ScottsMiracle-Gro Announces Record Sales for Fiscal 2009; Provides Sales and EPS Guidance for Fiscal 2010
- Press Release
- Source: The Scotts Miracle-Gro Company
- On 6:30 am EST, Thursday November 5, 2009
MARYSVILLE, Ohio, Nov. 5 /PRNewswire-FirstCall/ --
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| SMG | 40.93 | +0.33 |
- Full-year sales grew 5% to record $3.14 billion; fourth quarter sales up 7%
- Sales in the U.S. grew 15% for 2009, in line with consumer purchases at retail
- Adjusted full- year earnings: $2.46 per share; GAAP earnings: $2.32 per share
- Full-year adjusted gross margin rate improved 210 basis points
- Free cash flow of $189 million
The Scotts Miracle-Gro Company (NYSE: SMG - News), the world's leading marketer of branded consumer lawn and garden products, today announced that company-wide sales in fiscal 2009 increased 5 percent to a record $3.14 billion, driven by continued strength in the core U.S. consumer business.
Adjusted net income for fiscal 2009 - which excludes the impact of product registration and recall costs, as well as charges associated with the Smith & Hawken closure process - was $162.6 million, or $2.46 per share, better than the Company's previous guidance. Using generally accepted accounting principles (GAAP), the Company posted net income for the year of $153.3 million, or $2.32 per share, compared with a net loss of $10.9 million, or $0.17 per share, in fiscal 2008.
The full-year results included company-wide sales growth of 7 percent in the fourth quarter, driven by 14 percent growth in the U.S. consumer business. The adjusted seasonal net loss for the quarter was $21.5 million, or $0.33 per share, compared with a net loss of $17.5 million, or $0.27 per share, for the same period last year.
"We started the lawn and garden season with momentum and never lost it, allowing us to deliver strong results for fiscal 2009," said Jim Hagedorn, chairman and chief executive officer. "We're obviously pleased with our results, which validate the resilience of the lawn and garden category and the strength of our brands with our consumers and our retail partners. Consumer purchases of our products at our largest U.S. retailers grew 15 percent for the year, with double-digit improvements in 46 states."
The Company said its initial guidance for fiscal 2010 assumes sales growth of 3 to 5 percent and net income in a range of $3.00 to $3.10 per share. The forecast excludes the impact of product recall and registration issues and includes an expected benefit of $0.15 per share due to the elimination of losses from Smith & Hawken, which will be reported as a discontinued operation beginning in the first fiscal quarter.
FOURTH QUARTER RESULTS
Company-wide sales for the quarter ended September 30 were $583.4 million, an increase of 7 percent from the same period a year ago. Global Consumer sales increased 11 percent to $364.4 million from $328.9 million for the same period a year ago. Excluding the impact of foreign exchange, Global Consumer sales increased 12 percent, with sales in North America increasing 13 percent and sales in Europe growing 6 percent.
"The strength of our core consumer business continued all the way through to the end of the fiscal year," Hagedorn said. "We believe our late season investment in marketing, along with continued support from our retail partners, helped to drive the sale of fall products. Continued growth of our fall season products will be a key to our long-term success."
Scotts LawnService reported sales of $80.5 million, down 10 percent from the comparable quarter in 2008. Global Professional sales declined by 12 percent to $77.7 million. Excluding the impact of changes in foreign currency, sales declined 9 percent. Smith & Hawken reported sales of $61.0 million, compared with $37.6 million last year.
On an adjusted basis, company-wide gross margin increased to 28.8 percent in the quarter, compared with 26 percent a year earlier. Selling, general and administrative expenses (SG&A) were $191.1 million, up from $158.0 million a year earlier. The increase was driven by higher investments in sales and marketing, as well as increased variable compensation tied to the Company's strong results. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were a loss of $9.1 million, compared with a loss of $9.3 million a year ago.
