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Oil-Dri Corp. of America Message Board

  • algo41 algo41 Dec 10, 2009 10:16 AM Flag

    swiss operations

    Can anyone amplify on following:

    "Our wholly-owned subsidiary, Oil-Dri SARL, is a Swiss company that performs various management, customer service and administrative functions for our DOMESTIC operations." (caps mine).

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    • Why would you pick out that one line from the 10-K as though it meant anything?

      Going back at least to 1994, ODC has disclosed that its UK sub packages clay that is produced domestically and shipped to the UK. The UK sub then sells its product principally in the UK, and in more recent years cross border in Western Europe. The 10-K has always disclosed that such cross border shipments and sales require special work on customs, etc., and the 10-K disclosed that the foreign (presumably the UK) sub used the Swiss sub to handle administrative matters.

      Starting with the 1995 10-K, ODC disclosed that its Swiss subsidiary handled administrative functions for both ODC and its foreign subs, presumably covering the clay shipped from the US to the UK, as well as shipments of the packaged product throughout Europe.
      In the 2009 10-K, the reference to handling these functions for the foreign sub has been dropped. So I assume that either (1) cross border work within the EU isn’t as big a deal anymore, or (2) the UK operation now handles the intra-European transactions on its own. In either case, ODC still ships clay to the UK, and continues to use the Swiss sub to handle the administrative work on those shipments.

      As to what the specialized services the Swiss sub provides, how about this (taken from the Risk Factors): international sales and operations are subject to currency exchange fluctuations, fund transfer restrictions and import/export duties, and international operations are subject to foreign regulatory requirements and issues, including with respect to environmental matters. Any of these matters could result in sudden, and potentially prolonged, changes in demand for our products. Also, we may have difficulty enforcing agreements and collecting accounts receivable through a foreign country’s legal system.

      So I assume the Swiss company helps ODC with these issues.

 
ODC
29.17-0.24(-0.82%)Jul 31 4:02 PMEDT

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