( X )
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
( )
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
31-1414921
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer Identification No.)
43041
(Zip Code)
Title of Each Class | Name of Each Exchange On Which Registered | |
Common Shares, without par value | New York Stock Exchange |
* | Roundup ® is a registered trademark of Monsanto Technology LLC, a company affiliated with Monsanto Company. |
Category
Brands
Scotts
®
; Turf
Builder
®
Miracle-Gro
®
;
Osmocote
®
Miracle-Gro
®
;
Scotts
®
; Hyponex
®
;
Earthgro
®
; SuperSoil
®
(acquired
October 3, 2005)
Scotts
®
; Turf
Builder
®
Ortho
®
;
Roundup
®
Smith &
Hawken
®
(acquired October 2, 2004)
Morning Song
®
(acquired November 18, 2005)
North America;
Scotts LawnService
®
;
International; and
Corporate & Other.
that we have identified all of the significant sites that must
be remediated;
that there are no significant conditions of potential
contamination that are unknown to us; and
that with respect to the agreed judicial Consent Order in Ohio,
the potentially contaminated soil can be remediated in place
rather than having to be removed and only specific stream
segments will require remediation as opposed to the entire
stream.
make it more difficult for us to satisfy our obligations under
outstanding indebtedness and otherwise;
increase our vulnerability to general adverse economic and
industry conditions;
require us to dedicate a substantial portion of cash flows from
operating activities to payments on our indebtedness, which
would reduce the cash flows available to fund working capital,
capital expenditures, advertising, research and development
efforts and other general corporate requirements;
limit our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate;
place us at a competitive disadvantage compared to our
competitors that have less debt;
limit our ability to borrow additional funds; and
expose us to risks inherent in interest rate fluctuations
because some of our borrowings are at variable rates of
interest, which could result in higher interest expense in the
event of increases in interest rates.
that we have identified all of the significant sites that must
be remediated;
that there are no significant conditions of potential
contamination that are unknown to us; and
that with respect to the agreed judicial Consent Order in Ohio,
the potentially contaminated soil can be remediated in place
rather than having to be removed and only specific stream
segments will require remediation as opposed to the entire
stream.
fluctuations in currency exchange rates;
limitations on the remittance of dividends and other payments by
foreign subsidiaries;
additional costs of compliance with local regulations; and
historically, in certain countries, higher rates of inflation
than in the United States.
AgrEvo Environmental Health, Inc. v. The Scotts Company,
et al. (Southern District of New York)
The Scotts Company v. Aventis S.A. and Starlink
Logistics, Inc. (Southern District of Ohio)
A jury trial was held in New York from May 23, 2005 to
June 13, 2005 in the case originally filed by AgrEvo
Environmental Health, Inc. (which subsequently changed its name
to Aventis Environmental Science USA LP). The jury rejected all
of plaintiffs antitrust claims and all but one of its
contract claims, an undisputed, minor claim for non-payment of
invoices of approximately $194,000.
On September 30, 2005, sanofi-aventis Group S.A., the
successor to Aventis, S.A. and Aventis Environmental Science USA
LP and the parent of Starlink Logistics, Inc. (collectively,
Aventis) paid to the Company in full and final
settlement of all the outstanding claims between the Company and
Aventis approximately $10 million. Of this amount,
$8.9 million of the settlement is recorded in
Impairment, restructuring and other charges within
the Consolidated Statements of Operations (see Note 4 of
the Notes to Consolidated Financial Statements). The payment by
Aventis, and the agreement signed in connection with the
settlement, terminates Aventis post-trial motions and
appeals in New York and brings to a conclusion all litigation
between the companies.
The Scotts Company v. Central Garden (Southern District
of Ohio)
Central Garden v. The Scotts Company &
Pharmacia (Northern District of California)
In regards to this matter and related litigation against Central
Garden & Pet Company (Central Garden), on
April 12, 2005, the Sixth Circuit modified in part and
affirmed the trial courts judgment providing for a net
award of approximately $15 million to the Company, which we
received on July 15, 2005. The Company has recognized the
satisfaction of this judgment in its financial results for the
period ended July 2, 2005. Details of how the
$15 million was reflected in our financial statements are
presented in Note 16 of the Notes to Consolidated Financial
Statements. This brings to a conclusion all pending litigation
between the Company and Central Garden including the previously
pending antitrust case in the Northern District of California in
which the Company prevailed.
Years with
Name
Age
Position(s) Held
Company
50
Chief Executive Officer and
Chairman of the Board
18
55
President
2
43
Executive Vice President and Chief
Financial Officer
7
49
Executive Vice President, General
Counsel and Corporate Secretary
7
51
Executive Vice President, Global
Human Resources
5
ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Sale Prices
High
Low
$
36.83
$
30.95
$
36.19
$
33.29
$
36.56
$
33.55
$
43.97
$
36.19
$
30.10
$
27.63
$
31.98
$
28.92
$
34.28
$
30.93
$
32.10
$
28.01
2005(3)
2004
2003
2002
2001
$
2,369.3
$
2,106.5
$
1,941.6
$
1,772.9
$
1,697.9
860.4
792.4
701.7
649.4
613.6
200.9
252.8
231.6
238.4
113.4
100.4
100.5
103.2
100.5
13.9
100.6
100.9
103.8
82.5
15.5
67.2
57.7
52.2
43.5
63.6
301.6
396.7
364.4
278.3
249.1
1.6
1.9
1.8
1.6
1.5
337.0
328.0
338.2
329.2
310.7
2,018.9
2,047.8
2,030.3
1,914.1
1,854.8
27.7
%
41.9
%
51.0
%
58.3
%
63.7
%
393.5
630.6
757.6
829.4
887.8
1,026.2
874.6
728.2
593.9
506.2
226.7
214.2
216.1
238.9
65.7
40.4
35.1
51.8
57.0
63.4
84.6
20.5
57.1
63.0
37.6
$
1.51
$
1.56
$
1.68
$
1.41
$
0.27
1.47
1.52
1.62
1.30
0.25
8.6
$
0.125
43.97
32.08
27.35
20.85
17.05
43.97
34.28
28.85
25.18
23.55
30.95
27.63
21.77
17.23
14.44
268.1
310.5
283.8
281.9
177.0
6.3
3.3
4.1
3.7
2.0
66.8
64.7
61.8
58.6
56.8
68.6
66.6
64.3
63.3
60.8
(1)
All common share and per share information presented in the
above five-year summary have been adjusted to reflect the
2-for-1 stock split of the common shares which was distributed
on November 9, 2005 to shareholders of record on
November 2, 2005.
(2)
The information presented for all periods in the above five-year
summary has been adjusted to reflect: (a) as net sales,
amounts previously reported as net commission from the
Roundup
®
marketing agreement, and (b) as
net sales and cost of sales, certain reimbursements and costs
associated with the marketing agreement on a gross basis that
was previously reported on a net basis, with no effect to net
income. For further discussion of these adjustments, see
ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS and
Note 3 of the Notes to Consolidated Financial Statements
included in this Annual Report on Form 10-K.
(3)
Fiscal 2005 includes Smith & Hawken
®
from the October 2, 2004 date of acquisition. See further
discussion of acquisitions in ITEM 1. BUSINESS
and in Note 5 of the Notes to Consolidated Financial
Statements included in this Annual Report on Form 10-K.
(4)
Operating results includes the following items segregated by
accounts effected on the Consolidated Statements of Operations
included with the Consolidated Financial Statements included in
this Annual Report on Form 10-K.
For the fiscal year ended September 30,
2005
2004
2003
2002
2001
$
(5.3
)
$
28.5
$
17.6
$
16.2
$
20.8
40.7
40.1
36.3
33.0
32.3
(45.7
)
40.7
40.1
36.3
33.0
32.3
(0.3
)
0.6
9.1
1.7
7.3
9.8
9.1
8.0
8.1
75.7
23.4
1.3
45.5
(18.5
)
(5)
Basic and diluted earnings per share would have been as follows
if the accounting change for intangible assets adopted in the
fiscal year beginning October 1, 2001, had been adopted as
of October 1, 2000:
For the fiscal year ended
September 30, 2001
$
32.1
0.57
0.53
(6)
EBITDA is defined as income from operations, plus depreciation
and amortization. We believe that EBITDA provides additional
information for determining our ability to meet debt service
requirements. EBITDA does not represent and should not be
considered as an alternative to net income or cash flow from
operations as determined by accounting principles generally
accepted in the United States of America, and EBITDA does not
necessarily indicate whether cash flow will be sufficient to
meet cash requirements. EBITDA margin is calculated as EBITDA
divided into net sales. Our measure of EBITDA, which may not be
similar to other similarly titled captions used by other
companies, excludes $24.9 million of cash expenses related
to the refinancings of our credit facility and redemption our
8
5
/
8
% subordinated
notes in fiscal 2004. These expenses have been excluded since
they are deemed to be financing related costs that are typically
excluded from the presentation of EBITDA and the definitions
used by our lenders to evaluate the Companys compliance
with its debt agreements. A numeric reconciliation of EBITDA to
income from operations is as follows:
For the fiscal year ended September 30,
2005
2004
2003
2002
2001
$
200.9
$
252.8
$
231.6
$
238.4
$
113.4
67.2
57.7
52.2
43.5
63.6
$
268.1
$
310.5
$
283.8
$
281.9
$
177.0
ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Executive summary
Results of operations
Liquidity and capital resources
Critical accounting policies and estimates
Managements outlook
Percent Net Sales
by Quarter
2005
2004
2003
10.4
%
8.7
%
9.0
%
34.3
%
35.2
%
35.1
%
38.0
%
38.2
%
37.7
%
17.3
%
17.9
%
18.2
%
2005
2004
2003
100.0
%
100.0
%
100.0
%
63.7
62.4
63.4
0.0
0.0
0.5
36.3
37.6
36.1
26.7
25.7
24.4
1.4
0.4
0.4
(0.3
)
(0.5
)
(0.6
)
8.5
12.0
11.9
0.1
2.2
0.0
1.8
2.3
3.6
6.6
7.5
8.3
2.4
2.8
3.0
4.2
4.7
5.3
0.0
0.0
0.0
4.2
%
4.7
%
5.3
%
2005
2004
2003
$
122.5
$
105.0
$
97.7
486.6
419.6
361.8
9.9
7.8
4.8
14.8
8.3
8.6
$
633.8
$
540.7
$
472.9
2005
2004
2003
$
23.4
$
$
26.3
9.1
8.0
(16.8
)
0.3
$
33.2
$
9.1
$
8.0
2005
2004
2003
$
1,668.1
$
1,569.0
$
1,461.0
159.8
135.2
110.4
430.3
405.6
373.5
159.6
2,417.8
2,109.8
1,944.9
(45.7
)
(2.8
)
(3.3
)
(3.3
)
$
2,369.3
$
2,106.5
$
1,941.6
2005
2004
2003
$
343.9
$
306.1
$
282.3
13.1
9.4
6.0
34.3
29.3
29.4
(94.2
)
(70.6
)
(57.1
)
297.1
274.2
260.6
(45.7
)
(2.8
)
(3.3
)
(3.3
)
(14.8
)
(8.3
)
(8.6
)
(23.4
)
(9.5
)
(9.8
)
(17.1
)
$
200.9
$
252.8
$
231.6
Payments Due by Period
More than
Contractual Cash Obligations
Total
Less than 1 year
1-3 years
4-5 years
5 years
$
393.5
$
11.1
$
8.5
$
168.9
$
205.0
165.7
42.5
47.4
28.0
47.8
20.8
20.8
662.2
550.3
94.7
17.2
$
1,242.2
$
624.7
$
150.6
$
214.1
$
252.8
Expected
Maturity Date
Fair
2005
2010
After
Total
Value
$
200.0
$
200.0
$
201.5
6.625
%
6.625
%
$
166.2
$
166.2
$
166.2
3.52
%
3.52
%
Expected Maturity Date | |||||||||||||||||||||||||||||||||
Fair | |||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | After | Total | Value | |||||||||||||||||||||||||
Long-term debt:
|
|||||||||||||||||||||||||||||||||
Fixed rate debt
|
$ | 200.0 | $ | 200.0 | $ | 211.8 | |||||||||||||||||||||||||||
Average rate
|
6.625 | % | 6.625 | % | |||||||||||||||||||||||||||||
Variable rate debt
|
$ | 4.0 | $ | 4.0 | $ | 12.8 | $ | 43.4 | $ | 192.7 | $ | 142.1 | $ | 399.0 | $ | 399.0 | |||||||||||||||||
Average rate
|
3.98 | % | 3.98 | % | 3.98 | % | 3.98 | % | 3.98 | % | 3.98 | % | 3.98 | % | |||||||||||||||||||
Interest rate derivatives:
|
|||||||||||||||||||||||||||||||||
Interest rate swaps based on
U.S. dollar LIBOR
|
$ | 1.6 | $ | 0.3 | $ | (0.4 | ) | $ | (0.8 | ) | $ | (0.2 | ) | $ | 0.5 | $ | 0.5 | ||||||||||||||||
Average rate
|
3.53 | % | 3.43 | % | 3.43 | % | 3.53 | % | 3.55 | % | 3.75 | % |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A.
CONTROLS AND PROCEDURES
information required to be disclosed by the Registrant in this
Annual Report on Form 10-K and the other reports that the
Registrant files or submits under the Exchange Act would be
accumulated and communicated to the Registrants
management, including its principal executive officer and
principal financial officer, as appropriate to allow timely
decisions regarding required disclosure;
information required to be disclosed by the Registrant in this
Annual Report on Form 10-K and the other reports that the
Registrant files or submits under the Exchange Act would be
recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms; and
the Registrants disclosure controls and procedures are
effective as of the end of the fiscal year covered by this
Annual Report on Form 10-K to ensure that material
information relating to the Registrant and its consolidated
subsidiaries is made known to them, particularly during the
period in which the Registrants periodic reports,
including this Annual Report on Form 10-K, are being
prepared.
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The response to this portion of Item 15 is submitted as a
separate section of this Annual Report on Form 10-K.
Reference is made to the Index to Consolidated Financial
Statements and Financial Statement Schedule on
page 48 herein.
Exhibits filed with this Annual Report on Form 10-K are
attached hereto or incorporated herein by reference. For a list
of such exhibits, see Index to Exhibits beginning at
page 104. The following table provides certain information
concerning executive compensation plans and arrangements
required to be filed as exhibits to this Annual Report on
Form 10-K.
Exhibit
No.
Description
Location
The O.M. Scott & Sons
Company Excess Benefit Plan, effective October 1, 1993
Incorporated herein by reference to
the Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, of The Scotts Company, a Delaware
corporation (File No. 0-19768) [Exhibit 10(h)]
First Amendment to The O.M.
Scott & Sons Company Excess Benefit Plan, effective as
of January 1, 1998
Incorporated herein by reference to
the Annual Report on Form 10-K for the fiscal year ended
September 30, 2001 of The Scotts Company, an Ohio
Corporation (Scotts) (File No. 1-13292)
[Exhibit 10(a)(2)]
Second Amendment to The O.M.
Scott & Sons Company Excess Benefit Plan, effective as
of January 1, 1999
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(a)(3)]
Third Amendment to The O.M.
