Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 2011
The Scotts Miracle-Gro Company
(Exact name of registrant as specified in its charter)
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Ohio
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1-11593
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31-1414921 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.) |
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14111 Scottslawn Road,
Marysville, Ohio
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43041 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (937) 644-0011
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On January 28, 2011, The Scotts Miracle-Gro Company (the Company) issued a News Release reporting
information regarding its results of operations for the three-month period ended January 1, 2011
and its financial condition as of January 1, 2011. The News Release is included as Exhibit 99.1 to
this Current Report on Form 8-K.
The News Release includes the following non-GAAP financial measures as defined in Regulation G:
Adjusted loss from continuing operations and adjusted diluted loss per share from continuing
operations These measures exclude charges or credits relating to refinancings, impairments,
restructurings, product registration and recall matters, discontinued operations and other
unusual items such as costs or gains related to discrete projects or transactions that are apart
from and not indicative of the results of the operations of the business. In compliance with
Regulation G, the Company has provided a reconciliation of adjusted loss from continuing
operations and adjusted diluted loss per share from continuing operations to their most directly
comparable financial measures calculated and presented in accordance with accounting principles
generally accepted in the United States of America (GAAP). These non-GAAP financial measures
are provided solely for the purpose of complying with Regulation G and are not intended to
replace or serve as substitutes for any of the Companys GAAP financial measures.
Adjusted EBITDA This measure is provided as a convenience to the Companys lenders because
adjusted EBITDA is a component of certain debt compliance covenants. Adjusted EBITDA, as defined
by the Companys credit facility, is calculated as net income or loss before interest, taxes,
depreciation and amortization as well as certain other items such as the cumulative effect of
changes in accounting, costs associated with debt refinancing and other non-recurring, non-cash
items affecting net income. The Companys calculation of adjusted EBITDA does not represent and
should not be considered as an alternative to net income or cash flow from operations as
determined by GAAP. The Company makes no representation or assertion that adjusted EBITDA is
indicative of its cash flows from operations or results of operations. The Company has provided
a reconciliation of loss from continuing operations to adjusted EBITDA solely for the purpose of
complying with Regulation G and not as an indication that adjusted EBITDA is a substitute
measure for loss from continuing operations.
The Companys management believes that these non-GAAP financial measures are the most indicative of
the Companys ongoing earnings capabilities and that disclosure of these non-GAAP financial
measures therefore provides useful information to investors or other users of the financial
statements, such as lenders.
Item 9.01. Financial Statements and Exhibits.
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(a) |
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Financial statements of businesses acquired: |
Not applicable.
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Pro forma financial information: |
Not applicable.
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Shell company transactions: |
Not applicable.
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Exhibit No. |
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Description |
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99.1 |
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News Release issued by The Scotts Miracle-Gro Company on January 28, 2011 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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THE SCOTTS MIRACLE-GRO COMPANY
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Dated: January 28, 2011 |
By: |
/s/ David C. Evans
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Printed |
Name: David C. Evans |
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Title: |
Executive Vice President and Chief
Financial Officer |
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INDEX TO EXHIBITS
Current Report on Form 8-K
Dated January 28, 2011
The Scotts Miracle-Gro Company
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Exhibit No. |
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Description |
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99.1 |
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News Release issued by The Scotts Miracle-Gro Company on January 28, 2011 |
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Exhibit 99.1
Exhibit 99.1
The Scotts Miracle-Gro Company NEWS
The Scotts Miracle-Gro Company Reports First Quarter Results;
Consumer Demand Remains Strong Entering 2011 Lawn & Garden Season
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Strong fall lawn care season leads to 11% increase in U.S. consumer purchases |
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Scotts LawnService maintains momentum with 12% sales growth in the quarter |
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Company re-affirms full-year guidance from continuing operations |
MARYSVILLE, Ohio (January 28, 2011) The Scotts Miracle-Gro Company (NYSE: SMG), the worlds
largest marketer of branded consumer lawn and garden products, today reported first quarter results
in line with the Companys expectations and supported by an 11 percent increase in consumer
purchases of the Companys branded products at its largest retail partners in the United States.
