Document and Entity Information (USD $)	12 Months Ended
Document and Entity Information (USD $)	Sep. 30, 2010	Nov. 18, 2010	Apr. 02, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	SCOTTS MIRACLE-GRO CO
Entity Central Index Key	0000825542
Document Type	10-K
Document Period End Date	Sep. 30, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--09-30
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2,182,734,513
Entity Common Stock, Shares Outstanding		66,596,695

Consolidated Statements of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2008
Consolidated Statements of Operations [Abstract]
Net sales	$ 3,139.9	$ 2,980.7	$ 2,823.2
Cost of sales	1,989.6	1,911.4	1,883.0
Cost of sales - impairment, restructuring and other charges			1.3
Cost of sales - product registration and recall matters	3.0	11.7	27.2
Gross profit	1,147.3	1,057.6	911.7
Operating expenses:
Selling, general and administrative	746.7	742.9	657.1
Impairment, restructuring and other charges	18.5		109.8
Product registration and recall matters	5.7	16.8	12.7
Other (income) expense, net	(8.2)	0.3	(7.7)
Income from operations	384.6	297.6	139.8
Interest expense	46.8	56.4	82.2
Income from continuing operations before income taxes	337.8	241.2	57.6
Income tax expense from continuing operations	125.4	86.6	24.8
Income from continuing operations	212.4	154.6	32.8
Loss from discontinued operations, net of tax	(8.3)	(1.3)	(43.7)
Net income (loss)	$ 204.1	$ 153.3	$ (10.9)
Basic earnings (loss) per common share:
Income from continuing operations	$ 3.20	$ 2.38	$ 0.51
Loss from discontinued operations	$ (0.12)	$ (0.02)	$ (0.68)
Net income (loss)	$ 3.08	$ 2.36	$ (0.17)
Diluted earnings (loss) per common share:
Income from continuing operations	$ 3.14	$ 2.34	$ 0.50
Loss from discontinued operations	$ (0.12)	$ (0.02)	$ (0.67)
Net income (loss)	$ 3.02	$ 2.32	$ (0.17)

Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2010	Sep. 30, 2009	Sep. 30, 2008
OPERATING ACTIVITIES
Net income (loss)	$ 204.1	$ 153.3	$ (10.9)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairment and other charges	18.5	5.1	136.8
Share-based compensation expense	16.4	14.5	12.5
Depreciation	48.5	47.9	53.9
Amortization	10.9	12.5	16.4
Deferred taxes	37.7	(6.0)	(16.5)
Loss (gain) on sale of long-lived assets	(22.4)	(1.1)	1.0
Changes in assets and liabilities, net of acquired businesses:
Accounts receivable	(10.7)	7.1	(15.7)
Inventories	50.8	(47.4)	(17.9)
Prepaid and other current assets	(3.7)	4.7	(2.6)
Accounts payable	(31.2)	(17.3)	9.4
Other current liabilities	(24.1)	86.3	31.7
Restructuring reserves	(0.3)	(0.3)	(1.4)
Other non-current items	13.0	36.9	14.4
Other, net	(11.6)	(31.6)	(10.2)
Net cash provided by operating activities	295.9	264.6	200.9
INVESTING ACTIVITIES
Proceeds from sale of long-lived assets	24.5	1.4	1.1
Investments in property, plant and equipment	(83.4)	(72.0)	(56.1)
Investments in intellectual property		(3.4)	(4.1)
Investments in acquired businesses, net of cash acquired		(9.3)
Net cash used in investing activities	(58.9)	(83.3)	(59.1)
FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans	1,021.4	1,558.0	942.1
Repayments under revolving and bank lines of credit and term loans	(1,391.4)	(1,736.0)	(1,042.0)
Proceeds from issuance of 7.25% Senior Notes, net of discount	198.5
Financing and issuance fees	(5.5)	(0.1)
Dividends paid	(42.6)	(33.4)	(32.5)
Payments on seller notes	(0.6)	(1.4)	(2.7)
Purchase of common shares	(25.0)
Excess tax benefits from share-based payment arrangements	6.4	4.1	2.9
Cash received from exercise of stock options	22.5	14.8	9.2
Net cash used in financing activities	(216.3)	(194.0)	(123.0)
Effect of exchange rate changes	(3.2)	(0.4)	(2.0)
Net increase (decrease) in cash and cash equivalents	17.5	(13.1)	16.8
Cash and cash equivalents, beginning of year	71.6	84.7	67.9
Cash and cash equivalents, end of year	89.1	71.6	84.7
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of interest capitalized	(41.6)	(55.6)	(82.0)
Income taxes paid	$ (84.2)	$ (51.2)	$ (36.8)

Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2010	Sep. 30, 2009
Current assets:
Cash and cash equivalents	$ 89.1	$ 71.6
Accounts receivable, less allowances of $10.4 in 2010 and $11.1 in 2009	408.4	384.3
Accounts receivable pledged	0	17.0
Inventories, net	403.6	458.9
Prepaid and other assets	136.5	159.1
Total current assets	1,037.6	1,090.9
Property, plant and equipment, net	394.8	369.7
Goodwill	372.8	375.2
Intangible assets, net	330.2	364.2
Other assets	28.6	20.1
Total assets	2,164.0	2,220.1
Current liabilities:
Current portion of debt	195.0	160.4
Accounts payable	153.1	190.0
Other current liabilities	375.8	406.4
Total current liabilities	723.9	756.8
Long-term debt	436.7	649.7
Other liabilities	238.9	229.1
Total liabilities	1,399.5	1,635.6
Commitments and contingencies (Notes 3, 17, 18 and 19)
Shareholders' equity:
Common shares and capital in excess of $.01 stated value per share; shares issued and outstanding of 66.8 in 2010 and 66.2 in 2009	434.0	451.5
Retained earnings	499.6	337.5
Treasury shares, at cost; 1.8 million shares in 2010 and 2.4 million shares in 2009	(92.0)	(131.7)
Accumulated other comprehensive loss	(77.1)	(72.8)
Total shareholders' equity	764.5	584.5
Total liabilities and shareholders' equity	$ 2,164.0	$ 2,220.1

Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Sep. 30, 2010	Sep. 30, 2009
Current assets:
Allowances for accounts receivable	$ 10.4	$ 11.1
Shareholders' equity:
Common shares, par value	$ 0.01	$ 0.01
Common shares, shares issued	66.8	66.2
Common shares, shares outstanding	66.8	66.2
Treasury shares, at cost, shares	1.8	2.4

Consolidated Statements of Shareholders' Equity (USD $) In Millions	Total	Common Stock	Capital in Excess of Stated Value	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income/(loss)
Beginning Balance at Sep. 30, 2007	$ 479.3	$ 0.3	$ 480.0	$ 260.5	$ (219.5)	$ (42.0)
Beginning Balance, shares at Sep. 30, 2007		68.1			4.0
Net income (loss)	(10.9)			(10.9)
Foreign currency translation	8.5					8.5
Loss on derivatives, net of tax	(13.5)					(13.5)
Pension and other postretirement liabilities, net of tax	(20.1)					(20.1)
Comprehensive income (loss)	(36.0)
Adjustment to initially apply FASB ASC 740	(0.4)			(0.4)
Share-based compensation	12.5		12.5
Dividends declared of $0.50, $0.50 and $0.625 per share for 2008, 2009 and 2010, respectively	(32.5)			(32.5)
Treasury stock issuances	13.8		(20.4)		34.2
Treasury stock issuances, shares					(0.6)
Ending Balance at Sep. 30, 2008	436.7	0.3	472.1	216.7	(185.3)	(67.1)
Ending Balance, shares at Sep. 30, 2008		68.1			3.4
Net income (loss)	153.3			153.3
Foreign currency translation	9.6					9.6
Loss on derivatives, net of tax	(3.2)					(3.2)
Pension and other postretirement liabilities, net of tax	(12.1)					(12.1)
Comprehensive income (loss)	147.6
Share-based compensation	14.5		14.5
Dividends declared of $0.50, $0.50 and $0.625 per share for 2008, 2009 and 2010, respectively	(32.5)			(32.5)
Treasury stock issuances	20.1		(33.5)		53.6
Treasury stock issuances, shares					(1.0)
Other	(1.9)		(1.9)
Ending Balance at Sep. 30, 2009	584.5	0.3	451.2	337.5	(131.7)	(72.8)
Ending Balance, shares at Sep. 30, 2009		68.1			2.4
Net income (loss)	204.1			204.1
Foreign currency translation	1.0					1.0
Loss on derivatives, net of tax	4.6					4.6
Pension and other postretirement liabilities, net of tax	(9.9)					(9.9)
Comprehensive income (loss)	199.8
Share-based compensation	16.4		16.4
Dividends declared of $0.50, $0.50 and $0.625 per share for 2008, 2009 and 2010, respectively	(42.0)			(42.0)
Treasury stock purchases	(25.0)				(25.0)
Treasury stock purchases, shares					0.5
Treasury stock issuances	30.1		(34.6)		64.7
Treasury stock issuances, shares					(1.1)
Other	0.7		0.7
Ending Balance at Sep. 30, 2010	$ 764.5	$ 0.3	$ 433.7	$ 499.6	$ (92.0)	$ (77.1)
Ending Balance, shares at Sep. 30, 2010		68.1			1.8

Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2010

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


NOTE 1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Scotts Miracle-Gro Company (“Scotts Miracle-Gro”) and its subsidiaries (collectively, together with Scotts Miracle-Gro, the “Company”) are engaged in the manufacturing, marketing and sale of consumer branded products for lawn and garden care and professional horticulture products. The Company’s primary customers include home centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, food and drug stores, commercial nurseries and greenhouses and specialty crop growers. The Company’s products are sold primarily in North America and the European Union. The Company also operates the Scotts LawnService^® business, which provides residential and commercial lawn care, tree and shrub care and limited pest control services in the United States.

After its acquisition in fiscal 2005, the Company operated Smith & Hawken^®¹, an outdoor living and garden lifestyle category brand. As discussed in “NOTE 2. DISCONTINUED OPERATIONS,” on July 8, 2009, Scotts Miracle-Gro announced its intention to close the Smith & Hawken business by the end of calendar 2009. During the Company’s first quarter of fiscal 2010, all Smith & Hawken stores were closed and substantially all operational activities of Smith & Hawken were discontinued.

Due to the nature of the lawn and garden business, the majority of sales to customers occur in the Company’s second and third fiscal quarters. On a combined basis, net sales for the second and third fiscal quarters generally represent 70% to 75% of annual net sales.

Organization and Basis of Presentation

The Company’s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Scotts Miracle-Gro and all wholly-owned and majority-owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation. The Company’s consolidation criteria are based on majority ownership (as evidenced by a majority voting interest in the entity) and an objective evaluation and determination of effective management control.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results ultimately may differ from the estimates.

Revenue Recognition

Revenue is recognized when title and risk of loss transfer, which generally occurs when products or services are received by the customer. Provisions for estimated returns and allowances are recorded at the time revenue is recognized based on historical rates and are periodically adjusted for known changes in return levels. Outbound shipping and handling costs are included in cost of sales.

¹ Smith & Hawken^® is a registered trademark of Target Brands, Inc. The Company sold the Smith & Hawken brand and certain intellectual property rights related thereto to Target Brands, Inc. on December 30, 2009, and subsequently changed the name of the subsidiary entity formerly known as Smith & Hawken, Ltd. to Teak 2, Ltd. References in this Annual Report on Form 10-K to Smith & Hawken refer to Scotts Miracle-Gro’s subsidiary entity, not the brand itself.

Under the terms of the Amended and Restated Exclusive Agency and Marketing Agreement (the “Marketing Agreement”) between the Company and Monsanto Company (“Monsanto”), the Company, in its role as exclusive agent, performs certain functions, primarily manufacturing conversion, distribution and logistics, and selling and marketing support on behalf of Monsanto in the conduct of the consumer Roundup^®² business. The actual costs incurred by the Company on behalf of the consumer Roundup^® business are recovered from Monsanto through the terms of the Marketing Agreement. The reimbursement of costs for which the Company is considered the primary obligor is included in net sales.

Promotional Allowances

The Company promotes its branded products through, among other things, cooperative advertising programs with retailers. Retailers may also be offered in-store promotional allowances and rebates based on sales volumes. Certain products are promoted with direct consumer rebate programs and special purchasing incentives. Promotion costs (including allowances and rebates) incurred during the year are expensed to interim periods in relation to revenues and are recorded as a reduction of net sales. Accruals for expected payouts under these programs are included in the “Other current liabilities” line in the Consolidated Balance Sheets.

Advertising

Advertising costs incurred during the year by our Global Consumer segment are expensed to interim periods in relation to revenues. All advertising costs, except for external production costs, are expensed within the fiscal year in which such costs are incurred. External production costs for advertising programs are deferred until the period in which the advertising is first aired.

Scotts LawnService^® promotes its service offerings primarily through direct mail campaigns. External costs associated with these campaigns that qualify as direct response advertising costs are deferred and recognized as advertising expense in proportion to revenues over a period not beyond the end of the subsequent calendar year. Costs that do not qualify as direct response advertising costs are expensed within the fiscal year incurred on a monthly basis in proportion to net sales. The costs deferred at September 30, 2010 and 2009 were $1.5 million and $2.1 million, respectively.

Advertising expenses were $142.4 million in fiscal 2010, $127.2 million in fiscal 2009 and $127.7 million in fiscal 2008.

Research and Development

All costs associated with research and development are charged to expense as incurred. Expenses for fiscal 2010, fiscal 2009 and fiscal 2008 were $51.6 million, $56.3 million and $44.7 million, respectively, including product registration costs of $12.9 million, $15.6 million and $9.8 million, respectively.

Environmental Costs

The Company recognizes environmental liabilities when conditions requiring remediation are probable and the amounts can be reasonably estimated. Expenditures which extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. Environmental liabilities are not discounted or reduced for possible recoveries from insurance carriers.

² Roundup^® is a registered trademark of Monsanto Technology LLC, a company affiliated with Monsanto.

Share-Based Compensation Awards

The fair value of awards is expensed ratably over the vesting period, generally three years, except in cases where employees are eligible for accelerated vesting based on having satisfied retirement requirements relating to age and years of service. The Company uses a binomial model to determine the fair value of its option grants.

Earnings per Common Share

Basic earnings per common share is computed based on the weighted-average number of common shares outstanding each period. Diluted earnings per common share is computed based on the weighted-average number of common shares and dilutive potential common shares (dilutive stock options, stock appreciation rights, performance shares, restricted stock and restricted stock unit awards) outstanding each period.

Cash and Cash Equivalents

The Company considers all highly liquid financial instruments with original maturities of three months or less to be cash equivalents. The Company maintains cash deposits in banks which from time to time exceed the amount of deposit insurance available. Management periodically assesses the financial condition of the Company’s banks and believes that the risk of any potential credit loss is minimal.

Accounts Receivable and Allowances

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Allowances reflect the Company’s best estimate of amounts in its existing accounts receivable that may not be collected due to customer claims, or customer inability or unwillingness to pay. The allowance is determined based on the Company’s risk assessment of its customers and historical experience. Past due balances over 90 days and in excess of a specified amount are reviewed individually for collectability. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.

Inventories

Inventories are stated at the lower of cost or market, principally determined by the FIFO method of accounting, using an average costing approach. Inventories include the cost of raw materials, labor, manufacturing overhead and freight and in-bound handling costs incurred to pre-position goods in the Company’s warehouse network. The Company makes provisions for obsolete or slow-moving inventories as necessary to properly reflect inventory at the lower of cost or market value. Reserves for excess and obsolete inventories were $21.1 million and $33.0 million at September 30, 2010 and 2009, respectively.

Long-lived Assets

Property, plant and equipment are stated at cost. Interest capitalized on capital projects amounted to $0.8 million, $0.4 million and $0.3 million during fiscal 2010, fiscal 2009 and fiscal 2008, respectively. Expenditures for maintenance and repairs are charged to expense as incurred. When properties are retired or otherwise disposed of, the cost of the asset and the related accumulated depreciation are removed from the accounts with the resulting gain or loss being reflected in income from operations.

Depreciation of property, plant and equipment is provided on the straight-line method and is based on the estimated useful economic lives of the assets as follows:


Land improvements		10 — 25 years
Buildings		10 — 40 years
Machinery and equipment		3 — 15 years
Furniture and fixtures		6 — 10 years
Software		3 — 8 years

Intangible assets with finite lives, and therefore subject to amortization, include technology (e.g., patents), customer relationships, non-compete agreements and certain tradenames. These intangible assets are being amortized on the straight-line method over periods typically ranging from 3 to 25 years. The Company’s fixed assets and intangible assets subject to amortization are required to be tested for recoverability whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If an evaluation of recoverability was required, the estimated undiscounted future cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down is required. If the undiscounted cash flows are less than the carrying amount, an impairment loss is recorded to the extent that the carrying amount exceeds fair value.

The Company had noncash investing activities of $11.4 million, representing unpaid liabilities incurred during fiscal 2010 to acquire property, plant and equipment.

Internal Use Software

The costs of internal use software are expensed or capitalized depending on whether they are incurred in the preliminary project stage, application development stage or the post-implementation/operation stage. As of September 30, 2010 and 2009, the Company had $32.5 million and $23.4 million, respectively, in unamortized capitalized internal use computer software costs. Amortization of these costs was $8.2 million, $8.2 million and $7.2 million during fiscal 2010, fiscal 2009 and fiscal 2008, respectively.

Goodwill and Indefinite-lived Intangible Assets

Goodwill and intangible assets determined to have indefinite lives are not subject to amortization. Goodwill and indefinite-lived intangible assets are reviewed for impairment by applying a fair-value based test on an annual basis, as of the first day of the Company’s fiscal fourth quarter, or more frequently if circumstances indicate a potential impairment. If it is determined that an impairment has occurred, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds its estimated fair value and classified as “Impairment, restructuring and other charges” in the Consolidated Statements of Operations.

