Columbus, Ohio
July 26,  2001

The Scotts Company (NYSE: SMG) today reported that diluted earnings per share for the third quarter ended June 30, 2001, were $1.49 including restructuring and other charges. Excluding
the impact of restructuring and other charges, diluted earnings per share were up 8% to $1.91 compared to last year's third quarter diluted earnings per share of $1.77. Cash earnings per diluted share, defined as net earnings before restructuring and other charges plus amortization, for the quarter grew 7% to $2.11.

Restructuring and other charges of $16.0 million include the relocation and closure of certain facilities in the U.S. and the relocation of Scotts' corporate headquarters back to Marysville, Ohio.

Net sales for the third quarter ended June 30, 2001, grew 5% to $610.3 million, compared with last year's third quarter net sales of $581.4 million. Excluding the impact of foreign exchange rates, net sales for the third quarter were up 6%. In accordance with new accounting regulations, financial figures for both years reflect the reclassification of certain promotional expenses as reductions to revenues instead of expenses.

"Scotts' highly effective consumer-pull marketing strategy and its strong brand portfolio have enabled us to continue to grow earnings," said James Hagedorn, President and Chief Executive Officer of Scotts. "While the lawn and garden markets were weak, we improved our overall market share. This strengthened market position, together with the measures we are undertaking to improve return on invested capital, will ensure that we are poised for continued profitable growth."

Before restructuring and other charges, earnings before interest, taxes, depreciation and amortization (EBITDA) increased 10% to $135.1 million, and net earnings were $58.4 million compared with $52.8 million in the prior period.

Third Quarter Results

North American Consumer sales in the third quarter grew 8% to $487.1 million, compared with $449.9 million in the same quarter last year. The largest component of the North American group, Consumer Lawns, benefited from the introduction of the new Turf Builder(R) grass seed product, which increased sales 41% to $137.6 million compared with last year's third quarter. Growing Media sales rose 8% to $149.6, and Consumer Gardens sales rose 10% to $67.7 million. The company's new consumer lawn service business, Scotts Lawn Service, achieved sales growth of 86% in the quarter, reflecting its continued expansion and the success of their direct marketing campaign utilizing the Scotts brand name. Sales in the Ortho Group were $93.9 million compared to $119.5 in the prior year period, reflecting weak category demand and product availability problems.

International Consumer sales for the third quarter were $77.3 million, representing an 11% decline over last year's third quarter of $86.6 million. Excluding the effect of foreign exchange rates, sales decreased by 5%. The decline in International Consumer sales was due primarily to the continued poor weather in the U.K. and Continental Europe.

Global Professional sales for the quarter were $45.9 million, representing a 2% increase over last year's third quarter of $44.9 million. Excluding foreign currency impact, sales increased 6%. Sales in this segment were propelled by new product introductions, innovation and increased growing media sales under the Shamrock(R) brand name.

For the third quarter, the Company recognized a net $16.1 million in Roundup(R) commission compared with $14.9 million in the same quarter of fiscal year 2000. The increase in Roundup commission reflects the success of improved patented formulations, despite an increase in contribution expenses.

Nine-Month Results

For the nine months ended June 30, 2001, the company reported net sales of $1.5 billion, representing a 3% increase in sales during the same period last year. Excluding the impact of foreign exchange rates, net sales for the first nine months were up 4%. EBITDA before restructuring and other charges was $270.9 million compared with $258.6 million in the first nine months of fiscal year 2000. Net earnings before restructuring and other charges increased 8% to $91.9 million compared to $85.4 million in the prior year period. On a diluted per share basis, earnings were $2.61, or a record $3.04 before restructuring and other charges, which is a 6% increase over the $2.87 in the same period last year. Cash earnings per share before restructuring and other charges for the first nine months grew 4% to $3.65 as compared to the same period last year.

North American Consumer sales in the first nine months of fiscal 2001 grew 4% to $1.135 billion compared with $1.090 billion in the same period last year.

International Consumer sales for the nine-month period declined 5% to $225.6 million compared with the prior year period. Excluding the effect of foreign exchange rates, International Consumer sales increased 4%.

Global Professional sales in the first nine months of fiscal year 2001 increased 3% to $138.6 million compared with the prior year comparable period sales of $134.7 million. Excluding the effect of foreign exchange rates, sales from this segment increased 8% on a year-to-date basis.

Gross margins for the nine-month period decreased to 39.0% compared to 39.8% in the prior year period, due to unfavorable product mixes in the Ortho, Gardens and Global Professional businesses, and increased distribution costs in the Gardens and International Consumer businesses.

For the nine-month period, the Company recognized a net $23.4 million in Roundup commission compared with $18.4 million in the same period of fiscal year 2000.

The company will host a live webcast today at 10:00 a.m. EDT at http://www.smgnyse.com to discuss 2001 third quarter results and the 2002 outlook.

For more information on The Scotts Company please visit our web site at http://www.scottscompany.com. 

About Scotts

The Scotts Company is the world's leading supplier of consumer products for lawn and garden care, 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(R), Miracle-Gro(R) and Ortho(R) brands are market leading in their categories, as is the consumer Roundup(R) 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(R) and Pathclear(R), the top-selling consumer herbicides; Evergreen(R), the leading lawn fertilizer line; the Levington(R) line of lawn and garden products; and Miracle-Gro(R), the leading plant fertilizer. The company's leading brands in continental Europe include KB(R) and Fertiligene(R) in France and Substral(R), NexaLotte(R) and Celaflor(R) in Germany.

Company news release
N3678