For the three months ended January 1, 2011, the Company reported net sales from continuing
operations of $230.2 million, and an adjusted loss of $65.6 million, or $0.99 per share. Those
results exclude the performance of the Companys Global Professional business, which is presented
as a discontinued operation in anticipation of the sale of the business in the Companys second
quarter. The results also exclude costs related to product registration and recall matters.
Including those costs, the loss from continuing operations in the quarter was $66.7 million, or
$1.00 per share, as compared with a loss of $50.1 million, or $0.76 per share, for the same period
a year ago. Given the seasonal nature of the lawn and garden category, ScottsMiracle-Gro has
historically reported a net loss in its fiscal first quarter.
Consumer purchases of the Companys products increased in 48 states, including double-digit
increases in 34 states. Consumer activity in lawn renovation projects was up 75 percent, led by a
90 percent increase in consumer grass seed purchases, a nearly 50 percent increase in Turf Builder®
Starter® lawn fertilizer and more than a 30 percent increase in lawn soils.
The opportunity for long-term growth in our fall business remains significant, and we were
glad to see a second consecutive year of double-digit increase in fall products, said Jim
Hagedorn, chairman and chief executive officer. The strong consumer demand in the fall, coupled
with an anticipated slow down of shipments in December, means that current retail inventory levels
leave us well-positioned for strong sell-in as we approach the launch of the new lawn and garden
season.
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Global Consumer sales declined 12 percent in the quarter to $188.8 million. The decline was
anticipated as many retailers delayed purchases into the second fiscal quarter. Scotts LawnService
reported a 12 percent improvement in sales to $37.1 million as it continues to benefit from higher
year-over-year customer count.
Gross margin rate in the quarter improved by 40 basis points to 21.3 percent due primarily to
lower material costs. Selling, general and administrative expense (SG&A) increased $16.9 million
to $143.2 million. Approximately half of the increase was related to severance costs with the
balance due to planned investments in marketing, innovation, sustainability and the opening of two
additional regional offices.
As our business model continues to evolve to be more consumer-centric we are investing in key
areas that we believe will have long-term impact on our growth, Hagedorn said. For example, we
opened two new regional offices, have just completed our most comprehensive consumer study ever and
also launched a national search for a chief marketing officer. While these investments may not
generate significant benefits in 2011, they are critical to the continued successful execution of
our strategy and our ability to drive future shareholder value.
Interest expense in the quarter was $9.5 million. Adjusted loss before interest, taxes,
depreciation and amortization (EBITDA) from continuing operations was $80.3 million in the quarter
compared with a loss of $60.9 million a year earlier.
The Company purchased approximately 483,000 of its shares in open market transactions during
the quarter as part of its $500 million share repurchase authorization. Since program inception, a
total of $50 million of shares have been repurchased through the first quarter-end.
Full-year outlook
The Company said it continues to expect sales growth from continuing operations of 4 to 6
percent for the year. An anticipated improvement in gross margin rate, along with leverage from
SG&A, is expected to result in double-digit earnings per share growth on an adjusted basis.
In anticipation of completing the divestiture of its Global Professional business, the Company
expects to provide a detailed explanation of its full-year outlook at its Annual Analyst Day event
on February 23, 2011. At that point, the Company will provide full-year historical financial
statements that reflect the Global Professional business in discontinued operations.
The sale of Global Pro continues to remain on track to close during our second fiscal
quarter, said Dave Evans, chief financial officer. Our Global Consumer and Scotts LawnService
segments are performing as we expected. In addition, we have locked in more than 60 percent of our
most sensitive commodities for the year and remain focused on strong expense control. All of these
facts give us continued confidence in our outlook for the year.
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The Company will discuss its first quarter 2011 results during a Webcast conference call at
9:00 a.m. today. The call will be available live on the Investor Relations section of the
ScottsMiracle-Gro Web site, http://investor.scotts.com.
An archive of the Webcast, as well as accompanying financial information regarding any
non-GAAP financial measures discussed by the Company during the call, will be available on the Web
site for at least 12 months.