Accruals for Self-Insured Losses

The Company maintains insurance for certain risks, including workers’ compensation, general liability and vehicle liability, and is self-insured for employee-related health care benefits up to a specified level for individual claims. The Company accrues for the expected costs associated with these risks by considering historical claims experience, demographic factors, severity factors and other relevant information. Costs are recognized in the period the claim is incurred, and the financial statement accruals include an actuarially determined estimate of claims incurred but not yet reported.

Income Taxes

The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax bases. Management reviews the Company’s deferred tax assets to determine whether their value can be realized based upon available evidence. A valuation allowance is established when management believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in valuation allowances from period to period are included in the Company’s tax provision in the period of change.

The Company establishes a liability for tax return positions in which there is uncertainty as to whether or not the position will ultimately be sustained. Amounts for uncertain tax positions are adjusted in quarters when new information becomes available or when positions are effectively settled. The Company recognizes interest expense and penalties related to these unrecognized tax benefits within income tax expense.

U.S. income tax expense and foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. Where foreign earnings are indefinitely reinvested, no provision for U.S. income or foreign withholding taxes is made. When circumstances change and the Company determines that some or all of the undistributed earnings will be remitted in the foreseeable future, the Company accrues an expense in the current period for U.S. income taxes and foreign withholding taxes attributable to the anticipated remittance.

Translation of Foreign Currencies

For all foreign operations, the functional currency is the local currency. Assets and liabilities of these operations are translated at the exchange rate in effect at each year-end. Income and expense accounts are translated at the average rate of exchange prevailing during the year. Translation gains and losses arising from the use of differing exchange rates from period to period are included in other comprehensive income (loss), a component of shareholders’ equity. Foreign currency transaction gains and losses are included in the determination of net income (loss).

Derivative Instruments

In the normal course of business, the Company is exposed to fluctuations in interest rates, the value of foreign currencies and the cost of commodities. A variety of financial instruments, including forward and swap contracts, are used to manage these exposures. The Company’s objective in managing these exposures is to better control these elements of cost and mitigate the earnings and cash flow volatility associated with changes in the applicable rates and prices.

The Company has established policies and procedures that encompass risk-management philosophy and objectives, guidelines for derivative-instrument usage, counterparty credit approval, and the monitoring and reporting of derivative activity. The Company does not enter into derivative instruments for the purpose of speculation.

Variable Interest Entities

GAAP provides a framework for identifying variable interest entities (“VIEs”) and determining when a company should include the assets, liabilities, noncontrolling interests and results of operations of a VIE in its consolidated financial statements. In general, a VIE is a corporation, partnership, limited liability company, trust or any other legal structure used to conduct activities or hold assets that either: (1) has an insufficient amount of equity to carry out its principal activities without additional subordinated financial support, (2) has a group of equity owners that are unable to make significant decisions about its activities or (3) has a group of equity owners that do not have the obligation to absorb losses or the right to receive returns generated by its operations.

GAAP requires a VIE to be consolidated if a party with an ownership, contractual or other financial interest in the VIE (a variable interest holder) is obligated to absorb a majority of the risk of loss from the VIE’s activities, is entitled to receive a majority of the VIE’s residual returns (if no party absorbs a majority of the VIE’s losses), or both. A variable interest holder that consolidates the VIE is called the primary beneficiary. Upon consolidation, the primary beneficiary generally must initially record all of the VIE’s assets, liabilities and noncontrolling interests at fair value and subsequently account for the VIE as if it were consolidated based on majority voting interest. GAAP also requires disclosures about VIEs that the variable interest holder is not required to consolidate but in which it has a significant variable interest.

The Company’s Scotts LawnService^® business sells new franchise territories, primarily in small to mid-size markets, under arrangements where a portion of the franchise fee is paid in cash with the balance due under a promissory note. The Company believes that it may be the primary beneficiary for certain of its franchisees initially, but ceases to be the primary beneficiary as the franchisees develop their businesses and the promissory notes are repaid. At both September 30, 2010 and 2009, the Company had approximately $2.4 million in notes receivable from such franchisees. The effect of consolidating the entities where the Company may be the primary beneficiary for a limited period of time is not material to the consolidated financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS

Business Combinations

In December 2007, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance on business combinations and noncontrolling interests in consolidated financial statements. The objective is to improve the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. The guidance applies to all transactions or other events in which an entity (the “acquirer”) obtains control of one or more businesses (the “acquiree”), including those sometimes referred to as “true mergers” or “mergers of equals” and combinations achieved without the transfer of consideration. The guidance, among other things, requires companies to provide disclosures relating to the gross amount of goodwill and accumulated goodwill impairment losses. In April 2009, the FASB issued additional guidance which addresses application issues arising from contingencies in a business combination. The Company adopted the new guidance beginning October 1, 2009. The Company had no acquisition activity for fiscal 2010, and the adoption of the new guidance did not impact the Company’s financial statements. Refer to “NOTE 5. GOODWILL AND INTANGIBLE ASSETS, NET” for applicable disclosures regarding the gross amount of goodwill and accumulated goodwill impairment losses.

Employers’ Disclosures about Postretirement Benefit Plan Assets

In December 2008, the FASB issued new accounting guidance on employers’ disclosures about assets of a defined benefit pension or other postretirement plan. It requires employers to disclose information about fair value measurements of plan assets. The objectives of the disclosures are to provide an understanding of: (a) how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies; (b) the major categories of plan assets; (c) the inputs and valuation techniques used to measure the fair value of plan assets; (d) the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period; and (e) significant concentrations of risk within plan assets. The Company adopted this new guidance at September 30, 2010, the fair value measurement date of its defined benefit pension and retiree medical plans. Refer to “NOTE 9. RETIREMENT PLANS” for the applicable disclosures.

Variable Interest Entities

In June 2009, the FASB issued new accounting guidance requiring an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. The new guidance also requires enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity. The provisions are effective for the Company’s financial statements for the fiscal year that began October 1, 2010. The Company is in the process of evaluating the impact that the guidance may have on its financial statements and related disclosures.

Revenue Recognition — Multiple-Element Arrangements

In October 2009, the FASB issued new accounting guidance addressing the accounting for multiple-deliverable arrangements to enable entities to account for products or services (deliverables) separately rather than as a combined unit. The provisions establish the accounting and reporting guidance for arrangements under which the entity will perform multiple revenue-generating activities. Specifically, this guidance addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. The provisions are effective for the Company’s financial statements for the fiscal year that began October 1, 2010. The Company is in the process of evaluating the impact that the guidance may have on its financial statements and related disclosures.

Discontinued Operations

12 Months Ended

Sep. 30, 2010

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS


NOTE 2.	DISCONTINUED OPERATIONS

On July 8, 2009, Scotts Miracle-Gro announced that its wholly-owned subsidiary, Smith & Hawken, Ltd., had adopted a plan to close the Smith & Hawken business. During the Company’s first quarter of fiscal 2010, all Smith & Hawken stores were closed and substantially all operational activities of Smith & Hawken were discontinued. As a result, effective in its first quarter of fiscal 2010, the Company classified Smith & Hawken as discontinued operations. Accordingly, the Company has reclassified its results of operations for fiscal 2009 and fiscal 2008 to reflect Smith & Hawken as discontinued operations separate from the Company’s results of continuing operations.

In fiscal 2010, the Company incurred $18.3 million of charges related to the liquidation of the Smith & Hawken business primarily associated with the termination of retail site lease obligations, third-party agency fees and severance and benefit commitments. These charges, primarily recorded in the Company’s first quarter of fiscal 2010, were partially offset by a gain of approximately $18 million from the sale of the Smith & Hawken intellectual property on December 30, 2009.

The Company recorded Smith & Hawken-related impairment, restructuring and other charges of $14.7 million and $25.7 million in fiscal 2009 and fiscal 2008, respectively. Other charges in fiscal 2009 related to the Smith & Hawken closure process. Impairment, restructuring and other charges in fiscal 2008 for Smith & Hawken included $15.4 million for property, plant and equipment and $10.3 million for intangible assets.

The fiscal 2009 income tax expense for discontinued operations included the reduction of $18.4 million of valuation allowances recorded in prior years to fully reserve deferred tax assets that originated from impairment charges recorded for the Smith & Hawken business in fiscal 2007 and fiscal 2008. In fiscal 2008, when the Company was attempting to sell Smith & Hawken, the Company concluded that it would not receive any future tax benefit from these deferred tax assets as a stock sale would have resulted in a non-deductible capital loss. Given the Company’s fourth quarter fiscal 2009 decision to close the Smith & Hawken business, the Company concluded that the character of the losses generated would change from capital to ordinary and as an outcome, would be deductible for tax purposes.

The following table summarizes results of Smith & Hawken classified as discontinued operations in the Company’s Consolidated Statements of Operations for fiscal 2010, fiscal 2009 and fiscal 2008 (in millions):


	2010			2009			2008

Net sales	$	14.7		$	160.8		$	158.6
Operating costs		23.4			179.1			177.4
Impairment, restructuring and other charges		18.3			14.7			25.7
Other income, net		(20.0	)		(2.5	)		(2.7	)

Loss from discontinued operations before income taxes		(7.0	)		(30.5	)		(41.8	)
Income tax expense (benefit) from discontinued operations		1.3			(29.2	)		1.9

Loss from discontinued operations	$	(8.3	)	$	(1.3	)	$	(43.7	)

The major classes of assets and liabilities of Smith & Hawken were as follows (in millions):


	September 30,
	2010		2009

Inventory	$	—	$	11.5
Other current assets		1.3		3.3
Property, plant and equipment, net		—		1.9

Assets of discontinued operations	$	1.3	$	16.7

Accounts payable	$	—	$	6.2
Other current liabilities		0.9		13.2
Other liabilities		—		2.2

Liabilities of discontinued operations	$	0.9	$	21.6

Product Registration and Recall Matters

12 Months Ended

Sep. 30, 2010

Product Registration and Recall Matters [Abstract]

PRODUCT REGISTRATION AND RECALL MATTERS


NOTE 3.	PRODUCT REGISTRATION AND RECALL MATTERS

In April 2008, the Company became aware that a former associate apparently deliberately circumvented the Company’s policies and U.S. Environmental Protection Agency (“U.S. EPA”) regulations under the Federal Insecticide, Fungicide, and Rodenticide Act of 1947, as amended (“FIFRA”), by failing to obtain valid registrations for certain products and/or causing certain invalid product registration forms to be submitted to regulators. Since that time, the Company has been cooperating with both the U.S. EPA and the U.S. Department of Justice (the “U.S. DOJ”) in related civil and criminal investigations into the pesticide product registration issues as well as a state civil investigation into related allegations arising under state pesticide registration laws and regulations.

In late April of 2008, in connection with the U.S. EPA’s investigation, the Company conducted a consumer-level recall of certain consumer lawn and garden products and a Scotts LawnService^® product. Subsequently, the Company and the U.S. EPA agreed upon a Compliance Review Plan for conducting a comprehensive, independent review of the Company’s product registration records. Pursuant to the Compliance Review Plan, an independent third-party firm, Quality Associates Incorporated (“QAI”), reviewed substantially all of the Company’s U.S. pesticide product registrations and associated advertisements, some of which were historical in nature and no longer related to sales of the Company’s products. The U.S. EPA investigation and the QAI review process resulted in the temporary suspension of sales and shipments of certain products. In addition, as the QAI review process or the Company’s internal review identified potential FIFRA registration issues (some of which appear unrelated to the actions of the former associate), the Company endeavored to stop selling or distributing the affected products until the issues could be resolved. QAI’s review of the Company’s U.S. pesticide product registrations and associated advertisements is now substantially complete. The results of the QAI review process did not materially affect the Company’s fiscal 2009 and fiscal 2010 sales, and are not expected to materially affect the Company’s fiscal 2011 sales.

In fiscal 2008, the Company conducted a voluntary recall of certain of its wild bird food products due to a formulation issue. Certain wild bird food products had been treated with pest control additives to avoid insect infestation, especially at retail stores. While the pest control additives had been labeled for use on certain stored grains that can be processed for human and/or animal consumption, they were not labeled for use on wild bird food products. In October, 2008, the U.S. Food & Drug Administration concluded that the recall had been completed and that there had been proper disposition of the recalled products. The results of the wild bird food recall did not materially affect the Company’s fiscal 2009 financial condition, results of operations or cash flows.

In June of 2008, the California Department of Pesticide Regulation (“CDPR”) issued a request for information to the Company relating to products that had been the subject of the April 2008 recall. The Company cooperated with that inquiry and reached agreement with CDPR that CDPR would place its investigation on hold pending the completion of the Company’s internal audit. In furtherance of that agreement, in May of 2010, the Company and CDPR executed a tolling agreement that extends CDPR’s rights through April 2012. In July of 2010, CDPR notified the Company that CDPR planned to proceed with its investigation independent of the U.S. EPA and U.S. DOJ. The Company is continuing to cooperate with CDPR’s investigation.

As a result of these registration and recall matters, the Company has reversed sales associated with estimated returns of affected products, recorded charges for affected inventory and recorded other registration and recall-related costs. The effects of these adjustments were pre-tax charges of $8.7 million, $28.6 million and $51.1 million for the years ended September 30, 2010, 2009 and 2008, respectively. The Company expects to incur an additional $8-$10 million in fiscal 2011 on recall and registration matters, excluding possible fines, penalties, judgments and/or litigation costs. The Company expects that these charges will include costs associated with the rework of certain finished goods inventories, the potential disposal of certain products and ongoing third-party professional services related to the U.S. EPA, U.S. DOJ and state investigations.

The U.S. EPA, U.S. DOJ and CDPR investigations continue and may result in future state, federal or private rights of action including fines and/or penalties with respect to known or potential additional product registration issues. Until the U.S. EPA, U.S. DOJ and related state investigations are complete, the Company cannot reasonably determine the scope or magnitude of possible liabilities that could result from known or potential product registration issues, and no reserves for these potential liabilities have been established as of September 30, 2010. However, it is possible that such liabilities, including fines, penalties, judgments and/or litigation costs could be material and have an adverse effect on the Company’s financial condition, results of operations or cash flows.

The following tables summarize the impact of the product registration and recall matters on the results of operations during fiscal 2010, fiscal 2009 and fiscal 2008 and on accrued liabilities and inventory reserves as of September 30, 2010 and 2009 (in millions):


	Year Ended
	September 30,
	2010			2009			2008

Net sales — product recalls	$	—		$	(0.3	)	$	(22.3	)
Cost of sales — product recalls		—			(0.2	)		(11.1	)
Cost of sales — other charges		3.0			11.7			27.2

Gross profit		(3.0	)		(11.8	)		(38.4	)
SG&A		5.7			16.8			12.7

Loss from operations		(8.7	)		(28.6	)		(51.1	)
Income tax benefit		(3.1	)		(10.3	)		(17.9	)

Net loss	$	(5.6	)	$	(18.3	)	$	(33.2	)


			Additional
	Reserves at		Costs and					Reserves at
	September 30,		Changes in		Reserves			September 30,
	2009		Estimates		Used			2010

Inventory reserves	$	4.1	$	1.0	$	(2.1	)	$	3.0
Other incremental costs of sales		4.2		2.0		(5.7	)		0.5
Other general and administrative costs		1.4		5.7		(6.6	)		0.5

Accrued liabilities and inventory reserves	$	9.7	$	8.7	$	(14.4	)	$	4.0

Impairment, Restructuring and Other Charges

12 Months Ended

Sep. 30, 2010

Impairment Restructuring and Other Charges [Abstract]

IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES


NOTE 4.	IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES

The Company recorded intangible asset impairment charges of $18.5 million in fiscal 2010. The Company recorded net restructuring and other charges of $1.0 million and property, plant and equipment charges of $0.3 million in fiscal 2008 related to the Company’s turfgrass biotechnology program. Goodwill and intangible asset impairment charges of $109.8 million were also recorded in fiscal 2008. The nature of the impairment charges are discussed further in “NOTE 5. GOODWILL AND INTANGIBLE ASSETS, NET.”

The following table details impairment, restructuring and other charges and rolls forward the cash portion of the restructuring and other charges accrued in fiscal 2010, fiscal 2009 and fiscal 2008 (in millions):


	2010		2009		2008

Restructuring and other charges	$	—	$	—	$	1.0
Property, plant and equipment impairment		—		—		0.3
Goodwill and intangible asset impairments		18.5		—		109.8

Total impairment, restructuring and other charges	$	18.5	$	—	$	111.1


	2010			2009			2008

Amounts reserved for restructuring and other charges at beginning of year	$	14.6		$	1.1		$	2.5
Restructuring and other expense from continuing operations		—			—			1.0
Restructuring and other expense from discontinued operations (see “NOTE 2. DISCONTINUED OPERATIONS”)		18.3			14.7			—
Payments and other		(32.4	)		(1.2	)		(2.4	)

Amounts reserved for restructuring and other charges at end of year	$	0.5		$	14.6		$	1.1

Goodwill and Intangible Assets, Net

12 Months Ended

Sep. 30, 2010

Goodwill and Intangible Assets, Net [Abstract]

GOODWILL AND INTANGIBLE ASSETS, NET


NOTE 5.	GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and indefinite-lived intangible assets are not subject to amortization. Goodwill and indefinite-lived intangible assets are reviewed for impairment by applying a fair-value based test on an annual basis or more frequently if circumstances indicate impairment may have occurred. The Company assesses goodwill for impairment by comparing the carrying value of its reporting units to their respective fair values and reviewing the Company’s market value of invested capital. Management engages an independent valuation firm to assist in its impairment assessment reviews. The Company determines the fair value of its reporting units utilizing discounted cash flows and incorporates assumptions it believes marketplace participants would utilize. The Company also uses comparative market multiples and other factors to corroborate the discounted cash flow results used. As permitted by GAAP, if certain criteria are met, the Company carries forward the fair value of a reporting unit from the previous year. The value of all indefinite-lived tradenames was determined using a royalty savings methodology similar to that employed when the associated businesses were acquired but using updated estimates of sales, cash flow and profitability.