Scott & Sons Company Excess Benefit Plan, effective as
of March 18, 2005
Incorporated herein by reference to
the Quarterly Report on Form 10-Q for the quarterly period
ended April 2, 2005 of The Scotts Miracle-Gro Company (the
Registrant) (File No. 1-13292)
[Exhibit 10(CC)]
The Scotts Company 1992 Long Term
Incentive Plan (as amended through May 15, 2000)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended April 1, 2000 (File
No. 1-13292) [Exhibit 10(b)]
The Scotts Company 1992 Long Term
Incentive Plan (2002 Amendment)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended December 28, 2002 (File
No. 1-13292) [Exhibit 10(b)(i)]
Amendment to The Scotts Company
1992 Long Term Incentive Plan 2005 Amendment,
effective as of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(y)]
Exhibit
No.
Description
Location
The Scotts Company Executive Annual
Incentive Plan
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(c)]
First Amendment to The Scotts
Company Executive Annual Incentive Plan, effective as of
March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(BB)]
The Scotts Company 1996 Stock
Option Plan (as amended through May 15, 2000)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended April 1, 2000 (File
No. 1-13292) [Exhibit 10(d)]
The Scotts Company 1996 Stock
Option Plan (2002 Amendment)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended December 28, 2002 (File
No. 1-13292) [Exhibit 10(d)(i)]
Amendment to The Scotts Company
1996 Stock Option Plan 2005 Amendment, effective as
of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(z)]
Specimen form of Stock Option
Agreement (as amended through October 23, 2001) for
Non-Qualified Stock Options granted to employees under The
Scotts Company 1996 Stock Option Plan, U.S. specimen
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(e)]
Specimen form of Stock Option
Agreement (as amended through October 23, 2001) for
Non-Qualified Stock Options granted to employees under The
Scotts Company 1996 Stock Option Plan, French specimen
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(f)]
The Scotts Company Executive
Retirement Plan
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 (File No. 1-11593)
[Exhibit 10(j)]
Exhibit
No.
Description
Location
First Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 1999
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(g)(2)]
Second Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 2000
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(g)(3)]
Third Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 2003
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 (File No. 1-13292)
[Exhibit 10(g)(4)]
Fourth Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 2004
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2004 (File No. 1-13292)
[Exhibit 10(g)(5)]
Fifth Amendment to The Scotts
Company Executive Retirement Plan, effective as of
March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(DD)]
Employment Agreement, dated as of
May 19, 1995, between The Scotts Company and James Hagedorn
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 1995 (File No. 1-11593)
[Exhibit 10(p)]
Letter agreement, dated
June 8, 2000, between The Scotts Company and Patrick J.
Norton
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2000 (File No. 1-13292)
[Exhibit 10(q)]
Letter agreement, dated
November 5, 2002, pertaining to the terms of employment of
Mr. Norton through December 31, 2005, and superseding
certain provisions of the letter agreement, dated June 8,
2000, between The Scotts Company and Mr. Norton
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2002 (File No. 1-13292)
[Exhibit 10(q)]
Letter of Extension, dated
October 25, 2005, between The Scotts Miracle-Gro Company
and Patrick J. Norton
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed December 14, 2005 (File No. 1-13292)
[Exhibit 10.3]
Letter Agreement between The Scotts
Company LLC and Dr. Michael P. Kelty dated July 25,
2005
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed December 14, 2005 (File No. 1-13292)
[Exhibit 10.1]
Exhibit
No.
Description
Location
Separation Agreement and Release of
All Claims between The Scotts Company LLC and Dr. Michael
P. Kelty dated July 25, 2005
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed December 14, 2005 (File No. 1-13292)
[Exhibit 10.2]
Written description of employment
terms between the Registrant and David M. Aronowitz,
Christopher L. Nagel and Denise S. Stump
*
The Scotts Company 2003 Stock
Option and Incentive Equity Plan
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended December 28, 2002 (File
No. 1-13292) [Exhibit 10(w)]
First Amendment to The Scotts
Company 2003 Stock Option and Incentive Equity Plan, effective
as of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(AA)]
Letter agreement, dated
April 23, 2003, between The Scotts Company and Robert F.
Bernstock
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended June 28, 2003 (File
No. 1-13292) [Exhibit 10(x)]
Employment Agreement and Covenant
Not to Compete, effective October 1, 2004, between The
Scotts Company and Robert F. Bernstock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.1]
First Amendment to Employment
Agreement and Covenant Not to Compete, effective October 1,
2004, between The Scotts Company and Robert F. Bernstock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.2]
Second Amendment to Employment
Agreement and Covenant Not to Compete, effective October 1,
2004, between The Scotts Company and Robert F. Bernstock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.3]
The Scotts Company 2003 Stock
Option and Incentive Equity Plan Award Agreement for
Nondirectors, effective as of October 1, 2004, between The
Scotts Company and Robert F. Bernstock, in respect of grant
of 25,000 shares of restricted stock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.4]
Amendment to The Scotts Company
2003 Stock Option and Incentive Equity Plan Award Agreement for
Nondirectors, effective as of October 1, 2004, between The
Scotts Company and Robert F. Bernstock, in respect of
June 2, 2003 award of freestanding stock appreciation rights
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.5]
Exhibit
No.
Description
Location
Amendment to The Scotts Company
2003 Stock Option and Incentive Equity Plan Award Agreement for
Nondirectors, effective as of October 1, 2004, between The
Scotts Company and Robert F. Bernstock, in respect of
November 19, 2003 award of freestanding stock appreciation
rights
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.6]
Form of 1996 Stock Option Plan
Stock Option Agreement Non-Qualified Stock Option
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.7]
Form of 2003 Stock Option and
Incentive Equity Plan Award Agreement for Nondirectors
*
Form of 2003 Stock Option and
Incentive Equity Plan Award Agreement for Directors
*
*
Filed herewith.
THE SCOTTS MIRACLE-GRO COMPANY
By: /s/
James Hagedorn
Officer and Chairman of the Board
Signature | Title | Date | ||
/s/
Mark R. Baker
|
Director | December 14, 2005 | ||
/s/
Lynn J. Beasley
|
Director | December 14, 2005 | ||
/s/
Gordon F. Brunner
|
Director | December 14, 2005 | ||
/s/
Arnold W. Donald
|
Director | December 14, 2005 | ||
/s/
Joseph P. Flannery
|
Director | December 14, 2005 | ||
/s/
James Hagedorn
|
Chief Executive Officer
and Chairman of the Board (Principal Executive Officer) |
December 14, 2005 | ||
/s/
Katherine Hagedorn
Littlefield
|
Director | December 14, 2005 | ||
/s/
Karen G. Mills
|
Director | December 14, 2005 | ||
/s/
Christopher L. Nagel
|
Executive Vice President and
Chief
Financial Officer (Principal Financial and Principal Accounting Officer) |
December 14, 2005 | ||
/s/
Patrick J. Norton
|
Director | December 14, 2005 | ||
/s/
Stephanie M. Shern
|
Director | December 14, 2005 | ||
/s/
John M. Sullivan
|
Director | December 14, 2005 | ||
/s/
John Walker, Ph.D.
|
Director | December 14, 2005 |
Page | |||||
Consolidated Financial Statements
of The Scotts Miracle-Gro Company and Subsidiaries:
|
|||||
Annual Report of Management on
Internal Control Over Financial Reporting
|
49 | ||||
Reports of Independent Registered
Public Accounting Firms
|
50 | ||||
Consolidated Statements of
Operations for the fiscal years ended September 30, 2005,
2004 and 2003
|
54 | ||||
Consolidated Statements of Cash
Flows for the fiscal years ended September 30, 2005, 2004
and 2003
|
55 | ||||
Consolidated Balance Sheets at
September 30, 2005 and 2004
|
56 | ||||
Consolidated Statements of
Shareholders Equity for the fiscal years ended
September 30, 2005, 2004 and 2003
|
57 | ||||
Notes to Consolidated Financial
Statements
|
58 | ||||
Schedule Supporting the
Consolidated Financial Statements:
|
|||||
Reports of Independent Registered
Public Accounting Firms on Financial Statement Schedule
|
102 | ||||
Schedule II
Valuation and Qualifying Accounts for the fiscal years ended
September 30, 2005, 2004 and 2003
|
103 |
/s/
James Hagedorn
|
/s/ Christopher L. Nagel | |
James Hagedorn
Chief Executive Officer and Chairman of the Board Dated: December 14, 2005 |
Christopher L. Nagel
Executive Vice President and Chief Financial Officer Dated: December 14, 2005 |
2005
2004
2003
$
2,369.3
$
2,106.5
$
1,941.6
1,509.2
1,313.5
1,230.8
(0.3
)
0.6
9.1
860.4
792.4
701.7
633.8
540.7
472.9
33.2
9.1
8.0
(7.5
)
(10.2
)
(10.8
)
200.9
252.8
231.6
1.3
45.5
41.5
48.8
69.2
158.1
158.5
162.4
57.7
58.0
59.2
100.4
100.5
103.2
0.2
0.4
0.6
$
100.6
$
100.9
$
103.8
$
1.51
$
1.55
$
1.67
0.01
0.01
$
1.51
$
1.56
$
1.68
$
1.47
$
1.51
$
1.61
0.01
0.01
$
1.47
$
1.52
$
1.62
2005
2004
2003
$
100.6
$
100.9
$
103.8
23.4
1.3
45.5
10.7
7.8
4.8
49.6
46.1
40.3
17.6
11.6
11.9
(13.6
)
17.6
48.3
(37.9
)
(1.9
)
(27.3
)
(15.8
)
(14.0
)
(5.3
)
8.1
(16.9
)
3.7
10.3
(18.7
)
26.3
27.9
29.5
6.6
10.3
0.8
(7.1
)
6.6
(5.8
)
0.3
27.6
11.7
9.8
226.7
214.2
216.1
(121.4
)
57.2
64.2
(12.3
)
(36.7
)
(40.4
)
(35.1
)
(51.8
)
(77.7
)
(8.2
)
(20.4
)
(60.9
)
(112.8
)
(108.9
)
924.2
648.6
801.9
(736.4
)
(646.6
)
(819.5
)
(399.0
)
(827.5
)
(62.4
)
900.0
(418.0
)
200.0
(3.6
)
(13.0
)
(0.4
)
(8.6
)
(6.9
)
32.2
23.5
21.4
2.9
(195.2
)
(133.0
)
(59.0
)
(6.0
)
(8.7
)
8.0
(35.4
)
(40.3
)
56.2
115.6
155.9
99.7
$
80.2
$
115.6
$
155.9
(39.9
)
(50.9
)
(66.7
)
(64.0
)
(34.7
)
(19.5
)
Accumulated
Common Stock
Capital in
Treasury Stock
Other
Deferred
Excess of
Retained
Comprehensive
Shares
Amount
Compensation
Stated Value
Earnings
Shares
Amount
Income/(loss)
Total
62.7
$
0.3
$
398.6
$
294.8
(2.4
)
$
(41.8
)
$
(58.0
)
$
593.9
103.8
103.8
(2.8
)
(2.8
)
0.8
0.8
(0.8
)
(0.8
)
101.0
$
(13.1
)
13.1
4.8
4.8
1.4
(13.3
)
(13.3
)
2.4
41.8
41.8
64.1
0.3
(8.3
)
398.4
398.6
(60.8
)
728.2
100.9
100.9
(0.9
)
(0.9
)
1.0
1.0
2.9
2.9
103.9
(12.2
)
12.2
1.2
(1.2
)
8.9
8.9
1.6
33.6
33.6
65.7
0.3
(10.4
)
443.0
499.5
(57.8
)
874.6
100.6
100.6
4.1
4.1
2.1
2.1
(5.0
)
(5.0
)
101.8
(15.1
)
15.1
2.6
(2.6
)
10.7
10.7
(8.6
)
(8.6
)
2.1
47.7
47.7
67.8
$
0.3
$
(12.2
)
$
503.2
$
591.5
$
$
(56.6
)
$
1,026.2
10 25 years
10 40 years
3 15 years
6 10 years
3 8 years
September 30,
2005
2004
(In millions)
$
216.0
$
186.6
31.4
30.7
77.5
72.8
$
324.9
$
290.1
$
39.6
$
42.5
131.1
128.3
353.7
324.8
35.4
40.4
76.6
75.7
23.0
17.7
659.4
629.4
(322.4
)
(301.4
)
$
337.0
$
328.0
$
62.5
$
66.7
114.0
85.0
15.6
5.3
122.6
104.9
$
314.7
$
261.9
$
102.9
$
104.7
3.3
6.0
17.9
20.4
$
124.1
$
131.1
September 30, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(in millions) | |||||||||||||
ACCUMULATED OTHER COMPREHENSIVE
LOSS:
|
|||||||||||||
Unrecognized gain (loss) on
derivatives, net of tax of $(1.2), $0.2 and $0.9
|
$ | 1.8 | $ | (0.3 | ) | $ | (1.3 | ) | |||||
Minimum pension liability, net of
tax of $23.7, $22.7 and $24.8
|
(40.6 | ) | (35.6 | ) | (38.5 | ) | |||||||
Foreign currency translation
adjustment
|
(17.8 | ) | (21.9 | ) | (21.0 | ) | |||||||
$ | (56.6 | ) | $ | (57.8 | ) | $ | (60.8 | ) | |||||
2005
2004
2003
$
67.0
$
58.2
$
45.9
(23.8
)
(26.4
)
(25.0
)
(45.7
)
(2.8
)
(3.3
)
(3.3
)
(5.3
)
28.5
17.6
40.7
40.1
36.3
$
35.4
$
68.6
$
53.9
NOTE 4.
IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES
2005
2004
2003
$
15.9
$
7.6
$
5.3
0.1
1.0
9.1
(7.9
)
(8.9
)
4.9
5.4
1.1
2.7
9.5
9.7
17.1
23.4
$
32.9
$
9.7
$
17.1
$
5.3
$
4.5
$
12.0
9.5
9.7
17.1
0.8
(8.9
)
(24.6
)
$
15.6
$
5.3
$
4.5
Goodwill
|
$ | 24.6 | ||
Non-amortizing trademarks
|
12.4 | |||
Amortizing other intangibles
|
5.0 | |||
Property, plant and equipment
|
20.1 | |||
Working capital
|
5.4 | |||
Deferred taxes
|
6.1 | |||
$ | 73.6 | |||
Fiscal Year
2005
2004
2003
3
4
22
$6.4
$
4.0
$
30.6
4.1
3.0
17.2
2.3
1.0
13.4
4.7
3.0
22.3
0.9
0.6
6.2
0.8
0.4
2.1
NOTE 6. | GOODWILL AND INTANGIBLE ASSETS, NET |
September 30, 2005
September 30, 2004
Weighted
Gross
Net
Gross
Net
Average
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Life
Amount
Amortization
Amount
Amount
Amortization
Amount
13
$
73.3
$
(37.1
)
$
36.2
$
69.1
$
(26.1
)
$
43.0
24
44.1
(10.9
)
33.2
44.4
(8.6
)
35.8
17
11.3
(4.2
)
7.1
11.0
(3.6
)
7.4
14
89.7
(64.9
)
24.8
56.4
(41.6
)
14.8
101.3
101.0
September 30, 2005
September 30, 2004
Weighted
Gross
Net
Gross
Net
Average
Carrying
Accumulated
Carrying
Carrying
Accumulated
Carrying
Life
Amount
Amortization
Amount
Amount
Amortization
Amount
334.8
326.6
3.4
3.4
439.5
431.0
432.9
417.9
$
872.4
$
848.9
North | Scotts | Other/ | ||||||||||||||||||
America | LawnService ® | International | Corporate | Total | ||||||||||||||||
Balance as of September 30,
2003
|
$ | 203.4 | $ | 91.4 | $ | 111.7 | $ | | $ | 406.5 | ||||||||||
Increases due to acquisitions
|
3.2 | 8.9 | | | 12.1 | |||||||||||||||
Reduction of final purchase price
of previous acquisitions
|
(1.8 | ) | | (2.5 | ) | | (4.3 | ) | ||||||||||||
Reclassifications
|
(1.7 | ) | | 2.7 | | 1.0 | ||||||||||||||
Other, primarily cumulative
translation
|
(4.4 | ) | | 7.0 | | 2.6 | ||||||||||||||
Balance as of September 30,
2004
|
198.7 | 100.3 | 118.9 | | 417.9 | |||||||||||||||
Increases due to acquisitions
|
| 4.7 | | 24.6 | 29.3 | |||||||||||||||
Reclassifications
|
(8.0 | ) | | (2.7 | ) | (10.7 | ) | |||||||||||||
Other, primarily cumulative
translation
|
0.2 | | (3.8 | ) | | (3.6 | ) | |||||||||||||
Balance as of September 30,
2005
|
$ | 190.9 | $ | 105.0 | $ | 112.4 | $ | 24.6 | $ | 432.9 | ||||||||||
2006
|
$11.2 | |
2007
|
10.9 | |
2008
|
10.7 | |
2009
|
9.2 | |
2010
|
7.3 |
NOTE 7. | RETIREMENT PLANS |
Frozen Defined
International
Benefit Plans
Benefit Plans
2005
2004
2005
2004
$
92.1
$
88.7
$
130.9
$
119.0
3.3
4.1
5.2
5.1
7.1
6.6
1.1
0.9
2.3
(0.5
)
2.0
3.8
24.8
(3.6
)
(5.5
)
(5.5
)
(4.4
)
(4.5
)
(4.6
)
8.9
$
96.1
$
92.1
$
158.2
$
130.9
$
96.1
$
92.1
$
143.3
$
118.7
$
69.6
$
59.2
$
80.0
$
63.6
8.3
6.2
14.9
8.9
0.1
9.7
7.6
6.1
1.1
0.9
(5.5
)
(5.5
)
(4.7
)
(4.5
)
(2.5
)
5.0
$
72.5
$
69.6
$
96.4
$
80.0
$
(23.6
)
$
(22.5
)
$
(61.8
)
$
(50.9
)
32.1
35.6
45.4
31.9
8.5
13.1
(16.4
)
(19.0
)
(32.1
)
(35.6
)
(32.2
)
(22.1
)
$
(23.6
)
$
(22.5
)
$
(48.6
)
$
(41.1
)
5.63
%
5.75
%
4.68
%
5.35
%
n/a
n/a
3.5
%
3.7
%
Curtailed Defined
International
Benefit Plan
Benefit Plans
2005
2004
2003
2005
2004
2003
$
$
$
$
3.3
$
4.2
$
4.0
5.2
5.1
5.0
7.1
6.6
5.8
(5.4
)
(4.5
)
(3.8
)
(6.3
)
(5.3
)
(4.0
)
2.6
2.6
1.9
1.4
1.8
2.2
2.4
3.2
3.1
5.5
7.3
8.0
2.3
(0.3
)
$
4.7
$
3.2
$
3.1
$
5.5
$
7.0
$
8.0
Curtailed Defined | International Benefit | |||||||||||||||||||||||
Benefit Plan | Plans | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
Weighted average assumptions
used in development of net periodic benefit cost:
|
||||||||||||||||||||||||
Discount rate
|
5.75 | % | 6.0 | % | 6.75 | % | 5.35 | % | 5.25 | % | 5.5 | % | ||||||||||||
Expected return on plan assets
|
8.0 | % | 8.0 | % | 8.0 | % | 7.5 | % | 7.5 | % | 7.5 | % | ||||||||||||
Rate of compensation increase
|
n/a | n/a | n/a | 3.7 | % | 3.7 | % | 3.7 | % |
International | ||||||||||
Curtailed Defined | Benefit | |||||||||
Benefit Plans | Plans | |||||||||
Plan asset allocations:
|
||||||||||
Target for September 30, 2006:
|
||||||||||
Equity securities
|
60 | % | 55 | % | ||||||
Debt securities
|
40 | % | 45 | % | ||||||
September 30, 2005:
|
||||||||||
Equity securities
|
63 | % | 61 | % | ||||||
Debt securities
|
36 | % | 38 | % | ||||||
Other
|
1 | % | 1 | % | ||||||
September 30, 2004:
|
||||||||||
Equity securities
|
60 | % | 84 | % | ||||||
Debt securities
|
39 | % | 12 | % | ||||||
Other
|
1 | % | 4 | % | ||||||
Expected contributions in fiscal
2006:
|
||||||||||
Company
|
$ | 0.2 | $ | 7.5 | ||||||
Employee
|
| 1.0 | ||||||||
Expected future benefit payments:
|
||||||||||
2006
|
$ | 6.3 | $ | 4.5 | ||||||
2007
|
6.4 | 4.6 | ||||||||
2008
|
6.4 | 4.8 | ||||||||
2009
|
6.5 | 5.0 | ||||||||
2010
|
6.5 | 5.2 | ||||||||
Total 2011 to 2015
|
33.2 | 28.4 |
NOTE 8.
ASSOCIATE MEDICAL BENEFITS
2005
2004
$
33.8
$
31.8
0.7
0.5
2.0
2.0
0.6
0.5
2.5
(2.1
)
1.3
(2.8
)
(2.3
)
$
34.7
$
33.8
$
$
2.2
1.8
0.6
0.5
(2.8
)
(2.3
)
$
$
$
(34.7
)
$
(33.8
)
6.1
8.8
$
(28.6
)
$
(25.0
)
5.51
%
5.75
%
$
25.0
$
24.3
3.3
2.5
2.5
(2.2
)
(1.8
)
$
28.6
$
25.0
2005 | 2004 | 2003 | |||||||||||
Components of net periodic
benefit cost
|
|||||||||||||
Service cost
|
$ | 0.7 | $ | 0.5 | $ | 0.4 | |||||||
Interest cost
|
2.0 | 2.0 | 1.9 | ||||||||||
Amortization of:
|
|||||||||||||
Actuarial loss
|
0.6 | 0.4 | 0.2 | ||||||||||
Prior service cost
|
| (0.4 | ) | (0.7 | ) | ||||||||
Net periodic postretirement benefit
cost
|
3.3 | 2.5 | 1.8 | ||||||||||
Curtailment charge
|
2.5 | | | ||||||||||
Total postretirement benefit cost
|
$ | 5.8 | $ | 2.5 | $ | 1.8 | |||||||
Discount rate used in
development of net periodic benefit cost
|
5.75 | % | 6.00 | % | 6.75 | % |
Gross
Medicare
Net
Benefit
Retiree
Part D
Company
Payments
Contributions
Subsidy
Payments
$
3.4
$
(0.8
)
$
(0.2
)
$
2.4
3.9
(0.9
)
(0.3
)
2.7
4.1
(1.0
)
(0.3
)
2.8
4.3
(1.2
)
(0.3
)
2.8
4.5
(1.3
)
(0.4
)
2.8
26.7
(10.3
)
(2.7
)
13.7
NOTE 9.
DEBT
September 30,
2005
2004
(in millions)
$
166.2
$
399.0
200.0
200.0
8.1
13.2
6.8
10.8
12.4
7.6
393.5
630.6
11.1
22.1
$
382.4
$
608.5
$
11.1
6.3
2.2
1.7
167.2
205.0
$
393.5
2005
2004
(in millions)
0.2 shares
0.2 shares
0.0 shares
0.0 shares
100.0 shares
100.0 shares
67.8 shares
65.6 shares
Year Ended September 30,
2005
2004
2003
965,600
118,000
809,000
775,500
478,000
101,000
147,000
152,500
126,000
1,213,600
1,046,000
1,413,000
$
15.1
$
11.0
$
13.1
For the fiscal
Years Ended
September 30,
2004
2003
$
100.9
$
103.8
4.9
2.9
(7.1
)
(7.0
)
$
98.7
$
99.7
$
1.56
$
1.68
$
1.52
$
1.62
$
1.53
$
1.62
$
1.48
$
1.56
Fiscal Year Ended September 30,
2005
2004
2003
WTD.
WTD.
WTD.
Avg.
Avg.
Avg.
No. of
Exercise
No. of
Exercise
No. of
Exercise
Options/SARs
Price
Options/SARs
Price
Options/SARs
Price
7.6
$
19.87
8.2
$
17.50
8.4
$
15.63
1.2
$
34.56
1.2
$
29.41
1.4
$
24.54
(2.1
)
$
15.99
(1.6
)
$
14.67
(1.4
)
$
13.57
(0.3
)
$
28.06
(0.2
)
$
24.28
(0.2
)
$
18.22
6.4
$
23.09
7.6
$
19.87
8.2
$
17.50
3.4
$
17.89
4.6
$
16.97
4.8
$
15.66
Awards Outstanding | Awards Exercisable | |||||||||||||||||||
No. of | WTD. Avg. | WTD. Avg. | No. of | |||||||||||||||||
Range of | Options/ | Remaining | Exercise | Options/ | Exercise | |||||||||||||||
Exercise Price | SARs | Life | Price | SARS | Price | |||||||||||||||
$ 8.50 $14.72
|
0.5 | 1.54 | $ | 10.90 | 0.5 | $ | 10.90 | |||||||||||||
$15.00 $17.38
|
1.0 | 3.87 | 15.64 | 0.9 | 15.64 | |||||||||||||||
$17.50 $19.98
|
1.6 | 4.86 | 18.92 | 1.6 | 18.92 | |||||||||||||||
$20.07 $25.62
|
1.3 | 7.12 | 24.42 | 0.2 | 24.05 | |||||||||||||||
$29.08 $31.56
|
1.0 | 8.16 | 29.42 | 0.2 | 34.17 | |||||||||||||||
$32.58 $40.53
|
1.0 | 9.22 | 34.55 | | | |||||||||||||||
6.4 | $ | 23.09 | 3.4 | $ | 17.89 | |||||||||||||||
Year Ended September 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Market price volatility
|
23.9 | % | 24.3 | % | 30.1 | % | ||||||
Risk-free interest rates
|
3.7 | % | 3.3 | % | 3.5 | % | ||||||
Expected dividend yield
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected life of options/SARs
|
6.15 | 6.20 | 7.00 | |||||||||
Estimated weighted-average fair
value per share of options/SARs
|
$ | 10.57 | $ | 8.86 | $ | 9.68 |
No. of
Fair Value at
Shares
Date of Grant
$
30,000
0.9
30,000
$
0.9
101,000
3.3
(1,600
)
(0.1
)
(15,000
)
(0.5
)
114,400
$
3.6
Year Ended September 30,
2005
2004
2003
$
100.4
$
100.5
$
103.2
0.2
0.4
0.6
$
100.6
$
100.9
$
103.8
66.8
64.7
61.8
$
1.51
$
1.55
$
1.67
0.01
0.01
$
1.51
$
1.56
$
1.68
66.8
64.7
61.8
1.8
1.9
2.5
68.6
66.6
64.3
$
1.47
$
1.51
$
1.61
0.01
0.01
$
1.47
$
1.52
$
1.62
Year Ended September 30,
2005
2004
2003
$
55.9
$
33.4
$
7.9
7.0
4.9
0.9
8.4
4.5
5.3
(11.8
)
14.9
41.3
(1.8
)
0.2
3.8
0.1
$
57.7
$
58.0
$
59.2
Year Ended September 30,
2005
2004
2003
$
170.0
$
143.2
$
150.7
(11.9
)
15.3
11.7
$
158.1
$
158.5
$
162.4
Year Ended September 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Statutory income tax rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
Effect of foreign operations
|
0.2 | (0.4 | ) | (0.1 | ) | |||||||
State taxes, net of federal benefit
|
1.8 | 2.1 | 1.9 | |||||||||
Change in deferred state effective
tax rate
|
| | (1.8 | ) | ||||||||
Change in state NOL &
credit carry forwards
|
1.9 | (0.8 | ) | | ||||||||
Change in valuation allowance
|
| (0.6 | ) | 0.6 | ||||||||
Other
|
(2.4 | ) | 1.3 | 0.8 | ||||||||
Effective income tax rate
|
36.5 | % | 36.6 | % | 36.4 | % | ||||||
September 30, | ||||||||
2005 | 2004 | |||||||
Net current deferred tax asset
(classified with prepaid and other assets)
|
$ | 15.6 | $ | 24.9 | ||||
Net non-current deferred tax
liability (classified with other liabilities)
|
(4.5 | ) | (18.6 | ) | ||||
Net deferred tax asset
|
$ | 11.1 | $ | 6.3 | ||||
September 30,
2005
2004
$
11.4
$
14.8
54.7
38.2
38.4
32.5
6.5
10.6
18.3
16.4
129.3
112.5
(2.4
)
126.9
112.5
(47.5
)
(50.6
)
(59.9
)
(48.8
)
(8.4
)
(6.8
)
(115.8
)
(106.2
)
$
11.1
$
6.3
2005
2004
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
$
166.2
$
166.2
$
399.0
$
399.0
200.0
201.5
200.0
211.8
6.8
6.8
10.8
10.8
2.4
2.4
0.5
0.5
2005 | 2004 | |||||||
Notes due to sellers
|
$ | 8.1 | $ | 13.2 | ||||
Other
|
12.4 | 7.6 |
2006
|
$ | 31.4 | ||
2007
|
25.8 | |||
2008
|
21.6 | |||
2009
|
15.9 | |||
2010
|
12.1 | |||
Thereafter
|
47.8 | |||
Total future minimum lease payments
|
$ | 154.6 | ||
Amount of | Lease | |||||||
Guarantee | Termination Date | |||||||
Scotts LawnService
®
vehicles
|
$ | 4.9 million | 2009 | |||||
Corporate aircraft
|
12.2 million | 2008 and 2010 |
2006
|
$ | 96.5 | ||
2007
|
73.0 | |||
2008
|
21.7 | |||
2009
|
13.3 | |||
2010
|
3.9 | |||
$ | 208.4 | |||
that all significant sites that must be remediated have been
identified;
that there are no significant conditions of contamination that
are unknown to us; and
that with respect to the agreed judicial Consent Order in Ohio,
potentially contaminated soil can be remediated in place rather
than having to be removed and only specific stream segments will
require remediation as opposed to the entire stream.