About ScottsMiracle-Gro
With approximately $3 billion in worldwide sales, The Scotts Miracle-Gro Company, through its
wholly-owned subsidiary, The Scotts Company LLC, is the worlds largest marketer of branded
consumer products for lawn and garden care, with products for professional horticulture as well.
The Companys brands are the most recognized in the industry. In the U.S., the Companys Scotts®,
Miracle-Gro® and Ortho® brands are market-leading in their categories, as is the consumer Roundup®
brand, which is marketed in North America and most of Europe exclusively by Scotts and owned by
Monsanto. In the U.S., we operate Scotts LawnService®, the second largest residential lawn care
service business. In Europe, the Companys brands include Weedol®, Pathclear®, Evergreen®,
Levington®, Miracle-Gro®, KB®, Fertiligène® and Substral®. For additional information, visit us at
www.scotts.com.
Cautionary Note Regarding Forward-Looking Statements
Statements contained in this press release, other than statements of historical fact, which address
activities, events and developments that the Company expects or anticipates will or may occur in
the future, including, but not limited to, information regarding the future economic performance
and financial condition of the Company, the plans and objectives of the Companys management, the
Companys assumptions regarding such performance and plans, as well as the amount and timing of
repurchases of the Companys common shares are forward-looking statements within the meaning of
the U.S. federal securities laws that are subject to risks and uncertainties. These forward-looking
statements generally can be identified as statements that include phrases such as guidance,
outlook, projected, believe, target, predict, estimate, forecast, strategy, may,
goal, expect, anticipate, intend, plan, foresee, likely, will, should or other
similar words or phrases. Actual results could differ materially from the forward-looking
information in this release due to a variety of factors, including, but not limited to:
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The ongoing governmental investigations regarding the Companys compliance with the
Federal Insecticide, Fungicide, and Rodenticide Act of 1947, as amended, could adversely
affect the Companys financial condition, results of operations or cash flows; |
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Compliance with environmental and other public health regulations could increase the
Companys costs of doing business or limit the Companys ability to market all of its
products; |
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Increases in the prices of raw materials could adversely affect the Companys results of
operations; |
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The highly competitive nature of the Companys markets could adversely affect its
ability to maintain or grow revenues; |
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Because of the concentration of the Companys sales to a small number of retail
customers, the loss of one or more of, or significant reduction in orders from, its top
customers could adversely affect the Companys financial results; |
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Adverse weather conditions could adversely impact financial results; |
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The Companys international operations make the Company susceptible to fluctuations in
currency exchange rates and to other costs and risks associated with international
regulation; |
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The Company may not be able to adequately protect its intellectual property and other
proprietary rights that are material to the Companys business; |
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The Company depends on key personnel and may not be able to retain those employees or
recruit additional qualified personnel; |
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If Monsanto Company were to terminate the Marketing Agreement for consumer Roundup
products, the Company would lose a substantial source of future earnings and overhead
expense absorption;
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Hagedorn Partnership, L.P. beneficially owns approximately 30% of the Companys common
shares and can significantly influence decisions that require the approval of shareholders; |
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The Company may pursue acquisitions, dispositions, investments, dividends, share
repurchases and/or other corporate transactions that it believes will maximize equity
returns of its shareholders but may involve risks. |
Additional detailed information concerning a number of the important factors that could cause
actual results to differ materially from the forward-looking information contained in this release
is readily available in the Companys publicly filed quarterly, annual and other reports. The
Company disclaims any obligation to update developments of these risk factors or to announce
publicly any revision to any of the forward-looking statements contained in this release, or to
make corrections to reflect future events or developments.
