension and postretirement health plans.

See Note 8 of the Notes to the Consolidated Financial Statements for further information about pension and postretirement health
benefits.

NOTE 7 – STOCK-BASED COMPENSATION

The Oil-Dri Corporation of America 2006 Long Term Incentive Plan (as amended, the “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 to receive grants under the 2006 Plan. The total number of
shares of stock subject to grants under the 2006 Plan may not exceed 937,500. As of July 31, 2019, there were 74,263 shares
available for future grants under this plan.

RESTRICTED STOCK

All non-vested restricted stock as of July 31, 2019 was issued under the 2006 Plan with vesting periods generally from
two to five years. The fair value of restricted stock was determined by the closing market price of our Common Stock on the date
of grant multiplied by the number of shares granted.

A summary of restricted stock transactions under the plans is shown below.

Non-vested restricted stock outstanding at July 31, 2017

Granted

Vested

Forfeited

Non-vested restricted stock outstanding at July 31, 2018

Granted

Vested

Forfeited

Non-vested restricted stock outstanding at July 31, 2019

Number of
Shares
(in thousands)

Weighted
Average
Grant Date
Fair Value

Weighted
Average
Remaining
Contractual
Term
(Years)

Unamortized
Expense
(in thousands)

185

27
$
(28) $
(6) $
$
178
$
321
(61) $
(24) $
$
414

30.96

42.59

29.88

35.90

32.74
32.89

31.90

30.85

33.09

2.8

1.7

4.5

3,893

3,050

10,474

Stock-based compensation for restricted stock of $1,834,000 and $1,349,000, net of related tax effect, was recognized
in fiscal years 2019 and 2018, respectively. The total restricted stock compensation related tax benefit was $579,000 and $426,000
in fiscal years 2019 and 2018, respectively.

NOTE 8 – PENSION AND OTHER POSTRETIREMENT BENEFITS

The 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.

A postretirement health benefits plan is also provided to domestic salaried employees who meet specific age, participation
and length of service requirements at the time of retirement. Eligible employees may elect to continue their health care coverage
under the Oil-Dri Corporation of America Employee Benefits Plan until the date certain criteria are met, including attaining the
age of Medicare eligibility. We have the right to modify or terminate the postretirement health benefit plan at any time.

A 401(k) savings plan is maintained under which we match a portion of employee contributions. This plan is available
to essentially all domestic employees following a specific number of days of employment. Our contributions to this plan, and to
similar plans maintained by our foreign subsidiaries, were $764,000 and $782,000 for fiscal years 2019 and 2018, respectively.

Obligations and Funded Status

The following tables provide a reconciliation of changes in the plans’ benefit obligations, asset fair values and funded

status by fiscal year (in thousands):

Change in benefit obligation:

Benefit obligation, beginning of year

Service cost

Interest cost

Actuarial loss (gain)

Benefits paid

Benefit obligation, end of year

Change in plan assets:

Fair value of plan assets, beginning of year

Actual return on plan assets

Employer contribution

Benefits paid

Fair value of plan assets, end of year
Funded status, recorded in Consolidated Balance Sheets

Pension Benefits

Postretirement Health
Benefits

2019

2018

2019

2018

54,267

53,742

2,667

2,925

1,626

2,114

5,125
(1,579)
61,553

1,723

2,022
(1,811)
(1,409)
54,267

40,971

1,333

—
(1,579)
40,725
$ (20,828)

27,457

1,719

13,204
(1,409)
40,971
$ (13,296)

105

97
(8)
2,958

—

8
(8)
—
(2,958)

106

84
(363)
(85)
2,667

—

85
(85)
—
(2,667)

See “Cash Flows” below for further information about employer contributions and benefits payments.

The accumulated benefit obligation for the Pension Plan was $54,696,000 and $48,358,000 as of July 31, 2019 and

July 31, 2018, respectively.

The following table shows amounts recognized in the Consolidated Balance Sheets as of July 31 (in thousands):

Pension Benefits

Postretirement Health
Benefits

2019

2018

2019

2018

Deferred income taxes

Other current liabilities

Other noncurrent liabilities

Accumulated other comprehensive loss – net of tax:

Net actuarial loss

Prior service cost (income)

639
(57)
(2,610)

110
(29)

5,346

$
— $

$
$ (20,828)

3,525

$
— $
$

$ (13,296)

754
(65)
(2,893)

14,731

$
— $

10,301

184
(24)

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

2019

2018

2019

2018

Service cost

Interest cost

Expected return on plan assets

Amortization of:

Prior service costs (income)

Other actuarial loss

Net periodic benefit cost

1,723

105

1,626

2,114

(2,809)

771

1,704

2,022
(2,168)

1,274

2,853

—

(6)
—

106

—

(6)
—

196

184

The following table shows amounts, net of tax, that are recognized in other comprehensive income by fiscal year (in

thousands):

Net actuarial loss (gain)

Amortization of:

Prior service (cost) income

Amortization of actuarial (loss) gain

Total recognized in other comprehensive loss (income)

Pension Benefits

2019

$ 5,016

2018
$ (1,034)

Postretirement
Health Benefits

2019

2018

(276)

(1)
(586)
$ 4,429

(2)
(901)
$ (1,937)

—

5
(270)

The following table shows amortization amounts, net of tax, expected to be recognized in fiscal year 2020 in accumulated

other comprehensive income (in thousands):

Amortization of:

Net actuarial loss

Prior service income

Total to be recognized as other comprehensive loss (income)

Pension
Benefits

Postretirement
Health Benefits

1,087

—

1,087

—
(5)
(5)

Cash Flows

We have funded the Pension Plan based upon actuarially determined contributions that take into account the amount
deductible for income tax purposes, the normal cost and the minimum contribution required and the maximum contribution allowed
under applicable regulations. During fiscal 2018, we made an $11,500,000 voluntary contribution in excess of the minimum
required amount. This contribution was made within eight and one-half months after the end of our fiscal year 2017 and therefore
was deductible for our 2017 tax year. We received a greater tax benefit for this deduction in our 2017 tax year compared to the
the benefit we would have received if the contribution was attributed to our 2018 tax year. See Note 5 of the Notes to the Consolidated
Financial Statements for further discussion of the tax rates and other changes enacted by the 2017 Tax Act. This voluntary
contribution also improved our funded status and contributed to a lower net periodic benefit expense.