FULL-YEAR RESULTS
Company-wide sales for the year improved 5 percent to a record $3.14 billion. Excluding the impact of foreign exchange, sales increased 9 percent.
Global Consumer sales increased 10 percent to $2.46 billion and improved by 14 percent, when excluding the impact of foreign currency. Scotts LawnService sales decreased 7 percent to $230.8 million. Global Professional sales were $293.1 million, compared with $348.8 million for the same period last year. Excluding the impact of foreign exchange, Global Professional sales declined 6 percent. Smith & Hawken reported $160.8 million in sales, an increase of 1 percent.
Excluding the impact of product recalls, registration matters, and the Smith & Hawken closure process, the company-wide gross margin rate improved 210 basis points to 35.2 percent, driven by pricing, net of commodity cost increases, supply chain improvements and favorable product mix. SG&A increased 11 percent for the year to $799.2 million.
"Our strong improvement in the gross margin rate is an important first step in getting back to the historic levels we were reporting prior to the dramatic volatility in the commodity environment," said Dave Evans, chief financial officer. "Further improving our gross margin rate will remain an area of focus for us over the next several years and is critical in allowing us to make the investments necessary to continue driving category growth."
Operating income for the Company was $267.1 million. When excluding the impact of product registration and recall costs, as well as charges associated with the Smith & Hawken closure, adjusted company-wide operating income was $310.4 million. Operating income on a segment basis is as follows: Global Consumer, $429.3 million; Scotts LawnService, $19.0 million; and Global Professional, $19.4 million.
Adjusted EBITDA increased 10 percent to $350.5 million. Adjusted net income was $162.6 million, or $2.46 per share, compared with $134.1 million, or $2.05 per share a year earlier. Net income on a GAAP basis was $153.3 million, or $2.32 per share, compared with a net loss of $10.9 million, or $0.17 per share, in 2008.
The adjusted results for 2009 exclude $28.6 million of costs associated with product recalls and registration matters and $14.7 million of charges associated with the closure of Smith & Hawken. The adjusted results for 2008 exclude $51.1 million related to costs associated with product recalls and registration issues as well as non-cash impairment charges of $136.8 million.
The Company reported $189 million in free cash flow, which is defined as cash provided by operating activities, as defined by GAAP, less capital expenditures.
The Company will discuss its fourth quarter and full-year results during a Webcast and conference call at 9 a.m. Eastern Time 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 more than $3 billion in worldwide sales and more than 8,000 associates, The Scotts Miracle-Gro Company, through its wholly-owned subsidiary, The Scotts Company LLC, is the world's largest marketer of branded consumer products for lawn and garden care, with products for professional horticulture as well. The Company's brands are the most recognized in the industry. In the U.S., the Company's Scotts®, Miracle-Gro®, 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 Company's brands include Weedol®, Pathclear®, Evergreen®, Levington®, Miracle-Gro®, KB®, Fertiligene® and Substral®. For additional information, visit us at www.scotts.com
Statement under the Private Securities Litigation Act of 1995: Certain of the statements contained in this press release, including, but not limited to, information regarding the future economic performance and financial condition of the Company, the plans and objectives of the Company's management, and the Company's assumptions regarding such performance and plans are forward looking in nature. Actual results could differ materially from the forward-looking information in this release, due to a variety of factors, including, but not limited to:
- Adverse weather conditions could adversely affect the Company's sales and financial results;
- Failure to remain in compliance with the Company's debt covenants could result in the acceleration of the indebtedness, increase the Company's interest expense and harm the Company's ability to obtain additional credit or maintain its existing credit without significant costs, and therefore, could adversely affect the Company's liquidity and financial health;
- Public perceptions regarding the safety of the Company's products, and/or compliance with heightened environmental and other public health regulations, could increase the Company's cost of doing business and/or negatively impact sales;
- Costs associated with the Company's previously announced product recalls and product registration issues and the corresponding governmental investigation, including legal expenses, and potential fines, penalties and/or judgments could adversely affect the Company's financial results;
- The loss of one or more of the Company's top customers could adversely affect the Company's financial results because of the concentration of the Company's sales with a small number of retail customers;
- The Company's international operations make the Company susceptible to fluctuations in currency exchange rates and to the costs of international regulation, which could adversely affect the Company's financial results.