Fiscal 2010

The Company’s fiscal 2010 impairment review resulted in a non-cash charge of $18.5 million related to certain brands and sub-brands in its Global Consumer segment that have been discontinued or de-emphasized, consistent with the Company’s business strategy to increasingly concentrate its advertising and promotional spending on fewer, more significant brands to more efficiently drive growth.

Fiscal 2009

The Company completed its impairment analysis as of June 28, 2009 and determined that no charge for impairment was required.

Fiscal 2008

The Company’s fiscal 2008 impairment review resulted in a non-cash charge of $111.1 million to reflect the decline in the fair value of certain goodwill and other assets as evidenced by the decline in the price of the Company’s common shares as of the measurement date. In total, the fiscal 2008 impairment charges were comprised of $80.8 million for goodwill, $11.3 million related to indefinite-lived tradenames and $19.0 million for long-lived assets. Of the $19.0 million impairment charge recorded for long-lived assets, $1.3 million was recorded in cost of sales. On a reportable segment basis, $64.5 million of the impairment was in Global Consumer, $38.4 million was in Global Professional, with the remaining $8.2 million in Corporate.

The following table presents intangible assets as of September 30, 2010 and 2009 (dollars in millions).


	September 30, 2010							September 30, 2009
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount

Amortizable intangible assets:
Technology	$	53.2	$	(40.5	)	$	12.7	$	53.6	$	(40.3	)	$	13.3
Customer accounts		78.0		(43.7	)		34.3		85.0		(44.6	)		40.4
Tradenames		35.0		(11.3	)		23.7		11.3		(10.2	)		1.1
Other		104.8		(78.8	)		26.0		105.1		(75.1	)		30.0

Total amortizable intangible assets, net							96.7							84.8
Unamortizable intangible assets:
Tradenames							233.5							279.4

Total intangible assets, net						$	330.2						$	364.2

The total amortization expense for the years ended September 30, 2010, 2009 and 2008 was $10.9 million, $12.5 million and $16.4 million, respectively. Amortization expense is estimated to be as follows for the years ending September 30 (in millions):


2011	$	10.7
2012		9.9
2013		9.6
2014		9.5
2015		7.3

The following table displays a rollforward of the carrying amount of goodwill by reportable segment (in millions):


	Global			Global			Scotts
	Consumer			Professional			LawnService^®			Corporate			Total

Balance as of September 30, 2008
Goodwill	$	277.6		$	61.1		$	123.8		$	24.6		$	487.1
Accumulated impairment losses		(62.5	)		(22.3	)		—			(24.6	)		(109.4	)

		215.1			38.8			123.8			—			377.7
Other, primarily foreign currency translation		(3.4	)		1.0			(0.1	)		—			(2.5	)

Balance as of September 30, 2009
Goodwill	$	274.2		$	62.1		$	123.7		$	24.6		$	484.6
Accumulated impairment losses		(62.5	)		(22.3	)		—			(24.6	)		(109.4	)

		211.7			39.8			123.7			—			375.2
Reclassifications		(29.2	)		29.2			—			—			—
Other, primarily foreign currency translation		(0.4	)		(2.0	)		—			—			(2.4	)

Balance as of September 30, 2010
Goodwill	$	244.6		$	89.3		$	123.7		$	24.6		$	482.2
Accumulated impairment losses		(62.5	)		(22.3	)		—			(24.6	)		(109.4	)

	$	182.1		$	67.0		$	123.7		$	—		$	372.8

- Definition

Discloses the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

+ References+ Details

Detail of Certain Financial Statement Accounts

12 Months Ended

Sep. 30, 2010

Detail of Certain Financial Statement Accounts [Abstract]

DETAIL OF CERTAIN FINANCIAL STATEMENT ACCOUNTS


NOTE 6.	DETAIL OF CERTAIN FINANCIAL STATEMENT ACCOUNTS


	September 30,
	2010			2009
	(In millions)

INVENTORIES, NET:
Finished goods	$	215.8		$	239.1
Work-in-progress		29.8			41.5
Raw materials		158.0			178.3

	$	403.6		$	458.9

PREPAID AND OTHER ASSETS:
Deferred tax asset	$	78.6		$	103.8
Accounts receivable, non-trade		15.3			15.3
Other		42.6			40.0

	$	136.5		$	159.1

PROPERTY, PLANT AND EQUIPMENT, NET:
Land and improvements	$	66.6		$	61.5
Buildings		190.8			173.3
Machinery and equipment		439.7			449.6
Furniture and fixtures		39.4			36.3
Software		109.4			98.9
Aircraft		8.4			8.4
Construction in progress		36.4			34.0

		890.7			862.0
Less: accumulated depreciation		(495.9	)		(492.3	)

	$	394.8		$	369.7


OTHER CURRENT LIABILITIES:
Payroll and other compensation accruals	$	97.3	$	120.8
Advertising and promotional accruals		152.3		158.4
Other		126.2		127.2

	$	375.8	$	406.4

OTHER NON-CURRENT LIABILITIES:
Accrued pension and postretirement liabilities	$	139.0	$	128.4
Deferred tax liability		63.0		49.6
Other		36.9		51.1

	$	238.9	$	229.1


	September 30,
	2010			2009			2008
	(In millions)

ACCUMULATED OTHER COMPREHENSIVE LOSS:
Unrecognized loss on derivatives, net of tax of $7.9, $10.7 and $8.9	$	(12.7	)	$	(17.3	)	$	(14.1	)
Pension and other postretirement liabilities, net of tax of $40.4, $35.3 and $29.2		(69.1	)		(59.2	)		(47.1	)
Foreign currency translation adjustment		4.7			3.7			(5.9	)

	$	(77.1	)	$	(72.8	)	$	(67.1	)

Marketing Agreement

12 Months Ended

Sep. 30, 2010

Marketing Agreement [Abstract]

MARKETING AGREEMENT


NOTE 7.	MARKETING AGREEMENT

The Company is Monsanto’s exclusive agent for the marketing and distribution of consumer Roundup^® herbicide products (with additional rights to new products containing glyphosate or other similar non-selective herbicides) in the consumer lawn and garden market within the United States and other specified countries, including Australia, Austria, Belgium, Canada, France, Germany, the Netherlands and the United Kingdom. Under the terms of the Marketing Agreement, the Company is entitled to receive an annual commission from Monsanto as consideration for the performance of the Company’s duties as agent. The annual gross commission under the Marketing Agreement is calculated as a percentage of the actual earnings before interest and income taxes (EBIT) of the consumer Roundup^® business in the markets covered by the Marketing Agreement and is based on the achievement of two earnings thresholds, as defined in the Marketing Agreement. The Marketing Agreement also requires the Company to make annual payments to Monsanto as a contribution against the overall expenses of the consumer Roundup^® business. The annual contribution payment is defined in the Marketing Agreement as $20 million.

In consideration for the rights granted to the Company under the Marketing Agreement for North America, the Company was required to pay a marketing fee of $32 million to Monsanto. The Company has deferred this amount on the basis that the payment will provide a future benefit through commissions that will be earned under the Marketing Agreement. Based on management’s current assessment of the likely term of the Marketing Agreement, the useful life over which the marketing fee is being amortized is 20 years.

Under the terms of the Marketing Agreement, the Company performs certain functions, primarily manufacturing conversion, distribution and logistics, and selling and marketing support, on behalf of Monsanto in the conduct of the consumer Roundup^® business. The actual costs incurred for these activities are charged to and reimbursed by Monsanto. The Company records costs incurred under the Marketing Agreement for which the Company is the primary obligor on a gross basis, recognizing such costs in “Cost of sales” and the reimbursement of these costs in “Net sales,” with no effect on gross profit or net income. The related net sales and cost of sales were $65.0 million, $67.8 million and $58.0 million for fiscal 2010, fiscal 2009 and fiscal 2008, respectively.

The gross commission earned under the Marketing Agreement, the contribution payments to Monsanto and the amortization of the initial marketing fee paid to Monsanto are included in the calculation of net sales in the Company’s Consolidated Statements of Operations. For fiscal 2010, fiscal 2009 and fiscal 2008, the net amount earned under the Marketing Agreement was $70.0 million, $51.4 million and $44.3 million, respectively. The elements of the net commission earned under the Marketing Agreement and included in “Net sales” for each of the three years in the period ended September 30, 2010 were as follows (in millions):


	2010			2009			2008

Gross commission	$	90.8		$	72.2		$	65.1
Contribution expenses		(20.0	)		(20.0	)		(20.0	)
Amortization of marketing fee		(0.8	)		(0.8	)		(0.8	)

Net commission income		70.0			51.4			44.3
Reimbursements associated with Marketing Agreement		65.0			67.8			58.0

Total net sales associated with Marketing Agreement	$	135.0		$	119.2		$	102.3

The Marketing Agreement has no definite term except as it relates to the European Union countries (the “EU term”). The EU term extends through September 30, 2011, with up to two additional automatic renewal periods of two years each, subject to non-renewal only upon the occurrence of certain performance defaults. Thereafter, the Marketing Agreement provides that the parties may agree to renew the EU term for an additional three years.

The Marketing Agreement provides Monsanto with the right to terminate the Marketing Agreement upon an event of default (as defined in the Marketing Agreement) by the Company, a change in control of Monsanto or the sale of the consumer Roundup^® business. The Marketing Agreement provides the Company with the right to terminate the Marketing Agreement in certain circumstances, including an event of default by Monsanto or the sale of the consumer Roundup^® business. Unless Monsanto terminates the Marketing Agreement due to an event of default by the Company, Monsanto is required to pay a termination fee to the Company that varies by program year. The termination fee is calculated as a percentage of the value of the Roundup^® business exceeding a certain threshold, but in no event will the termination fee be less than $16 million. If Monsanto were to terminate the Marketing Agreement due to an event of default by the Company, however, the Company would not be entitled to any termination fee, and the Company would lose all, or a substantial portion, of the significant source of earnings and overhead expense absorption the Marketing Agreement provides. Monsanto may also be able to terminate the Marketing Agreement within a given region, including North America, without paying a termination fee if unit volume sales to consumers in that region decline: (1) over a cumulative three-fiscal-year period; or (2) by more than 5% for each of two consecutive years.

Monsanto has agreed to provide the Company with notice of any proposed sale of the consumer Roundup^® business, allow the Company to participate in the sale process and negotiate in good faith with the Company with respect to any such proposed sale. In the event the Company acquires the consumer Roundup^® business in such a sale, the Company would receive as a credit against the purchase price the amount of the termination fee that would have been paid to the Company if Monsanto had exercised its right to terminate the Marketing Agreement in connection with a sale to another party. If Monsanto decides to sell the consumer Roundup^® business to another party, the Company must let Monsanto know whether the Company intends to terminate the Marketing Agreement and forfeit any right to a termination fee or whether it will agree to continue to perform under the Marketing Agreement on behalf of the purchaser.

Acquisitions

12 Months Ended

Sep. 30, 2010

Acquisitions [Abstract]

ACQUISITIONS


NOTE 8.	ACQUISITIONS

Effective October 1, 2008, the Company acquired Humax Horticulture Limited (“Humax”), a privately-owned growing media company in the United Kingdom, for a total cost of $9.3 million. Purchase accounting allocations have been recorded for Humax, including the allocation of the purchase price to assets acquired and liabilities assumed, based on estimated fair values at the date of acquisition. Pro forma net sales, net income and net income per common share for fiscal 2008 would not have been significantly different had the acquisition of Humax occurred as of October 1, 2007.

Retirement Plans

12 Months Ended

Sep. 30, 2010

Retirement Plans [Abstract]

RETIREMENT PLANS


NOTE 9.	RETIREMENT PLANS

The Company sponsors a defined contribution 401(k) plan for substantially all U.S. associates. The Company provides a base contribution equal to 2% of compensation up to 50% of the Social Security taxable wage base plus 4% of remaining compensation. Associates also may make pretax contributions from compensation that are matched by the Company at 100% of the associates’ initial 3% contribution and 50% of their remaining contribution up to 5%. The Company recorded charges of $14.5 million, $15.3 million and $11.4 million under the plan in fiscal 2010, fiscal 2009 and fiscal 2008, respectively. Beginning January 1, 2011, the Company will no longer provide base contributions and will match 150% of the associates’ initial 4% contribution and 50% of their remaining contribution up to 6%.

The Company sponsors two defined benefit plans for certain U.S. associates. Benefits under these plans have been frozen and closed to new associates since 1997. The benefits under the primary plan are based on years of service and the associates’ average final compensation or stated amounts. The Company’s funding policy, consistent with statutory requirements and tax considerations, is based on actuarial computations using the Projected Unit Credit method. The second frozen plan is a non-qualified supplemental pension plan. This plan provides for incremental pension payments so that total pension payments equal amounts that would have been payable from the Company’s pension plan if it were not for limitations imposed by the income tax regulations.

The Company sponsors defined benefit pension plans associated with its international businesses in the United Kingdom, the Netherlands, Germany and France. These plans generally cover all associates of the respective businesses, with retirement benefits primarily based on years of service and compensation levels.

On July 1, 2010, the Company froze its two U.K. defined benefit pension plans and transferred participants to an amended defined contribution plan. Under the frozen plans, participants are no longer credited for future service; however, future salary increases will continue to be factored into each participant’s final pension benefit. As a result of the freeze, the Company measured the unfunded status of the U.K. defined benefit pension plans as of July 3, 2010. The results of the freeze and remeasurement did not affect the Company’s results of operations or cash flows, and did not significantly affect the Company’s financial position.

The following tables present information about benefit obligations, plan assets, annual expense, assumptions and other information about the Company’s defined benefit pension plans (in millions). The defined benefit plans are valued using a September 30 measurement date.


							International
	U.S. Defined						Defined
	Benefit Plans						Benefit Plans
	2010			2009			2010			2009

Change in projected benefit obligation
Benefit obligation at beginning of year	$	101.5		$	90.2		$	182.4		$	176.7
Service cost		—			—			2.8			2.4
Interest cost		5.1			5.6			9.8			9.6
Plan participants’ contributions		—			—			0.7			0.8
Actuarial loss		6.4			12.1			22.0			8.3
Benefits paid		(6.4	)		(6.4	)		(5.7	)		(5.1	)
Projected benefit obligation gain due to plan freeze		—			—			(2.6	)		—
Other		—			—			0.5			(0.3	)
Foreign currency translation		—			—			(6.1	)		(10.0	)

Projected benefit obligation at end of year	$	106.6		$	101.5		$	203.8		$	182.4

Accumulated benefit obligation at end of year	$	106.6		$	101.5		$	192.9		$	157.4

Change in plan assets
Fair value of plan assets at beginning of year	$	64.2		$	65.9		$	122.9		$	118.9
Actual return on plan assets		6.2			3.2			10.7			11.9
Employer contribution		5.7			1.5			8.3			9.3
Plan participants’ contributions		—			—			0.7			0.8
Actuarial gain/(loss)		—			—			1.2			(4.4	)
Benefits paid		(6.4	)		(6.4	)		(5.7	)		(5.1	)
Foreign currency translation		—			—			(3.3	)		(8.2	)
Other		—			—			(0.4	)		(0.3	)

Fair value of plan assets at end of year	$	69.7		$	64.2		$	134.4		$	122.9

Underfunded status at end of year	$	(36.9	)	$	(37.3	)	$	(69.4	)	$	(59.5	)

Information for pension plans with an accumulated benefit obligation in excess of plan assets
Projected benefit obligation	$	106.6		$	101.5		$	203.8		$	182.4
Accumulated benefit obligation		106.6			101.5			192.9			157.4
Fair value of plan assets		69.7			64.2			134.4			122.9
Amounts recognized in the Consolidated Balance Sheets consist of:
Current liabilities	$	(0.2	)	$	(0.2	)	$	(0.9	)	$	(1.1	)
Noncurrent liabilities		(36.7	)		(37.1	)		(68.5	)		(58.4	)

Total amount accrued	$	(36.9	)	$	(37.3	)	$	(69.4	)	$	(59.5	)

Amounts recognized in accumulated other comprehensive loss consist of:
Actuarial loss	$	49.4		$	48.6		$	60.6		$	48.3
Prior service cost		—			—			(0.3	)		(1.0	)

Net amount recognized	$	49.4		$	48.6		$	60.3		$	47.3

Total change in other comprehensive loss attributable to:
Pension benefit losses during the period	$	5.1		$	13.9		$	16.2		$	8.1
Reclassification of pension benefit losses to net income		(4.3	)		(3.0	)		(2.0	)		(2.0	)
Foreign currency translation		—			—			(1.2	)		(4.0	)

Total change in other comprehensive loss	$	0.8		$	10.9		$	13.0		$	2.1

Amounts in accumulated other comprehensive loss expected to be recognized as components of net periodic benefit cost in fiscal 2011 are as follows:
Actuarial loss	$	4.9					$	1.5
Prior service cost		—						(0.1	)

Amount to be amortized into net periodic benefit cost	$	4.9					$	1.4

Weighted average assumptions used in development of projected benefit obligation
Discount rate		4.66	%		5.23	%		5.01	%		5.51	%
Rate of compensation increase		n/a			n/a			3.5	%		3.8	%


	U.S. Defined Benefit Plans									International Defined Benefit Plans
	2010			2009			2008			2010			2009			2008

Components of net periodic benefit cost
Service cost	$	—		$	—		$	—		$	2.8		$	2.4		$	2.8
Interest cost		5.1			5.6			5.4			9.8			9.6			10.0
Expected return on plan assets		(5.0	)		(5.1	)		(6.2	)		(8.1	)		(7.2	)		(9.3	)
Net amortization		4.3			3.1			1.3			2.0			2.0			0.4

Net periodic benefit cost		4.4			3.6			0.5			6.5			6.8			3.9
Curtailment/settlement loss		—			—			—			—			—			0.1