We do not expect to make a contribution to the Pension Plan in fiscal year 2020. The postretirement health plan is an

unfunded plan. Our policy is to pay health insurance premiums and claims from our assets.

The following table shows the estimated future benefit payments by fiscal year (in thousands):

Pension
Benefits

Postretirement
Health Benefits

2020
2021
2022
2023
2024

2025-29

$
$
$
$
$

1,686
1,763
1,864
1,902
2,013

13,969

$
$
$
$
$

66
98
108
147
236

1,412

Assumptions

Our pension benefit and postretirement health benefit obligations and the related effects on operations are calculated
using actuarial models. Critical assumptions that are important elements of plan expenses and asset/liability measurements include
discount rate and expected return on assets for the Pension Plan and health care cost trend for the postretirement health plan. We
evaluate these critical assumptions at least annually. Other assumptions involving demographic factors such as retirement age,
mortality and turnover are evaluated periodically and are updated to reflect our experience and to meet regulatory requirements.
Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The assumptions
used in the previous calculations by fiscal year were as follows:

Discount rate for net periodic benefit costs
Discount rate for year-end obligations
Rate of increase in compensation levels for net periodic benefit costs
Rate of increase in compensation levels for year-end obligations
Long-term expected rate of return on assets

Pension Benefits
2018
2019
4.04%
3.75%
3.35%
4.04%
3.50%
3.50%
3.50%
3.50%
7.00%
7.00%

Postretirement Health
Benefits

2019
3.81%
2.93%
—
—
—

2018
3.26%
3.81%
—
—
—

The discount rate was based on the FTSE Pension Discount Curve to determine separately for the Pension Plan and the
postretirement health 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, our estimate of future long-term returns by asset class (using input from our actuaries, investment managers and
investment advisors), and long-term inflation assumptions.

For fiscal year 2019, the medical cost trend assumption used for the postretirement health benefit cost was 7.5%. The

graded trend rate is expected to decrease to an ultimate rate of 4.5% in fiscal year 2038.

The following table reflects the effect on postretirement health costs and accruals in fiscal year 2019 of a one-percentage

point change in the assumed health care cost trend (in thousands):

Effect on total service and interest cost
Effect on accumulated postretirement benefit obligation

One-Percentage Point
Increase
$26
$301

One-Percentage
Point Decrease
$(22)
$(267)

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 benefit obligations to participants at a reasonable cost. To reach this goal, our investment structure includes various
asset classes, asset allocations and investment management styles that, in total, have a reasonable likelihood of producing a
sufficient level of overall diversification that balances expected return with expected 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 targeted allocation percentages of plan assets is shown below for fiscal year 2020 and the
actual allocation as of July 31:

Asset Allocation

Cash and accrued income

Fixed income

Equity

Target
fiscal 2020

38%

60%

2019

—%

42%

58%

2018

—%

36%

64%

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, 2019
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Total

Asset Class
Cash and cash equivalents(a)
Equity securities(b):
U.S. companies

International companies

Equity securities - international mutual funds:
Developed market(c)
Emerging markets(d)
Commodities(e)
Fixed Income:

U.S. Treasuries
Debt securities(f)
Government sponsored entities(g)
Multi-strategy bond fund(h)
Money market fund(i)
Other(j)
Total

—

13,775

2,609

4,147

2,609

5,275

1,141

637

3,273

8,103

2,087

813

557

—

9,628

—

5,275

1,141

637

3,273

8,103

2,087

813

557

2,389
40,725

—
6,822

2,389
33,903

Fair Value At July 31, 2018
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Total

Asset Class
Cash and cash equivalents(a)
Equity securities(b):
U.S. companies

International companies

Equity securities - international mutual funds:
Developed market(c)
Emerging markets(d)
Commodities(e)
Fixed Income:

U.S. Treasuries

Debt securities(f)
Government sponsored entities(g)
Money market fund(i)
Other(j)
Total

1,102

—

14,253

3,157

5,519

3,157

5,851

905

687

1,929

8,325

1,814

1,567

1,381

—

8,734

—

5,851

905

687

1,929

8,325

1,814

1,567

1,381

40,971

9,778

31,193

(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 in developed markets, but also may invest in emerging and less developed markets.

(d) These mutual funds seek to track the performance of a benchmark index that measures the investment return of stock

issued by companies located in emerging market countries.

(e) These investments seek attractive total return by investing primarily in a diversified portfolio of commodity futures

contracts and fixed income investments.

(f) This class includes bonds and loans of U.S. and non-U.S. corporate issuers from diverse industries and bonds of domestic

and foreign municipalities.

(g) This class represents a beneficial ownership interest in a pool of single-family residential mortgage loans. These
investments are generally not backed by the full faith and credit of the United States government, except for securities
valued at $377,000 in our portfolio as of July 31, 2019 and $443,000 as of July 31, 2018.