$
7.9
4.1
12.0
3.0
$
15.0
Largest
2nd Largest
Customer
Customer
23.5
%
11.9
%
25.0
%
12.9
%
24.5
%
13.7
%
2005
2004
2003
$
(6.5
)
$
(5.4
)
$
(5.0
)
(0.8
)
(2.4
)
(2.4
)
(0.3
)
(1.0
)
(2.1
)
2.1
(0.7
)
(0.2
)
(4.0
)
2.0
(0.7
)
(1.1
)
$
(7.5
)
$
(10.2
)
$
(10.8
)
2005
2004
2003
$
$
17.7
$
22.4
(18.9
)
(20.5
)
(1.2
)
1.9
0.3
(1.1
)
(1.0
)
4.1
0.3
1.8
0.9
(0.1
)
(1.4
)
(0.3
)
$
0.2
$
0.4
$
0.6
NOTE 21. | SEGMENT INFORMATION |
2005
2004
2003
$
1,668.1
$
1,569.0
$
1,461.0
159.8
135.2
110.4
430.3
405.6
373.5
159.6
2,417.8
2,109.8
1,944.9
(45.7
)
(2.8
)
(3.3
)
(3.3
)
$
2,369.3
$
2,106.5
$
1,941.6
$
343.9
$
306.1
$
282.3
13.1
9.4
6.0
34.3
29.3
29.4
(94.2
)
(70.6
)
(57.1
)
297.1
274.2
260.6
(45.7
)
(2.8
)
(3.3
)
(3.3
)
(14.8
)
(8.3
)
(8.6
)
(23.4
)
(9.5
)
(9.8
)
(17.1
)
$
200.9
$
252.8
$
231.6
2005
2004
2003
$
30.9
$
24.9
$
26.2
3.9
3.9
3.5
11.5
12.6
8.1
20.9
16.3
14.4
$
67.2
$
57.7
$
52.2
$
22.6
$
21.4
$
24.7
2.1
1.5
0.8
3.5
9.2
13.3
12.2
3.0
13.0
$
40.4
$
35.1
$
51.8
$
704.7
$
702.6
116.8
113.0
262.4
301.8
125.5
59.5
$
1,209.4
$
1,176.9
$
1,219.3
$
1,269.0
146.7
134.5
463.1
509.0
189.8
135.3
$
2,018.9
$
2,047.8
NOTE 22.
QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
First
Second
Third
Fourth
Quarter
Quarter
Quarter
Quarter
Full Year
$
246.5
$
813.4
$
901.2
$
408.2
$
2,369.3
61.1
327.6
333.8
137.9
860.4
(62.5
)
83.3
88.1
(8.4
)
100.4
(0.2
)
(0.1
)
0.4
0.2
(62.7
)
83.2
88.5
(8.4
)
100.6
$
(0.95
)
$
1.25
$
1.32
$
(0.13
)
$
1.51
0.01
$
(0.95
)
$
1.25
$
1.33
$
(0.13
)
$
1.51
66.0
66.6
67.0
67.4
66.8
(0.95
)
1.22
1.29
(0.13
)
1.47
$
(0.95
)
$
1.22
$
1.29
$
(0.13
)
$
1.47
66.0
68.2
68.6
67.4
68.6
First | Second | Third | Fourth | ||||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Full Year | |||||||||||||||||
FISCAL 2004
|
|||||||||||||||||||||
Net sales
|
$ | 183.0 | $ | 742.4 | $ | 803.4 | $ | 377.7 | $ | 2,106.5 | |||||||||||
Gross profit
|
40.8 | 296.5 | 329.3 | 125.8 | 792.4 | ||||||||||||||||
Income (loss) from continuing
operations
|
(70.6 | ) | 72.9 | 100.1 | (1.9 | ) | 100.5 | ||||||||||||||
Income from discontinued operations
|
| 0.2 | | 0.2 | 0.4 | ||||||||||||||||
Net income (loss)
|
(70.6 | ) | 73.1 | 100.1 | (1.7 | ) | 100.9 | ||||||||||||||
Basic earnings (loss) per common
share Income (loss) from continuing operations
|
$ | (1.11 | ) | $ | 1.14 | $ | 1.55 | $ | (0.03 | ) | $ | 1.55 | |||||||||
Income from discontinued operations
|
| | | | 0.01 | ||||||||||||||||
Net income (loss) per share
|
$ | (1.11 | ) | $ | 1.14 | $ | 1.55 | $ | (0.03 | ) | $ | 1.56 | |||||||||
Common shares used in basic EPS
calculation
|
64.0 | 64.4 | 65.0 | 65.2 | 64.7 | ||||||||||||||||
Diluted earnings (loss) per common
share Income (loss) from continuing operations
|
(1.11 | ) | 1.11 | 1.51 | (0.03 | ) | 1.51 | ||||||||||||||
Income from discontinued operations
|
| | | | 0.01 | ||||||||||||||||
Net income (loss) per share
|
$ | (1.11 | ) | $ | 1.11 | $ | 1.51 | $ | (0.03 | ) | $ | 1.52 | |||||||||
Common shares and dilutive
potential common shares used in diluted EPS calculation
|
64.0 | 66.0 | 66.6 | 65.2 | 66.6 |
NOTE 23.
FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND
NON-GUARANTORS
Subsidiary
Non-
Parent
Guarantors
Guarantors
Eliminations
Consolidated
$
$
1,850.8
$
518.5
$
$
2,369.3
1,172.9
336.3
1,509.2
(0.4
)
0.1
(0.3
)
678.3
182.1
860.4
494.1
139.7
633.8
8.0
25.2
33.2
(117.8
)
117.8
(23.5
)
23.5
(9.6
)
2.1
(7.5
)
117.8
209.3
(8.4
)
(117.8
)
200.9
1.3
1.3
15.9
16.5
9.1
41.5
100.6
192.8
(17.5
)
(117.8
)
158.1
64.1
(6.4
)
57.7
100.6
128.7
(11.1
)
(117.8
)
100.4
0.2
0.2
$
100.6
$
128.9
$
(11.1
)
$
(117.8
)
$
100.6
Subsidiary
Non-
Parent
Guarantors
Guarantors
Eliminations
Consolidated
$
100.6
$
128.9
$
(11.1
)
$
(117.8
)
$
100.6
23.4
23.4
1.3
1.3
10.7
10.7
42.7
6.9
49.6
9.8
7.8
17.6
(13.6
)
(13.6
)
(117.8
)
117.8
(29.4
)
(8.5
)
(37.9
)
(21.0
)
5.2
(15.8
)
(0.2
)
8.3
8.1
19.3
(9.0
)
10.3
28.1
(0.2
)
27.9
11.4
(1.1
)
10.3
5.9
0.7
6.6
32.3
(4.7
)
27.6
(15.9
)
224.9
17.7
226.7
57.2
57.2
(36.9
)
(3.5
)
(40.4
)
(77.7
)
(77.7
)
(57.4
)
(3.5
)
(60.9
)
174.3
749.9
924.2
(169.4
)
(567.0
)
(736.4
)
(399.0
)
(399.0
)
(3.6
)
(3.6
)
(8.6
)
(8.6
)
(6.9
)
(6.9
)
2.9
2.9
32.2
32.2
424.2
(238.0
)
(186.2
)
15.9
(207.8
)
(3.3
)
(195.2
)
(6.0
)
(6.0
)
(41.2
)
5.8
(35.4
)
83.7
31.9
115.6
$
$
42.5
$
37.7
$
$
80.2
Subsidiary
Non-
Parent
Guarantors
Guarantors
Eliminations
Consolidated
$
1,087.4
$
544.2
$
474.9
$
$
2,106.5
684.0
328.6
300.9
1,313.5
0.2
0.4
0.6
403.2
215.6
173.6
792.4
345.6
53.6
141.5
540.7
4.1
0.2
4.8
9.1
(107.2
)
107.2
(27.7
)
6.7
21.0
(1.9
)
(4.5
)
(3.8
)
(10.2
)
190.3
159.6
10.1
(107.2
)
252.8
45.5
45.5
52.1
(13.1
)
9.8
48.8
92.7
172.7
0.3
(107.2
)
158.5
(8.2
)
66.1
0.1
58.0
100.9
106.6
0.2
(107.2
)
100.5
0.4
0.4
$
100.9
$
107.0
$
0.2
$
(107.2
)
$
100.9
Subsidiary
Non-
Parent
Guarantors
Guarantors
Eliminations
Consolidated
$
100.9
$
107.0
$
0.2
$
(107.2
)
$
100.9
45.5
45.5
7.8
7.8
26.4
11.3
8.4
46.1
0.4
7.0
4.2
11.6
17.6
17.6
(107.2
)
107.2
14.6
(20.2
)
3.7
(1.9
)
10.9
(7.2
)
(17.7
)
(14.0
)
(3.3
)
(2.2
)
(11.4
)
(16.9
)
(8.4
)
(10.7
)
0.4
(18.7
)
25.2
2.8
1.5
29.5
0.6
(0.5
)
0.7
0.8
(9.1
)
1.4
1.9
(5.8
)
6.6
3.2
1.9
11.7
128.5
91.9
(6.2
)
214.2
(121.4
)
(121.4
)
64.2
64.2
(2.0
)
(10.3
)
(12.3
)
(10.7
)
(15.2
)
(9.2
)
(35.1
)
(0.3
)
(4.7
)
(3.2
)
(8.2
)
(70.2
)
(30.2
)
(12.4
)
(112.8
)
648.6
648.6
(646.6
)
(646.6
)
(827.5
)
(827.5
)
900.0
900.0
(418.0
)
(418.0
)
200.0
200.0
(13.0
)
(13.0
)
23.5
23.5
27.0
(61.6
)
34.6
(108.0
)
(61.6
)
36.6
(133.0
)
(8.7
)
(8.7
)
(49.7
)
0.1
9.3
(40.3
)
132.1
1.2
22.6
155.9
$
82.4
$
1.3
$
31.9
$
$
115.6
Subsidiary
Non-
Parent
Guarantors
Guarantors
Eliminations
Consolidated
$
1,004.7
$
505.1
$
431.8
$
$
1,941.6
639.7
310.4
280.7
1,230.8
5.2
3.9
9.1
359.8
194.7
147.2
701.7
300.7
51.4
120.8
472.9
2.7
0.8
4.5
8.0
(97.0
)
97.0
(18.8
)
6.0
12.8
(2.3
)
(5.0
)
(3.5
)
(10.8
)
174.5
141.5
12.6
(97.0
)
231.6
70.6
(15.4
)
14.0
69.2
103.9
156.9
(1.4
)
(97.0
)
162.4
0.1
59.6
(0.5
)
59.2
103.8
97.3
(0.9
)
(97.0
)
103.2
0.6
0.6
$
103.8
$
97.9
$
(0.9
)
$
(97.0
)
$
103.8
Subsidiary
Non-
Parent
Guarantors
Guarantors
Eliminations
Consolidated
$
103.8
$
97.9
$
(0.9
)
$
(97.0
)
$
103.8
4.8
4.8
25.3
10.7
4.3
40.3
3.8
3.9
4.2
11.9
48.3
48.3
(97.0
)
97.0
(6.0
)
(12.7
)
(8.6
)
(27.3
)
2.1
(7.5
)
0.1
(5.3
)
0.8
0.4
2.5
3.7
10.1
10.0
6.2
26.3
(0.5
)
(2.2
)
9.3
6.6
(4.0
)
(3.1
)
(7.1
)
4.8
(0.7
)
(3.8
)
0.3
12.4
(2.6
)
9.8
108.7
99.8
7.6
216.1
(11.5
)
(10.4
)
(14.8
)
(36.7
)
(19.3
)
(20.0
)
(12.5
)
(51.8
)
(3.8
)
(16.6
)
(20.4
)
(34.6
)
(47.0
)
(27.3
)
(108.9
)
801.9
801.9
(819.5
)
(819.5
)
(18.0
)
(44.4
)
(62.4
)
(0.4
)
(0.4
)
21.4
21.4
0.3
(53.6
)
53.3
3.3
(53.6
)
(8.7
)
(59.0
)
8.0
8.0
77.4
(0.8
)
(20.4
)
56.2
54.7
2.0
43.0
99.7
$
132.1
$
1.2
$
22.6
$
$
155.9
Column A
Column B
Column C
Column D
Column E
Column F
Balance
Additions
Deductions
at
Charged
Credited
Balance
Beginning
Reserves
to
and
at End of
Classification
of Period
Acquired
Expense
Write-Offs
Period
$
21.3
$
$
11.4
$
(16.4
)
$
16.3
29.0
1.9
(19.5
)
11.4
2.4
2.4
Column A
Column B
Column C
Column D
Column E
Column F
Balance
Additions
Deductions
at
Charged
Credited
Balance
Beginning
Reserves
to
and
at End of
Classification
of Period
Acquired
Expense
Write-Offs
Period
$
22.0
$
$
11.8
$
(12.5
)
$
21.3
29.0
3.4
(3.4
)
29.0
1.0
(1.0
)
Column A
Column B
Column C
Column D
Column E
Column F
Balance
Additions
Deductions
at
Charged
Credited
Balance
Beginning
Reserves
to
and
at End of
Classification
of Period
Acquired
Expense
Write-Offs
Period
$
25.9
$
$
5.1
$
(9.0
)
$
22.0
33.2
3.2
(7.4
)
29.0
1.0
1.0
Exhibit
No.
Description
Location
Amended and Restated Agreement and
Plan of Merger, dated as of May 19, 1995, among
Sterns Miracle-Gro Products, Inc., Sterns Nurseries,
Inc., Miracle-Gro Lawn Products Inc., Miracle-Gro Products
Limited, Hagedorn Partnership, L.P., the general partners of
Hagedorn Partnership, L.P., Horace Hagedorn, Community Funds,
Inc., and John Kenlon, The Scotts Company and ZYX Corporation
Incorporated herein by reference to
the Current Report on Form 8-K dated May 31, 1995 and
filed June 2, 1995, of The Scotts Company, an Ohio
corporation (Scotts) (File No. 0-19768)
[Exhibit 2(b)]
First Amendment to Amended and
Restated Agreement and Plan of Merger, made and entered into as
of October 1, 1999, among The Scotts Company, Scotts
Miracle-Gro Products, Inc. (as successor to ZYX Corporation and
Sterns Miracle-Gro Products, Inc.), Miracle-Gro Lawn
Products Inc., Miracle-Gro Products Limited, Hagedorn
Partnership, L.P., Community Funds, Inc., Horace Hagedorn and
John Kenlon, and James Hagedorn, Katherine Hagedorn Littlefield,
Paul Hagedorn, Peter Hagedorn, Robert Hagedorn and Susan Hagedorn
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated
October 4, 1999 and filed October 5, 1999 (File
No. 1-11593) [Exhibit 2]
Agreement and Plan of Merger, dated
as of December 13, 2004, by and among The Scotts Company,
The Scotts Company LLC and The Scotts Miracle-Gro Company
Incorporated herein by reference to
the Current Report on Form 8-K of The Scotts Miracle-Gro
Company (the Registrant) dated February 1, 2005
and filed February 2, 2005 (File No. 1-13292))
[Exhibit 2.1]
Initial Articles of Incorporation
of The Scotts Miracle-Gro Company as filed with Ohio Secretary
of State on November 22, 2004
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed March 24, 2005 (File No. 1-13292)
[Exhibit 3.1]
Certificate of Amendment by
Shareholders to Articles of Incorporation of The Scotts
Miracle-Gro Company as filed with Ohio Secretary of State on
March 18, 2005
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed March 24, 2005 (File No. 1-13292)
[Exhibit 3.2]
Code of Regulations of The Scotts
Miracle-Gro Company
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed March 24, 2005 (File No. 1-13292)
[Exhibit 3.3]
INDENTURE, dated as of
October 8, 2003, between The Scotts Company; the Guarantors
identified therein; and U.S. Bank National Association, as
Trustee
Incorporated herein by reference to
Scotts Annual Report on 10-K for the fiscal year ended
September 30, 2003 (File No. 1-13292)
[Exhibit 4(n)]
Registration Rights Agreement,
dated October 8, 2003, among The Scotts Company; the
Guarantors identified therein; and Citigroup Global Markets
Inc., Banc of America Securities LLC and J.P. Morgan
Securities Inc. as representatives for the initial purchasers of
the 6.625% Senior Subordinated Notes due 2013 described
therein
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 (File No. 1-13292)
[Exhibit 4(o)]
Exhibit
No.