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 Company's publicly filed quarterly, annual and other reports.
THE SCOTTS MIRACLE-GRO COMPANY
Results of Operations for the Three and Twelve Months
Ended September 30, 2009 and September 30, 2008
(in millions, except per share data)
(Unaudited)
Note: See Accompanying Footnotes on Page 12
Three Months Ended
September 30, September 30, %
Footnotes 2009 2008 Change
--------- ---- ---- ------
Net sales $583.4 $544.2 7%
Cost of sales 415.2 403.0
Cost of sales -
impairment,
restructuring and
other charges 3.9 15.1
Cost of sales - product
registration and
recall matters 4.6 4.4
--- ---
Gross profit 159.7 121.7 31%
% of sales 27.4% 22.4%
Operating expenses:
Selling, general and
administrative 191.1 158.0 21%
Product registration
and recall matters 2.0 5.9
Impairment, restructuring
and other charges 8.1 (1.6)
Other income, net 1.2 (0.8)
--- ----
Total operating expenses 202.4 161.5 25%
----- -----
Income (loss) from operations (42.7) (39.8) 7%
% of sales -7.3% -7.3%
Interest expense 10.5 17.6
---- ----
Income (loss) before taxes (53.2) (57.4)
Income tax expense
(benefit) (38.3) (22.7)
----- -----
Net income (loss) $(14.9) $(34.7)
====== ======
Basic income
(loss) per share (1) $(0.23) $(0.54)
====== ======
Diluted income
(loss) per share (2) $(0.23) $(0.54)
====== ======
Common shares used in basic
income (loss) per share
calculation 65.3 64.7
==== ====
Common shares and potential
common shares used in diluted
income (loss) per share
calculation 65.3 64.7
==== ====
Results of operations
excluding impairment,
restructuring and other
charges and product
registration
and recall matters:
Adjusted net income (loss) (4) $(21.5) $(17.5) 23%
====== ======
Adjusted diluted income
(loss) per share (2) (4) $(0.33) $(0.27) 22%
====== ======
Adjusted EBITDA (3) (4) $(9.1) $(9.3) -2%
===== =====
Twelve Months Ended
September 30, September 30, %
Footnotes 2009 2008 Change
--------- ---- ---- ------
Net sales $3,141.5 $2,981.8 5%
Cost of sales 2,034.2 1,999.9
Cost of sales -
impairment,
restructuring and
other charges 6.6 15.1
Cost of sales -
product registration
and recall matters 11.7 27.2
---- ----
Gross profit 1,089.0 939.6 16%
% of sales 34.7% 31.5%
Operating expenses:
Selling, general
and administrative 799.2 717.6 11%
Product registration and
recall matters 16.8 12.7
Impairment, restructuring
and other charges 8.1 121.7
Other income, net (2.2) (10.4)
---- -----
Total operating expenses 821.9 841.6 -2%
----- -----
Income (loss) from operations 267.1 98.0 173%
% of sales 8.5% 3.3%
Interest expense 56.4 82.2
---- ----
Income (loss) before taxes 210.7 15.8
Income tax expense (benefit) 57.4 26.7
---- ---
Net income (loss) $153.3 $(10.9)
====== ======
Basic income (loss)
per share (1) $2.36 $(0.17)
===== ======
Diluted income (loss)
per share (2) $2.32 $(0.17)
===== ======
Common shares used in
basic income (loss) per
share calculation 65.0 64.5
==== ====
Common shares and potential
common shares used in diluted
income (loss) per share
calculation 66.1 64.5
==== ====
Results of operations
excluding impairment,
restructuring and other
charges and product
registration and recall
matters:
Adjusted net income (loss) (4) $162.6 $134.1 21%
====== ======
Adjusted diluted income
(loss) per share (2) (4) $2.46 $2.05 20%
===== =====