(h) This class invests at least 80% of its net assets in bonds and other fixed income instruments issued by governmental or
private-sector entities. More than 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, bank loans and assignments and credit default swaps.

(i) These money market mutual funds seek to provide current income consistent with liquidity and stability of principal by
investing in a diversified portfolio of high quality, short-term, dollar-denominated debt securities. These funds may include
securities issued or guaranteed as to principal and interest by the U.S. government or its agencies, short-term securities
issued by domestic or foreign banks, domestic and dollar-denominated foreign commercial papers, and other short-term
corporate obligations and obligations issued or guaranteed by one or more foreign governments.

(j) This class includes funds that use a number of other strategies, including arbitrage, to obtain long-term positive returns.
The portfolio of instruments may include equities, debt securities, real estate properties, warrants, options, swaps, future
contracts, forwards or other types of derivative instruments.

NOTE 9 – DEFERRED COMPENSATION

Oil-Dri's deferred compensation plans permit directors and certain management employees to defer portions of their
compensation and to earn interest on the deferred amounts. Participants have deferred $418,000 and $578,000 into these plans in
fiscal years 2019 and 2018, respectively. We recorded $204,000 and $371,000 of interest expense associated with these plans in
fiscal years 2019 and 2018, respectively. Payments to participants were $1,144,000 and $6,010,000 in fiscal years 2019 and 2018,
respectively, and the total liability recorded for deferred compensation was $3,560,000 and $4,218,000 as of July 31, 2019 and
2018, respectively.

The Oil-Dri Corporation of America Annual Incentive Plan provides certain executives with the opportunity to receive
a deferred executive bonus award if certain financial goals are met. A total of $513,000 and $609,000 were awarded to certain
executives for fiscal years 2019 and 2018, respectively. These awards will vest and accrue interest over a three-year period.

Our deferred compensation plans are unfunded. We fund these benefits when payments are made, and the timing and
amount of the payments are determined according to the plans' provisions and, for certain plans, according to individual employee
agreements.

The Oil-Dri Corporation of America Supplemental Executive Retirement Plan (“SERP”) provides certain retired
participants in the Pension Plan with the amount of benefits that would have been provided under the Pension Plan but for: (1)
the limitations on benefits imposed by Section 415 of the Internal Revenue Code (“Code”), and/or (2) the limitation on compensation
for purposes of calculating benefits under the Pension Plan imposed by Section 401(a)(17) of the Code. The SERP liability is
actuarially determined at the end of each fiscal year using assumptions similar to those used for the Pension Plan, see Note 8 of
the Notes to the Consolidated Financial Statements. The SERP liability was $2,708,000 and $2,169,000 as of July 31, 2019 and
July 31, 2018, respectively. We recorded expense related to the SERP of $539,000 and $87,000 in fiscal years 2019 and 2018,
respectively. The SERP is unfunded and benefits will be funded when payments are made.

NOTE 10 – 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 not possible 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 a material adverse effect on our business, financial condition, results of operations
or cash flows. See Item 3 “Legal Proceedings” for more information about specific legal matters related to our patents.

NOTE 11 – 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 to pay a minimum monthly rental, which is typically applied against the per ton royalty when the
property is mined. We also lease certain offices and production facilities. In addition, we may lease vehicles, railcars, mining
property and equipment, warehouse space, data processing equipment, and office equipment. 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-cancelable lease terms in excess of one year as of July 31, 2019 (in thousands):

2020

2021

2022

2023
2024
Later years

$
$
$

2,255

1,640

1,513

1,038
899
7,422

The following schedule shows the composition of total rent expense by fiscal year for all operating leases, including

those with terms of one month or less which were not renewed (in thousands):

Vehicles and Railcars

Office facilities

Warehouse facilities

Mining properties:

Minimum

Contingent (1)

Other

Total

2019

2018

$ 1,319

$ 1,404

626

434

118

301

985

408

106

208

$ 2,873

$ 3,203

(1) Contingent mining royalty payments are determined based on the tons of raw clay mined.

NOTE 12 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date the financial statements were issued. Based on our
evaluation no events have occurred that would require recognition in the Consolidated Financial Statements or disclosure in the
Notes to the Consolidated Financial Statements.

NOTE 13 – RELATED PARTIES

One member of our Board of Directors is currently the President and Chief Executive Officer of a customer of ours. Total
net sales to that customer, including sales to subsidiaries of that customer, were $462,000 and $388,000 for fiscal years 2019 and
2018, respectively. There were $10,000 and $14,000 outstanding accounts receivable due from that customer, and its subsidiaries,
as of July 31, 2019 and July 31, 2018, respectively.

One member of our Board of Directors is currently the President and Chief Executive Officer of a vendor of ours. Total
payments to this vendor for fees and cost reimbursements were $271,000 and $229,000 for fiscal years 2019 and 2018, respectively.
There were no outstanding amounts due to that vendor as of July 31, 2019 or July 31, 2018.

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 in Exchange Act Rules 13a-15f. Our internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with accounting principles generally accepted in the United States of America.

Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework (2013 framework) issued by the Committee Sponsoring Organizations of
the Treadway Commission (COSO). Based on our assessment, our management concluded that our internal control over financial
reporting was effective as of July 31, 2019.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our internal controls over financial reporting as of July 31, 2019 have been audited by Grant Thornton LLP, an independent

registered public accounting firm, as stated in their report which appears on the next page of this Annual Report on Form 10-K.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Oil-Dri Corporation of America

Opinions on the financial statements and internal control over financial reporting
We have audited the accompanying consolidated balance sheets of Oil-Dri Corporation of America (a Delaware corporation)
and subsidiaries (the “Company”) as of July 31, 2019 and 2018, and the related consolidated statements of comprehensive
income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended July 31, 2019, and the
related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”).
We also have audited the Company’s internal control over financial reporting as of July 31, 2019, based on criteria established
in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of July 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the
period ended July 31, 2019 in conformity with accounting principles generally accepted in the United States of America. Also
in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July
31, 2019, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

Basis for opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.

Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely 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 of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2014.

Chicago, Illinois
October 10, 2019

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 the period covered by this Form 10-K. The controls evaluation was conducted under the supervision
and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”).
Based upon the controls evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this report,
our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed
in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC, and
that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Management’s Report on Internal Control Over Financial Reporting is set forth in Part II, Item 8 of this Annual Report

on Form 10-K.

Changes in Internal Control over Financial Reporting

The Company is engaged in a multi-year implementation of a new ERP system designed to upgrade our technology and
improve our financial and operational information. While the Company believes that this new system and related changes to
internal controls will ultimately strengthen its internal control over financial reporting, there are inherent risks in implementing a
new ERP system. The Company has appropriately considered these changes in its design of and testing for effectiveness of internal
controls over financial reporting and concluded, as part of the evaluation described in the above paragraph, that the implementation
of the new ERP in these circumstances has not materially changed the effectiveness of its internal control over financial reporting.

There were no changes, other than those described herein, in our internal control over financial reporting that occurred
during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, do not expect that our disclosure controls and procedures or our internal
control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a
control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to
their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness
to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.

ITEM 9B – OTHER INFORMATION

None.

PART III

ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item (except as set forth below) is contained in Oil-Dri’s Proxy Statement for its 2019
annual meeting of stockholders under the captions “1. Election of Directors,” “Executive Officers,” “Section 16(a) Beneficial
Ownership Reporting Compliance,” “Director Nominations,” “Audit Committee” and “Corporate Governance Matters” and is
incorporated herein by this reference.

The Company has adopted a Code of Ethics and Business Conduct (the “Code”) which applies to all of its directors,
officers (including the Company’s Chief Executive Officer and senior financial officers) and employees. The Code imposes
significant responsibilities on the Chief Executive Officer and the senior financial officers of the Company. The Code, the
Company’s Corporate Governance Guidelines and the charter of its Audit Committee may be viewed on the Company’s website
at www.oildri.com and are available in print to any person upon request to Investor Relations, Oil-Dri Corporation of America,
410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone (312) 321-1515 or e-mail to info@oildri.com.
Any amendment to, or waiver of, a provision of the Code which applies to the Company’s Chief Executive Officer or senior
financial officers and relates to the elements of a “code of ethics” as defined by the SEC will also be posted on the Company’s
website. As allowed by the “controlled company” exemption to certain NYSE rules, the Company does not have a nominating/
corporate governance committee and its compensation committee does not have a charter.

ITEM 11 – EXECUTIVE COMPENSATION

The information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2019 annual meeting of stockholders
under the captions “Executive Compensation,” “Director Compensation” and “Compensation Committee” and is incorporated
herein by reference.

ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

Except as set forth herein, the information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2019
annual meeting of stockholders under the captions “Principal Stockholders” and “Security Ownership of Management” and is
incorporated herein by reference.

Equity Compensation Plan Information. The following table presents information about compensation plans under
which our equity securities are authorized for issuance. There are no outstanding stock options as of July 31, 2019. See Note 7 of
the Notes to the Consolidated Financial Statements for further information about these stock-based compensation plans.

Equity Compensation Plan Information As Of July 31, 2019

Number of
securities to be
issued upon
exercise of
outstanding options
(in thousands)
(a)

Weighted-average
exercise price of
outstanding options
(b)

Number of securities
remaining available for
further issuance under
equity compensation plans
(excluding securities
reflected in column (a)) (in
thousands)
(c)

Plan Category

Equity compensation plans approved by stockholders

—

$—

The number of securities remaining in column (c) above includes, in accordance with the terms of the plan, shares that
were: 1) not vested or exercised in full due to expiration or termination, or 2) tendered or withheld for payment of the exercise
price or to satisfy tax withholding amounts.

ITEM 13 – CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is contained in Oil-Dri’s Proxy Statement for its 2019 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 2019 annual meeting of stockholders

under the caption “Auditor Fees” and is incorporated herein by reference.

ITEM 15 – EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

PART IV

(a)(1)

The following consolidated financial statements are contained herein.

Consolidated Balance Sheets as of July 31, 2019 and July 31, 2018.

Consolidated Statements of Operations for the fiscal years ended July 31, 2019 and July 31, 2018.

Consolidated Statements of Comprehensive Income for the fiscal years ended July 31, 2019 and July 31, 2018.

Consolidated Statements of Stockholders’ Equity for the fiscal years ended July 31, 2019 and July 31, 2018.

Consolidated Statements of Cash Flows for the fiscal years ended July 31, 2019 and July 31, 2018.

Notes to the Consolidated Financial Statements.

Report of Independent Registered Public Accounting Firm.

(a)(2) The following financial statement schedule is contained herein:

Schedule to Financial Statements, as follows:

Schedule II - Valuation and Qualifying Accounts, years ended July 31, 2019 and July 31, 2018.

All other schedules are omitted because they are inapplicable, not required under the instructions or the
information is included in the consolidated financial statements or notes thereto.

(a)(3) The following documents are exhibits to this Report:

Exhibit
No.
3.1

Certificate of Incorporation of Oil-Dri, as amended.