Description
Location
Supplemental Indenture, dated as of
October 15, 2004, between Smith & Hawken, Ltd., as
a guaranteeing subsidiary, and U.S. Bank National
Association, as Trustee
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed March 24, 2005 (File No. 1-13292)
[Exhibit 4.2]
Second Supplemental Indenture,
dated as of March 18, 2005, among The Scotts Company; The
Scotts Miracle-Gro Company; The Scotts Company LLC; the other
subsidiaries identified as Guarantors therein; and
U.S. Bank National Association, as Trustee
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed March 24, 2005 (File No. 1-13292)
[Exhibit 4.3]
Joinder Agreement, dated as of
March 18, 2005, among The Scotts Miracle-Gro Company, The
Scotts Company and JPMorgan Chase Bank, N.A. (formerly known as
JPMorgan Chase Bank), as Administrative Agent
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed March 24, 2005 (File No. 1-13292)
[Exhibit 4.1]
The O.M. Scott & Sons
Company Excess Benefit Plan, effective October 1, 1993
Incorporated herein by reference to
the Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, of The Scotts Company, a Delaware
corporation (File No. 0-19768) [Exhibit 10(h)]
First Amendment to The O.M.
Scott & Sons Company Excess Benefit Plan, effective as
of January 1, 1998
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(a)(2)]
Second Amendment to The O.M.
Scott & Sons Company Excess Benefit Plan, effective as
of January 1, 1999
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(a)(3)]
Third Amendment to The O.M.
Scott & Sons Company Excess Benefit Plan, effective as
of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(CC)]
The Scotts Company 1992 Long Term
Incentive Plan (as amended through May 15, 2000)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended April 1, 2000 (File
No. 1-13292) [Exhibit 10(b)]
The Scotts Company 1992 Long Term
Incentive Plan (2002 Amendment)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended December 28, 2002 (File
No. 1-13292) [Exhibit 10(b)(i)]
Amendment to The Scotts Company
1992 Long Term Incentive Plan 2005 Amendment,
effective as of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(y)]
Exhibit
No.
Description
Location
The Scotts Company Executive Annual
Incentive Plan
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(c)]
First Amendment to The Scotts
Company Executive Annual Incentive Plan, effective as of
March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(BB)]
The Scotts Company 1996 Stock
Option Plan (as amended through May 15, 2000)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended April 1, 2000 (File
No. 1-13292) [Exhibit 10(d)]
The Scotts Company 1996 Stock
Option Plan (2002 Amendment)
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended December 28, 2002 (File
No. 1-13292) [Exhibit 10(d)(i)]
Amendment to The Scotts Company
1996 Stock Option Plan 2005 Amendment, effective as
of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(z)]
Specimen form of Stock Option
Agreement (as amended through October 23, 2001) for
Non-Qualified Stock Options granted to employees under The
Scotts Company 1996 Stock Option Plan, U.S. specimen
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(e)]
Specimen form of Stock Option
Agreement (as amended through October 23, 2001) for
Non-Qualified Stock Options granted to employees under The
Scotts Company 1996 Stock Option Plan, French specimen
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(f)]
The Scotts Company Executive
Retirement Plan
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 (File No. 1-11593)
[Exhibit 10(j)]
First Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 1999
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(g)(2)]
Second Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 2000
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2001 (File No. 1-13292)
[Exhibit 10(g)(3)]
Exhibit
No.
Description
Location
Third Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 2003
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 (File No. 1-13292)
[Exhibit 10(g)(4)]
Fourth Amendment to The Scotts
Company Executive Retirement Plan, effective as of
January 1, 2004
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2004 (File No. 1-13292)
[Exhibit 10(g)(5)]
Fifth Amendment to The Scotts
Company Executive Retirement Plan, effective as of
March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(DD)]
Employment Agreement, dated as of
May 19, 1995, between The Scotts Company and James Hagedorn
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 1995 (File No. 1-11593)
[Exhibit 10(p)]
Letter agreement, dated
June 8, 2000, The Scotts Company and Patrick J. Norton
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2000 (File No. 1-13292)
[Exhibit 10(q)]
Letter agreement, dated
November 5, 2002, pertaining to the terms of employment of
Mr. Norton through December 31, 2005, and superseding
certain provisions of the letter agreement, dated June 8,
2000, between The Scotts Company and Mr. Norton
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2002 (File No. 1-13292)
[Exhibit 10(q)]
Letter of Extension, dated
October 25, 2005, between The Scotts Miracle-Gro Company
and Patrick J. Norton
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed December 14, 2005 (File No. 1-13292)
[Exhibit 10.3]
Letter Agreement between The Scotts
Company LLC and Dr. Michael P. Kelty dated July 25,
2005
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed December 14, 2005 (File No. 1-13292)
[Exhibit 10.1]
Separation Agreement and Release of
All Claims between The Scotts Company LLC and Dr. Michael
P. Kelty dated July 25, 2005
Incorporated herein by reference to
the Registrants Current Report on Form 8-K dated and
filed December 14, 2005 (File No. 1-13292)
[Exhibit 10.2]
Written description of employment
terms between the Registrant and David M. Aronowitz,
Christopher L. Nagel and Denise S. Stump
*
Exhibit
No.
Description
Location
The Scotts Company 2003 Stock
Option and Incentive Equity Plan
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended December 28, 2002 (File
No. 1-13292) [Exhibit 10(w)]
First Amendment to The Scotts
Company 2003 Stock Option and Incentive Equity Plan, effective
as of March 18, 2005
Incorporated herein by reference to
the Registrants Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File
No. 1-13292) [Exhibit 10(AA)]
Letter agreement, dated
April 23, 2003, between The Scotts Company and Robert F.
Bernstock
Incorporated herein by reference to
Scotts Quarterly Report on Form 10-Q for the
quarterly period ended June 28, 2003 (File
No. 1-13292) [Exhibit 10(x)]
Employment Agreement and Covenant
Not to Compete, effective October 1, 2004, between The
Scotts Company and Robert F. Bernstock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.1]
First Amendment to Employment
Agreement and Covenant Not to Compete, effective October 1,
2004, between The Scotts Company and Robert F. Bernstock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.2]
Second Amendment to Employment
Agreement and Covenant Not to Compete, effective October 1,
2004, between The Scotts Company and Robert F. Bernstock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.3]
The Scotts Company 2003 Stock
Option and Incentive Equity Plan Award Agreement for
Nondirectors, effective as of October 1, 2004, between The
Scotts Company and Robert F. Bernstock, in respect of grant of
25,000 shares of restricted stock
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.4]
Amendment to The Scotts Company
2003 Stock Option and Incentive Equity Plan Award Agreement for
Nondirectors, effective as of October 1, 2004, between The
Scotts Company and Robert F. Bernstock, in respect of
June 2, 2003 award of freestanding stock appreciation rights
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.5]
Amendment to The Scotts Company
2003 Stock Option and Incentive Equity Plan Award Agreement for
Nondirectors, effective as of October 1, 2004, between The
Scotts Company and Robert F. Bernstock, in respect of
November 19, 2003 award of freestanding stock appreciation
rights
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.6]
Form of 1996 Stock Option Plan
Stock Option Agreement Non-Qualified Stock Option
Incorporated herein by reference to
Scotts Current Report on Form 8-K dated and filed
November 19, 2004 (File No. 1-13292)
[Exhibit 10.7]
Form of 2003 Stock Option and
Incentive Equity Plan Award Agreement for Nondirectors
*
Exhibit
No.
Description
Location
Form of 2003 Stock Option and
Incentive Equity Plan Award Agreement for Directors
*
Exclusive Distributor
Agreement Horticulture, effective as of
June 22, 1998, between The Scotts Company and AgrEvo USA
Company
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 (File No. 1-11593)
[Exhibit 10(v)]
Amended and Restated Exclusive
Agency and Marketing Agreement, dated as of September 30,
1998, between Monsanto Company (now Pharmacia Corporation) and
the Registrant
*
Code of Business Conduct and Ethics
of the Registrant
Incorporated herein by reference to
Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 (File No. 1-13292)
[Exhibit 14]
Subsidiaries of the Registrant
*
Consent of Independent Registered
Public Accounting Firm Deloitte & Touche LLP
*
Consent of Independent Registered
Public Accounting Firm PricewaterhouseCoopers LLP
*
Rule 13a-14(a)/15d-14(a)
Certification (Principal Executive Officer)
*
Rule 13a-14(a)/15d-14(a)
Certification (Principal Financial Officer)
*
Section 1350 Certification
(Principal Executive Officer and Principal Financial Officer)
*
*
Filed herewith.
| Carefully read this Award Agreement and the attached copies of the Plan and Prospectus; and | ||
| Call us at ___if you have any questions about your Award. Or, you may send a written inquiry to: |
| Cashless Exercise and Sell ; You will settle in shares of Company Stock. This will result in a cash payment (net of taxes) at settlement. The number of shares required to settle costs and taxes is equal to the stock price appreciation at the time of exercise. | |
| Combination Exercise (Exercise and sell enough shares to cover cost and taxes); You have no out of pocket costs for doing the transaction, and hold a smaller number of shares than exercised. | |
| Exercise and Hold; You come up with the monies to cover the exercise cost and taxes, and you will receive the shares exercised on settlement. |
| Cashless Exercise and Sell ; You will settle in shares of Company Stock. This will result in a cash payment (net of taxes) at settlement. The number of shares required to settle costs and taxes is equal to the stock price appreciation at the time of exercise. | |
| Combination Exercise (Exercise and sell enough shares to cover cost and taxes); You have no out of pocket costs for doing the transaction, and hold a smaller number of shares than exercised. | |
| Exercise and Hold; You come up with the monies to cover the exercise cost and taxes, and you will receive the shares exercised on settlement. |
| You may exercise a TSAR without actually spending any money; or | ||
| You may exercise the option associated with your TSAR, in which case you will receive one common share of the Company for each option exercised, although you will be required to actually pay the options Exercise Price. |
OPTIONEE/GRANTEE
|
THE SCOTTS MIRACLE-GRO COMPANY | |||||
|
||||||
|
||||||
|
||||||
|
||||||
|
||||||
(date signed)
|
(date signed) | |||||
|
|
||||||
DATE OF THIS AGREEMENT:
|
||||||
|
| Carefully read this Award Agreement and the attached copies of the Plan and Prospectus; and | ||
| Call us at (937) 644-0011 if you have any questions about your options. Or, you may send a written inquiry to: |
| Cashless Exercise and Sell ; You will settle in shares of Company Stock. This will result in a cash payment (net of taxes) at settlement. The number of shares required to settle costs and taxes is equal to the stock price appreciation at the time of exercise. | |
| Combination Exercise (Exercise and sell enough shares to cover cost and taxes); You have no out of pocket costs for doing the transaction, and hold a smaller number of shares than exercised. | |
| Exercise and Hold; You come up with the monies to cover the exercise cost and taxes, and you will receive the shares exercised on settlement. |
-2-
-3-
-4-
OPTIONEE/GRANTEE
|
THE SCOTTS MIRACLE-GRO COMPANY | |||||
|
||||||
|
||||||
|
||||||
|
||||||
|
||||||
(date signed)
|
(date signed) | |||||
|
|
||||||
DATE OF THIS AGREEMENT:
|
||||||
|
-5-
Page | ||||||||
ARTICLE 1- DEFINITIONS AND RULES OF CONSTRUCTION | 2 | |||||||
|
Section 1.1. | Definitions | 2 | |||||
|
Section 1.2. | Rules of Construction and Interpretation | 10 | |||||
ARTICLE 2 - EXCLUSIVE AGENCY AND DISTRIBUTORSHIP | 10 | |||||||
|
Section 2.1. | Appointment of the Exclusive Agent | 10 | |||||
|
Section 2.2. | The Agents Obligations and Standards | 11 | |||||
|
Section 2.3 | Appointment of Sub-Agents and Sub-Distributors | 15 | |||||
|
Section 2.4 | Limitations on Agent | 15 | |||||
ARTICLE 3 - ACCOUNTING AND CASH FLOW FOR THE ROUNDUP L&G BUSINESS | 16 | |||||||
|
Section 3.1. | Bookkeeping and Financial Reporting | 16 | |||||
|
Section 3.2. | Ordering, Invoicing and Cash Flow Cycle | 17 | |||||
|
Section 3.3. | Expenses and Allocation Rules | 18 | |||||
|
Section 3.4. | Resolution of Disputes Arising under Article 3 | 19 | |||||
|
Section 3.5. | Fixed Contribution to Expenses | 20 | |||||
|
Section 3.6. | Commission | 21 | |||||
|
Section 3.7. | Marketing Fee | 23 | |||||
|
Section 3.8. | Additional Commission | 23 | |||||
ARTICLE 4 - ROUNDUP L&G BUSINESS MANAGEMENT STRUCTURE | 25 | |||||||
|
Section 4.1. | Underlying principles for the Roundup L&G Business Management Structure | 25 | |||||
|
Section 4.2. | Steering Committee | 26 | |||||
|
Section 4.3. | Business Units | 27 |
i
Page | ||||||||
|
Section 4.4. | Global Support Team | 28 | |||||
ARTICLE 5 - DUTIES AND OBLIGATIONS OF MONSANTO | 29 | |||||||
|
Section 5.1. | Monsantos Obligations and Rights | 29 | |||||
|
Section 5.2. | Warranties | 30 | |||||
ARTICLE 6 - REPORTS AND ADDITIONAL OBLIGATIONS OF THE PARTIES | 30 | |||||||
|
Section 6.1. | Cooperation | 30 | |||||
|
Section 6.2. | Use of EDI | 30 | |||||
|
Section 6.3. | The Agents Systems and Reporting Obligation | 30 | |||||
|
Section 6.4. | Employee Incentives | 31 | |||||
|
Section 6.5. | Insurance | 31 | |||||
|
Section 6.6. | Liens | 31 | |||||
|
Section 6.7. | Promoting Safe Use-Practices | 32 | |||||
|
Section 6.8. | Monsanto Inspection Rights | 32 | |||||
|
Section 6.9. | Recalls | 32 | |||||
|
Section 6.10. | New Roundup Products | 32 | |||||
|
Section 6.11. | Confidentiality | 33 | |||||
|
Section 6.12. | Noncompetition | 33 | |||||
|
Section 6.13. | Industrial Property | 35 | |||||
|
Section 6.14. | Conflicts of Interest | 36 | |||||
|
Section 6.15. | Records Retention | 37 | |||||
ARTICLE 7 - CENTRAL AGREEMENTS | 37 | |||||||
|
Section 7.1. | Acknowledgment of Central Agreements | 37 | |||||