Adjusted EBITDA (3) (4) $350.5 $318.4 10%
====== ======
THE SCOTTS MIRACLE-GRO COMPANY
Net Sales by Segment for the Three and Twelve Months
Ended September 30, 2009 and September 30, 2008
(in millions)
(Unaudited)
Three Months Ended
September 30, September 30,
2009 2008 % Change
---- ---- --------
Global Consumer $364.4 $328.9 11%
Global Professional 77.7 88.2 -12%
Scotts LawnService® 80.5 89.7 -10%
Corporate & Other 60.8 37.4 63%
---- ----
Consolidated $583.4 $544.2 7%
====== ======
Twelve Months Ended
September 30, September 30,
2009 2008 % Change
---- ---- --------
Global Consumer $2,457.6 $2,227.8 10%
Global Professional 293.1 348.8 -16%
Scotts LawnService® 230.8 247.4 -7%
Corporate & Other 160.0 157.8 1%
----- -----
Consolidated $3,141.5 $2,981.8 5%
======== ========
THE SCOTTS MIRACLE-GRO COMPANY
Consolidated Balance Sheets
September 30, 2009 and September 30, 2008
(in millions)
(Unaudited)
September 30, September 30,
2009 2008
---- ----
ASSETS
Current assets
Cash and cash equivalents $71.6 $84.7
Accounts receivable, net 401.3 406.4
Inventories, net 458.9 415.9
Prepaids and other current assets 159.1 137.9
----- -----
Total current assets 1,090.9 1,044.9
Property, plant and equipment, net 369.7 344.1
Goodwill, net 375.2 377.7
Other intangible assets, net 364.2 367.2
Other assets 20.1 22.4
---- ----
Total assets $2,220.1 $2,156.3
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of debt $160.4 $150.0
Accounts payable 190.0 207.6
Other current liabilities 412.6 320.5
----- -----
Total current liabilities 763.0 678.1
Long-term debt 649.7 849.5
Other liabilities 222.9 192.0
----- -----
Total liabilities 1,635.6 1,719.6
Shareholders' equity 584.5 436.7
----- -----
Total liabilities and shareholders'
equity $2,220.1 $2,156.3
======== ========
THE SCOTTS MIRACLE-GRO COMPANY
Reconciliation of Non-GAAP Disclosure Items for the Three
Months Ended September 30, 2009 and September 30, 2008
(in millions, except per share data)
(Unaudited)
Note: See Notes 3 and 4 to the Accompanying Footnotes on Page 12
Three Months Ended September 30, 2009
Product Smith &
Registration Hawken®
As and Recall Closure
Reported Matters Process Adjusted
-------- ---------- -------- --------
Net sales $583.4 $- $- $583.4
Cost of sales 415.2 - - 415.2
Cost of sales -
impairment,
restructuring and other
charges 3.9 - 3.9 -
Cost of sales - product
registration and recall
matters 4.6 4.6 - -
--- --- --- ---
Gross profit 159.7 (4.6) (3.9) 168.2
% of sales 27.4% 28.8%
Operating expenses:
Selling, general and
administrative 191.1 - - 191.1
Product registration
and recall matters 2.0 2.0 - -
Impairment,
restructuring and
other charges 8.1 - 8.1 -
Other income, net 1.2 - - 1.2
--- - - ---
Total operating expenses 202.4 2.0 8.1 192.3
----- --- --- -----
Loss from operations (42.7) (6.6) (12.0) (24.1)
% of sales -7.3% -4.1%
Interest expense 10.5 - - 10.5
---- --- --- ----
Loss before taxes (53.2) (6.6) (12.0) (34.6)
Income tax expense
(benefit) (38.3) (2.4) (22.8) (13.1)
----- ---- ----- -----
Net income (loss) $(14.9) $(4.2) $10.8 $(21.5)
====== ===== ===== ======
Basic income (loss) per
share $(0.23) $(0.06) $0.17 $(0.33)
====== ====== ===== ======
Diluted income (loss)
per share $(0.23) $(0.06) $0.17 $(0.33)
------ ------ ----- ------
Common shares used in
basic income (loss)
per share calculation 65.3 65.3 65.3 65.3
