The Scotts Company (NYSE: SMG), the world's largest marketer of branded consumer lawn and garden products, said today it expects net sales to grow 6 to 7 percent in fiscal 2004 leading to adjusted net income growth, which excludes restructuring and other charges, of at least 10 percent. During its Annual Analyst and Investor Day presentation, company executives outlined various initiatives in both North America and Europe that are expected to drive growth in 2004 and beyond.

The Company said it expects free cash flow - which it defines as operating cash flow less capital expenditures, cash used for acquisitions and the impact of stock option exercises - in the range $90-110 million. Scotts plans to continue using cash to accelerate the repayment of debt. Return on invested capital (ROIC), which has improved by nearly 200 basis points since 2001, is also expected to improve slightly in fiscal 2004.

"We expect Scotts to continue benefiting from our market-leading position in the increasingly strong lawn and garden category," said Jim Hagedorn, chairman and chief executive officer. "The demographics of gardening remain outstanding and our relationships with our retail partners have never been stronger. I believe the combination of these factors will allow Scotts to continue driving the category to new heights while enhancing shareholder value.

"However, we are not simply looking at 'growth for growth sake.' Margin expansion, free cash flow and improving ROIC will be driving factors in our decisions."

The Company said the incremental pre-tax impact of its decision to expense stock options will be about $5 million in fiscal 2004 - in line with the impact in 2003. That decision, coupled with increased legal expenses as well as increased advertising and in-store investments, is expected to offset anticipated interest savings of about $15 million from the Company's recently completed refinancing efforts.

Scotts expects its core consumer business in North America to grow sales by approximately 6 to 8 percent and continue to increase its investment in advertising at a slightly higher rate than sales growth. Several new product introductions, including Organic Choice(TM) and Nursery Select(TM), which will be offered exclusively to independent retailers in 2004, are expected to be important contributors to growth.

Gross margins are expected to improve 110 to 120 basis points in 2004 due to stronger product mix and supply chain savings in both the United States and Europe.

International sales, which includes both the consumer and professional businesses, are expected to grow 2 to 3 percent during the year as the Company's major European operations continue to improve. Increased advertising - especially in the UK and France - will be key to growth in 2004.

Scotts said it also continues to successfully implement its International Growth and Integration Plan. Fiscal 2004 marks the second of a multi-year effort that is expected to result in sharply higher operating profits and ROIC.

Sales growth of about 16-18 percent is expected in fiscal 2004 from Scotts LawnService. The Company plans to make fewer acquisitions in this business during the year as it focuses on creating a customer service model that enhances long-term profitability by further improving its industry leading customer retention levels.

"The fundamental strength of our business entering fiscal 2004 has never been better," Hagedorn said. "We look forward to another record year for Scotts as we continue to leverage our industry-leading brands to drive growth for both Scotts and the overall category."

The Scotts Company is the world's largest marketer of branded consumer lawn and garden products, with a full range of products for professional horticulture as well. The company owns the industry's most recognized brands. In the U.S., the company's 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.K., Scotts' brands include Weedol® and Pathclear®, the top-selling consumer herbicides; Evergreen®, the leading lawn fertilizer line; the Levington® line of lawn and garden products; and Miracle-Gro®.