On May 1, 2024, pursuant to a Stock Purchase Agreement (the “Purchase Agreement”), dated April 16, 2024, we acquired all of the issued and outstanding shares of capital stock of Ultra Pet, in order to enter into the crystal cat litter segment. Ultra Pet became a wholly owned and consolidated subsidiary of Oil-Dri within the Retail and Wholesale Products Group operating segment, upon the closing of the acquisition on May 1, 2024.

The purchase was financed through cash on hand, a $10 million advance under the Credit Agreement, and the issuance of $10 million in aggregate principal amount of 6.47% Series D Senior Notes due April 30, 2033, pursuant to the shelf facility provisions of the Note Agreement. Debt issuance costs of $0.1 million were deferred and are being amortized over the life of the note. During fiscal year 2025, the $10 million advance under the Credit Agreement was repaid in full. Refer to Note 4 of the Consolidated Financial Statements for additional details regarding the debt used in funding the acquisition.

During fiscal year 2025, the Company completed the assessment to assign fair values to all tangible and intangible assets acquired and liabilities assumed. As a result, goodwill increased $0.6 million due to measurement period adjustments to inventory, accounts receivable, deferred tax and other assets and to account for the final purchase price adjustments. The following table summarizes the final consideration paid and fair value of the assets acquired, and liabilities assumed at the acquisition date.


Consideration	(in thousands)
Cash, net of cash acquired and restricted cash	$	44,413

Identifiable assets acquired and liabilities assumed
Accounts receivable	4,246
Inventories	6,751
Prepaid expenses and other assets	877
Property, plant and equipment	270
Trade name	5,200
Customer list	20,400
Operating lease right-of-use assets	1,463
Trade and other liabilities	(1,663)
Operating lease right-of-use liabilities	(1,472)
Deferred tax liabilities	(4,058)
Total identifiable net assets	32,014
Goodwill	12,399
Total	$	44,413

Various fair value methodologies were used for the valuation of identifiable intangibles including the 'excess earnings method' used for the valuation of the customer list and 'relief from royalty' method used for the valuation of the trade name. Our fair value was based on the projected financial information and unobservable inputs including revenue growth rate, weighted average cost of capital, royalty rate, and customer attrition rates. Finished goods inventory was valued using the net realizable value approach and approximate the selling price less disposal costs and allowance for a reasonable profit. The goodwill of $12.4 million arising from the acquisition consists largely of intangible assets that do not qualify for separate recognition and were fully assigned to our Retail and Wholesale Products Group. None of the goodwill recognized is expected to be deductible for income tax purposes.

Ultra Pet contributed net sales of $4.8 million and pre-tax income of $0.2 million for the period from May 1, 2024, to July 31, 2024, net of acquisition adjustments including non-cash inventory fair value step up amortization included in cost of goods sold and customer list amortization included in SG&A. The total fair value step up adjustment to inventory was $0.8 million of which $0.4 million was amortized in fiscal year 2024 and the remainder in fiscal year 2025. The following unaudited pro forma summary presents consolidated information of Oil-Dri as if the business combination had occurred on August 1, 2022.


(unaudited- in thousands)			Pro forma year ended July 31, 2024

Acquisition related expenses (a)			$1,172
Interest expense (b)			$(1,158)
Customer list amortization (c)			$(850)
Inventory step up adjustment (d)			$449

(a) Adjustment for acquisition related expenses reflects the reversal of legal and other professional fees and integration costs incurred in fiscal year 2024. These expenses are included in general and administrative expense on the Consolidated Statement of Operations.