|
Section 7.2. | Notice of Termination | 37 | |||||
|
Section 7.3. | Conflict | 37 |
ii
Page | ||||||||
|
Section 7.4. | Action by Parties and Assignment of Rights | 37 | |||||
ARTICLE 8 - REPRESENTATIONS, WARRANTIES, AND COVENANTS | 38 | |||||||
|
Section 8.1. | The Agents Representations and Warranties | 38 | |||||
|
Section 8.2. | Monsantos Representations and Warranties | 39 | |||||
ARTICLE 9 - INDEMNIFICATION | 39 | |||||||
|
Section 9.1. | Indemnification and Claims Procedure | 39 | |||||
ARTICLE 10 - TERMS, TERMINATION, AND FORCE MAJEURE | 41 | |||||||
|
Section 10.1. | Terms | 41 | |||||
|
Section 10.2. | EU Initial Term and Renewal | 41 | |||||
|
Section 10.3. | Procedure to Renew | 41 | |||||
|
Section 10.4. | Termination by Monsanto | 41 | |||||
|
Section 10.5. | Termination by the Agent | 48 | |||||
|
Section 10.6. | Roundup Sale | 49 | |||||
|
Section 10.7. | Effect of Termination | 49 | |||||
|
Section 10.8. | Force Majeure | 50 | |||||
|
Section 10.9. | Special Termination Provisions | 50 | |||||
ARTICLE 11 - MISCELLANEOUS | 52 | |||||||
|
Section 11.1. | Relationship of the Parties | 52 | |||||
|
Section 11.2. | Interpretation in accordance with GAAP | 52 | |||||
|
Section 11.3. | Currency | 52 | |||||
|
Section 11.4. | Monsanto Obligations | 53 | |||||
|
Section 11.5. | Expenses | 53 | |||||
|
Section 11.6. | Entire Agreement | 53 | |||||
|
Section 11.7. | Modification and Waiver | 53 |
iii
Page | ||||||||
|
Section 11.8. | Assignment | 53 | |||||
|
Section 11.9. | Notices | 54 | |||||
|
Section 11.10. | Severability | 55 | |||||
|
Section 11.11. | Equal Opportunity | 55 | |||||
|
Section 11.12. | Governing Law | 55 | |||||
|
Section 11.13. | Public Announcements | 56 | |||||
|
Section 11.14. | Counterparts | 56 |
iv
|
Schedule 1.1(a): | Included Markets | ||
|
Schedule 1.1(b): | Roundup Products | ||
|
Schedule 2.2(a)(ii): | Transition Services (to be provided) | ||
|
Schedule 2.2(a): | Annual Business Plan Format | ||
|
Schedule 3.1: | Services Outside North America (to be provided) | ||
|
Schedule 3.2(d): | Cash Flow Chart | ||
|
Schedule 3.3(c): | Income Statement Definitions and Allocation Methods | ||
|
Schedule 3.8: | Current Sales of 2.5 Gallon SKU into the Lawn & Garden Channels | ||
|
Schedule 4.1(a): | Management Structure | ||
|
Schedule 4.2(a): | Steering Committee | ||
|
Schedule 4.3(b): | Assigned Employees | ||
|
Schedule 4.4(a): | Global Support Team |
v
2
3
4
5
6
7
8
9
10
(i) | It is the anticipation of the parties that for the duration of the term of the Central Agreements, Central and its subagents and subdistributors will continue to perform its duties and obligations under the Central Agreements, and Monsantos payments to Central for services provided by Central, subagents and subdistributors with respect to the 1999 Program Year only, under the Central Agreements as amended or renegotiated, it being the intention of the parties to amend or terminate the Central Agreements prior to the end of the 1999 Program Year, shall be included in the Expenses payable under this Agreement. | ||
(ii) | It is the understanding of the parties that the Agent currently is not able to perform all or part of the services described hereunder and that Monsanto shall perform such services, or have such services performed, during a certain transition period which may vary according to region and service being contemplated. Accordingly the parties agree to negotiate in good faith and agree, within ninety (90) days from the date of this Agreement, on the terms and conditions pursuant to which Monsanto shall continue to perform or have performed on its behalf, all or part of the services referred to hereunder, provided (x) Monsanto shall provide such services on a basis necessary to service the Customers needs and in accordance with the Budget prescribed in the 1999 Program Year Annual Business Plan, and (y) Monsanto shall be solely responsible for any MAT Expenses in excess of the amount provided therefor in such Budget incurred with respect to any such transition services wherever performed. Upon agreement of the parties, such terms and conditions shall be attached as Schedule 2.2(a)(ii) and shall be deemed to form a part of this Agreement ab initio . Such Schedule 2.2(a)(ii) shall contain but not be limited to, the allocation rules applicable in any such region, the prior written notice to be given by the Agent to Monsanto prior to taking over the performance of any given service, the amount of severance cost, if any, which shall be shared by the Agent in case of termination of such Monsanto employee(s) in charge of performing the service being terminated, the obligations of each party with regard to data information, order processing and invoicing, and the Agents right of audit. |
11
| coordinating and staffing annual physical inventory for all Roundup Products (including raw materials, packaging- when the Agent shall formulate under the Formulation Agreement- and finished goods). Physical inventories shall be conducted by September 30 of every calendar year and Monsanto shall have the right to request physical counts on specific product at any time upon reasonable request (which shall be at Monsantos cost if there are more than two such counts in any Program Year) and to observe or conduct physical counts with Monsantos representatives; | ||
| reconciling the physical inventory to perpetual records; | ||
| physically moving the Roundup Products out of the warehouse by following a First In, First Out (FIFO) policy; and | ||
| arranging for warehousing of adequate inventory levels of Roundup Products in sufficient quantities to satisfy the criteria set forth in the Annual Business Plan. |
12
13
14
15
16
17
18
19
Year | Contribution Payment | Amount Deferred | ||
1999
|
-0- | $20MM | ||
2000
|
$5MM | $15MM | ||
2001
|
$15MM | $ 5MM | ||
2002
|
$20MM | |||
2003-18 | $25MM until the full $40MM bearing an 8% interest (starting to run on the date each monthly installment would otherwise be due) is entirely recovered by Monsanto, at which point the Contribution Payment shall revert to $20MM per Program Year. |
20
Year | Net Commission Level | |||
2001
|
$32.5MM | |||
2002
|
$28.1MM | |||
2003
|
$26.7MM | |||
2004
|
$30.5MM | |||
2005
|
$34.6MM | |||
2006
|
$38.9MM | |||
2007
|
$43.5MM | |||
2008
|
$49.0MM |
Amount of Program EBIT | ||||||||
Year | First Commission Threshold | Second Commission Threshold | ||||||
1999-2000
|
$ | 30,000,000 | $80MM | |||||
2001
|
$ | 31,250,000 | $80MM | |||||
2002
|
$ | 32,531,250 | $80MM | |||||
2003
|
$ | 33,844,531 | $80MM | |||||
2004
|
$ | 35,190,645 | $80MM | |||||
2005
|
$ | 36,570,411 | $80MM | |||||
2006
|
$ | 37,984,471 | $80MM | |||||
2007
|
$ | 39,434,288 | $80MM | |||||
2008
|
$ | 40,920,145 | $80MM | |||||
2009+
|
$ | 30,000,000 | $80MM |
21
Amount of Program EBIT | Multiplied By | |||
(1)
|
0 - First Commission Threshold: | 0% | ||
|
||||
(2)
|
Second Commission Threshold less | |||
|
First Commission Threshold: | 46% in Program Year 1999* | ||
|
44% in Program Year 2000 | |||
|
40% thereafter | |||
|
||||
(3)
|
Above the Second Commission | |||
|
Threshold: | 50%** |
* | 1999 Program EBIT shall be increased by $15MM. | |
** | subject to Section 3.5(b). |
22
23
24
(i) | Common Interests: |
(A) | achieve the maximum volume and profit levels for the Roundup Business; | ||
(B) | continue to strengthen the Roundup brand; and | ||
(C) | leverage the strengths of both parties while working together in a constructive and harmonious way. |
(ii) | Monsantos Interests: |
(A) | retain ability to resume full management of the Roundup Business upon termination of this Agreement; | ||
(B) | retain control over key business decisions; and | ||
(C) | provide global stewardship of the Roundup brand. |
(iii) | The Agents Interests: |
(A) | manage the Roundup Business within the parameters of approved Annual Business Plans; | ||
(B) | have clear reporting relationship to Business Units heads for all Assigned Employees within the Business Units; and | ||
(C) | have clear definition of roles and responsibilities for all Assigned Employees within the Business Units. |
25
(i) | approve all Annual Business Plans, and any Significant Deviations (as described in Section 4.3(c)) therefrom not previously approved jointly by the Business Units and the Global Support Team; |
26
(ii) | approve any and all strategic plans; | ||
(iii) | review monthly reports submitted by the Business Units for the purposes of monitoring achievement and redirecting the Business Units by issuing a formal amendment to the Annual Business Plan then in effect; | ||
(iv) | monitor and redirect, if need be, the performance of the Global Support Team; | ||
(v) | approve any decisions relating to key personnel assigned to the Roundup Business within the Business Units, including Monsantos and the Agents employees; | ||
(vi) | resolve any disagreement occurring between a Business Unit and the Global Support Team; and | ||
(vii) | decide any other matter mutually agreed upon by Monsanto and the Agent. |
(i) | taking any and all necessary actions to implement the approved Annual Business Plan and strategic plans, as may be amended from time to time, |
27
either by mutual agreement of the Business Unit and the Global Support Team or by the Steering Committee as described in Section 4.2(c); | |||
(ii) | managing the day-to-day Roundup L&G Business; | ||
(iii) | developing and submitting, in cooperation with the Global Support Team all strategic and Annual Business Plans; | ||
(iv) | communicating, in writing or via meetings, on a regular basis, with the Global Support Team on all significant issues affecting the Roundup L&G Business; and | ||
(v) | notifying the Global Support Team of any deviation to the Annual Business Plan, which, in their view, is reasonably likely to have a financial impact on the Program EBIT of at least $500,000 or constitutes a significant deviation from a non-financial item approved in the Annual Business Plan (Significant Deviation). |
(i) | participate actively in the development of all strategic and Annual Business Plans; | ||
(ii) | act as a liaison between any of Monsantos functions or departments providing a support service to the Roundup Business (such as R&D, regulatory, etc.) and monitor the quality of services rendered; | ||
(iii) | provide stewardship for the Roundup brand image worldwide; | ||
(iv) | prepare internal assessments of the performance of the Roundup L&G Business for Monsanto management; | ||
(v) | review, and approve any performance reviews prepared by the Business Unit head for any of the Assigned Employees; |
28
(vi) | participate in planned key customer interactions and program presentations, either by participation in meetings or in preparatory sessions therefor; | ||
(vii) | review and approve any material change or deviation in consumer communication, mass media, packaging design or any other marketing tactic that directly impacts the consumer perception and interface with the brand which may occur from time to time; | ||
(viii) | review and approve any Significant Deviation from the Annual Business Plan; and upon failure to agree with the Business Unit, prepare a recommendation to submit to the Steering Committee for resolution, provided that the Business Unit may similarly prepare a recommendation to submit to the Steering Committee. |
29
30
31
32
33
34
35
36
37
38
39
40
41
42
(1) | in the event the Agreement is effectively terminated by either Monsanto or its successor or by the Agent upon Material Breach, Material Fraud or Material Willful Misconduct by Monsanto as provided for in Section 10.5.(c); | ||
(2) | no later than the effective date of the applicable termination notice and no later than the effective date of the termination; and | ||
(3) | only in the event the Agent does not become the successor to the Roundup Business, in which case the Termination Fee shall not be paid but shall be credited against the purchase price as described in Section 10.4(d). |
43
Program Year | Termination Fee | |
0-5
|
$150MM* | |
6
|
$140MM | |
7
|
$130MM | |
8
|
$120MM | |
9
|
$110MM | |
10
|
$100MM | |
11-20
|
Seven and a half percent (7.5%) of the portion of the purchase price for the Roundup Sale above $1.2 billion (which shall be no less than $16MM in any event) provided that in the event of a Change of Control and subsequent termination of this Agreement by the successor to the Roundup Business and the absence of any purchase price, the fair market value of the Roundup Business shall be determined by an independent accounting firm mutually agreeable to the parties. |
* | $185MM if Monsanto or any successor terminates within the first five (5) years for anything other than an Event of Default on the part of the Agent. |
44
45
46
47
48
49
50
51
52
53
|
If to the Agent, to: | The Scotts Company | ||
|
14111 Scottslawn Road | |||
|
Marysville, OH 43041 | |||
|
Attn: President | |||
|
Telephone: (937) 644-0011 | |||
|
Facsimile No.: (937) 644-7136 | |||
|
||||
|
with a copy to: | Vorys, Sater, Seymour and Pease LLP | ||
|
52 East Gay Street | |||
|
Columbus, Ohio 43215 | |||
|
Attn: Ronald A. Robins, Jr. | |||
|
Telephone: (614) 464 6223 | |||
|
Facsimile: (614) 464 6350 | |||
|
||||
|
If to Monsanto, to: | Monsanto Company | ||
|
800 North Lindbergh Boulevard | |||
|
St. Louis, MO 63167 | |||
|
Attn: Monsanto Ag President | |||
|
Telephone: (314) 694-1000 | |||
|
Facsimile No.: (314) 694-2120 | |||
|
||||
|
with a copy to: | Monsanto Company | ||
|
800 North Lindbergh Boulevard | |||
|
St. Louis, Missouri 63167 | |||
|
Attn: Ag Counsel | |||
|
Telephone: (314)694-2851 | |||
|
Facsimile No.: (314) 694 2920 |
54
55
56
THE MONSANTO COMPANY | ||||||||
|
||||||||
By: | /s/ Arnold W. Donald | |||||||
Name: Arnold W. Donald | ||||||||
Title: Senior Vice-President | ||||||||
|
||||||||
THE SCOTTS COMPANY | ||||||||
|
||||||||
By: | /s/ James Hagedorn | |||||||
Name: | James Hagedorn | |||||||
Title: | Executive Vice President, | |||||||
|
U.S. Business Groups |
57
|
Schedule 1.1(a): | Included Markets | ||
|
Schedule 1.1(b): | Roundup Products | ||
|
Schedule 2.2(a)(ii): | Transition Services (to be provided) | ||
|
Schedule 2.2(a): | Annual Business Plan Format | ||
|
Schedule 3.1: | Services Outside North America (to be provided) | ||
|
Schedule 3.2(d): | Cash Flow Chart | ||
|
Schedule 3.3(c): | Income Statement Definitions and Allocation Methods | ||
|
Schedule 3.8: | Current Sales of 2.5 Gallon SKU into the Lawn & Garden Channels | ||
|
Schedule 4.1(a): | Management Structure | ||
|
Schedule 4.2(a): | Steering Committee | ||
|
Schedule 4.3(b): | Assigned Employees | ||
|
Schedule 4.4(a): | Global Support Team |
58
Roundup Products
Formulation
Size
2% or less
2 gal or less
18%
1 gal or less
27%
1 gal or less
41%
1 gal or less
2% or less
2 gal or less
2% or less
2 gal or less
1% or less
1 gal or less
7.5% or less
1/2 gal or less
1% or less RTU
1 gal or less RTU
7.5% or less Conc.