Description

SEC Document Reference
Incorporated by reference to Exhibit 4.1 to Oil-Dri’s
Registration Statement on Form S-8 (Registration No.
333-57625), filed on June 24, 1998.

3.2

By-Laws of Oil-Dri Corporation of America, as
Amended and Restated on December 12, 2017.

Incorporated by reference to Exhibit 3 to Oil-Dri’s (file
No. 001-12622) Quarterly Report on Form 10-Q filed on
March 9, 2018.

4.1

Description of Capital Stock

Filed herewith

10.1

Memorandum of Agreement #1450 “Fresh Step“®
dated as of March 12, 2001 between A&M Products
Manufacturing Company and Oil-Dri (confidential
treatment of certain portions of this exhibit has been
granted).

Incorporated by reference to Exhibit 10(s) to Oil-Dri’s
(File No. 001-12622) Current Report on Form 8-K filed
on May 1, 2001.

Exhibit
No.
10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

Description
First Amendment, dated as of December 13, 2002,
to Memorandum of Agreement #1450 “Fresh Step”®
dated as of March 12, 2001.

SEC Document Reference
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.

Second Amendment, dated as of October 15, 2007,
to Memorandum of Agreement #1450 “Fresh Step”®
dated as of March 12, 2001 (confidential treatment
of certain portions of this exhibit has been granted).

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended October 31, 2007.

Third Amendment, dated as of May 27, 2016, to
Memorandum of Agreement #1450 “Fresh Step”®
dated as of March 12, 2001 (confidential treatment
of certain portions of this exhibit have been
requested).

Incorporated by reference to Exhibit 10.4 to Oil-Dri’s (File
No. 001-12622) Annual Report on Form 10-K for the
fiscal year ended July 31, 2016.

Exclusive Supply Agreement dated May 19, 1999
between Church & Dwight Co., Inc. and Oil-Dri
(confidential treatment of certain portions of this
exhibit has been granted).

Incorporated by reference to Exhibit (10)(r) to Oil-Dri’s
(File No. 001-12622) Annual Report on Form 10-K for
the fiscal year ended July 31, 1999.

Credit Agreement, dated January 27, 2006 among
the Company, certain subsidiaries of the Company
and Harris N.A.

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Current Report on Form 8-K filed on
February 1, 2006.

First Amendment, dated as of December 19, 2008 to
Credit Agreement dated as of January 27, 2006.

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended January 31, 2009.

Second Amendment, dated as of December 21, 2011
to Credit Agreement dated as of January 27, 2006.

Incorporated by reference to Exhibit 10 to Oil-Dri’s (File
No. 001-12622) Current Report on Form 8-K filed on
December 28, 2011.

Third Amendment, dated as of June 21, 2012 to
Credit Agreement dated as of January 27, 2006.

Incorporated by reference to Exhibit 10.12 to Oil-Dri’s
(File No. 001-12622) Annual Report on Form 10-K for
the fiscal year ended July 31, 2012.

10.10

Fourth Amendment, dated as of December 4, 2014
to Credit Agreement dated as of January 27, 2006.

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended October 31, 2014.

10.11

Fifth Amendment, dated as of January 31, 2019 to
Credit Agreement dated as of January 27, 2006.

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Current Report on Form 8-K filed on
January 31, 2019.

10.12

Annex A to the Fifth Amendment to Credit
Agreement dated as of January 27, 2006.

Incorporated by reference to Exhibit 10.2 to Oil-Dri’s (File
No. 001-12622) Current Report on Form 8-K filed on
January 31, 2019.

10.13

$18,500,000 Note Agreement dated as of November
12, 2010 among Oil-Dri Corporation of America,
The Prudential Insurance Company of America,
Prudential Retirement Insurance and Annuity
Company, Forethought Life Insurance Company,
Physicians Mutual
Insurance Company and
BCBSM, Inc. dba Blue Cross and Blue Shield of
Minnesota.

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Current Report on Form 8-K filed on
November 16, 2010.

Exhibit
No.
10.14

10.15

10.16

10.17

Description
Compensation Program.*

Description
1987 Executive Deferred

SEC Document Reference
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.

of America Deferred
Oil-Dri Corporation
Compensation Plan, as amended and restated
effective April 1, 2003.*

Incorporated by reference to Exhibit (10)(j)(1) to Oil-Dri’s
(File No. 001-12622) Quarterly Report on Form 10-Q for
the quarter ended April 30, 2003.

First Amendment, effective as of January 1, 2007,
to Oil-Dri Corporation of America Deferred
Compensation Plan, as amended and restated
effective April 1, 2003.*

Incorporated by reference to Exhibit 10.1 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended January 31, 2008.

Second Amendment, effective as of January 1, 2008,
to Oil-Dri Corporation of America Deferred
Compensation Plan, as amended and restated
effective April 1, 2003.*

Incorporated by reference to Exhibit 10.2 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended January 31, 2008.

10.18

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.

10.19

Oil-Dri Corporation of America Annual Incentive
Plan (as amended and restated effective January 1,
2008).*

Incorporated by reference to Exhibit 10.4 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended January 31, 2008.

10.20

10.21

10.22

10.23

10.24

10.25

10.26

Oil-Dri Corporation of America 2005 Deferred
Compensation Plan (as amended and restated
effective January 1, 2008)*

Incorporated by reference to Exhibit 10.3 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended January 31, 2008.

Oil-Dri Corporation of America 2006 Long Term
Incentive Plan (as amended and restated effective
July 28, 2006)*

Incorporated by reference to Appendix A to Oil-Dri’s (File
No. 001-12622) Definitive Proxy Statement on Schedule
14A filed on November 3, 2006.