Total benefit cost	$	4.4		$	3.6		$	0.5		$	6.5		$	6.8		$	4.0

Weighted average assumptions used in development of net periodic benefit cost
Discount rate		5.23	%		6.46	%		6.11	%		5.51	%		6.06	%		5.67	%
Expected return on plan assets		8.0	%		8.0	%		8.0	%		6.9	%		5.8	%		5.8	%
Rate of compensation increase		n/a			n/a			n/a			3.8	%		4.1	%		3.5	%

Other information


	U.S. Defined			International Defined
	Benefit Plans			Benefit Plans

Plan asset allocations:
Target for September 30, 2011:
Equity securities		40	%		49	%
Debt securities		60	%		51	%
September 30, 2010:
Equity securities		53	%		49	%
Debt securities		47	%		51	%
September 30, 2009:
Equity securities		57	%		50	%
Debt securities		41	%		50	%
Other		2	%		0	%
Expected company contributions in fiscal 2011		11.1			8.7
Expected future benefit payments:
2011		6.5			5.4
2012		6.8			5.7
2013		6.8			5.9
2014		6.9			6.2
2015		7.1			6.8
2016 — 2020		36.2			39.8

The following table sets forth the fair value of the Company’s pension plan assets as of September 30, 2010 (in millions), segregated by level within the fair value hierarchy (refer to “NOTE 16. FAIR VALUE MEASUREMENTS” for further discussion of the fair value hierarchy and fair value principles):


	September 30, 2010
	Quoted Prices in Active		Significant Other		Unobservable
	Markets for Identical		Observable		Inputs
	Assets (Level 1)		Inputs (Level 2)		(Level 3)		Total

U.S. Defined Benefit Plan Assets
Cash and cash equivalents	$	0.6	$	—	$	—	$	0.6
Common stock		3.9		—		—		3.9
Mutual funds — equities		32.7		—		—		32.7
Mutual funds — fixed income		32.5		—		—		32.5

Total	$	69.7	$	—	$	—	$	69.7

International Defined Benefit Plan Assets
Cash and cash equivalents	$	0.7	$	—	$	—	$	0.7
Insurance contracts		—		—		22.7		22.7
Mutual funds — equities		—		65.1		—		65.1
Mutual funds — fixed income		—		45.9		—		45.9

Total	$	0.7	$	111.0	$	22.7	$	134.4

The table below sets forth a summary of changes in the fair value of the Company’s level 3 pension plan assets for the year ended September 30, 2010 (in millions):


	Level 3 Assets
	Insurance contracts

Balance, October 1, 2009	$	20.9
Realized gain on plan assets		0.9
Unrealized gain on plan assets		1.1
Foreign currency translation		(1.5	)
Purchases, sales, issuances and settlements (net)		1.3

Balance, September 30, 2010	$	22.7

Investment Strategy

Target allocation percentages among various asset classes are maintained based on an individual investment policy established for each of the various pension plans. Asset allocations are designed to achieve long-term objectives of return, while mitigating against downside risk and considering expected cash requirements necessary to fund benefit payments. However, we cannot predict future investment returns, and therefore cannot determine whether future pension plan funding requirements could materially and adversely affect our financial condition, results of operations or cash flows.

Basis for Long-Term Rate of Return on Asset Assumptions

The Company’s expected long-term rate of return on asset assumptions are derived from studies conducted by third parties. The studies include a review of anticipated future long-term performance of individual asset classes and consideration of the appropriate asset allocation strategy given the anticipated requirements of the plans to determine the average rate of earnings expected. While the studies give appropriate consideration to recent fund performance and historical returns, the assumptions primarily represent expectations about future rates of return over the long term.

- Definition

Description containing the entire pension and other postretirement benefits disclosure as a single block of text.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 158

-Paragraph 7, 21, 22

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5, 6, 7, 8

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 8

-Subparagraph m

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 106

-Paragraph 518

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 87

-Paragraph 264

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph b

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph a

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph h

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph q

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Staff Position (FSP)

-Number FAS106-2

-Paragraph 20, 21, 22

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 03-2

-Paragraph 8

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 30

-Paragraph 26

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Implementation Guide (Q and A)

-Number FAS88

-Paragraph 63

+ Details

Associate Medical Benefits

12 Months Ended

Sep. 30, 2010

Associate Medical Benefits [Abstract]

ASSOCIATE MEDICAL BENEFITS


NOTE 10.	ASSOCIATE MEDICAL BENEFITS

The Company provides comprehensive major medical benefits to certain of its retired associates and their dependents. Substantially all of the Company’s domestic associates who were hired before January 1, 1998 become eligible for these benefits if they retire at age 55 or older with more than ten years of service. The retiree medical plan requires certain minimum contributions from retired associates and includes provisions to limit the overall cost increases the Company is required to cover. The Company funds its portion of retiree medical benefits on a pay-as-you-go basis.

The following table sets forth information about the retiree medical plan for domestic associates (in millions). The retiree medical plan is valued using a September 30 measurement date.


	2010			2009

Change in Accumulated Plan Benefit Obligation (APBO)
Benefit obligation at beginning of year	$	31.0		$	26.2
Service cost		0.5			0.4
Interest cost		1.7			1.9
Plan participants’ contributions		0.9			0.9
Actuarial loss		0.5			4.8
Benefits paid (net of federal subsidy of $0.3 and $0.3)		(2.9	)		(3.2	)

Benefit obligation at end of year	$	31.7		$	31.0

Change in plan assets
Fair value of plan assets at beginning of year	$	—		$	—
Employer contribution		2.4			2.6
Plan participants’ contributions		0.9			0.9
Gross benefits paid		(3.3	)		(3.5	)

Fair value of plan assets at end of year		—			—

Unfunded status at end of year	$	(31.7	)	$	(31.0	)

Amounts recognized in the Consolidated Balance Sheets consist of:
Current liabilities	$	(2.1	)	$	(2.2	)
Noncurrent liabilities		(29.6	)		(28.8	)

Total amount accrued	$	(31.7	)	$	(31.0	)

Amounts recognized in accumulated other comprehensive loss consist of:
Actuarial loss	$	1.4		$	0.8

Total change in other comprehensive loss attributable to:
Benefit losses during the period	$	0.6		$	4.8
Reclassification of benefit gains to net income		—			0.2

Total change in other comprehensive loss	$	0.6		$	5.0

The estimated actuarial gain that will be amortized from accumulated loss into net periodic benefit cost over the next fiscal year is immaterial
Discount rate used in development of APBO		4.91	%		5.50	%


	2010			2009			2008

Components of net periodic benefit cost
Service cost	$	0.5		$	0.4		$	0.5
Interest cost		1.7			1.9			1.8
Amortization of actuarial gain		—			(0.2	)		—

Total postretirement benefit cost	$	2.2		$	2.1		$	2.3

Discount rate used in development of net periodic benefit cost		5.50	%		7.54	%		6.22	%

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act (the “Act”) became law. The Act provides for a federal subsidy to sponsors of retiree health care benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to the benefit established by the Act. The APBO at September 30, 2010, has been reduced by a deferred actuarial gain in the amount of $0.8 million to reflect the effect of the subsidy related to benefits attributed to past service. The amortization of the actuarial gain and reduction of service and interest costs served to reduce net periodic post retirement benefit cost for fiscal 2010, fiscal 2009 and fiscal 2008 by $0.5 million, $0.6 million and $0.5 million, respectively.

The Company has historically received a federal retiree drug subsidy as it offers retiree prescription drug coverage that is at a minimum as valuable as Medicare Part D coverage. The Patient Protection and Affordable Care Act (“PPACA”), which was enacted on March 23, 2010, repealed the existing rule that permitted a tax deduction for the portion of the drug coverage expense that was offset by the Medicare Part D subsidy received by the Company. This provision of PPACA was to be effective beginning with the Company’s fiscal 2012 tax year. On March 30, 2010, a companion bill, the Health Care and Education Reconciliation Act of 2010 (“HCERA”), was enacted. HCERA delayed the effective date of the reduction under PPACA until the Company’s fiscal 2014 tax year. As a result of this new legislation, the Company recorded a $1.9 million charge to tax expense during its second quarter of fiscal 2010 to reduce its deferred tax asset for the portion of the subsidy that will no longer be deductible when paid after fiscal 2013.

For measurement as of September 30, 2010, management has assumed that health care costs will increase at an annual rate of 7.5% in fiscal 2010, decreasing 0.50% per year to an ultimate trend of 5.00% in 2015. A 1% increase in health cost trend rate assumptions would increase the APBO by $0.9 million both as of September 30, 2010 and 2009. A 1% decrease in health cost trend rate assumptions would decrease the APBO by $1.0 million both as of September 30, 2010 and 2009. A 1% increase or decrease in the same rate would not have a material effect on service or interest costs.

Estimated Future Benefit Payments

The following benefit payments under the plan are expected to be paid by the Company and the retirees for the fiscal years indicated (in millions):


	Gross					Medicare			Net
	Benefit		Retiree			Part D			Company
	Payments		Contributions			Subsidy			Payments

2011	$	3.3	$	(0.9	)	$	(0.3	)	$	2.1
2012		3.6		(1.1	)		(0.4	)		2.1
2013		3.8		(1.3	)		(0.4	)		2.1
2014		4.2		(1.5	)		(0.5	)		2.2
2015		4.5		(1.7	)		(0.5	)		2.3
2016 — 2020		27.5		(12.5	)		(3.1	)		11.9

The Company also provides comprehensive major medical benefits to its associates. The Company is self-insured for certain health benefits up to $0.3 million per occurrence per individual. The cost of such benefits is recognized as expense in the period the claim is incurred. This cost was $27.6 million, $27.8 million and $24.1 million in fiscal 2010, fiscal 2009 and fiscal 2008, respectively.

Debt

12 Months Ended

Sep. 30, 2010

Debt [Abstract]

DEBT


NOTE 11.	DEBT


	September 30,
	2010		2009
	(In millions)

Credit Facilities:
Revolving loans	$	111.7	$	330.4
Term loans		302.4		456.4
Senior Notes — 7.25%		200.0		—
Master Accounts Receivable Purchase Agreement		—		4.2
Contingent consideration		10.9		11.0
Other		6.7		8.1

		631.7		810.1
Less current portions		195.0		160.4

	$	436.7	$	649.7

The Company’s debt matures as follows for each of the next five fiscal years and thereafter (in millions):


2011	$	195.0
2012		232.8
2013		0.5
2014		0.5
2015		0.5
Thereafter		202.4

	$	631.7

In February 2007, Scotts Miracle-Gro and certain of its subsidiaries entered into the following senior secured credit facilities totaling up to $2.15 billion in the aggregate: (a) a senior secured five-year term loan facility in the principal amount of $560 million and (b) a senior secured five-year revolving loan facility in the aggregate principal amount of up to $1.59 billion. Under the terms of these senior secured credit facilities, the Company may request an additional $200 million in revolving credit and/or term credit commitments, subject to approval from the lenders. Borrowings may be made in various currencies including U.S. dollars, Euros, British pounds, Australian dollars and Canadian dollars. Amortization payments on the term loan portion of the senior secured credit facilities began on September 30, 2007 and are due quarterly through 2012. As of September 30, 2010, the cumulative total amortization payments on the term loan were $257.6 million, reducing the balance of the Company’s term loans and effectively reducing the amount outstanding under the senior secured credit facilities.

The terms of these senior secured credit facilities provide for customary representations and warranties and affirmative covenants. The senior secured credit facilities also contain customary negative covenants setting forth limitations, subject to negotiated carve-outs on liens; contingent obligations; fundamental changes; acquisitions, investments, loans and advances; indebtedness; restrictions on subsidiary distributions; transactions with affiliates and officers; sales of assets; sale and leaseback transactions; changing the Company’s fiscal year end; modifications of certain debt instruments; negative pledge clauses; entering into new lines of business; and restricted payments (including restricting dividend payments to $75 million annually based on the current leverage ratio (as defined) of the Company). The senior secured credit facilities are secured by collateral that includes the capital stock of specified subsidiaries of Scotts Miracle-Gro, substantially all domestic accounts receivable (exclusive of any “sold” receivables), inventory and equipment. The senior secured credit facilities also require the maintenance of a specified leverage ratio and interest coverage ratio (both as defined), and are guaranteed by substantially all of Scotts Miracle-Gro’s domestic subsidiaries.

The senior secured credit facilities have several borrowing options, including interest rates that are based on (i) a LIBOR rate plus a margin based on a leverage ratio (as defined) or (ii) the greater of the prime rate or the Federal Funds Effective Rate (as defined) plus 1/2 of 1% plus a margin based on a leverage ratio (as defined). Commitment fees are paid quarterly and are calculated as an amount equal to the product of a rate based on a leverage ratio (as defined) and the average daily unused portion of both the revolving and term credit facilities. Amounts outstanding under the senior secured credit facilities at September 30, 2010 were at interest rates based on LIBOR applicable to the borrowed currencies plus 87.5 basis points. The weighted average interest rates on average debt were 4.7% for fiscal 2010 and fiscal 2009. As of September 30, 2010, there was $1.5 billion of availability under the senior secured credit facilities. Under the senior secured credit facilities, the Company has the ability to issue letter of credit commitments up to $65.0 million. At September 30, 2010, the Company had letters of credit in the amount of $26.7 million outstanding.

On January 14, 2010, Scotts Miracle-Gro issued $200 million aggregate principal amount of 7.25% Senior Notes due 2018 (the “Senior Notes”). The proceeds of the offering were used to reduce outstanding borrowings under the Company’s senior secured revolving credit facility. The Senior Notes represent general unsecured senior obligations of Scotts Miracle-Gro, and were sold to the public at 99.254% of the principal amount thereof, to yield 7.375% to maturity. The Senior Notes have interest payment dates of January 15 and July 15, which began on July 15, 2010, and may be redeemed prior to maturity at applicable redemption premiums. The Senior Notes contain usual and customary incurrence-based covenants, which include, but are not limited to, restrictions on the incurrence of additional indebtedness, the incurrence of liens and the issuance of certain preferred shares, and the making of certain distributions, investments and other restricted payments, as well as other usual and customary covenants, which include, but are not limited to, restrictions on sale and leaseback transactions, restrictions on purchases for or redemptions of Scotts Miracle-Gro stock and prepayments of subordinated debt, limitations on asset sales and restrictions on transactions with affiliates. The Senior Notes mature on January 15, 2018. Certain of Scotts Miracle-Gro’s domestic subsidiaries serve as guarantors of the Senior Notes. Refer to “NOTE 24. FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTORS” for more information regarding the guarantor entities.

The Company was in compliance with the terms of all debt covenants at September 30, 2010. The senior secured credit facilities contain, among other obligations, an affirmative covenant regarding the Company’s leverage ratio, calculated as average total indebtedness, as described in the Company’s senior secured credit facilities, relative to the Company’s EBITDA, as adjusted pursuant to the terms of senior secured credit facilities (“Adjusted EBITDA”). Under the terms of the senior secured credit facilities, the maximum leverage ratio was 3.50 as of September 30, 2010, which is scheduled to decrease to 3.25 on September 30, 2011. The Company’s leverage ratio was 2.0 at September 30, 2010. The Company’s senior secured credit facilities also include an affirmative covenant regarding its interest coverage ratio. Interest coverage ratio is calculated as Adjusted EBITDA divided by interest expense, as described in the senior secured credit facilities, and excludes costs related to refinancings. Under the terms of the senior secured credit facilities, the minimum interest coverage ratio was 3.50 for the year ended September 30, 2010. The Company’s interest coverage ratio was 9.4 for the year ended September 30, 2010.

At September 30, 2010, the Company had outstanding interest rate swap agreements with major financial institutions that effectively converted a portion of variable-rate debt denominated in U.S. dollars to a fixed rate. The swap agreements had a total U.S. dollar notional amount of $450 million at September 30, 2010. Interest payments made between the effective date and expiration date are hedged by the swap agreement, except as noted below. The notional amount, effective date, expiration date and rate of each of these swap agreements are shown in the table below.


			Effective		Expiration		Fixed
Notional Amount			Date(a)		Date		Rate
(In millions)

$	200			2/14/2007		2/14/2012		5.20	%
	50			2/14/2012		2/14/2016		3.78	%
	150	(b)		11/16/2009		5/16/2016		3.26	%
	50	(c)		2/16/2010		5/16/2016		3.05	%


(a)		The effective date refers to the date on which interest payments are first hedged by the applicable swap agreement.

(b)		Interest payments made during the six-month period beginning November 14 of each year between the effective date and expiration date are hedged by the swap agreement.

(c)		Interest payments made during the three-month period beginning February 14 of each year between the effective date and expiration date are hedged by the swap agreement.

In November 2010, the Company entered into additional interest rate swap agreements to convert a portion of variable-rate debt denominated in U.S. dollars to a fixed rate for an aggregate notional amount of $300 million. The effective dates of the agreements are in 2011 or 2012 and expiration dates are in 2016 or 2017. The swap agreements hedge interest payments for three-month or six-month periods each year between the effective date and expiration date. The fixed rates range from 2.34% to 2.96%.

Master Accounts Receivable Purchase Agreement

On April 9, 2008, the Company entered into a Master Accounts Receivable Purchase Agreement (the “2008 MARP Agreement”). The 2008 MARP Agreement provided for the discounted sale, on a revolving basis, of accounts receivable generated by specified account debtors, with seasonally adjusted monthly aggregate limits ranging from $10 million to $300 million. The 2008 MARP Agreement also provided for specified account debtor sublimit amounts, which provided limits on the amount of receivables owed by individual account debtors that could be sold to the banks. The 2008 MARP Agreement provided an interest rate that approximated the 7-day LIBOR rate plus 85 basis points. The 2008 MARP Agreement expired by its terms on April 8, 2009.