Contact:
Jim King
Senior Vice President
Investor Relations & Corporate Affairs
(937) 578-5622
4
THE SCOTTS MIRACLE-GRO COMPANY
Results of Operations for the Three Months
Ended January 1, 2011 and January 2, 2010
(in millions, except per share data)
(Unaudited)
Note: See Accompanying Footnotes on Page 9
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Three Months Ended |
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January 1, |
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January 2, |
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Footnotes |
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2011 |
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2010 |
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Change |
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Net sales |
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$ |
230.2 |
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$ |
252.4 |
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-9 |
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Cost of sales |
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180.3 |
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198.7 |
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Cost of sales product registration and recall matters |
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0.8 |
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0.9 |
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Gross profit |
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49.1 |
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52.8 |
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% of sales |
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21.3 |
% |
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20.9 |
% |
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Operating expenses: |
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Selling, general and administrative |
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143.2 |
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126.3 |
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13 |
% |
Product registration and recall matters |
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0.9 |
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1.7 |
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Other income, net |
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(0.5 |
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(6.2 |
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Loss from operations |
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(94.5 |
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(69.0 |
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-37 |
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% of sales |
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-41.1 |
% |
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-27.3 |
% |
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Interest expense |
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9.5 |
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9.7 |
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Loss from continuing operations before income taxes |
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(104.0 |
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(78.7 |
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-32 |
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Income tax benefit from continuing operations |
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(37.3 |
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(28.6 |
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Loss from continuing operations |
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(66.7 |
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(50.1 |
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-33 |
% |
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Loss from discontinued operations, net of tax |
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(1.2 |
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(7.6 |
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Net loss |
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$ |
(67.9 |
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(57.7 |
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-18 |
% |
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Basic loss per common share: |
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(1 |
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Loss from continuing operations |
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$ |
(1.00 |
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$ |
(0.76 |
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-32 |
% |
Loss from discontinued operations |
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(0.02 |
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(0.12 |
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Net loss |
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$ |
(1.02 |
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$ |
(0.88 |
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-16 |
% |
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Diluted loss per common share: |
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(2 |
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Loss from continuing operations |
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$ |
(1.00 |
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$ |
(0.76 |
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-32 |
% |
Loss from discontinued operations |
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(0.02 |
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(0.12 |
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Net loss |
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$ |
(1.02 |
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$ |
(0.88 |
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-16 |
% |
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Common shares used in basic
loss per share calculation |
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66.3 |
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65.9 |
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1 |
% |
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Common shares and potential common
shares used in diluted
loss per share calculation |
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66.3 |
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65.9 |
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1 |
% |
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Results from continuing operations excluding
product registration and recall matters: |
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Adjusted loss from continuing operations |
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(4 |
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$ |
(65.6 |
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$ |
(48.4 |
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-36 |
% |
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Adjusted diluted loss per share from continuing operations |
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(2 |
) (4) |
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$ |
(0.99 |
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$ |
(0.73 |
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-35 |
% |
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Adjusted EBITDA |
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(3 |
) (4) |
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$ |
(80.3 |
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$ |
(60.9 |
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-32 |
% |
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5
THE SCOTTS MIRACLE-GRO COMPANY
Net Sales and Loss from Operations by Segment for the
Three Months Ended January 1, 2011 and January 2, 2010
(in millions)
(Unaudited)
The Company is divided into the following reportable segments: Global Consumer, Scotts
LawnService® and Corporate & Other. The Corporate & Other segment consists of the non-European professional
seed business and corporate general and administrative expenses. This division of reportable
segments is consistent with how the segments report to and are managed by senior management of the
Company.
Reclassifications have been made to prior period segment amounts to reflect changes in the
allocation of certain shared expenses among the segments, which in managements judgment better
align those expenses with the associated drivers and benefits. Furthermore, our reportable
segments have been revised to reflect the proposed sale of a significant majority of our previously
reported Global Professional business segment, which is now reported in discontinued operations
(see Note 5 on page 9). Our non-European professional seed business is not part of the proposed
sale and is now included in the Companys Corporate & Other segment.