==== ==== ==== ====
Common shares and
potential common shares
used in diluted income
(loss) per share
calculation 65.3 65.3 65.3 65.3
==== ==== ==== ====
Net loss $(14.9)
Income tax benefit (38.3)
Interest expense 10.5
Depreciation 12.9
Amortization, including
marketing fees 3.0
Product registration and
recall matters, non-cash
portion 0.3
Smith & Hawken closure
process, non-cash
portion 10.0
Impairment of assets -
Other non-cash
adjustments 7.4
---
Adjusted EBITDA $(9.1)
=====
Three Months Ended September 30, 2008
Product
Registration
As and Recall
Reported Matters Impairment Adjusted
-------- --------- ---------- --------
Net sales $544.2 $1.9 $- $542.3
Cost of sales 403.0 1.7 - 401.3
Cost of sales -
impairment,
restructuring and other
charges 15.1 - 15.1 -
Cost of sales - product
registration and recall
matters 4.4 4.4 - -
--- --- --- ---
Gross profit 121.7 (4.2) (15.1) 141.0
% of sales 22.4% 26.0%
Operating expenses:
Selling, general and
administrative 158.0 - - 158.0
Product registration
and recall matters 5.9 5.9 - -
Impairment,
restructuring and
other charges (1.6) - (1.6) -
Other income, net (0.8) - - (0.8)
---- --- --- ----
Total operating expenses 161.5 5.9 (1.6) 157.2
----- --- ---- -----
Loss from operations (39.8) (10.1) (13.5) (16.2)
% of sales -7.3% -3.0%
Interest expense 17.6 - - 17.6
---- --- --- ----
Loss before taxes (57.4) (10.1) (13.5) (33.8)
Income tax expense
(benefit) (22.7) (17.9) 11.5 (16.3)
----- ----- ---- -----
Net income (loss) $(34.7) $7.8 $(25.0) $(17.5)
====== ==== ====== ======
Basic income (loss) per
share $(0.54) $0.12 $(0.39) $(0.27)
====== ===== ====== ======
Diluted income (loss)
per share $(0.54) $0.12 $(0.39) $(0.27)
------ ----- ------ ------
Common shares used in
basic income (loss)
per share calculation 64.7 64.7 64.7 64.7
==== ==== ==== ====
Common shares and
potential common shares
used in diluted income
(loss) per share
calculation 64.7 64.7 64.7 64.7
==== ==== ==== ====
Net loss $(34.7)
Income tax benefit (22.7)
Interest expense 17.6
Depreciation 13.8
Amortization, including
marketing fees 3.6
Product registration and
recall matters, non-cash
portion (0.4)
Smith & Hawken closure
process, non-cash
portion -
Impairment of assets 13.5
Other non-cash
adjustments -
-
Adjusted EBITDA $(9.3)
=====
THE SCOTTS MIRACLE-GRO COMPANY
Reconciliation of Non-GAAP Disclosure Items for the Twelve
Months Ended September 30, 2009 and September 30, 2008
(in millions, except per share data)
(Unaudited)
Note: See Notes 3 and 4 to the Accompanying Footnotes on Page 12
Twelve Months Ended September 30, 2009
Product Smith &
Registration Hawken®
As and Recall Closure
Reported Matters Process Adjusted
-------- ------------- ----------- --------
Net sales $3,141.5 $(0.3) $- $3,141.8
Cost of sales 2,034.2 (0.2) - 2,034.4
Cost of sales -
impairment, restructuring
and other charges 6.6 - 6.6 -
Cost of sales - product
registration and recall
matters 11.7 11.7 - -
---- ---- --- ---
Gross profit 1,089.0 (11.8) (6.6) 1,107.4
% of sales 34.7% 35.2%
Operating expenses:
Selling, general and
administrative 799.2 - - 799.2
Product registration
and recall matters 16.8 16.8 - -
Impairment,
restructuring and other
charges 8.1 - 8.1 -
Other income, net (2.2) - - (2.2)
---- --- --- ----
Total operating expenses 821.9 16.8 8.1 797.0
----- ---- --- -----
Income (loss) from