On May 1, 2009, the Company entered into a Master Accounts Receivable Purchase Agreement (the “2009 MARP Agreement”), with an initial stated termination date of May 1, 2010, or such later date as may be mutually agreed by the Company and its lender. The 2009 MARP Agreement provided for the discounted sale, on an uncommitted, revolving basis, of accounts receivable generated by a specified account debtor, with aggregate limits not to exceed $80 million. The 2009 MARP Agreement provided an interest rate that approximated the 7-day LIBOR rate plus 225 basis points.

On May 13, 2010, the Company and its lender entered into a First Amendment to the 2009 MARP Agreement (the “First Amendment”). The First Amendment, which was effective May 1, 2010, extended the stated termination date of the 2009 MARP Agreement through May 12, 2011, or such later date as may be mutually agreed by the Company and its lender. The 2009 MARP Agreement, as amended by the First Amendment, provides an interest rate that approximates the 7-day LIBOR rate plus 125 basis points; the First Amendment did not otherwise modify any substantive provisions of the 2009 MARP Agreement.

The Company accounts for the sale of receivables under the 2009 MARP Agreement, as amended, as short-term debt and continues to carry the receivables on its Consolidated Balance Sheet, primarily as a result of the Company’s right to repurchase receivables sold. The caption “Accounts receivable pledged” on the accompanying Consolidated Balance Sheets in the amount of $17.0 million as of September 30, 2009, represents the pool of receivables that have been designated as “sold” under the 2009 MARP Agreement and serve as collateral for short-term debt thereunder in the amount of $4.2 million as September 30, 2009. There were no short-term borrowings under the amended 2009 MARP Agreement as of September 30, 2010.

Contingent Consideration

In May 2006, the Company acquired certain brands and assets of Turf-Seed, Inc., a leading producer of quality commercial turfgrasses, for cash of $10.0 million, assumed liabilities of $4.5 million and contingent consideration due in the second half of fiscal 2012. The final determination of the contingent consideration is largely based on the performance of the Company’s consumer and professional seed business for the twelve-month period ending in May 2012.

Estimated Fair Values

A description of the methods and assumptions used to estimate the fair values of the Company’s debt instruments is as follows:

Long-Term Debt

The interest rate currently available to the Company fluctuates with the applicable LIBOR rate, prime rate or Federal Funds Effective Rate, and thus the carrying value is a reasonable estimate of fair value.

Senior Notes — 7.25%

The fair value of the Senior Notes can be determined based on the trading of the Senior Notes in the open market. The difference between the carrying value and the fair value of the Senior Notes represents the premium or discount on that date. Based on the trading value on or around September 30, 2010, the fair value of the Senior Notes was approximately $211.0 million.

Accounts Receivable Pledged

The interest rate on the short-term debt associated with accounts receivable pledged under the 2009 MARP Agreement fluctuates with the one-week LIBOR rate, and thus the carrying value is a reasonable estimate of fair value.

The estimated fair values of the Company’s debt instruments are as follows for the fiscal years ended September 30 (in millions):


	2010				2009
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

Revolving loans	$	111.7	$	111.7	$	330.4	$	330.4
Term loans		302.4		302.4		456.4		456.4
Senior Notes — 7.25%		200.0		211.0		—		—
Master Accounts Receivable Purchase Agreement		—		—		4.2		4.2
Contingent consideration		10.9		10.9		11.0		11.0
Other		6.7		6.7		8.1		8.1

Shareholders' Equity

12 Months Ended

Sep. 30, 2010

Shareholders' Equity [Abstract]

SHAREHOLDERS' EQUITY


NOTE 12.	SHAREHOLDERS’ EQUITY


	2010		2009
	(In millions)

Preferred shares, no par value:
Authorized		0.2 shares		0.2 shares
Issued		0.0 shares		0.0 shares
Common shares, no par value, $.01 stated value per share
Authorized		100.0 shares		100.0 shares
Issued		68.1 shares		68.1 shares

In fiscal 1995, The Scotts Company merged with Stern’s Miracle-Gro Products, Inc. (“Miracle-Gro”). At September 30, 2010, the former shareholders of Miracle-Gro, including Hagedorn Partnership L.P., owned approximately 30% of Scotts Miracle-Gro’s outstanding common shares and, thus, have the ability to significantly influence the election of directors and other actions requiring the approval of Scotts Miracle-Gro’s shareholders.

Under the terms of the merger agreement with Miracle-Gro, the former shareholders of Miracle-Gro may not collectively acquire, directly or indirectly, beneficial ownership of Voting Stock (as that term is defined in the Miracle-Gro merger agreement) representing more than 49% of the total voting power of the outstanding Voting Stock, except pursuant to a tender offer for 100% of that total voting power, which tender offer is made at a price per share which is not less than the market price per share on the last trading day before the announcement of the tender offer and is conditioned upon the receipt of at least 50% of the Voting Stock beneficially owned by shareholders of Scotts Miracle-Gro other than the former shareholders of Miracle-Gro and their affiliates and associates.

On August 10, 2010, Scotts Miracle-Gro announced that its Board of Directors had authorized the repurchase of up to $500 million of Scotts Miracle-Gro’s common shares over the next four years. The authorization provides the Company with flexibility to purchase the common shares from time to time in open market purchases or through privately negotiated transactions. All or part of the repurchases may be made under Rule 10b5-1 plans, which the Company may enter from time to time and which enable the repurchases to occur on a more regular basis, or pursuant to accelerated share repurchases. The share repurchase authorization, which expires September 30, 2014, may be suspended or discontinued at any time, and there can be no guarantee as to the timing or amount of any repurchases. Scotts Miracle-Gro reacquired 0.5 million common shares during fiscal 2010 to be held in treasury. Scotts Miracle-Gro did not reacquire any common shares in fiscal 2009. Common shares held in treasury totaling 1.1 million and 1.0 million were reissued in support of share-based compensation awards and employee purchases under the employee stock purchase plan during fiscal 2010 and fiscal 2009, respectively.

Share-Based Awards

Scotts Miracle-Gro grants share-based awards annually to officers, other key employees of the Company and non-employee directors of Scotts Miracle-Gro. The share-based awards typically consist of stock options, restricted stock, restricted stock units and deferred stock units, although performance share awards have been made. Stock appreciation rights (“SARs”) also have been granted, though not in recent years. SARs result in less dilution than stock options as the SAR holder receives a net share settlement upon exercise. All of these share-based awards have been made under plans approved by the shareholders. Generally, employee share-based awards provide for three-year cliff vesting. Vesting for non-employee director awards varies based on the length of service and age of each director at the time of the award. Share-based awards are forfeited if a holder terminates employment or service with the Company prior to the vesting date. The Company estimates that 10-15% of its share-based awards will be forfeited based on an analysis of historical trends. This assumption is re-evaluated on an annual basis and adjusted as appropriate. Stock options and SAR awards have exercise prices equal to the market price of the underlying common shares on the date of grant with a term of 10 years. If available, Scotts Miracle-Gro will typically use treasury shares, or if not available, newly-issued common shares, in satisfaction of its share-based awards.

A maximum of 18 million common shares are available for issuance under share-based award plans. At September 30, 2010, approximately 1.1 million common shares were not subject to outstanding awards and were available to underlie the grant of new share-based awards.

The following is a recap of the share-based awards granted during the periods indicated:


	Year Ended September 30,
	2010		2009		2008

Key employees
Options		367,600		701,100		889,700
Restricted stock		—		243,400		154,900
Restricted stock units		259,353		199,262		—
Performance shares		4,200		—		40,000
Board of Directors
Deferred stock units		28,854		33,281		30,271

Total share-based awards		660,007		1,177,043		1,114,871

Aggregate fair value at grant dates (in millions)	$	16.9	$	16.7	$	18.7

Total share-based compensation was as follows for the periods indicated (in millions):


	Year Ended September 30,
	2010		2009		2008

Share-based compensation	$	16.4	$	14.5	$	12.5
Tax benefit recognized		6.3		5.6		4.8

Stock Options/SARs

Aggregate stock option and SARs activity consisted of the following for the year ended September 30, 2010 (options/SARs in millions):


				WTD.
				Avg.
	No. of			Exercise
	Options/SARs			Price

Beginning balance		5.4		$	29.36
Granted		0.4			41.68
Exercised		(1.1	)		23.61
Forfeited		(0.1	)		34.47

Ending balance		4.6			31.74

Exercisable		2.9			30.98

The following summarizes certain information pertaining to stock option and SAR awards outstanding and exercisable at September 30, 2010 (options/SARs in millions):


	Awards Outstanding						Awards Exercisable
	No. of		WTD. Avg.		WTD. Avg.		No. of		WTD. Avg.		WTD. Avg.
Range of	Options/		Remaining		Exercise		Options/		Remaining		Exercise
Exercise Price	SARs		Life		Price		SARS		Life		Price

$16.80 — $19.82		0.2		1.09	$	17.13		0.2		1.09	$	17.13
$20.12 — $21.65		1.0		5.88		21.48		0.4		2.41		21.20
$24.45 — $28.72		0.5		3.41		25.70		0.5		3.41		25.70
$29.01 — $31.62		0.4		4.30		29.12		0.4		4.21		29.08
$33.25 — $37.48		0.5		5.16		35.73		0.5		5.10		35.77
$37.89 — $38.90		1.3		6.61		38.61		0.6		6.01		38.58
$40.81 — $47.90		0.7		7.85		42.45		0.3		5.95		43.46

		4.6		5.65	$	31.74		2.9		4.28	$	30.98

The intrinsic value of the stock option and SAR awards outstanding and exercisable at September 30 were as follows (in millions):


	2010

Outstanding	$	91.9
Exercisable		59.3

The grant date fair value of stock option awards are estimated using a binomial model and the assumptions in the following table. Expected market price volatility is based on implied volatilities from traded options on Scotts Miracle-Gro’s common shares and historical volatility specific to the common shares. Historical data, including demographic factors impacting historical exercise behavior, is used to estimate stock option exercises and employee terminations within the valuation model. The risk-free rate for periods within the contractual life (normally ten years) of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life of stock options is based on historical experience and expectations for grants outstanding. The weighted average assumptions for awards granted are as follows for the periods indicated:


	Year Ended September 30,
	2010			2009			2008

Expected market price volatility		32.1	%		45.3	%		30.2	%
Risk-free interest rates		2.8	%		3.0	%		4.0	%
Expected dividend yield		1.2	%		2.3	%		1.3	%
Expected life of stock options in years		6.00			5.93			6.19
Estimated weighted-average fair value per stock option	$	12.90		$	7.93		$	12.34

Restricted Stock and Performance Shares

Restricted stock and performance share award activity was as follows:


				WTD. Avg.
				Grant Date
	No. of			Fair Value
	Shares			per Share

Awards outstanding at September 30, 2007		277,080		$	43.74
Granted		187,000			39.99
Vested		(29,215	)		34.91
Forfeited		(53,300	)		43.23

Awards outstanding at September 30, 2008		381,565			42.65
Granted		251,300			22.31
Vested		(113,653	)		38.86
Forfeited		(34,962	)		36.35

Awards outstanding at September 30, 2009		484,250			33.44
Granted		4,200			48.71
Vested		(129,450	)		40.15
Forfeited		(26,000	)		27.05

Awards outstanding at September 30, 2010		333,000			31.52

Restricted Stock Units and Deferred Stock Units

Restricted and deferred stock unit award activity was as follows:


				WTD. Avg.
				Grant Date
	No. of			Fair Value
	Units			per Unit

Awards outstanding at September 30, 2007		—		$	—
Granted		30,271			38.78
Vested		—			—
Forfeited		—			—

Awards outstanding at September 30, 2008		30,271			38.78
Granted		232,543			25.57
Vested		(6,115	)		38.74
Forfeited		(3,000	)		21.65

Awards outstanding at September 30, 2009		253,699			26.87
Granted		288,207			41.53
Vested		(9,680	)		40.87
Forfeited		(600	)		35.59

Awards outstanding at September 30, 2010		531,626			34.60

As of September 30, 2010, total unrecognized compensation cost related to non-vested share-based awards amounted to $11.6 million. This cost is expected to be recognized over a weighted-average period of 1.0 years. Unearned compensation cost is amortized by grant on the straight-line method over the vesting period, with the amortization expense classified as a component of “Selling, general and administrative” expense within the Consolidated Statements of Operations.

The total intrinsic value of stock options exercised was $25.9 million, $16.1 million and $11.4 million during fiscal 2010, fiscal 2009 and fiscal 2008, respectively. The total fair value of restricted stock vested was $5.2 million, $4.4 million and $1.1 million during fiscal 2010, fiscal 2009 and fiscal 2008, respectively. The total fair value of restricted stock units vested was $0.4 million and $0.2 million during fiscal 2010 and fiscal 2009, respectively.

Cash received from the exercise of stock options for fiscal 2010 was $22.5 million. The tax benefit realized from the tax deductions associated with the exercise of share-based awards and the vesting of restricted stock totaled $11.0 million for fiscal 2010.

Earnings (Loss) Per Common Share

12 Months Ended

Sep. 30, 2010

Earnings (Loss) Per Common Share [Abstract]

EARNINGS (LOSS) PER COMMON SHARE


NOTE 13.	EARNINGS (LOSS) PER COMMON SHARE

The following table (in millions, except per share data) presents information necessary to calculate basic and diluted earnings (loss) per common share. Basic earnings (loss) per common share are computed by dividing income from continuing operations, loss from discontinued operations or net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share are computed by dividing income from continuing operations, loss from discontinued operations or net income (loss) by the weighted average number of common shares outstanding plus all potentially dilutive securities. Stock options with exercise prices greater than the average market price of the underlying common shares are excluded from the computation of diluted earnings (loss) per common share because they are out-of-the-money and the effect of their inclusion would be anti-dilutive. The number of common shares covered by out-of-the-money stock options was 0.2 million, 2.3 million and 4.0 million for the years ended September 30, 2010, 2009 and 2008, respectively.


	Year Ended September 30,
	2010			2009			2008
	(In millions, except per share data)

Income from continuing operations	$	212.4		$	154.6		$	32.8
Loss from discontinued operations		(8.3	)		(1.3	)		(43.7	)

Net income (loss)	$	204.1		$	153.3		$	(10.9	)

BASIC EARNINGS (LOSS) PER COMMON SHARE:
Weighted-average common shares outstanding during the period		66.3			65.0			64.5

Income from continuing operations	$	3.20		$	2.38		$	0.51
Loss from discontinued operations		(0.12	)		(0.02	)		(0.68	)

Net income (loss)	$	3.08		$	2.36		$	(0.17	)

DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Weighted-average common shares outstanding during the period		66.3			65.0			64.5
Potential common shares		1.3			1.1			0.9

Weighted-average number of common shares outstanding and dilutive potential common shares		67.6			66.1			65.4

Income from continuing operations	$	3.14		$	2.34		$	0.50
Loss from discontinued operations		(0.12	)		(0.02	)		(0.67	)

Net income (loss)	$	3.02		$	2.32		$	(0.17	)

Income Taxes

12 Months Ended

Sep. 30, 2010

Income Taxes [Abstract]

INCOME TAXES


NOTE 14.	INCOME TAXES

The provision (benefit) for income taxes allocated to continuing operations consisted of the following (in millions):


	Year Ended September 30,
	2010		2009		2008

Current:
Federal	$	86.7	$	58.0	$	31.2
State		10.5		5.8		4.7
Foreign		10.5		8.4		12.5

Total Current		107.7		72.2		48.4
Deferred:
Federal		16.2		13.1		(20.7	)
State		1.1		1.0		(1.9	)
Foreign		0.4		0.3		(1.0	)

Total Deferred		17.7		14.4		(23.6	)

Provision for income taxes	$	125.4	$	86.6	$	24.8

The domestic and foreign components of income from continuing operations before income taxes were as follows (in millions):


	Year Ended September 30,
	2010		2009		2008

Domestic	$	318.8	$	221.6	$	116.8
Foreign		19.0		19.6		(59.2	)

Income from continuing operations before income taxes	$	337.8	$	241.2	$	57.6

A reconciliation of the federal corporate income tax rate and the effective tax rate on income from continuing operations before income taxes is summarized below:


	Year Ended September 30,
	2010			2009			2008

Statutory income tax rate		35.0	%		35.0	%		35.0	%
Effect of foreign operations		(0.3	)		(0.6	)		(1.2	)
State taxes, net of federal benefit		2.4			2.3			2.0
Change in state NOL and credit carryforwards		0.1			(0.3	)		(0.3	)
Research & Development tax credit		—			(0.4	)		(1.2	)
Effect of goodwill impairment and other permanent differences		(0.6	)		(0.8	)		11.1
Other		0.5			0.7			(2.3	)

Effective income tax rate		37.1	%		35.9	%		43.1	%

Deferred income taxes arise from temporary differences between financial reporting and tax reporting bases of assets and liabilities, and operating loss and tax credit carryforwards for tax purposes. The components of the deferred income tax assets and liabilities as of September 30, 2010 and 2009 were as follows (in millions):


	September 30,
	2010			2009

DEFERRED TAX ASSETS
Inventories	$	14.6		$	20.3
Accrued liabilities		68.0			76.5
Postretirement benefits		47.6			46.6
Accounts receivable		9.3			8.6
State NOL carryovers		4.2			4.6
Foreign NOL carryovers		40.9			42.0
Other		12.9			16.1

Gross deferred tax assets		197.5			214.7
Valuation allowance		(42.3	)		(43.1	)

Total deferred tax assets		155.2			171.6

DEFERRED TAX LIABILITIES
Property, plant and equipment		(54.3	)		(41.7	)
Intangible assets		(79.1	)		(68.6	)
Other		(6.2	)		(7.1	)

Total deferred tax liabilities		(139.6	)		(117.4	)

Net deferred tax asset	$	15.6		$	54.2

The net current and non-current components of deferred income taxes recognized in the Consolidated Balance Sheets were (in millions):


	September 30,
	2010			2009

Net current deferred tax asset (classified with prepaid and other assets)	$	78.6		$	103.8
Net non-current deferred tax liability (classified with other liabilities)		(63.0	)		(49.6	)

Net deferred tax asset	$	15.6		$	54.2

Foreign net operating losses of controlled foreign corporations were $5.0 million as of September 30, 2010, the majority of which have indefinite carryforward periods. State net operating losses were $57.3 million as of September 30, 2010, with carryforward periods ranging from 5 to 20 years. Any losses not utilized within a specific state’s carryforward period will expire. State net operating loss carryforwards included $1.4 million of tax benefits relating to Smith & Hawken. As these losses may only be used against income of Smith & Hawken, and cannot be used to offset income of the consolidated group, a full valuation allowance has been recorded against this tax asset. Tax benefits associated with state tax credits will expire if not utilized and amounted to $0.5 million and $0.4 million at September 30, 2010 and 2009, respectively.