Segment performance is evaluated based on several factors, including income from continuing
operations before amortization, product registration and recall costs, and impairment,
restructuring and other charges, which are not generally accepted accounting principles (GAAP)
measures. Management uses this measure of operating profit to gauge segment performance because we
believe this measure is the most indicative of performance trends and the overall earnings
potential of each segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
January 1, |
|
|
January 2, |
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
% Change |
|
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
Global Consumer |
|
$ |
188.8 |
|
|
$ |
214.0 |
|
|
|
-12 |
% |
Scotts LawnService® |
|
|
37.1 |
|
|
|
33.0 |
|
|
|
12 |
% |
Corporate and Other |
|
|
4.5 |
|
|
|
5.6 |
|
|
|
-20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment total |
|
|
230.4 |
|
|
|
252.6 |
|
|
|
-9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Roundup® amortization |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
230.2 |
|
|
$ |
252.4 |
|
|
|
-9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Global Consumer |
|
$ |
(55.1 |
) |
|
$ |
(40.4 |
) |
|
|
-36 |
% |
Scotts LawnService® |
|
|
(4.5 |
) |
|
|
(7.5 |
) |
|
|
40 |
% |
Corporate and Other |
|
|
(30.7 |
) |
|
|
(15.6 |
) |
|
|
-97 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment total |
|
|
(90.3 |
) |
|
|
(63.5 |
) |
|
|
-42 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Roundup® amortization |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
|
|
Other amortization |
|
|
(2.3 |
) |
|
|
(2.7 |
) |
|
|
|
|
Product registration and recall matters |
|
|
(1.7 |
) |
|
|
(2.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
(94.5 |
) |
|
$ |
(69.0 |
) |
|
|
-37 |
% |
|
|
|
|
|
|
|
|
|
|
|
6
THE SCOTTS MIRACLE-GRO COMPANY
Consolidated Balance Sheets
January 1, 2011, January 2, 2010 and September 30, 2010
(in millions)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 1, |
|
|
January 2, |
|
|
September 30, |
|
|
|
2011 |
|
|
2010 |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
78.8 |
|
|
$ |
51.5 |
|
|
$ |
88.1 |
|
Accounts receivable, net |
|
|
213.2 |
|
|
|
214.6 |
|
|
|
350.9 |
|
Inventories, net |
|
|
567.0 |
|
|
|
587.5 |
|
|
|
352.9 |
|
Assets held for sale |
|
|
207.3 |
|
|
|
221.7 |
|
|
|
193.1 |
|
Prepaids and other current assets |
|
|
136.1 |
|
|
|
164.3 |
|
|
|
133.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,202.4 |
|
|
|
1,239.6 |
|
|
|
1,118.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
384.7 |
|
|
|
356.5 |
|
|
|
381.3 |
|
Goodwill, net |
|
|
305.8 |
|
|
|
305.8 |
|
|
|
305.8 |
|
Other intangible assets, net |
|
|
326.7 |
|
|
|
359.8 |
|
|
|
330.2 |
|
Other assets |
|
|
35.6 |
|
|
|
24.3 |
|
|
|
28.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,255.2 |
|
|
$ |
2,286.0 |
|
|
$ |
2,164.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of debt |
|
$ |
168.5 |
|
|
$ |
166.7 |
|
|
$ |
195.0 |
|
Accounts payable |
|
|
208.5 |
|
|
|
279.3 |
|
|
|
141.7 |
|
Liabilities held for sale |
|
|
45.4 |
|
|
|
42.5 |
|
|
|
43.0 |
|
Other current liabilities |
|
|
244.8 |
|
|
|
251.3 |
|
|
|
357.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
667.2 |
|
|
|
739.8 |
|
|
|
736.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
687.4 |
|
|
|
798.8 |
|
|
|
436.7 |
|
Other liabilities |
|
|
222.0 |
|
|
|
208.9 |
|
|
|
226.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,576.6 |
|
|
|
1,747.5 |
|
|
|
1,399.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
678.6 |
|
|
|
538.5 |
|
|
|
764.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
2,255.2 |
|
|
$ |
2,286.0 |
|
|
$ |
2,164.0 |
|
|
|
|
|
|
|
|
|
|
|
7
THE SCOTTS MIRACLE-GRO COMPANY
Reconciliation of Non-GAAP Disclosure Items for the Three
Months Ended January 1, 2011 and January 2, 2010
(in millions, except per share data)
(Unaudited)
Note: See Notes 3 and 4 to the Accompanying Footnotes on Page 9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended January 1, 2011 |
|
|