1/2 gal or less Conc.
7.2 g/l
3 1 or less
60 g/l
500 ml or less
120 g/l
500 ml or less
360 g/l
500 ml or less
120 g/l
500 ml or less
120 g/l
500 ml or less
7.2 g/l
3 1 or less
120 g/l
1 1 or less
7.2 g/l
3 l or less
120 g/l
250 ml or less
7.2 g/l
3 l or less
120 g/l
1 l or less
7.2 g/l
3 1 or less
120 g/l
500 ml or less
7.2 g/l
3 l or less
360 g/l
1 l or less
170 g/l
1 l or less
400 g/l
.91, 451
360 g/l
500 ml or less
120 g/l
1 l or less
90 g/l
1 l or less
100 g/l
1 l or less
7.2 g/l
1 l or less
360 g/l
125 ml or less
420 g/l
15.5g
7.2 g/l
1 l or less
360 g/l
125 ml
2% or less
4 l or less
18%
1 l or less
41%
1 l or less
7.2 g/l
3 l or less
360 g/l
1 l or less
7.2 g/l
3 l or less
120 g/l
1 l or less
7.2 g/l
1 l or less
120 g/l
1 l or less
360 g/l
1 l or less
7.2 g/l
3 l or less
45.2 g/l
1 l or less
360 g/l
125 ml or less
7.2 g/l
3 l or less
120 g/l
1 l or less
1) | Mission Statement and Explanation: Answers questions: What business are we in? Why does the business exist? |
2) | Category Definition/Growth Trend: Also need to address related categories and their potential interaction with the target category |
a) |
Assessment of growth potential
|
||
b) | Competitor evaluation/assessment of threat |
3) | Business Review: Summary of a process that will occur in each preceding January |
a) |
Critical learning from prior year
|
||
b) | Key Implications from learning: Arranged by key functional area |
4) | Brand Positioning: |
a) | Consumer Target: Demographics, Psychographics, use Segmentation | ||
b) | Key feature(s), Attribute(s) and Benefits delivered (for brand and sub-brands) | ||
c) | Brand Character/Imagery: Describe the personification of the brand/sub-brands |
i) | This section should also specifically address the degree to which the proposed positioning is consistent with the Brands historical image |
5) | Key Business Goals |
a) | Financial: Historical trend and three year projections of Equivalent Case Volume, Net Sales, EBIT and ACM | ||
b) | Competitive: |
i) |
Market Share Goal and trend
|
||
ii) | Advertising Share of Voice Goal and trend |
c) | Consumer: Critical behavioral and attitudinal measures that describe the development of the Brand which could include: |
i) | Penetration | ||
ii) | Unaided awareness | ||
iii) | Annual usage | ||
iv) | Seasonal usage |
d) | Customer: |
i) | % ACV Distribution by Channel | ||
ii) | Fill Rates by Top 10 customers (with detailed definition of what constitutes an on-time shipment) | ||
iii) |
Display achievement
|
||
iv) | Other measurable customer satisfaction measures |
6) | Major Strategies to achieve Key Goals (some examples include...) |
a) | Product Line: What products/drive groups/lines to focus on | ||
b) | Significant new product launches | ||
c) | Private Label at a Key Account(s) | ||
d) | Marketing Support focus: Example would be a shift from advertising to promotion | ||
e) |
New Consumer Uses: Extended use campaign, new forms
|
||
f) | Geographic focus including a new regional/market emphasis. CDI/BDI analysis | ||
g) | Seasonal focus including new emphasis if relevant. Weekly seasonality by region and drive group/item. | ||
h) | Channel/Customer including new/alternative channels if relevant | ||
i) | Operational strategies to address quality, capacity, cost position, service, technology application, etc., including fill rates, inventory levels and turns | ||
j) | Acquisition/divestiture strategies to improve market position |
7) | Functional Operating Plans: This is a lengthy section that lays out a detailed annual operating plan for each functional area in the business (including rationale where appropriate) and that pays particular attention to changes in that plan from the prior years plans and results. Each section will contain a detailed budget with direct and assigned expenses shown. |
a) | General Management: Description of Business Unit Management team and planned costs |
i) | Performance standards for all employees | ||
ii) | Description of employee performance incentives and link to performance standards |
b) | Marketing: |
i) | Organization Plan | ||
ii) | Spending allocation: Total spending by marketing support category including working and non-working media, consumer promotion, public relations, market research, etc. | ||
iii) | Advertising: Preliminary media plan including spending trends, creative strategy and discussion of any planned/contemplated changes to that strategy. | ||
iv) | Consumer Promotion: Promotion objectives, key plan elements and payout calculations | ||
v) |
POP Plan: Focus on Key changes versus prior year plan
|
||
vi) | Pricing: To include trends and competitive benchmarks | ||
vii) | Packaging graphic and physical: Changes planned along with specific costs, implementation timing and risk factors | ||
viii) | Market Research plan: List all studies, cost estimate and rationale for each, including tracking | ||
ix) |
Public Relations
|
||
x) | Test plans (applies to all of above) |
c) | Sales: |
i) |
Organization Plan
|
||
ii) | Top 5 Account Plans |
(1) | Program changes anticipated | ||
(2) | Planned Net Sales trends by drive group/item (with historical trend) | ||
(3) |
Profitability analysis
|
||
(4) | Category Management plans |
iii) |
Five year sales goals
|
||
iv) | Private Label/control brand opportunities | ||
v) | Headquarter Sales Presentation plan with a focus on what the key messages are and discussion of any unique methods of communication to customers | ||
vi) | Retail Merchandising Support including planned in-house, distributor and contracted merchandising services. Focus on in-store merchandising and display techniques as well as pre-season store set plans |
(1) |
Share of shelf
|
||
(2) | Share of off-shelf |
vii) |
Other selling services plans as appropriate
|
||
viii) | Product Knowledge Plan including principle target(s) and vehicles |
d) | Operations: |
i) | Organization Plan | ||
ii) | Key Manufacturing initiatives such as: Cost savings, capacity planning, make/buy analyses, etc. | ||
iii) | Distribution/Warehousing Plan | ||
iv) | Inventory plan by month (versus prior year) that balances the need for high fill rates with a product utilization of working capital. Targets to be included in plan. |
v) | Purchasing: Including Key supplier relationship development | ||
vi) | Quality: Measurement and delivery against objectives from balanced scorecard | ||
vii) | Capital Plan with capital expenditure detail |
e) | Research & Development: |
i) | Organization/Staffing Plan | ||
ii) | Priority projects and innovation pipeline new product portfolio review | ||
iii) | Innovation launch timeline | ||
iv) | Product specifications and planned changes | ||
v) | Pioneering Research |
f) | Customer Service: |
i) |
Organization Plan
|
||
ii) | Special Programs such as telemarketing | ||
iii) | Discussion of and key changes to order taking, order processing invoicing, collection, reconciliation (to original P0 and program) procedures |
g) | Consumer Service: |
i) | Organization plan including a discussion of outsourced versus in-house services | ||
ii) | Call volume and measurement of answering efficiency and effectiveness | ||
iii) | Plan for communicating to marketing and operations any significant consumer complaints |
8) | Detailed Financials Prior Year, Current Year, Future Year |
a) | Income Statement (annual and monthly), cash flow and balance sheet | ||
b) | Net Sales and margins by key drive group/item, and including product mix analysis | ||
c) | Selling and Marketing Expenses by key line item | ||
d) | Assignment of Shared Services: This section will discuss the agreed upon allocation methodology for shared services to their respective Business Unit statements and highlights any proposed changes to that methodology | ||
e) |
Anticipated changes form prior year
|
||
f) | Financial Metrics |
i) | Invoice accuracy |
ii) | Days Sales Outstanding (DSO) | ||
iii) | Obsolete inventory charge | ||
iv) | Bad debt allowance | ||
v) | Netbacks, MAT and COGS detail prior, current and next year |
9) | Approved amendments: This section will show any amendments approved by senior management (or the Steering Committee) |
a) | Includes spending at levels above those established in the annual business plan. |
DESCRIPTION
ACCTING ENTRI
Monsanto plc receipt
- direct payments to bank
- cheques received and banked / cheque register created
- RIP credited
cr to 11125839
Roundup / Non Roundup invoices cleared from SAP according customer
remittance advice / Deductions entered in accordance with attached agreement
This allocation debits Mplc / Phostrogen RIP.
dr to 11125839
Phostrogen related cash placed in holding account
cr to ????
Cash paid on the 20th of the month following receipt
dr to ????
Non Roundup receipts
- direct payments to bank
- cheques received and banked / cheque register created
- RIP credited
cr to 11125839
Roundup / Non Roundup invoices cleared from SAP according to customer
remittance advice / Deductions entered in accordance with attached agreement
This allocation debits Mplc / Phostrogen RIP.
dr to 11125839
Phostrogen Limited receipt
Cheques received payable to Phostrogen Limited forwarded to Corwen immediately
and no accounting entries made
Cheque banked into Phostrogen bank account by Corwen
Customer accounts cleared in Corwen and deductions booked in accordance with
agreement
Monsanto
Example C3
Roundup Australia
Date
Cash Flow Statement
Month
YTD
0
0
AND
ALLOCATION METHODS
Monsanto and Scotts
Exclusive Agency and Marketing Agreement for Roundup
Income Statement Definitions and Allocation Methods
Schedule 3.3(c)
Page 4 of 11
RUPPLDefinitions.xls
Anticipated Source
Revenue/Expense Category
Definition
Determination/Allocation Method
Roundup
SMG
MTC
Differences between
actual standard
costs of products
at toll
manufacturers
Direct; default based on % of
Roundup cases produced at
specific toll manufacturer
X
X
Differences between
actual and standard
costs of raw and
packaging materials
acquired for
production
Direct; default based on % of
Roundup purchases related to
price variance drivers
X
X
Net sales less
product and
non-standard cost
of good sold
Functional areas
responsible for
creating brand
Image, developing
brand awareness
strategies and
promotions. Also
includes all sales
activities
performed by
business unit
personnel.
Marketing
activities
associated expenses
which can be
directly traced to
Roundup
Includes network,
spot and cable TV,
radio, print media,
advertising
production costs,
and advertising
agency fees
Actual default based on % of
direct media spending
X
Includes expenses
related to public
relations (indirect
advertising) and
related agency fees
Actual
X
Includes consumer
directed rebates,
in-stores
promotional
activities and
give-aways, and
point-of-purchase
materials
Actual
X
Any trade directed promotions (not
already included in MDF), including related agency fees
Actual
X
Market research directed toward the Roundup brand
Actual
X
Monsanto and Scotts
Exclusive Agency and Marketing Agreement for Roundup
Income Statement Definitions and Allocation Methods
Schedule 3.3(c)
Page 5 of 11
RUPPLDefinitions.xls
Anticipated Source
Revenue/Expense Category
Definition
Determination/Allocation Method
Roundup
SMG
MTC
Primarily personnel
and related support
cost (salaries,
incentives,
fringes, travel &
entertainment,
computers,
communications, and
space & supplies)
of marketing
personnel dedicated
to L&G Roundup
Actual
x
x
x
Marketing activities
managed on a shared
services basis
Primarily personnel
and related support
cost (salaries,
incentives,
fringes,
relocation, travel
& entertainment,
computers,
communications, and
space & supplies)
of marketing
management group
overseeing L&G
Roundup and related
products
Based on managements
assessment of % of time of
general marketing management
group spend on
Roundup activities
x
Functions included
innovation, market
research and
creative services.
Principally
personnel costs
(salaries,
incentives,
fringes, travel &
entertainment,
computers,
communications, and
space & supplies)
of the marketing
support functions
Based on managements
assessment of % of time
marketing support function
groups spend on
Roundup activities
x
All other
marketing related
expenses, excluding
advertising,
promotions and
personnel costs
Consulting material
and other
non-personnel
related costs
associated with
package design
Direct default based on
overall % of innovation group
activities directed toward
Roundup
x
x
Agency fees,
supplies and
material and other
non-personnel
related cost
associated with
package design
Direct default based on
overall % of creative service
group activities directed
toward Roundup
x
x
x
Fees and other
non-personnel costs
associated with
non-brand specific
market research
(POS data, usage
and attitudes
studies, etc.)
Direct default based on
overall % of market research
group activities directed
toward Roundup
x
x
Schedule 3.3(c)
page 8 of 11
RUPPLDefinitions.xls
Anticipated Source | ||||||||||||||||
Revenue/Expense Category | Definition | Determination/Allocation Method | Roundup | SMG | MTC | |||||||||||
SVP and general management
|
Primarily personnel and related support costs (salaries, incentives, fringes, travel & entertainment, computers, communications, and space & supplies) of the business unit general management group. Also includes general costs of operating the business unit not otherwise assigned or classified |
Direct for Roundup assigned
employees, including reasonable charges for fringe benefits and
related support costs.
Scotts costs will be allocated based on agreed to % of actual business unit general support costs |
X | X | ||||||||||||
Information technology
|
Personnel and related support costs (salaries, incentives, fringes, travel & entertainment, computers, communications, and space & supplies) of the information technology function supporting the business unit which manages the L&G Roundup brand. Costs also include depreciation and annual software license fees, hardware depreciation and rental, outside service fees and contracts and other non-personnel costs associated with operating the information technology group. | Scotts costs will be allocated based on agreed to % of actual business unit information technology costs, net of developmental costs, but including service costs | X | |||||||||||||
Finance and accounting
|
Personnel and related support costs (salaries, incentives, fringes, travel & entertainment, computers, communications, and space & supplies) of the finance and accounting functions supporting the business unit which manages the L&G Roundup brand. Functions include financial planning and analysis, general accounting, order-to-cash functions assigned to finance, accounts payable and payroll. Costs will also include internal and external audit fees, specialized IT services, and corporate treasury, tax and controllership functions. |
Direct for Roundup seconded people,
including reasonable charges for fringe benefits and related
support costs.