Deferred taxes have not been provided on unremitted earnings approximating $128.0 million of certain foreign subsidiaries and foreign corporate joint ventures as such earnings have been permanently reinvested. The Company has also elected to treat certain foreign entities as disregarded entities for U.S. tax purposes, which results in their net income or loss being recognized currently in the Company’s U.S. tax return. As such, the tax benefit of net operating losses available for foreign statutory tax purposes has already been recognized for U.S. purposes. Accordingly, a full valuation allowance is required on the tax benefit of these net operating losses on global consolidation. The foreign net operating losses of these foreign disregarded entities were $138.8 million at September 30, 2010, the majority of which have indefinite carryforward periods. The statutory tax benefit of these net operating loss carryovers amounted to $39.6 million and $40.5 million for the fiscal years ended September 30, 2010 and 2009, respectively.

GAAP provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. The amount recognized is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

The Company had $7.8 million, $6.2 million and $7.2 million of gross unrecognized tax benefits related to uncertain tax positions at September 30, 2010, 2009 and 2008, respectively. Included in the September 30, 2010, 2009 and 2008 balances were $6.4 million, $6.4 million and $6.5 million, respectively, of unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate.

A reconciliation of the unrecognized tax benefits for fiscal 2010, fiscal 2009 and fiscal 2008 is as follows (in millions):


	2010			2009			2008

Balance at beginning of year	$	6.2		$	7.2		$	10.0
Additions for tax positions of the current year		2.1			0.5			2.2
Additions for tax positions of prior years		2.4			1.1			0.6
Reductions for tax positions of the current year		(0.8	)		(0.1	)		(0.1	)
Reductions for tax positions of prior years		(1.3	)		(0.7	)		(1.8	)
Settlements with tax authorities		—			(0.3	)		(1.8	)
Expiration of statutes of limitation		(0.8	)		(1.5	)		(1.9	)

Balance at end of year	$	7.8		$	6.2		$	7.2

The Company continues to recognize accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. As of September 30, 2010, 2009 and 2008, respectively, the Company had $1.3 million, $1.2 million and $1.2 million accrued for the payment of interest that, if recognized, would impact the effective tax rate. As of September 30, 2010, 2009 and 2008, respectively, the Company had $0.7 million, $0.6 million and $0.6 million accrued for the payment of penalties that, if recognized, would impact the effective tax rate. For the year ended September 30, 2010, the Company recognized a $0.4 million detriment related to tax interest and tax penalties in its statement of operations.

Scotts Miracle-Gro or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. With few exceptions, the Company is no longer subject to examinations by these tax authorities for fiscal years prior to 2007. The Company is currently under examination by the Internal Revenue Service (the “IRS”) and certain foreign and U.S. state and local tax authorities. The IRS is currently reviewing the fiscal 2008 tax period only. In regard to the local German audit, the tax periods under investigation are limited to fiscal years 2004 through 2008. In regard to the U.S. state and local audits, the tax periods under investigation are limited to fiscal years 2000 through 2008. In addition to these aforementioned audits, certain other tax deficiency notices and refund claims for previous years remain unresolved.

The Company currently anticipates that few of its open and active audits will be resolved in the next 12 months. The Company is unable to make a reasonably reliable estimate as to when or if cash settlements with taxing authorities may occur. Although audit outcomes and the timing of audit payments are subject to significant uncertainty, the Company does not anticipate that the resolution of these tax matters or any events related thereto will result in a material change to its consolidated financial position, results of operations or cash flows.

Management judgment is required in determining tax provisions and evaluating tax positions. Management believes its tax positions and related provisions reflected in the consolidated financial statements are fully supportable and appropriate. The Company established reserves for additional income taxes that may become due if the tax positions are challenged and not sustained, and as such, the Company’s tax provision includes the impact of recording reserves and changes thereto.

Derivative Instruments and Hedging Activities

12 Months Ended

Sep. 30, 2010

Derivative Instruments and Hedging Activities [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES


NOTE 15.	DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivatives and Hedging

The Company is exposed to market risks, such as changes in interest rates, currency exchange rates and commodity prices. To manage the volatility related to these exposures, the Company enters into various financial transactions. The utilization of these financial transactions is governed by policies covering acceptable counterparty exposure, instrument types and other hedging practices. The Company does not hold or issue derivative financial instruments for speculative trading purposes.

The Company formally designates and documents qualifying instruments as hedges of underlying exposures at inception. The Company formally assesses, both at inception and at least quarterly, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair value or cash flows of the related underlying exposure. Fluctuations in the value of these instruments generally are offset by changes in the fair value or cash flows of the underlying exposures being hedged. This offset is driven by the high degree of effectiveness between the exposure being hedged and the hedging instrument. GAAP requires all derivative instruments to be recognized as either assets or liabilities at fair value in the Consolidated Balance Sheets. The Company designates commodity hedges as cash flow hedges of forecasted purchases of commodities and interest rate swap agreements as cash flow hedges of interest payments on variable rate borrowings. Any ineffective portion of a change in the fair value of a qualifying instrument is immediately recognized in earnings. The amounts recorded in earnings related to ineffectiveness of derivative hedges for the years ended September 30, 2010, 2009 and 2008 were not significant.

Foreign Currency Swap Contracts

The Company periodically uses foreign currency swap contracts to manage the exchange rate risk associated with intercompany loans with foreign subsidiaries that are denominated in local currencies. At September 30, 2010, the notional amount of outstanding foreign currency swap contracts was $209.9 million, with a liability position based on a negative fair value of $6.6 million. The fair value of foreign currency swap contracts is determined based on changes in spot rates. The unrealized loss on the foreign currency swap contracts approximates the unrealized gain on the intercompany loans recognized by the Company’s lending subsidiaries.

Interest Rate Swap Agreements

The Company enters into interest rate swap agreements as a means to hedge its variable interest rate exposure on debt instruments. The fair values are reflected in the Company’s Consolidated Balance Sheets. Net amounts to be received or paid under the swap agreements are reflected as adjustments to interest expense. Since the interest rate swap agreements have been designated as hedging instruments, unrealized gains or losses resulting from adjusting these swaps to fair value are recorded as elements of accumulated other comprehensive loss (“AOCI”) within the Consolidated Balance Sheets. The fair value of the swap agreements is determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date.

At September 30, 2010 and 2009, the Company had outstanding interest rate swap agreements with major financial institutions that effectively converted a portion of the Company’s variable-rate debt to a fixed rate. The swap agreements had a total U.S. dollar equivalent notional amount of $450.0 million and $650.0 million at September 30, 2010 and 2009, respectively. Refer to “NOTE 11. DEBT” for the terms of the swap agreements outstanding at September 30, 2010. Included in the AOCI balance at September 30, 2010 is a pre-tax loss of $12.2 million related to interest rate swap agreements that is expected to be reclassified to earnings during the next 12 months, consistent with the timing of the underlying hedged transactions.

Commodity Hedges

The Company had outstanding hedging arrangements at September 30, 2010 designed to fix the price of a portion of its urea needs. The contracts are designated as hedges of the Company’s exposure to future cash flow fluctuations associated with the cost of urea. The objective of the hedges is to mitigate the earnings and cash flow volatility attributable to the risk of changing prices. Unrealized gains or losses in the fair value of these contracts are recorded to the AOCI component of shareholders’ equity. Realized gains or losses remain as a component of AOCI until the related inventory is sold. Upon sale of the underlying inventory, the gain or loss is reclassified to cost of sales. Included in the AOCI balance at September 30, 2010 was a pre-tax gain of $1.4 million related to urea derivatives that is expected to be reclassified to earnings during the next 12 months, consistent with the timing of the underlying hedged transactions.

Periodically, the Company also uses fuel derivatives to partially mitigate the effect of fluctuating diesel and gasoline costs on operating results. Fuel derivatives used by the Company that do not qualify for hedge accounting treatment in accordance with GAAP are marked-to-market, with unrealized gains and losses on open contracts and realized gains or losses on settled contracts recorded as an element of cost of sales.

Beginning in fiscal 2009, the Company entered into fuel derivatives for its Scotts LawnService^® business that qualify for hedge accounting treatment. Unrealized gains or losses in the fair value of these contracts are recorded to the AOCI component of shareholders’ equity except for any ineffective portion of the change in fair value, which is immediately recorded in earnings. For the effective portion of the change in fair value, realized gains or losses remain as a component of AOCI until the related fuel is consumed by the Scotts LawnService^® service vehicles. Upon consumption of the fuel, the gain or loss is reclassified to cost of sales. Included in the AOCI balance at September 30, 2010 was a pre-tax gain of $0.1 million related to fuel derivatives that is expected to be reclassified to earnings during the next 12 months, consistent with the timing of the underlying hedged transactions.

As of September 30, 2010, the Company had the following outstanding commodity contracts that were entered into to hedge forecasted purchases:


Commodity		Volume

Urea		62,000 tons
Diesel		420,000 gallons

Fair Values of Derivative Instruments

The fair values of the Company’s derivative instruments were as follows for the fiscal years ended September 30, (in millions):


	Assets/(Liabilities)
Derivatives Designated as		2010			2009
Hedging Instruments	Balance Sheet Location	Fair Value			Fair Value

Interest rate swap agreements	Other current liabilities	$	(12.1	)	$	—
	Other liabilities		(12.5	)		(23.7	)
Commodity hedging instruments	Prepaid and other assets		1.9			0.1

Total derivatives designated as hedging instruments		$	(22.7	)	$	(23.6	)




Derivatives not Designated as
Hedging Instruments(1)

Foreign currency swap contracts	Other current liabilities	$	(6.6	)	$	(3.9	)
Commodity hedging instruments	Prepaid and other assets		—			0.1
	Other current liabilities		—			(0.1	)

Total derivatives not designated as hedging instruments(1)		$	(6.6	)	$	(3.9	)

Total derivatives		$	(29.3	)	$	(27.5	)


(1)		See discussion above for additional information regarding the Company’s purpose for entering into derivatives not designated as hedging instruments and its overall risk management strategy.

Refer to “NOTE 16. FAIR VALUE MEASUREMENTS” for the Company’s fair value measurements of derivative instruments as they relate to the valuation hierarchy.

The effect of derivative instruments on AOCI and the Consolidated Statements of Operations for the years ended September 30, 2010 and 2009 was as follows (in millions):


	Amount of Gain/(Loss)
	Recognized in AOCI
	Year Ended
Derivatives in Cash Flow Hedging Relationships	2010			2009

Interest rate swap agreements	$	(17.6	)	$	(20.5	)
Commodity hedging instruments		2.8			(6.7	)

Total	$	(14.8	)	$	(27.2	)


		Amount of (Loss)
	Location of (Loss)	Reclassified From AOCI Into Earnings
Derivatives in Cash Flow	Reclassified From AOCI Into Earnings	Year Ended
Hedging Relationships		2010			2009

Interest rate swap agreements	Interest expense	$	(17.1	)	$	(16.1	)
Commodity hedging instruments	Cost of sales		(2.3	)		(8.0	)

Total		$	(19.4	)	$	(24.1	)


		Amount of (Loss)
	Location of (Loss)	Recognized in Earnings
Derivatives not Designated As	Recognized in Income	Year Ended
Hedging Instruments		2010			2009

Foreign currency swap contracts	Interest expense	$	(14.4	)	$	(10.2	)
Commodity hedging instruments	Cost of sales		(0.7	)		(0.7	)

Total		$	(15.1	)	$	(10.9	)

Fair Value Measurements

12 Months Ended

Sep. 30, 2010

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS


NOTE 16.	FAIR VALUE MEASUREMENTS

The Company adopted new accounting guidance for all financial assets and liabilities accounted for at fair value on a recurring basis effective October 1, 2008. The Company adopted new accounting guidance for all non-financial assets and liabilities accounted for at fair value on a non-recurring basis effective October 1, 2009. The guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. GAAP establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The following describes the valuation methodologies used for financial assets and liabilities measured at fair value, as well as the general classification within the valuation hierarchy.

Derivatives

Derivatives consist of foreign currency, interest rate and commodity derivative instruments. The Company uses foreign currency swap contracts to manage the exchange rate risk associated with intercompany loans with foreign subsidiaries that are denominated in U.S. dollars. These contracts are valued using observable forward rates in commonly quoted intervals for the full term of the contracts.

Interest rate derivatives consist of interest rate swap agreements. The Company enters into interest rate swap agreements as a means to hedge its variable interest rate exposure on debt instruments. The fair value of the swap agreements is determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date.

The Company has hedging arrangements designed to fix the price of a portion of its urea and fuel needs. The objective of the hedges is to mitigate the earnings and cash flow volatility attributable to the risk of changing prices. These contracts are measured using observable commodity exchange prices in active markets.

These derivative instruments are classified within Level 2 of the valuation hierarchy and are included within other assets and other liabilities in our Consolidated Balance Sheets, except for derivative instruments expected to be settled within the next 12 months, which are included within prepaid and other assets and other current liabilities.

For further information on the Company’s derivative instruments, refer to “NOTE 15. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.”

Other

Other financial assets consist of investment securities in non-qualified retirement plan assets. These securities are valued using observable market prices in active markets. These investment securities are classified within Level 1 of the valuation hierarchy and are included within other assets in our Consolidated Balance Sheets.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2010 (in millions):


	Quoted Prices in Active
	Markets for Identical		Significant Other			Unobservable
	Assets		Observable Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)		Total

Assets
Derivatives
Commodity hedging instruments	$	—	$	1.9		$	—	$	1.9
Other		6.5		—			—		6.5

Total	$	6.5	$	1.9		$	—	$	8.4

Liabilities
Derivatives
Interest rate swap agreements	$	—	$	(24.6	)	$	—	$	(24.6	)
Foreign currency swap contracts		—		(6.6	)		—		(6.6	)

Total	$	—	$	(31.2	)	$	—	$	(31.2	)

The following presents the Company’s non-financial assets and liabilities measured at fair value on a non-recurring basis at September 30, 2010 (in millions) and describes the valuation methodologies used for non-financial assets and liabilities measured at fair value, as well as the general classification within the valuation hierarchy:

Quoted Prices in Active

Markets for Identical

Significant Other

Unobservable

Assets

Observable Inputs

Inputs

Total

(Level 1)

(Level 2)

(Level 3)

Losses

Tradenames

—

257.2

18.5

Certain intangible assets held and used were written down to their fair value, resulting in an impairment charge of $18.5 million, which was included in earnings for the period. The value of the indefinite-lived tradenames was determined using a royalty savings methodology similar to that employed when the associated businesses were acquired but using updated estimates of sales, cash flow and profitability. For further information on the Company’s intangible assets, refer to “NOTE 4. IMPAIRMENT, RESTRUCTURING AND OTHER CHARGES” and “NOTE 5. GOODWILL AND INTANGIBLE ASSETS, NET.”

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis at September 30, 2009 (in millions):


	Quoted Prices in Active
	Markets for Identical		Significant Other			Unobservable
	Assets		Observable Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)		Total

Assets
Derivatives
Commodity hedging instruments	$	—	$	0.2		$	—	$	0.2
Other		5.7		—			—		5.7

Total	$	5.7	$	0.2		$	—	$	5.9

Liabilities
Derivatives
Interest rate swap agreements	$	—	$	(23.7	)	$	—	$	(23.7	)
Foreign currency swap contracts		—		(3.9	)		—		(3.9	)
Commodity hedging instruments		—		(0.1	)		—		(0.1	)

Total	$	—	$	(27.7	)	$	—	$	(27.7	)

- Definition

This element represents the disclosure related to the fair value measurement of assets and liabilities which includes [financial] instruments measured at fair value that are classified in stockholders' equity. Such assets and liabilities may be measured on a recurring or nonrecurring basis. The disclosures which may be required or desired include: (1) for assets and liabilities measured on a recurring basis, disclosure may include: (a) the fair value measurements at the reporting date; (b) the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3); (c) for fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (ii) purchases, sales, issuances, and settlements (net); (iii) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs); (d) the amount of the total gains or losses for the period in subparagraph (c) (i) above included in earnings (or changes in net assets) that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of income (or activities); (e) the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period and (2) for assets and liabilities that are measured at fair value on a nonrecurring basis (for example, impaired assets) disclosure may include, in addition to (a) above: (a) the reasons for the fair value measurements recorded; (b) the same as (b) above; (c) for fair value measurements using significant unobservable inputs (Level 3), a description of the inputs and the information used to develop the inputs; and (d) the valuation technique(s) used to measure fair value and a discussion of changes, if any, in the valuation technique(s) used to measure similar assets and/or liabilities in prior periods.

+ References+ Details

Operating Leases

12 Months Ended

Sep. 30, 2010

Operating Leases [Abstract]

OPERATING LEASES


NOTE 17.	OPERATING LEASES

The Company leases certain property and equipment from third parties under various non-cancelable operating lease agreements. Certain lease agreements contain renewal and purchase options. The lease agreements generally require that the Company pay taxes, insurance and maintenance expenses related to the leased assets. Future minimum lease payments for non-cancelable operating leases at September 30, 2010, were as follows (in millions):


2011	$	42.7
2012		36.5
2013		32.2
2014		19.4
2015		16.8
Thereafter		15.9

Total future minimum lease payments	$	163.5

The Company also leases certain vehicles (primarily cars and light trucks) under agreements that are cancelable after the first year, but typically continue on a month-to-month basis until canceled by the Company. The vehicle leases and certain other non-cancelable operating leases contain residual value guarantees that create a contingent obligation on the part of the Company to compensate the lessor if the leased asset cannot be sold for an amount in excess of a specified minimum value at the conclusion of the lease term. If all such vehicle leases had been canceled as of September 30, 2010, the Company’s residual value guarantee would have approximated $5.1 million.