Three Months Ended January 2, 2010 |
|
|
|
|
|
|
|
Product |
|
|
|
|
|
|
|
|
|
|
Product |
|
|
|
|
|
|
|
|
|
|
Registration and |
|
|
|
|
|
|
|
|
|
|
Registration and |
|
|
|
|
|
|
As Reported |
|
|
Recall Matters |
|
|
Adjusted |
|
|
As Reported |
|
|
Recall Matters |
|
|
Adjusted |
|
Net sales |
|
$ |
230.2 |
|
|
$ |
|
|
|
|
230.2 |
|
|
$ |
252.4 |
|
|
$ |
|
|
|
$ |
252.4 |
|
Cost of sales |
|
|
180.3 |
|
|
|
|
|
|
|
180.3 |
|
|
|
198.7 |
|
|
|
|
|
|
|
198.7 |
|
Cost of sales product registration and recall matters |
|
|
0.8 |
|
|
|
0.8 |
|
|
|
|
|
|
|
0.9 |
|
|
|
0.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
49.1 |
|
|
|
(0.8 |
) |
|
|
49.9 |
|
|
|
52.8 |
|
|
|
(0.9 |
) |
|
|
53.7 |
|
% of sales |
|
|
21.3 |
% |
|
|
|
|
|
|
21.7 |
% |
|
|
20.9 |
% |
|
|
|
|
|
|
21.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
143.2 |
|
|
|
|
|
|
|
143.2 |
|
|
|
126.3 |
|
|
|
|
|
|
|
126.3 |
|
Product registration and recall matters |
|
|
0.9 |
|
|
|
0.9 |
|
|
|
|
|
|
|
1.7 |
|
|
|
1.7 |
|
|
|
|
|
Other income, net |
|
|
(0.5 |
) |
|
|
|
|
|
|
(0.5 |
) |
|
|
(6.2 |
) |
|
|
|
|
|
|
(6.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(94.5 |
) |
|
|
(1.7 |
) |
|
|
(92.8 |
) |
|
|
(69.0 |
) |
|
|
(2.6 |
) |
|
|
(66.4 |
) |
% of sales |
|
|
-41.1 |
% |
|
|
|
|
|
|
-40.3 |
% |
|
|
-27.3 |
% |
|
|
|
|
|
|
-26.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
9.5 |
|
|
|
|
|
|
|
9.5 |
|
|
|
9.7 |
|
|
|
|
|
|
|
9.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes |
|
|
(104.0 |
) |
|
|
(1.7 |
) |
|
|
(102.3 |
) |
|
|
(78.7 |
) |
|
|
(2.6 |
) |
|
|
(76.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit from continuing operations |
|
|
(37.3 |
) |
|
|
(0.6 |
) |
|
|
(36.7 |
) |
|
|
(28.6 |
) |
|
|
(0.9 |
) |
|
|
(27.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(66.7 |
) |
|
$ |
(1.1 |
) |
|
$ |
(65.6 |
) |
|
$ |
(50.1 |
) |
|
$ |
(1.7 |
) |
|
$ |
(48.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share from continuing operations |
|
$ |
(1.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.99 |
) |
|
$ |
(0.76 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.73 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share from continuing operations |
|
$ |
(1.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.99 |
) |
|
$ |
(0.76 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.73 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares used in basic
loss per share calculation |
|
|
66.3 |
|
|
|
66.3 |
|
|
|
66.3 |
|
|
|
65.9 |
|
|
|
65.9 |
|
|
|
65.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares and potential common
shares used in diluted loss
per share calculation |
|
|
66.3 |
|
|
|
66.3 |
|
|
|
66.3 |
|
|
|
65.9 |
|
|
|
65.9 |
|
|
|
65.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(66.7 |
) |
|
|
|
|
|
|
|
|
|
$ |
(50.1 |
) |
|
|
|
|
|
|
|
|
Income tax benefit from continuing operations |
|
|
(37.3 |
) |
|
|
|
|
|
|
|
|
|
|
(28.6 |
) |
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax |
|
|
(1.2 |
) |
|
|
|
|
|
|
|
|
|
|
(7.6 |
) |
|
|
|
|
|
|
|
|
Income tax (benefit) expense from discontinued operations |
|
|
(0.4 |
) |
|
|
|
|
|
|
|
|
|
|
0.8 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
9.5 |
|
|
|
|
|
|
|
|
|
|
|
9.7 |
|
|
|
|
|
|
|
|
|
Interest expense from discontinued operations |
|
|
1.1 |
|
|
|
|
|
|
|
|
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
12.2 |
|
|
|
|
|
|
|
|
|
|
|
12.2 |
|
|
|
|
|
|
|
|
|
Amortization, including marketing fees |
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
|
2.9 |
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Product registration and recall matters, non-cash portion |
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0.4 |
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Smith & Hawken closure process, non-cash portion |
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(1.6 |
) |
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Adjusted EBITDA |
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$ |
(80.3 |
) |
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$ |
(60.9 |
) |