First Amendment, effective as of January 1, 2008,
to Oil-Dri Corporation of America 2006 Long Term
Incentive Plan (as amended and restated effective
July 28, 2006)*

Incorporated by reference to Exhibit 10.5 to Oil-Dri’s (File
No. 001-12622) Quarterly Report on Form 10-Q for the
quarter ended January 31, 2008.

Second Amendment, effective as of October 15,
2015, to Oil-Dri Corporation of America 2006 Long
Term Incentive Plan (as previously amended and
restated effective July 28, 2006)*

Incorporated by reference to Appendix A to Oil-Dri’s (File
No. 001-12622) Definitive Proxy Statement on Schedule
14A filed on October 28, 2015.

Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Employee Stock Option
Agreement for Class A Common Stock.*

Incorporated by reference to Exhibit 10.2 to Oil-Dri’s (file
No. 001-12622) Current Report on Form 8-K filed on
December 11, 2006.

Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Employee Stock Option
Agreement for Common Stock.*

Incorporated by reference to Exhibit 10.3 to Oil-Dri’s (file
No. 001-12622) Current Report on Form 8-K filed on
December 11, 2006.

Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Employee Stock Option
Agreement for Class B Stock.*

Incorporated by reference to Exhibit 10.4 to Oil-Dri’s (file
No. 001-12622) Current Report on Form 8-K filed on
December 11, 2006.

Exhibit
No.
10.27

10.28

10.29

10.30

10.31

Description
Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Director Stock Option
Agreement for Common Stock.*

SEC Document Reference
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.

Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Restricted Stock Agreement for
Class A Common Stock.*

Incorporated by reference to Exhibit 10.6 to Oil-Dri’s (file
No. 001-12622) Current Report on Form 8-K filed on
December 11, 2006.

Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Restricted Stock Agreement for
Common Stock.*

Incorporated by reference to Exhibit 10.7 to Oil-Dri’s (file
No. 001-12622) Current Report on Form 8-K filed on
December 11, 2006.

Form of Oil-Dri Corporation of America 2006 Long
Term Incentive Plan Restricted Stock Agreement for
Class B Stock.*

Incorporated by reference to Exhibit 10.8 to Oil-Dri’s (file
No. 001-12622) Current Report on Form 8-K filed on
December 11, 2006.

Form of 2018 Restricted Stock Agreement for
Class B Stock under the Oil-Dri Corporation of
America 2006 Long Term Incentive Plan.*

Incorporated by reference to Exhibit 10.29 to Oil-Dri's
(file No. 001-12622) Annual Report on Form 10-K for
the fiscal year ended July 31, 2018.

11.1

Statement re: Computation of Net Income Per Share.

Filed herewith.

14.1

Code of Ethics

Available at Oil-Dri’s website at www.oildri.com or in
print upon request to Investor Relations, Oil-Dri
Corporation of America, 410 North Michigan Avenue,
Suite 400, Chicago, IL 60611-4213, telephone (312)
321-1515 or e-mail to info@oildri.com.

21.1

Subsidiaries of Oil-Dri Corporation of America

Filed herewith.

23.1

Consent of
Accounting Firm

Independent Registered Public

Filed herewith.

31.1

Certifications pursuant to Rule 13a – 14(a).

Filed herewith.

32.1

Certifications pursuant to Section 1350 of the
Sarbanes-Oxley Act of 2002.

Furnished herewith.

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.

Exhibit
No.

101.LAB

Description

SEC Document Reference

XBRL Taxonomy Extension Labels Linkbase
Document

Furnished herewith.

101.PRE

XBRL Taxonomy Extension Presentation
Linkbase

Furnished herewith.

Management contract or compensatory plan or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Oil-Dri has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

OIL-DRI CORPORATION OF AMERICA
(Registrant)

/s/ Daniel S. Jaffee
Daniel S. Jaffee
President and Chief Executive Officer, Director

Dated: October 10, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons

on behalf of Oil-Dri and in the capacities and on the dates indicated:

/s/ Daniel S. Jaffee

October 10, 2019

Daniel S. Jaffee

President and Chief Executive Officer,
Chairman of the Board of Directors

(Principal Executive Officer)

/s/ Susan M. Kreh

October 10, 2019

Susan M. Kreh

Chief Financial Officer

(Principal Financial Officer)

/s/ Paula J. Krystopolski

October 10, 2019

Paula J. Krystopolski

Vice President, Corporate Controller

(Controller)

/s/ Ellen-Blair Chube

October 10, 2019

Ellen-Blair Chube

Director

/s/ Paul M. Hindsley

October 10, 2019

Paul M. Hindsley

Director

/s/ Joseph C. Miller

October 10, 2019

Joseph C. Miller

Vice Chairman of the Board of Directors

/s/ Michael A. Nemeroff

October 10, 2019

Michael A. Nemeroff
Director

/s/ George C. Roeth

October 10, 2019

George C. Roeth
Director

/s/ Allan H. Selig

October 10, 2019

Allan H. Selig
Director

/s/ Paul E. Suckow

October 10, 2019

Paul E. Suckow
Director

/s/ Lawrence E. Washow

October 10, 2019

Lawrence E. Washow
Director

SCHEDULE II

OIL-DRI CORPORATION OF AMERICA AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

Allowance for doubtful accounts and cash discounts:

Balance, beginning of year

(Reduction) Addition

Net recovery (write off)

Balance, end of year

Valuation reserve for income taxes:
Balance, beginning of year

Change

Balance, end of year

Year Ended July 31,

2018
2019
(in thousands)

817
(181)
8

644

748

251
(182)
817

789
(57)
732

793
(4)
789

Exhibit
No.