Other residual value guarantee amounts that apply at the conclusion of non-cancelable lease terms are as follows:


	Amount of		Lease
	Guarantee		Termination Date

Scotts LawnService^® vehicles	$	16.0 million		2013
Corporate aircraft		12.8 million		2012

Rent expense for fiscal 2010, fiscal 2009 and fiscal 2008 totaled $68.1 million, $65.2 million and $67.5 million, respectively.

- Definition

General description of lessee's leasing arrangements including: (1) The basis on which contingent rental payments are determined, (2) The existence and terms of renewal or purchase options and escalation clauses, (3) Restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing, (4) Rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions. Disclosure may also include the specific period used to amortize material leasehold improvements made at the inception of the lease or during the lease term. Additionally, for operating leases having initial or remaining noncancelable lease terms in excess of one year: (a) future minimum rental payments required as of the date of the latest balance sheet presented, in the aggregate and for each of the five succeeding fiscal years, (b) the total of minimum rentals to be received in the future under noncancelable subleases as of the date of the latest balance sheet presented, and (c) for all operating leases, rental expense for each period for which an income statement is presented, with separate amounts for minimum rentals, contingent rentals, and sublease rentals. Rental payments under leases with terms of a month or less that were not renewed need not be included.

+ References+ Details

Commitments

12 Months Ended

Sep. 30, 2010

Commitments [Abstract]

COMMITMENTS


NOTE 18.	COMMITMENTS

The Company has the following unconditional purchase obligations due during each of the next five fiscal years that have not been recognized on the Consolidated Balance Sheet at September 30, 2010 (in millions):


2011	$	178.2
2012		84.5
2013		58.5
2014		11.7
2015		5.0
Thereafter		2.5

	$	340.4

Purchase obligations primarily represent commitments for materials used in the Company’s manufacturing processes, as well as commitments for warehouse services, grass seed and out-sourced information services.

In addition, the Company leases certain property and equipment from third parties under various non-cancelable operating lease agreements. Future minimum lease payments for non-cancelable operating leases not included above are included in “NOTE 17. OPERATING LEASES.”

Contingencies

12 Months Ended

Sep. 30, 2010

Contingencies [Abstract]

CONTINGENCIES


NOTE 19.	CONTINGENCIES

Management regularly evaluates the Company’s contingencies, including various lawsuits and claims which arise in the normal course of business, product and general liabilities, workers’ compensation, property losses and other fiduciary liabilities for which the Company is self-insured or retains a high exposure limit. Self-insurance reserves are established based on actuarial loss estimates for specific individual claims plus actuarially estimated amounts for incurred but not reported claims and adverse development factors for existing claims. Legal costs incurred in connection with the resolution of claims, lawsuits and other contingencies generally are expensed as incurred. In the opinion of management, its assessment of contingencies is reasonable and related reserves, in the aggregate, are adequate; however, there can be no assurance that final resolution of these matters will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. The following are the more significant of the Company’s identified contingencies:

FIFRA Compliance and the Corresponding Governmental Investigations

For a description of the Company’s ongoing FIFRA compliance efforts and the corresponding governmental investigations, see “NOTE 3. PRODUCT REGISTRATION AND RECALL MATTERS.”

Other Regulatory Matters

At September 30, 2010, $2.6 million was accrued for other regulatory matters in the “Other liabilities” line in the Consolidated Balance Sheet. The amounts accrued are believed to be adequate to cover such known environmental exposures based on current facts and estimates of likely outcomes. However, if facts and circumstances change significantly, they could result in a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Other

The Company has been named as a defendant in a number of cases alleging injuries that the lawsuits claim resulted from exposure to asbestos-containing products, apparently based on the Company’s historic use of vermiculite in certain of its products. The complaints in these cases are not specific about the plaintiffs’ contacts with the Company or its products. The Company in each case is one of numerous defendants and none of the claims seek damages from the Company alone. The Company believes that the claims against it are without merit and is vigorously defending against them. It is not currently possible to reasonably estimate a probable loss, if any, associated with these cases and, accordingly, no accrual or reserves have been recorded in the Company’s consolidated financial statements. The Company is reviewing agreements and policies that may provide insurance coverage or indemnity as to these claims and is pursuing coverage under some of these agreements and policies, although there can be no assurance of the results of these efforts. There can be no assurance that these cases, whether as a result of adverse outcomes or as a result of significant defense costs, will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

On April 27, 2007, the Company received a proposed Order On Consent from the New York State Department of Environmental Conservation (the “Proposed Order”) alleging that, during calendar year 2003, the Company and James Hagedorn, individually and as Chairman of the Board and Chief Executive Officer of the Company, unlawfully donated to a Port Washington, New York youth sports organization forty bags of Scotts^® LawnPro Annual Program Step 3 Insect Control Plus Fertilizer which, while federally registered, was allegedly not registered in the state of New York. The Proposed Order requests penalties totaling $695,000. The Company has responded in writing to the New York State Department of Environmental Conservation with respect to the Proposed Order and is awaiting a response.

The Company is involved in other lawsuits and claims which arise in the normal course of business. These claims individually and in the aggregate are not expected to result in a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Concentrations of Credit Risk

12 Months Ended

Sep. 30, 2010

Concentrations of Credit Risk [Abstract]

CONCENTRATIONS OF CREDIT RISK


NOTE 20.	CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. The Company sells its consumer products to a wide variety of retailers, including home centers, mass merchandisers, warehouse clubs, large hardware chains, independent hardware stores, nurseries, garden centers, food and drug stores, commercial nurseries and greenhouses and specialty crop growers. Concentrations of accounts receivable at September 30, net of accounts receivable pledged ($17.0 million for 2009) under the terms of the 2009 MARP Agreement whereby the purchaser has assumed the risk associated with the debtor’s financial inability to pay, were as follows:


	2010			2009

Due from customers geographically located in North America		72	%		76	%
Applicable to the consumer business		85	%		84	%
Applicable primarily to Scotts LawnService^® and the professional businesses		15	%		16	%
Top 3 customers as a percent of total North America Consumer accounts receivable		73	%		63	%

The remainder of the Company’s accounts receivable at September 30, 2010 and 2009 were generated from customers located outside of North America, primarily retailers, distributors, nurseries and growers in Europe. No concentrations of customers or individual customers within this group accounted for more than 10% of the Company’s accounts receivable at either balance sheet date.

The Company’s three largest customers are reported within the Global Consumer segment and are the only customers that individually represent more than 10% of reported consolidated net sales for each of the last three fiscal years. These three customers accounted for the following percentages of consolidated net sales for the fiscal years ended September 30:


	Largest			2nd Largest			3rd Largest
	Customer			Customer			Customer

2010		27.6	%		16.6	%		14.6	%
2009		27.1	%		15.6	%		15.0	%
2008		22.2	%		14.3	%		14.1	%

Segment Information

12 Months Ended

Sep. 30, 2010

Segment Information [Abstract]

SEGMENT INFORMATION


NOTE 22.	SEGMENT INFORMATION

The Company divides its business into the following segments — Global Consumer, Global Professional and Scotts LawnService^®. For the first three quarters of fiscal 2010, the Company included Corporate & Other as a separate reportable segment. That segment included the Smith & Hawken business until the first quarter of fiscal 2010, at which time substantially all operational activities of Smith & Hawken were discontinued and the Company classified Smith & Hawken as discontinued operations. As a result, Corporate activity is no longer presented as part of a segment. This division of reportable segments is consistent with how the segments report to and are managed by senior management of the Company.

Certain reclassifications were made to the Global Consumer and Global Professional prior period amounts to reflect changes in the structure of the Company’s organization effective in fiscal 2010. For fiscal 2010, the Company’s consumer businesses in Australia, Latin America and Italy were reported as part of its Global Consumer segment. Previously, these businesses were reported as part of the Company’s Global Professional segment.

The Global Consumer segment consists of the U.S. Consumer and International Consumer business groups. The business groups comprising this segment manufacture, market and sell dry, granular slow-release lawn fertilizers, combination lawn fertilizer and control products, grass seed, spreaders, water-soluble, liquid and continuous release garden and indoor plant foods, plant care products, potting, garden and lawn soils, mulches and other growing media products, wild bird food, pesticide and rodenticide products. Products are marketed to mass merchandisers, home centers, large hardware chains, warehouse clubs, distributors, garden centers and grocers in the United States, Canada, Europe, Latin America, and Australia.

The Global Professional segment is focused on a full line of horticultural products including controlled-release and water-soluble fertilizers and plant protection products, wetting agents, grass seed products, spreaders and customer application services. Products are sold to commercial nurseries and greenhouses and specialty crop growers, primarily in North America and Europe. On August 10, 2010, the Company indicated it is actively exploring strategic alternatives for its Global Professional business segment. These strategic alternatives include the potential divestiture of that segment, consistent with the Company’s previously stated intent to focus on its core Global Consumer business segment.

The Scotts LawnService^® segment provides residential and commercial lawn fertilization, disease and insect control and other related services such as tree and shrub fertilization and limited pest control services through Company-owned branches and franchises in the United States.

The accounting policies of the segments are the same as those described in the “NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.” The Company evaluates segment performance based on several factors, including income from operations before amortization, product registration and recall costs, and impairment, restructuring and other charges. Management uses this measure of operating profit to gauge segment performance because the Company believes this metric is the most indicative of performance trends and the overall earnings potential of each segment. Total assets reported for the Company’s operating segments include the intangible assets for the acquired businesses within those segments.

Corporate consists primarily of unallocated corporate general and administrative expenses and certain other income/expense items not allocated to the business segments. Corporate assets primarily include deferred financing and debt issuance costs and corporate intangible assets, as well as deferred tax assets. For capital expenditures and total assets, Corporate also includes Smith & Hawken, which is classified as discontinued operations on the Consolidated Statements of Operations.

The following table presents summarized financial information concerning the Company’s reportable segments for fiscal years ended September 30 (in millions):


	2010			2009			2008

Net sales:
Global Consumer	$	2,649.7		$	2,485.3		$	2,282.5
Global Professional		266.9			265.4			316.4
Scotts LawnService^®		224.1			231.1			247.4

Segment total		3,140.7			2,981.8			2,846.3
Roundup^® amortization		(0.8	)		(0.8	)		(0.8	)
Product registration and recall matters — returns		—			(0.3	)		(22.3	)

	$	3,139.9		$	2,980.7		$	2,823.2

Operating income (loss):
Global Consumer	$	504.1		$	430.1		$	346.5
Global Professional		12.1			18.6			31.7
Scotts LawnService^®		24.3			19.0			11.3

Segment total		540.5			467.7			389.5
Corporate		(117.8	)		(129.0	)		(71.6	)
Roundup^® amortization		(0.8	)		(0.8	)		(0.8	)
Amortization		(10.1	)		(11.7	)		(15.1	)
Product registration and recall matters		(8.7	)		(28.6	)		(51.1	)
Impairment of assets		(18.5	)		—			(111.1	)

	$	384.6		$	297.6		$	139.8

Depreciation & amortization:
Global Consumer	$	41.0		$	39.7		$	42.2
Global Professional		2.7			3.5			3.3
Scotts LawnService^®		3.8			4.9			5.2
Corporate		11.9			12.3			19.6

	$	59.4		$	60.4		$	70.3

Capital expenditures:
Global Consumer	$	72.2		$	62.6		$	50.2
Global Professional		0.5			1.8			1.0
Scotts LawnService^®		1.5			1.8			1.8
Corporate		9.2			9.2			7.2

	$	83.4		$	75.4		$	60.2


	2010		2009

Total assets:
Global Consumer	$	1,457.4	$	1,504.5
Global Professional		322.2		334.1
Scotts LawnService^®		177.7		176.1
Corporate		206.7		205.4

	$	2,164.0	$	2,220.1

The following table presents net sales and long-lived assets (property, plant and equipment and finite-lived intangibles) by geographic area for fiscal 2010, fiscal 2009 and fiscal 2008 (in millions):


	2010		2009		2008

Net sales:
United States	$	2,479.6	$	2,367.3	$	2,121.6
International		660.3		613.4		701.6

	$	3,139.9	$	2,980.7	$	2,823.2

Long-lived assets:
United States	$	407.8	$	358.3	$	338.1
International		83.7		96.2		94.6

	$	491.5	$	454.5	$	432.7

Quarterly Consolidated Financial Information (Unaudited)

12 Months Ended

Sep. 30, 2010

Quarterly Consolidated Financial Information [Abstract]

QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)


NOTE 23.	QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations for fiscal 2010 and fiscal 2009 (in millions, except per share data).


	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter			Full Year

FISCAL 2010
Net sales	$	302.2		$	1,123.1		$	1,238.9		$	475.7		$	3,139.9
Gross profit		65.1			436.0			504.8			141.4			1,147.3
Income (loss) from continuing operations		(49.8	)		119.9			175.9			(33.6	)		212.4
Income (loss) from discontinued operations, net of tax		(7.9	)		(1.4	)		—			1.0			(8.3	)
Net income (loss)		(57.7	)		118.5			175.9			(32.6	)		204.1
Basic earnings (loss) per common share:
Income (loss) from continuing operations	$	(0.76	)	$	1.81		$	2.65		$	(0.51	)	$	3.20
Income (loss) from discontinued operations, net of tax		(0.12	)		(0.02	)		—			0.02			(0.12	)

Net income (loss)	$	(0.88	)	$	1.79		$	2.65		$	(0.49	)	$	3.08

Common shares used in basic EPS calculation		65.9			66.2			66.5			66.5			66.3
Diluted earnings (loss) per common share:
Income (loss) from continuing operations	$	(0.76	)	$	1.78		$	2.59		$	(0.51	)	$	3.14
Income (loss) from discontinued operations, net of tax		(0.12	)		(0.02	)		—			0.02			(0.12	)

Net income (loss)	$	(0.88	)	$	1.76		$	2.59		$	(0.49	)	$	3.02

Common shares and dilutive potential common shares used in diluted EPS calculation		65.9			67.4			67.9			66.5			67.6

FISCAL 2009
Net sales	$	286.1		$	940.7		$	1,231.4		$	522.5		$	2,980.7
Gross profit		77.3			356.3			475.7			148.3			1,057.6
Income (loss) from continuing operations		(52.9	)		84.1			150.7			(27.3	)		154.6
Income (loss) from discontinued operations, net of tax		(4.1	)		(6.7	)		(2.9	)		12.4			(1.3	)
Net income (loss)		(57.0	)		77.4			147.8			(14.9	)		153.3
Basic earnings (loss) per common share:
Income (loss) from continuing operations	$	(0.82	)	$	1.29		$	2.32		$	(0.42	)	$	2.38
Income (loss) from discontinued operations, net of tax		(0.06	)		(0.10	)		(0.05	)		0.19			(0.02	)

Net income (loss)	$	(0.88	)	$	1.19		$	2.27		$	(0.23	)	$	2.36

Common shares used in basic EPS calculation		64.7			64.9			65.0			65.3			65.0
Diluted earnings (loss) per common share:
Income (loss) from continuing operations	$	(0.82	)	$	1.28		$	2.28		$	(0.42	)	$	2.34
Income (loss) from discontinued operations, net of tax		(0.06	)		(0.10	)		(0.05	)		0.19			(0.02	)

Net income (loss)	$	(0.88	)	$	1.18		$	2.23		$	(0.23	)	$	2.32

Common shares and dilutive potential common shares used in diluted EPS calculation		64.7			65.8			66.1			65.3			66.1

Common share equivalents, such as share-based awards, are excluded from the diluted loss per common share calculation in periods where there is a loss from continuing operations because the effect of their inclusion would be anti-dilutive.

The Company’s business is highly seasonal, with 70% to 75% of net sales occurring in the second and third fiscal quarters.

Unusual items during fiscal 2010 consisted of impairment and product registration and recall charges. These items are reflected in the quarterly financial information as follows: first quarter product registration and recall charges of $2.6 million; second quarter product registration and recall charges of $1.7 million; third quarter product registration and recall charges of $1.5 million; and fourth quarter impairment charges of $18.5 million and product registration and recall charges of $2.9 million. Unusual items in discontinued operations consisted of Smith & Hawken restructuring and other charges of $17.1 million in the first quarter, offset by a gain of approximately $18 million from the sale of Smith & Hawken intellectual property; restructuring and other charges of $1.9 million in the second quarter; restructuring and other charges of $0.3 million in the third quarter; and restructuring and other charges of $(1.0) million in the fourth quarter.

Unusual items during fiscal 2009 consisted of product registration and recall charges. These items are reflected in the quarterly financial information as follows: first quarter product registration and recall charges of $7.6 million; second quarter product registration and recall charges of $8.0 million; third quarter product registration and recall charges of $6.4 million; and fourth quarter product registration and recall charges of $6.6 million. Unusual items in discontinued operations consisted of Smith & Hawken restructuring and other charges of $2.7 million in the third quarter and $12.0 million in the fourth quarter, as well as an $18.4 million reduction in deferred tax asset valuation allowances for Smith & Hawken in the fourth quarter.