operations 267.1 (28.6) (14.7) 310.4
% of sales 8.5% 9.9%
Interest expense 56.4 - - 56.4
---- --- --- ----
Income (loss) before taxes 210.7 (28.6) (14.7) 254.0
Income tax expense
(benefit) 57.4 (10.3) (23.7) 91.4
---- ----- ----- ----
Net income (loss) $153.3 $(18.3) $9.0 $162.6
====== ====== ==== ======
Basic income (loss) per
share $2.36 $(0.28) $0.14 $2.50
===== ====== ===== =====
Diluted income (loss) per
share $2.32 $(0.28) $0.14 $2.46
----- ------ ----- -----
Common shares used in
basic income (loss) per
share calculation 65.0 65.0 65.0 65.0
==== ==== ==== ====
Common shares and
potential common shares
used in diluted income
(loss) per share
calculation 66.1 66.1 66.1 66.1
==== ==== ==== ====
Net income (loss) $153.3
Income tax expense 57.4
Interest expense 56.4
Depreciation 47.9
Amortization, including
marketing fees 12.5
Product registration and
recall matters, non-cash
portion 2.9
Smith & Hawken closure
process, non-cash
portion 12.7
Impairment of assets -
Other non-cash
adjustments 7.4
---
Adjusted EBITDA $350.5
======
Net income (loss) $153.3
Depreciation 47.9
Amortization, including
marketing fees 12.5
Impairment and other 5.1
Stock-based
compensation 14.5
Changes in working
capital and other 31.3
Investment in property,
plant and equipment (72.0)
Investment in
intellectual property (3.4)
----
Free cash flow $189.2
======
Twelve Months Ended September 30, 2008
Product
Registration
As and Recall
Reported Matters Impairment Adjusted
-------- ------------- ---------- --------
Net sales $2,981.8 $(22.3) $- $3,004.1
Cost of sales 1,999.9 (11.1) - 2,011.0
Cost of sales -
impairment, restructuring
and other charges 15.1 - 15.1 -
Cost of sales - product
registration and recall
matters 27.2 27.2 - -
---- ---- --- ---
Gross profit 939.6 (38.4) (15.1) 993.1
% of sales 31.5% 33.1%
Operating expenses:
Selling, general and
administrative 717.6 - - 717.6
Product registration
and recall matters 12.7 12.7 - -
Impairment,
restructuring and other
charges 121.7 - 121.7 -
Other income, net (10.4) - - (10.4)
----- --- --- -----
Total operating expenses 841.6 12.7 121.7 707.2
----- ---- ----- -----
Income (loss) from
operations 98.0 (51.1) (136.8) 285.9
% of sales 3.3% 9.5%
Interest expense 82.2 - - 82.2
---- --- --- ----
Income (loss) before taxes 15.8 (51.1) (136.8) 203.7
Income tax expense
(benefit) 26.7 (17.9) (25.0) 69.6
---- ----- ----- ----
Net income (loss) $(10.9) $(33.2) $(111.8) $134.1
====== ====== ======= ======
Basic income (loss) per
share $(0.17) $(0.52) $(1.73) $2.08
====== ====== ====== =====
Diluted income (loss) per
share $(0.17) $(0.52) $(1.73) $2.05
------ ------ ------ -----
Common shares used in
basic income (loss) per
share calculation 64.5 64.5 64.5 64.5
==== ==== ==== ====
Common shares and potential
common shares used in
diluted income (loss)
per share calculation 64.5 64.5 64.5 65.4
==== ==== ==== ====
Net income (loss) $(10.9)
Income tax expense 26.7
Interest expense 82.2
Depreciation 53.9
Amortization, including
marketing fees 16.4
Product registration and
recall matters, non-cash
portion 13.3
Smith & Hawken closure
process, non-cash
portion -
Impairment of assets 136.8
Other non-cash
adjustments -
---
Adjusted EBITDA $318.4
======
Net income (loss) $(10.9)
Depreciation 53.9
Amortization, including
marketing fees 16.4
Impairment and other 136.8