4.1

Description of Capital Stock

EXHIBITS

Description

11.1

21.1

23.1

31.1

Statement Re: Computation of Net Income Per Share

Subsidiaries of Oil-Dri Corporation of America

Consent of Independent Registered Public Accounting Firm

Certifications by Daniel S. Jaffee, President and Chief Executive Officer and Susan M. Kreh, Chief Financial Officer,
required by Rule 13a-14(a)

32.1

Certifications pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002

Mine Safety Disclosure

101.INS

XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Labels Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase

Note:

Stockholders may receive copies of the above listed exhibits, without fee, by written request to Investor Relations,
Oil-Dri Corporation of America, 410 North Michigan Avenue, Suite 400, Chicago, Illinois 60611-4213, telephone
(312) 321-1515 or e-mail to info@oildri.com.

EXHIBIT 4.1:

DESCRIPTION OF CAPITAL STOCK

The following description of our Common Stock is a summary and does not purport to be complete and is subject to and qualified
in its entirety by reference to both the Certificate of Incorporation of Oil-Dri, as amended (the "Certificate of Incorporation"), and
the By-Laws of Oil-Dri Corporation of America, as Amended and Restated (the "By-laws"). The Certificate of Incorporation and
the By-laws are each incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a
part.

Authorized Shares of Capital Stock

Our authorized capital stock as of July 31, 2019 and 2018 consisted of 15,000,000 shares of Common Stock, 7,000,000 shares of
Class B Stock and 30,000,000 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.

Voting Rights

Common Stock is entitled to one vote per share and Class B Stock is entitled to ten votes per share, while Class A Common Stock
has no voting rights except in accordance with law.

Dividends

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 paid on 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, while shares 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 Stock and 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.

Shares of Common Stock, Class A Common Stock and Class B Stock are equal in respect of all rights to dividends (other than
cash as described above) and distributions in 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 and Class 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 half share
of Class A Common Stock.

Conversion Rights

Common Stock and Class A Common Stock have no conversion rights. Class B Stock is convertible on a share-by-share basis
into Common Stock at any time and is subject to mandatory conversion under certain circumstances.

Duration of Class Rights and Powers

At any time when the shares of Class B Stock cease to account for at least 20% of the total of both shares of Common Stock and
Class B Stock outstanding, or for a period of one year do not account for at least 10% of the the total shares of Common Stock,
Class B Stock and Class A Common Stock outstanding, then any shares of Class B Stock outstanding shall, without any action
by the Board of Directors, automatically convert to shares of Common Stock. In addition, and the provisions for different voting
or cash dividend rights for Common Stock and Class B Stock shall thence forth not be in effect.

Liquidation Rights

In the event of any liquidation, dissolution or winding up of the Company, the holders of all classes of stock are entitled to share
ratably as a single class in the remaining net assets of the Company. A merger or consolidation of the Company or a sale or
conveyance of all or any part of the Company's assets will not be deemed a liquidation, dissolution or winding up.

Restrictions on Sale and Transfer

Class B Stock is subject to restrictions that permit the sale or transfer of these shares only to certain permitted transferees.

7(cid:24)

No Redemption or Preemptive Rights

Holders of common stock have no preemptive, redemption or subscription rights.

7(cid:25)

EXHIBIT 11.1:

OIL-DRI CORPORATION OF AMERICA
Computation of Net Income Per Share
(in thousands except for per share amounts)

Net income available to stockholders

Less: Distributed and undistributed earnings allocated to nonvested restricted stock
Earnings available to common shareholders

Shares Calculation

Average shares outstanding - Basic Common

Average shares outstanding - Basic Class B Common

Potential Common Stock relating to stock options and non-vested restricted stock
Average shares outstanding - Assuming dilution

Net Income Per Share: Basic Common

Net Income Per Share: Basic Class B Common

Net Income Per Share: Diluted Common

Year Ended July 31,

2019

2018

$ 12,611
(490)
$ 12,121

8,240
(193)
8,047

5,112

2,068

71
7,251

1.82

1.36

1.67

5,036

2,097

89
7,222

1.22

0.91

1.11

7(cid:26)

EXHIBIT 21.1:

SUBSIDIARIES OF OIL-DRI CORPORATION OF AMERICA

Subsidiary
Amlan Trading (Shenzhen) Company, Ltd.
Blue Mountain Production Company
Mounds Management, Inc.
Mounds Production Company, LLC
ODC Acquisition Corp.
Oil-Dri Canada ULC
Oil-Dri Corporation of Georgia
Amlan International
Oil-Dri Production Company
Oil-Dri SARL
Oil-Dri (U.K.) Limited
Taft Production Company

State or Country
of Organization
China
Mississippi
Delaware
Illinois
Illinois
Canada
Georgia
Nevada
Mississippi
Switzerland
United Kingdom
Delaware

7(cid:27)

EXHIBIT 23.1:

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated October 10, 2019, with respect to the consolidated financial statements and internal control over
financial reporting included in the Annual Report of Oil-Dri Corporation of America on Form 10-K for the year ended
July 31, 2019. We consent to the incorporation 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 LLP

Chicago, Illinois
October 10, 2019

7(cid:28)

EXHIBIT 31.1:

CERTIFICATIONS PURSUANT TO RULE 13A -14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED
Certification of Principal Executive Officer
(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Daniel S. Jaffee, certify that:

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 make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the 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 in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
(as defined in Exchange Act Rules 13a-15(f) and 15d-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 within those 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 our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external 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 the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the 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 are reasonably likely to adversely affect the registrant's ability to record, process, summarize
and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role

in the registrant's internal control over financial reporting.