Scotts costs will be allocated based on agreed to % of actual business unit finance and accounting costs |
X | X |
Oct 97 | Oct 97 | Oct 97 | Jan 98 | Jan 98 | Jan 98 | |||||||||||||||||||||||||||
to Sep 98 | to Sep 98 | to Sep 98 | to Dec 98 | to Dec 98 | to Dec 98 | |||||||||||||||||||||||||||
Product | Description | Parent | Description | Ship $ | Ship QtyEA | Ship Cost | Ship $ | Ship QtyEA | Ship Cost | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 1446 | Costco | 1,108,248 | 8,640 | 1,048,232 | 834,179 | 6,432 | 781,006 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 2886 | Navy Norioi rent | 272 | 2 | 243 | 272 | 2 | 243 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 10542 | Tru Serve Corp party | 276,674 | 2,128 | 257,624 | 251,121 | 1,954 | 238,479 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 11339 | Home Depot | 1,556,696 | 11,478 | 1,393,109 | 1,648,968 | 12,206 | 1,482,114 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 11465 | Lowes Companies Inc | 1,217,734 | 9,038 | 1,098,436 | 1,207,974 | 8,928 | 1,084,082 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 12384 | Tru Serv Corp east | 1,560 | 12 | 1,457 | 1,560 | 12 | 1,457 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13141 | Wal-Mart | (737 | ) | (6 | ) | (729 | ) | (737 | ) | (6 | ) | (729 | ) | |||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13346 | Ace Hardware Corp | 405,686 | 3,182 | 385,664 | 436,995 | 3,470 | 421,345 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13501 | Handy Hdwe Wholesale Inc | 41,247 | 320 | 38,856 | 47,635 | 370 | 44,927 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13508 | Do It Best Corporation | 76,060 | 604 | 73,341 | 65,325 | 508 | 61,684 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13509 | Our Own Hardw 720 | 1,560 | 12 | 1,443 | - | - | | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13627 | Sams Club | 180,940 | 1,236 | 150,324 | 159,120 | 1,224 | 148,624 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13631 | Sample Deferred Account | - | 2 | 121 | - | 2 | 121 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13660 | Tru Serv Corp | 69,827 | 536 | 84,899 | 51,979 | 400 | 48,570 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 13710 | United Hardward Distributing | 280 | 2 | 248 | 260 | 2 | 243 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 72320 | Jerrys Bldg Materials Inc | 17,266 | 128 | 15,338 | 17,058 | 128 | 15,300 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 77404 | CGP Buy/Sell Distr | 91,164 | 712 | 86,066 | 71,200 | 560 | 67,998 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 81121 | Payless Cashways Inc | (266 | ) | (8 | ) | (765 | ) | 24,304 | 172 | 20,885 | ||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 81264 | Orgill, Inc. | 85,020 | 654 | 79,316 | 115,587 | 906 | 110,011 | |||||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E | 81719 | Tru Serv Corporation | (1,366 | ) | - | - | (283 | ) | - | | |||||||||||||||||||||
50326
|
ROUNDUP PRO 2/2.5 GAL PL E**** | *TOTAL* | 5,109,834 | 38,674 | 4,689,219 | 4,932,493 | 37,278 | 4,526,360 |
1
0
0
0
0
0
0
0
0
0
0
96/97
97/98
429,720
322,908
140,000
64,000
102,000
(Volume)
96/97
97/98
0
0
137,364
110,124
0
0
0
0
0
0
13,584
11,568
0
0
0
0
0
0
0
0
Sales Bio 1 L
Avg. NSP in USD at budget parity
9697=5.071 FF 9798=5.80 FF
Invoiced Customers
Volume
N.S.
9697
9798
9697
9798
137,364
110,124
2,358,023
1,939,277
139,500
85,116
2,394,690
1,498,888
23,400
21,600
401,690
380,375
4,632
1,860
79,514
32,754
52,176
44,232
895,666
778,923
12,000
4,284
205,995
75,441
10,176
3,120
174,684
54,943
50,472
52,572
866,414
925,790
429,720
322,908
7,376,676
5,686,390
17.17
17.61
| 2 from MTC, 2 from OMS | |
| Disputes decided by President of Monsanto Ag |
| 3 members, all from MTC |
| Business Unit Head, Marketing, Sales, Finance, Operations and Other functional areas (including seconded MTC employees) |
| Advertising Creative Development | ||
| Negative reaction to advertising | ||
| Key Account Planning | ||
| Key Account price exception |
Approval/Dispute | ||||
Action Step | Responsibility | Resolution | ||
|
||||
Overall Brand Strategy developed as part of
Business Plan
|
BU Brand Team | BU Mgmt | ||
Business Plan presentation to BU Mgmt & GRST
|
BU Brand Team | GRST + BU Mgmt | ||
Annual Business Plan preliminary approval
|
RU Mgmt & GRST | Steering Committee | ||
Annual Business Plan final approval
|
Steering Committee | |||
Brand Positioning statement developed
|
BU Brand Team | |||
Brand Positioning approved
|
BU Mgmt & Global
Rup Team |
GRST | ||
Advertising campaign Creative Direction to Agency
|
BU Brand Team | BU Mgmt | ||
Campaign concepts developed by Ad Agency
|
BU Mgmt & GRST | GRST | ||
Advertising direction approval
|
BU Brand Team | BU Mgmt | ||
Narrow campaign concepts to 2
|
BU Mgmt | |||
Concept testing with consumers
|
BU Brand Team | BU Mgmt | ||
TV story board developed
|
BU Brand Team | BU Mgmt | ||
Final TV storyboard approved including copy
|
BU Mgmt & GRST | GRST | ||
TV production (talent, TV shoot, etc.)
|
BU Brand Team | BU Mgmt | ||
Rough cuts reviewed
|
BU Mgmt & GRST | |||
Final TV spot approved
|
BU Mgmt & GRST | GRST |
Approval/Dispute
Action Step
Responsibility
Resolution
1-800 Hot-line
no choice
BU Mgmt
no choice
BUMgmt&GRST
either can decide
BU Brand Team
BU Mgmt & GRST
GRST
BU Brand Team
Approval/Dispute | ||||
Action Step | Responsibility | Resolution | ||
|
||||
Overall Brand Strategy developed as part of Business Plan
|
BU Brand Team | BU Mgmt | ||
Business Plan presentation to BU Mgmt & GRST
|
BU Brand Team | GRST/BU Msmt | ||
Annual Business Plan preliminary approval
|
BU Mgmt & GRST | Steering Committee | ||
Annual Business Plan final approval
|
Steering Committee | |||
Key Account Strategies developed
|
BU Key Accounts Team | BU Mgmt | ||
Home Depot approach & specific MDF plan developed
|
Depot Account Team | BUMgmt&GRST | ||
Preliminary planning session with Home Depot
|
Depot Account Team | |||
Finalization session with Home Depot at Hardware Show
|
BU Mgmt & Depot Account Team | GRST | ||
Regional marketing meetings with Depot Regional Merchants
|
Depot Account Team | |||
Implementation of plan
|
Depot Account Team |
Approval/Dispute | ||||
Action Step | Responsibility | Resolution | ||
|
||||
Buyer contacts BU Home Depot Account rep/team
|
||||
Account rep determines request is above plan & approval level
|
Account Team | no choice | ||
Rep contacts Sales management & BUp seconded Acct Rep
|
Account Team | |||
BU Account Team develops recommendation in concert with MTC
|
||||
Rup key accounts rep
|
Account Team | |||
...recommendation is within overall Annual Plan
|
BU Mgmt | |||
... recommendation is outside Annual Plan
|
GRST/BU Mgmt | Steering Committee | ||
Implementation of price change/no change
|
Account Team | BU Mgmt |
> | Deliver Monsanto budgeted and LRP levels of financial performance for the business including: |
| gross and net sales net income | ||
| net income | ||
| CODB | ||
| COGS | ||
| MAT | ||
| Capital Employed | ||
| Cash Flow |
> | Participate in development of strategic business plans including the annual business plan and long range strategic plans. | |
> | Provide Roundup brand stewardship and oversight to protect and build the value of the brand in all markets and for all products. | |
> | Participate in all brand advertising and creative development efforts and promotions to ensure executions that are aligned with financial objectives and brand stewardship interests. | |
> | Ensure measurement of key consumer brand metrics to monitor the health and growth of the brand. | |
> | Monitor AG, industrial and L&G market activities and pricing moves on Roundup to ensure maximum profitability for the overall Roundup franchise. | |
> | Direct all brand innovation efforts consistent with business plan objectives and financial targets. | |
> | Provide sales leadership and focus for Roundup. Facilitate achievement of account goals through joint/Scotts sales people and distribution. | |
> | Maintain key account relationships to secure leverage and support for Roundup. | |
> | Leverage trade marketing and category management initiatives to secure Roundups lead position in the weed control market. | |
> | Provide global priority and focus to the Scotts business units for Roundup interests. | |
> | Maintain critical leverage across the business management process to ensure development and growth of Monsantos Roundup L&G business interests. | |
> | Maintain involvement in analysis of competitive activity and play an integral role in addressing competitive pressures and future threats. | |
> | Coordinate SKU forecasts for production/deployment and financial purposes. | |
> | Provide regulatory interface with MTC to ensure proper regulatory support for products. |
| Develop and manage business plans to exceed Brand annual plan volume and profit goals |
> | Recommend Brand annual plans | ||
> | Perform ongoing review of Brand business to confirm appropriateness of selected strategy and plans. Recommend and alter as appropriate to deliver against Company volume and profit commitments | ||
> | Develop overall Brand marketing plans including advertising, strategy, advertising creative, media, public relations, consumer promotion, trade promotion, and merchandising | ||
> | Recommend and manage market research studies that can result in higher sales through improved consumer and customer understanding | ||
> | Identify and implement cost savings opportunities that improve profitability without sacrificing Brand performance |
| Manage major Brand product development projects |
> | Identify and evaluate opportunities and formulate plans to address them | ||
> | Inspire all functions involved in projects to outstanding levels of performance | ||
> | Recommend, conduct and analyze appropriate research to guide the process |
| Ensure all managed marketing plans are executed with excellence through Sales and all other functional groups |
> | Inspire Sales through development and presentation of compelling selling tools | ||
> | Communicate with Sales continually to ensure plan success | ||
> | Work to ensure smooth transition of improved products or packages to distribution channels |
| Train subordinates to allow them to achieve their full potential as business managers |
> | Develop and implement training plans, continuous feedback and formal evaluation | ||
> | Foster an environment that supports high performance, job and Company commitment and fun | ||
> | Manage and administer subordinate compensation consistent with Company policy |
| Make contributions to Brand, Department and Company to improve overall performance |
> | Contribute to the recruiting process as appropriate | ||
> | Mentor high potential employees | ||
> | Develop and present marketing training programs as appropriate | ||
> | Recommend and implement new processes or systems to smooth work process |
| Develop annual business plans for managed Brands to surpass budgeted volume and profit goals |
> | Business Review | ||
> | Product Line Review | ||
> | Annual Business Plan |
| Manage the strategic planning process to ensure the long-term health of the Brands |
> | SWOT Analysis | ||
> | Identification of key success factors | ||
> | Long Term Strategic Plan |
| Aggressively manage the growth of relevant category (ies) and ensure that Brands take a disproportionate share of that growth. |
> | Ensure that category (ies) grow at a rate in excess of base population growth | ||
> | Recommend category business building initiatives and test or expand them aggressively as appropriate |
| Ensure all Brands business plans are executed with excellence through Sales and other functional groups |
> | Work closely with Sales Management to ensure strategic alignment | ||
> | Collaborate with appropriate Innovation Team members to manage executional consistency to base Brands plans |
| Train subordinates to allow them to achieve their full potential as business managers |
> | Develop and execute training plans, continuous feedback and formal evaluation | ||
> | Create an atmosphere that fosters high performance, job and Company commitment and fun on the job | ||
> | Manage and administer subordinate compensation consistent with Corporate policies |
| Make contributions to Department and Company to improve overall performance |
> | Develop and present relevant training programs for Marketing and other functions | ||
> | Create and refine Business processes to ensure excellent execution of plans |
SMG Brands, Inc., a Delaware corporation
|
SMG Growing Media, Inc., an Ohio corporation
|
Rod McLellan Company, a California corporation
|
SMGM LLC, an Ohio corporation
|
The Scotts Company LLC, an Ohio corporation
|
EG Systems, Inc., dba Scotts LawnService, an Indiana corporation
|
Hyponex Corporation, a Delaware corporation
|
OMS Investments, Inc., a Delaware corporation
|
Scotts Temecula Operations, LLC, a Delaware corporation
|
Sanford Scientific, Inc., a New York corporation
|
Scotts Global Services, Inc., a Nevada corporation
|
Scotts Manufacturing Company, a Delaware corporation
|
Miracle-Gro Lawn Products, Inc., a New York corporation
|
Scotts Products Company, an Ohio corporation
|
Scotts Professional Products Co., an Ohio corporation
|
Scotts-Sierra Horticultural Products Company, a California corporation
|
Scotts-Sierra Crop Protection Company, a California corporation
|
Scotts-Sierra Investments, Inc., a Delaware corporation
|
ASEF BV (Netherlands)
|
Scotts Australia Pty Ltd. (Australia)
|
Scotts Benelux BVBA (Belgium)
|
Scotts Canada Ltd. (Canada)
|
Scotts Chile Limitada (Chile)
|
Scotts Czech s.r.o. (Czech Republic)
|
Scotts de Mexico SA de CV (Mexico)
|
Scotts France Holdings SARL (France)
|
Scotts France SARL (France)
|
Scotts France SAS (France)
|
Scotts Holding GmbH (Germany)
|
Scotts Celaflor GmbH & Co. KG (Germany)
|
Scotts Celaflor HGmbH (Austria)
|
Scotts Holdings Limited (United Kingdom)
|
Levington Group Ltd. (United Kingdom)
|
The Scotts Company (UK) Ltd. (United Kingdom)
|
The Scotts Company (Manufacturing) Ltd. (United Kingdom)
|
OM Scott International Investments Ltd. (United Kingdom)
|
Corwen Home and Garden Limited (United Kingdom)
|
Scotts International B.V. (Netherlands)
|
Scotts Deutschland GmbH (Germany)
|
Scotts O.M. España, S.A. (Spain)
|
Scotts Profi HGmbH (Austria)
|
Scotts Italia S.r.l. (Italy)
|
Scotts Horticulture Ltd. (Ireland)
|
Scotts Hungary KFT (Hungary)
|
*Scotts Japan, Ltd. (Japan)
|
Scotts Norway AS (Norway)
|
Scotts PBG Malaysia Sdn. Bhd. (Malaysia)
|
Scotts Poland Sp.z.o.o. (Poland)
|
Scotts Sweden AB (Sweden)
|
The Scotts Company (Nordic) A/S (Denmark)
|
The Scotts Company Italia S.r.l. (Italy)
|
The Scotts Company Kenya Ltd. (Kenya)
|
Smith & Hawken®, Ltd., a Delaware corporation
|
Swiss Farms Products, Inc., a Delaware corporation
|
* | Not wholly-owned |
1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2005 of The Scotts Miracle-Gro Company; | ||
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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
|
By: | /s/ James Hagedorn | ||
|
||||
Dated: December 14, 2005 | ||||
Printed Name: James Hagedorn | ||||
Title: Chief Executive Officer and Chairman of the Board |
1. | I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2005 of The Scotts Miracle-Gro Company; | ||
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 registrants 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 registrants 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 registrants internal control over financial reporting that occurred during the registrants fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting. |
|
By: | /s/ Christopher L. Nagel | ||
|
||||
Dated: December 14, 2005 | ||||
Printed Name: Christopher L. Nagel | ||||
Title: Executive Vice President and Chief Financial Officer |
1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and | ||
2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ James Hagedorn
|
/s/ Christopher L. Nagel | |
|
||
James Hagedorn
Chief Executive Officer and Chairman of the Board Date: December 14, 2005 |
Christopher L. Nagel
Executive Vice President and Chief Financial Officer Date: December 14, 2005 |
* | THIS CERTIFICATION IS BEING FURNISHED AS REQUIRED BY RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934 (THE EXCHANGE ACT) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE, AND SHALL NOT BE DEEMED FILED FOR PURPOSES OF SECTION 18 OF THE EXCHANGE ACT OR OTHERWISE SUBJECT TO THE LIABILITY OF THAT SECTION. THIS CERTIFICATION SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE. |