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

+ References+ Details

Financial Information for Subsidiary Guarantors and Non-Guarantors

12 Months Ended

Sep. 30, 2010

Financial Information for Subsidiary Guarantors and Non-Guarantors [Abstract]

FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTORS


NOTE 24.	FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTORS

The Senior Notes issued by Scotts Miracle-Gro on January 14, 2010 are guaranteed by certain of its domestic subsidiaries and, therefore, the Company has disclosed condensed, consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. The following 100% directly or indirectly owned subsidiaries fully and unconditionally guarantee the Senior Notes on a joint and several basis: EG Systems, Inc., dba Scotts LawnService^®; Gutwein & Co., Inc.; Hyponex Corporation; Miracle-Gro Lawn Products, Inc.; OMS Investments, Inc.; Rod McLellan Company; Sanford Scientific, Inc.; Scotts Temecula Operations, LLC; Scotts Manufacturing Company; Scotts Products Co.; Scotts Professional Products Co.; Scotts-Sierra Crop Protection Company; Scotts-Sierra Horticultural Products Company; Scotts-Sierra Investments, Inc.; SMG Growing Media, Inc.; Swiss Farms Products, Inc.; and The Scotts Company LLC (collectively, the “Guarantors”). Teak 2, Ltd., f/k/a Smith & Hawken, Ltd., was released from its guarantee under the Senior Notes on March 18, 2010. Accordingly, Teak 2, Ltd. has been classified as a Non-Guarantor for all periods presented in the condensed, consolidating financial information accompanying this Note 24.

The following information presents condensed, consolidating Statements of Operations and Statements of Cash Flows for each of the three years in the period ended September 30, 2010, and condensed, consolidating Balance Sheets as of September 30, 2010 and 2009. The condensed, consolidating financial information presents, in separate columns, financial information for: Scotts Miracle-Gro on a Parent-only basis, carrying its investment in subsidiaries under the equity method; Guarantors on a combined basis, carrying investments in subsidiaries which do not guarantee the debt (collectively, the “Non-Guarantors”) under the equity method; Non-Guarantors on a combined basis; and eliminating entries. The eliminating entries primarily reflect intercompany transactions, such as interest expense, accounts receivable and payable, short and long-term debt, and the elimination of equity investments and income in subsidiaries. Because the Parent is obligated to pay the unpaid principal amount and interest on all amounts borrowed by the Guarantors or Non-Guarantors under the senior secured five-year revolving loan facility, the borrowings and related interest expense for the revolving loans outstanding of the Guarantors and Non-Guarantors are also presented in the accompanying Parent-only financial information, and are then eliminated.

The Scotts Miracle-Gro Company

Condensed, Consolidating Statement of Operations

for the fiscal year ended September 30, 2010


				Subsidiary			Non-
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
	(In millions)

Net sales	$	—		$	2,498.3		$	641.6		$	—		$	3,139.9
Cost of sales		—			1,550.5			439.1			—			1,989.6
Cost of sales — product registration and recall matters		—			3.0			—			—			3.0

Gross profit		—			944.8			202.5			—			1,147.3
Operating expenses:
Selling, general and administrative		—			596.0			150.7			—			746.7
Impairment, restructuring and other charges		—			18.2			0.3			—			18.5
Product registration and recall matters		—			5.7			—			—			5.7
Other income, net		—			(5.0	)		(3.2	)		—			(8.2	)

Income from operations		—			329.9			54.7			—			384.6
Equity income in subsidiaries		(212.5	)		(32.0	)		—			244.5			—
Other non-operating income		(24.0	)		—			—			24.0			—
Interest expense		37.6			28.7			4.5			(24.0	)		46.8

Income before taxes		198.9			333.2			50.2			(244.5	)		337.8
Income tax expense (benefit)		(5.2	)		121.2			9.4			—			125.4

Income from continuing operations		204.1			212.0			40.8			(244.5	)		212.4
Income (loss) from discontinued operations, net of tax		—			—			(8.3	)		—			(8.3	)

Net income	$	204.1		$	212.0		$	32.5		$	(244.5	)	$	204.1

The Scotts Miracle-Gro Company

Condensed, Consolidating Statement of Cash Flows

for the fiscal year ended September 30, 2010


				Subsidiary			Non-
	Parent			Guarantors			Guarantors			Eliminations		Consolidated
	(In millions)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(4.2	)	$	269.6		$	30.5		$	—	$	295.9

INVESTING ACTIVITIES
Proceeds from sale of long-lived assets		—			5.4			19.1			—		24.5
Investments in property, plant and equipment		—			(77.1	)		(6.3	)		—		(83.4	)
Investments in intellectual property		—			—			—			—		—
Investments in acquired businesses, net of cash acquired		—			—			—			—		—

Net cash provided by (used in) investing activities		—			(71.7	)		12.8			—		(58.9	)

FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans		—			593.4			428.0			—		1,021.4
Repayments under revolving and bank lines of credit and term loans		—			(851.6	)		(539.8	)		—		(1,391.4	)
Proceeds from issuance of 7.25% Senior Notes, net of discount		198.5			—			—			—		198.5
Financing and issuance fees		(5.5	)		—			—			—		(5.5	)
Dividends paid		(42.6	)		—			—			—		(42.6	)
Payments on sellers notes		—			(0.6	)		—			—		(0.6	)
Purchase of common shares		(25.0	)		—			—			—		(25.0	)
Excess tax benefits from share-based payment arrangements		—			6.4			—			—		6.4
Cash received from exercise of stock options		22.5			—			—			—		22.5
Intercompany financing		(143.7	)		52.5			91.2			—		—

Net cash provided by (used in) financing activities		4.2			(199.9	)		(20.6	)		—		(216.3	)

Effect of exchange rate changes		—			—			(3.2	)		—		(3.2	)

Net increase (decrease) in cash		—			(2.0	)		19.5			—		17.5
Cash and cash equivalents, beginning of year		—			7.0			64.6			—		71.6

Cash and cash equivalents, end of year	$	—		$	5.0		$	84.1		$	—	$	89.1

The Scotts Miracle-Gro Company

Condensed, Consolidating Balance Sheet

As of September 30, 2010


			Subsidiary		Non-
	Parent		Guarantors		Guarantors			Eliminations			Consolidated
	(In millions)

ASSETS
Current assets:
Cash and cash equivalents	$	—	$	5.0	$	84.1		$	—		$	89.1
Accounts receivable, net		—		284.5		123.9			—			408.4
Inventories, net		—		305.1		98.5			—			403.6
Prepaid and other assets		—		99.0		37.5			—			136.5

Total current assets		—		693.6		344.0			—			1,037.6
Property, plant and equipment, net		—		338.2		56.6			—			394.8
Goodwill		—		305.1		67.7			—			372.8
Intangible assets, net		—		275.2		55.0			—			330.2
Other assets		13.9		16.1		43.8			(45.2	)		28.6
Equity investment in subsidiaries		773.7		—		—			(773.7	)		—
Intercompany receivables		496.1		—		—			(496.1	)		—

Total assets	$	1,283.7	$	1,628.2	$	567.1		$	(1,315.0	)	$	2,164.0


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of debt	$	193.2	$	1.8	$	—		$	—		$	195.0
Accounts payable		—		94.6		58.5			—			153.1
Other current liabilities		3.6		251.7		120.5			—			375.8

Total current liabilities		196.8		348.1		179.0			—			723.9
Long-term debt		318.8		25.5		102.1			(9.7	)		436.7
Other liabilities		3.6		205.9		74.6			(45.2	)		238.9
Equity investment in subsidiaries		—		63.6		—			(63.6	)		—
Intercompany payables		—		210.0		276.4			(486.4	)		—

Total liabilities		519.2		853.1		632.1			(604.9	)		1,399.5
Shareholders’ equity		764.5		775.1		(65.0	)		(710.1	)		764.5

Total liabilities and shareholders’ equity	$	1,283.7	$	1,628.2	$	567.1		$	(1,315.0	)	$	2,164.0

The Scotts Miracle-Gro Company

Condensed, Consolidating Statement of Operations

for the fiscal year ended September 30, 2009


				Subsidiary			Non-
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
	(In millions)

Net sales	$	—		$	2,382.7		$	598.0		$	—		$	2,980.7
Cost of sales		—			1,503.5			407.9			—			1,911.4
Cost of sales — product registration and recall matters		—			11.7			—			—			11.7

Gross profit		—			867.5			190.1			—			1,057.6
Operating expenses:
Selling, general and administrative		—			577.6			165.3			—			742.9
Product registration and recall matters		—			16.8			—			—			16.8
Other (income) expense, net		—			2.5			(2.2	)		—			0.3

Income from operations		—			270.6			27.0			—			297.6
Equity income in subsidiaries		(155.1	)		(7.2	)		—			162.3			—
Other non-operating income		(33.6	)		—			—			33.6			—
Interest expense		36.3			43.1			10.6			(33.6	)		56.4

Income before taxes		152.4			234.7			16.4			(162.3	)		241.2
Income tax expense (benefit)		(0.9	)		79.7			7.8			—			86.6

Income from continuing operations		153.3			155.0			8.6			(162.3	)		154.6
Loss from discontinued operations, net of tax		—			—			(1.3	)		—			(1.3	)

Net income	$	153.3		$	155.0		$	7.3		$	(162.3	)	$	153.3

The Scotts Miracle-Gro Company

Condensed, Consolidating Statement of Cash Flows

for the fiscal year ended September 30, 2009


				Subsidiary			Non-
	Parent			Guarantors			Guarantors			Eliminations		Consolidated
	(In millions)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(2.4	)	$	237.4		$	29.6		$	—	$	264.6

INVESTING ACTIVITIES
Proceeds from sale of long-lived assets		—			1.4			—			—		1.4
Investments in property, plant and equipment		—			(54.3	)		(17.7	)		—		(72.0	)
Investments in intellectual property		—			(3.4	)		—			—		(3.4	)
Investments in acquired businesses, net of cash acquired		—			—			(9.3	)		—		(9.3	)

Net cash used in investing activities		—			(56.3	)		(27.0	)		—		(83.3	)

FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans		—			1,181.5			376.5			—		1,558.0
Repayments under revolving and bank lines of credit and term loans		—			(1,314.9	)		(421.1	)		—		(1,736.0	)
Financing and issuance fees		—			(0.1	)		—			—		(0.1	)
Dividends paid		(33.4	)		—			—			—		(33.4	)
Payments on sellers notes		—			(1.4	)		—			—		(1.4	)
Excess tax benefits from share-based payment arrangements		—			4.1			—			—		4.1
Cash received from exercise of stock options		14.8			—			—			—		14.8
Intercompany financing		21.0			(47.8	)		26.8			—		—

Net cash provided by (used in) financing activities		2.4			(178.6	)		(17.8	)		—		(194.0	)

Effect of exchange rate changes		—			—			(0.4	)		—		(0.4	)

Net increase (decrease) in cash		—			2.5			(15.6	)		—		(13.1	)
Cash and cash equivalents, beginning of year		—			4.5			80.2			—		84.7

Cash and cash equivalents, end of year	$	—		$	7.0		$	64.6		$	—	$	71.6

The Scotts Miracle-Gro Company

Condensed, Consolidating Balance Sheet

As of September 30, 2009


			Subsidiary		Non-
	Parent		Guarantors		Guarantors			Eliminations			Consolidated
	(In millions)

ASSETS
Current assets:
Cash and cash equivalents	$	—	$	7.0	$	64.6		$	—		$	71.6
Accounts receivable, net		—		269.1		115.2			—			384.3
Accounts receivable pledged		—		17.0		—			—			17.0
Inventories, net		—		328.9		130.0			—			458.9
Prepaid and other assets		—		112.4		46.7			—			159.1

Total current assets		—		734.4		356.5			—			1,090.9
Property, plant and equipment, net		—		306.1		63.6			—			369.7
Goodwill		—		305.1		70.1			—			375.2
Intangible assets, net		—		299.2		65.0			—			364.2
Other assets		12.5		14.4		41.3			(48.1	)		20.1
Equity investment in subsidiaries		579.4		—		—			(579.4	)		—
Intercompany receivables		798.7		—		—			(798.7	)		—

Total assets	$	1,390.6	$	1,659.2	$	596.5		$	(1,426.2	)	$	2,220.1


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of debt	$	154.0	$	5.9	$	0.5		$	—		$	160.4
Accounts payable		—		125.3		64.7			—			190.0
Other current liabilities		1.5		263.1		141.8			—			406.4

Total current liabilities		155.5		394.3		207.0			—			756.8
Long-term debt		632.8		125.7		221.6			(330.4	)		649.7
Other liabilities		17.8		192.8		66.6			(48.1	)		229.1
Equity investment in subsidiaries		—		82.9		—			(82.9	)		—
Intercompany payables		—		282.6		185.7			(468.3	)		—

Total liabilities		806.1		1,078.3		680.9			(929.7	)		1,635.6
Shareholders’ equity		584.5		580.9		(84.4	)		(496.5	)		584.5

Total liabilities and shareholders’ equity	$	1,390.6	$	1,659.2	$	596.5		$	(1,426.2	)	$	2,220.1

The Scotts Miracle-Gro Company

Condensed, Consolidating Statement of Operations

for the fiscal year ended September 30, 2008


				Subsidiary			Non-
	Parent			Guarantors			Guarantors			Eliminations			Consolidated
	(In millions)

Net sales	$	—		$	2,141.4		$	681.8		$	—		$	2,823.2
Cost of sales		—			1,418.2			464.8			—			1,883.0
Cost of sales — impairment, restructuring and other charges		—			1.3			—			—			1.3
Cost of sales — product registration and recall matters		—			27.2			—			—			27.2

Gross profit		—			694.7			217.0			—			911.7
Operating expenses:
Selling, general and administrative		—			469.0			188.1			—			657.1
Impairment, restructuring and other charges		—			41.7			68.1			—			109.8
Product registration and recall matters		—			12.7			—			—			12.7
Other (income) expense, net		—			(8.5	)		0.8			—			(7.7	)

Income (loss) from operations		—			179.8			(40.0	)		—			139.8
Equity loss in subsidiaries		9.1			84.6			—			(93.7	)		—
Other non-operating income		(46.5	)		—			—			46.5			—
Interest expense		49.2			57.3			22.2			(46.5	)		82.2

Income (loss) before taxes		(11.8	)		37.9			(62.2	)		93.7			57.6
Income tax expense (benefit)		(0.9	)		45.4			(19.7	)		—			24.8

Income (loss) from continuing operations		(10.9	)		(7.5	)		(42.5	)		93.7			32.8
Loss from discontinued operations, net of tax		—			—			(43.7	)		—			(43.7	)

Net loss	$	(10.9	)	$	(7.5	)	$	(86.2	)	$	93.7		$	(10.9	)

The Scotts Miracle-Gro Company

Condensed, Consolidating Statement of Cash Flows

for the fiscal year ended September 30, 2008


				Subsidiary			Non-
	Parent			Guarantors			Guarantors			Eliminations		Consolidated
	(In millions)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(2.2	)	$	222.9		$	(19.8	)	$	—	$	200.9

INVESTING ACTIVITIES
Proceeds from sale of long-lived assets		—			1.1			—			—		1.1
Investments in property, plant and equipment		—			(45.1	)		(11.0	)		—		(56.1	)
Investments in intellectual property		—			(4.1	)		—			—		(4.1	)

Net cash used in investing activities		—			(48.1	)		(11.0	)		—		(59.1	)

FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans		—			689.3			252.8			—		942.1
Repayments under revolving and bank lines of credit and term loans		—			(821.4	)		(220.6	)		—		(1,042.0	)
Dividends paid		(32.5	)		—			—			—		(32.5	)
Payments on sellers notes		—			(2.7	)		—			—		(2.7	)
Excess tax benefits from share-based payment arrangements		—			2.9			—			—		2.9
Cash received from exercise of stock options		9.2			—			—			—		9.2
Intercompany financing		25.5			(40.8	)		15.3			—		—

Net cash provided by (used in) financing activities		2.2			(172.7	)		47.5			—		(123.0	)

Effect of exchange rate changes		—			—			(2.0	)		—		(2.0	)

Net increase in cash		—			2.1			14.7			—		16.8
Cash and cash equivalents, beginning of year		—			2.4			65.5			—		67.9

Cash and cash equivalents, end of year	$	—		$	4.5		$	80.2		$	—	$	84.7

Schedule II-Valuation and Qualifying Accounts

12 Months Ended

Sep. 30, 2010

Valuation and Qualifying Accounts [Abstract]

Valuation and Qualifying Accounts

The Scotts Miracle-Gro Company

Schedule II — Valuation and Qualifying Accounts

for the fiscal year ended September 30, 2010


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
	(In millions)

Valuation and qualifying accounts deducted from the assets to which they apply:
Inventory reserve	$	24.7	$	—	$	9.0	$	(16.1	)	$	17.6
Inventory reserve — product recalls		8.3		—		0.8		(5.6	)		3.5
Allowance for doubtful accounts		11.1		—		4.4		(5.3	)		10.2
Income tax valuation allowance		43.1		—		0.5		(1.3	)		42.3

Schedule II — Valuation and Qualifying Accounts
for the fiscal year ended September 30, 2009


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
	(In millions)

Valuation and qualifying accounts deducted from the assets to which they apply:
Inventory reserve	$	17.5	$	—	$	14.1	$	(6.9	)	$	24.7
Inventory reserve — product recalls		8.7		—		2.9		(3.3	)		8.3
Allowance for doubtful accounts		10.6		—		6.2		(5.7	)		11.1
Income tax valuation allowance		65.8		—		1.8		(24.5	)		43.1

Schedule II — Valuation and Qualifying Accounts
for the fiscal year ended September 30, 2008


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
	(In millions)

Valuation and qualifying accounts deducted from the assets to which they apply:
Inventory reserve	$	15.6	$	—	$	13.3	$	(11.4	)	$	17.5
Inventory reserve — product recalls		—		—		16.7		(8.0	)		8.7
Allowance for doubtful accounts		11.4		—		4.7		(5.5	)		10.6
Income tax valuation allowance		41.0		—		27.0		(2.2	)		65.8

Consolidated Statements of Cash Flows (Parenthetical)	12 Months Ended
Consolidated Statements of Cash Flows (Parenthetical)	Sep. 30, 2010
FINANCING ACTIVITIES
Senior Notes interest rate stated percentage	7.25%