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Exhibit 99(b)
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THE SCOTTS COMPANY NEWS
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Contacts:
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William Jenks Rebecca Bruening
Broadgate Consultants, Inc. The Scotts Company
212/232-2222 937/644-7290
SCOTTS CONSOLIDATES UK OPERATIONS AND EXITS NON-CORE BUSINESS
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Reduction in Annual Operating Costs by Approximately $10-12 Million
1998 Special Charges of Approximately 33-39 Cents Per Diluted Share
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MARYSVILLE, OHIO - October 1, 1998 -- The Scotts Company (NYSE: SMG) announced
today that it will consolidate its two U.K. operations into a single lower-cost
business, discontinue most of its U.S. composting operations, and divest its
AgrEvo pesticides business.
The Company expects that these actions will make a positive contribution
to annualized pre-tax operating earnings of approximately $10-12 million in the
form of lower production, sales and administrative costs in its U.K. operations
and the elimination of contract losses in its composting operations. The Company
expects that approximately two-thirds of these savings will take effect in
fiscal 1999 and the balance in fiscal 2000. For the fiscal year ended September
30, 1998, the Company will incur restructuring and other charges of
approximately $17-20 million pre-tax, or 33-39 cents per diluted share, related
to its consolidation and exit plans.
"Based on our strong top-line growth, we remain committed, excluding the
impact of special charges, to our goal of 15% EPS growth for both the 1998 and
1999 fiscal years. Our goal should be met despite having had to incur
significant one-time costs for the start-up of new projects in our manufacturing
operations, addressing year 2000 requirements, and implementing a
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major upgrade of our information systems to accommodate our expanding global
business," said Charles M. Berger, Scotts' Chairman, President and Chief
Executive Officer. The Company expects to distribute an earnings release for
1998 during the latter part of October.
The U.K. charges reflect the costs of closing duplicate facilities,
discontinuing overlapping product lines and providing for severance expenses
related to headcount reductions in sales, administrative and manufacturing
functions. As a result of the consolidation, Scotts will cut headcount in its
existing international operations by 81 people, eliminate one of its two U.K.
manufacturing operations and reduce the number of SKU's it produces in the U.K.
by over 25%.
Scotts plans to close nine composting sites in the U.S. that collect yard
and compost waste on behalf of municipalities. The economics of composting have
deteriorated as municipalities have found lower-cost alternatives to disposing
of their yard waste, resulting in substantial drops in the fees that
municipalities had been providing to Scotts in return for removing yard waste.
In addition, Scotts' costs to process and transport composted waste have
exceeded original industry expectations. Scotts plans to close six facilities in
1999 and three in year 2000, as their contracts expire. These restructuring
charges reflect the write-off of assets, estimated losses under contractual
commitments, and certain closing costs.
Scotts has decided to divest its AgrEvo operations because AgrEvo's
non-selective herbicide brand, Finale(TM), overlaps with the consumer Roundup(R)
line of products. Scotts completed an agreement with Monsanto Company for
exclusive international marketing and agency rights to the consumer Roundup(R)
herbicide products. The charges to Scotts' fourth quarter operations reflect an
expected loss on the sale of the AgrEvo operations.
The Scotts Company is a leading supplier of consumer products for the
lawn and garden care, professional turf care and professional horticulture
businesses in both the U.S. and U.K., and is expanding operations in other
international businesses. The Company owns what are by far the industry's most
recognized brands. In the U.S. lawn care business, consumer awareness of the
Company's Scotts(R) family of brands outscore the nearest competitor by about
6-to-8 times, as does awareness of the Company's Miracle-Gro(R) family of brands
in the U.S. garden care business. In the U.K., the Company's 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.
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Statement under the Private Securities Litigation Act of 1995: Forward-looking
statements represent challenging goals for the Company, and the achievement
thereof is subject to a variety of risks and assumptions. Certain
forward-looking statements contained in this press release, include, but are 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. Actual
results may differ materially from the forward-looking statements in this
release, due to a variety of factors, including, but not limited to:
- - The effects of weather conditions on sales of the Company's products,
especially during the spring selling season;
- - The success of the Company's advertising and promotional programs;
- - The Company's ability to maintain favorable profit margins on its products
and to produce its products on a timely basis;
- - The possibility of new competitors entering into the pesticides business
and or the Company's existing lines of business;
- - Inherent risks of international development including currency exchange
rates, economic conditions, regulatory and cultural differences:
- - Changes in economic conditions in the U.S. and Europe and the impact of
changes in interest rates;
- - Ability to successfully integrate the operations of acquired companies;
- - Ability to complete various transactions that have been announced and are
currently under negotiation;
- - Environmental issues and consumer perceptions; and
- - Ability to execute the restructuring plans set forth in this release.
Additional detailed information concerning a number of the important factors
that could cause results to differ materially from the forward-looking
information contained in this release is readily available in the Company's
publicly-filed quarterly and annual reports.
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