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8
THE SCOTTS MIRACLE-GRO COMPANY
Footnotes to Preceding Financial Statements
Results of Operations
(1) |
|
Basic loss per common share amounts are calculated by dividing loss from continuing
operations, loss from discontinued operations and net loss by average common shares outstanding
during the period. |
(2) |
|
Diluted loss per common share amounts are calculated by dividing loss from continuing
operations, loss from discontinued operations and net loss by the average common shares and
dilutive potential common shares (common stock options, stock appreciation rights, performance shares, restricted stock and restricted stock units) outstanding during the period. Since there is
a loss for the period, dilutive potential common shares were not included in the calculation
because to do so would have been anti-dilutive. |
(3) |
|
Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization
as well as certain other items such as the impact of the cumulative effect of changes in
accounting, costs associated with debt refinancing and other non-recurring, non-cash items
affecting net income. Adjusted EBITDA is not intended to represent cash flow from operations as
defined by generally accepted accounting principles and should not be used as an alternative to
net income or income from continuing operations as an indicator of operating performance or to
cash flow as a measure of liquidity. |
(4) |
|
The Reconciliation of Non-GAAP Disclosure Items includes the following non-GAAP financial
measures: |
|
|
Adjusted loss from continuing operations and adjusted diluted loss per share from continuing
operations These measures exclude charges or credits relating to refinancings, impairments,
restructurings, product registration and recall matters, discontinued operations and other unusual
items such as costs or gains related to discrete projects or transactions that are apart from and
not indicative of the results of the operations of the business. |
|
|
Adjusted EBITDA The presentation of adjusted EBITDA is provided as a convenience to the
Companys lenders because adjusted EBITDA is a component of certain debt covenants. |
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|
The Company reports its financial results in accordance with U.S. generally accepted accounting
principles (GAAP). However, management believes that certain non-GAAP financial measures used in
managing the business may provide users of this financial information additional meaningful
comparisons between current results and results in prior operating periods. The Company believes
that these non-GAAP financial meaures are the most indicative of the companys ongoing earnings capabilities and that disclosure of these non-GAAP financial measures therefore provides useful information to
investors and other users of its financial statements, such as lenders. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Companys reported results prepared in accordance with GAAP. |
(5) |
|
In December 2010, the Company, subject to various terms and conditions, agreed to sell a
significant majority of the assets of its Global Professional business (excluding the Companys
non-European professional seed business, Global Pro) to Israel Chemicals Ltd. (ICL) for $270
million, subject to certain adjustments at closing, in an all-cash transaction. The proposed sale
is expected to close in the Companys second quarter of fiscal 2011, subject to regulatory review
and the satisfaction of certain other conditions. |
Beginning in its fiscal quarter ended January 1, 2011, the Company has reclassified the assets and
liabilities of Global Pro to assets and liabilities held for sale, and included the results of
operations of Global Pro in discontinued operations for all periods presented.
During the first quarter of fiscal 2010, the Company completed the closure of its Smith & Hawken
business. As a result, beginning in the first quarter of fiscal 2010 the Company included the
results of operations of Smith & Hawken in discontinued operations for all periods presented.
9