Date:
By:

October 10, 2019
/s/ Daniel S. Jaffee
Daniel S. Jaffee

President and Chief Executive Officer

(cid:27)(cid:19)

EXHIBIT 31.1 (CONTINUED):

Certification of a Principal Financial Officer
(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Susan M. Kreh, certify that:

I have reviewed this Annual Report on Form 10-K of Oil-Dri Corporation of America (the “registrant”);

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 within those entities, particularly during the period in
which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and

All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize
and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant's internal control over financial reporting.

Date:
By:

October 10, 2019
/s/ Susan M. Kreh
Susan M. Kreh

Chief Financial Officer

(cid:27)(cid:20)

EXHIBIT 32.1:

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
THE 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 my knowledge the Company's Annual Report on Form 10-K for the year ended July 31, 2019 (the “Report”)
fully complies with the requirements of Section 13(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 10, 2019
/s/ Daniel S. Jaffee
Name: Daniel S. Jaffee
Title: 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-Dri Corporation 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

Dated: October 10, 2019
/s/ Susan M. Kreh
Name: Susan M. Kreh
Title: Chief Financial Officer

(cid:27)(cid:21)

EXHIBIT 95:

MINE SAFETY DISCLOSURE

Under 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 other mine is required to include certain mine safety information in its periodic reports filed with the SEC.
The table below includes this mine safety information for each mine facility owned and operated by Oil-Dri Corporation of
America, or its subsidiaries, for the year ended July 31, 2019. Due to timing and other factors, our data may not agree with the
mine data retrieval system maintained by the Mine Safety and Health Administration (“MSHA”). The columns in the table represent
the total number of, and the proposed dollar assessment for, violations, citations and orders issued by MSHA during the period
upon periodic inspection 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 and substantially 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 previously cited 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 mandatory health and safety standards. The violation could significantly and substantially contribute to the cause
and effect of a safety and health hazard, but the conditions 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 a known 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 withdrawn from 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 total dollar 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 Commission as of the last day of the reporting period or the number of such cases initiated or resolved during
the reporting period.

Legal Actions

Section 104
“Significant
and
Substantial”
Violations
(#)

Section
104(d)
Citations
and
Orders
(#)

Section
110(b)(2)
Flagrant
Violations
(#)

Section
107(a)
Imminent
Danger
Orders
(#)

Total Dollar
Value of
Proposed
MSHA
Assessments
($)

Section
104(b)
Orders
(#)

Pending
as of Last
Day of
Period
(#)

Initiated
During
Period
(#)

Resolved
During
Period
(#)

—

3,448

944

2,552

3,051

54,258

—

Mine location

Ochlocknee,
Georgia
Ripley,
Mississippi

Mounds, Illinois

Blue Mountain,
Mississippi

Taft, California

We had no mining-related fatalities at any of our facilities during the twelve months ended July 31, 2019. During this period we
also received no written notices 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 could have 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 a pattern. All legal actions pending and initiated during
the period were contests of proposed penalties.

(cid:27)(cid:22)

BOARD OF DIRECTORS

EXECUTIVE OFFICERS

INVESTOR INQUIRIES

Daniel S. Jaffee
Chairman, President &
Chief Executive Officer

Joseph C. Miller
Vice Chairman of the Board
Independent Consultant

George C. Roeth
Lead Director of the Board

Ellen-Blair Chube
Managing Director
& Client Service Officer,
William Blair & Company

Paul M. Hindsley
Managing Director & Partner,
William Blair & Company

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.
President, AHS Management
Consulting Company

Paul E. Suckow
Business Fellow & Adjunct
Professor, Finance & Economics,
Villanova University

Lawrence E. Washow
Chairman, First Bauxite Corporation
Board Member & Partner,
Eudora Global, LLC
Board Member, Aspire Brands, Inc.

Daniel S. Jaffee
President & Chief Executive Officer

Susan M. Kreh
Chief Financial Officer

Molly D. VandenHeuvel
Chief Operating Officer

Michael A. McPherson
Group Vice President,
Business to Business

Laura G. Scheland
Vice President, General
Counsel and Secretary

Mary E. Sullivan
Vice President,
Human Resources

ANNUAL MEETING

On Wednesday, December 11, 2019,
at 9:30am CT, Oil-Dri Corporation
of America will hold its 2019 Annual
Meeting of stockholders.

Please joins us:
The University of Chicago
Booth School of Business,
Gleacher Center
450 Cityfront Plaza Drive
Chicago, IL 60611

INDEPENDENT
REGISTERED PUBLIC
ACCOUNTING FIRM

Grant Thornton LLP

NYSE: ODC

Please direct all investor relations
inquiries to:

Leslie A. Garber
(312) 321-1515
InvestorRelations@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.

BALANCE SHEET DATA

Working Capital

Total Assets

Notes Payable

PER SHARE DATA

Net Income per Diluted Share

Book Value per Share

Common Stock Price at July 31,

$56,670

$52,065

$61,276

$205,227

$194,682

$212,575

$6,135

$9,190

$12,244

$1.67

$1.11

$1.47

$18.88

$18.49

$17.75

$35.43

$42.36

$41.36

410 NORTH MICHIGAN AVENUE, SUITE 400 | CHICAGO, ILLINOIS 60611

2019

ANNUAL REPORT

LETTER TO STAKEHOLDERS & FORM 10-K