Stock-based
compensation 12.5
Changes in working
capital and other (7.8)
Investment in property,
plant and equipment (56.1)
Investment in
intellectual property (4.1)
----
Free cash flow $140.7
======
THE SCOTTS MIRACLE-GRO COMPANY
Operating Income by Segment for the Three and Twelve Months
Ended September 30, 2009 and September 30, 2008
(in millions, except per share data)
(Unaudited)
The Company is divided into the following reportable segments: Global
Consumer, Global Professional, Scotts LawnService® and Corporate & Other.
The Corporate & Other segment consists of Smith & Hawken® and corporate
general and administrative expenses. Segment performance is evaluated
based on several factors, including income from 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 Twelve Months Ended
September September % September September %
30, 2009 30, 2008 Change 30, 2009 30, 2008 Change
-------- -------- ------ -------- -------- ------
Global Consumer $0.4 $(4.7) 109% $429.3 $344.5 25%
Global
Professional (7.8) (0.9) -767% 19.4 33.7 -43%
Scotts
LawnService® 21.3 20.8 3% 19.0 11.3 68%
Corporate and
Other (35.0) (27.8) -26% (144.8) (87.2) -66%
----- ----- ------ -----
Segment total (21.1) (12.6) -67% 322.9 302.3 7%
Roundup®
amortization (0.2) (0.2) (0.8) (0.8)
Other
amortization (2.8) (3.4) (11.7) (15.6)
Product
registration
and recall
matters (6.6) (10.1) (28.6) (51.1)
Impairment of
assets - (13.5) - (136.8)
Smith & Hawken®
closure process (12.0) - (14.7) -
----- --- ----- ---
Consolidated $(42.7) $(39.8) $267.1 $98.0
====== ====== ====== =====
THE SCOTTS MIRACLE-GRO COMPANY
Footnotes to Preceding Financial Statements
Results of Operations
----------------------
(1) Basic income (loss) per common share is calculated by dividing net
income by average common shares outstanding during the period.
(2) Diluted income (loss) per share is calculated by dividing net income
(loss) by the average common shares and dilutive potential common
shares (common stock options, stock appreciation rights, restricted
stock and restricted stock units) outstanding during the period.
(3) "Adjusted EBITDA" is defined as net income (loss) before interest,
taxes, depreciation and amortization as well as certain other items
such as the impact of discontinued operations, 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 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 net income (loss) and adjusted diluted income (loss) per
share -These measures exclude charges or credits relating to
refinancings, impairments, restructurings, product registration and
recall matters, 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 Company's lenders because adjusted EBITDA is
a component of certain debt covenants.
Free cash flow - This annual measure is often used by analysts and
creditors as a measure of a company's ability to service debt,
reinvest in the business beyond normal capital expenditures, and
return cash to shareholders. Free cash flow is equivalent to cash
provided by operating activities as defined by generally accepted
accounting principles less capital expenditures.
The Company believes that the disclosure of these non-GAAP financial
measures provides useful information to investors or other users of
the financial statements, such as lenders.
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