UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________
Commission file number 33-47073
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
The Scotts Company
Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
The Scotts Company
14111 Scottslawn Road
Marysville, Ohio 43041
REQUIRED INFORMATION
The following financial statements and supplemental schedule for The
Scotts Company Retirement Savings Plan are being filed herewith:
Audited Financial Statements:
Report of Independent Registered Public Accounting Firm
Financial Statements:
Statements of Net Assets Available
for Benefits as of December 31, 2003 and 2002
Statements of Changes in Net Assets Available
for Benefits for the Years Ended December 31, 2003 and
2002
Notes to Financial Statements - December 31, 2003 and 2002
The following exhibits are being filed herewith:
Exhibit No. Description
----------- -----------
1 Consent of Independent Registered Public Accounting Firm
-2-
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
Date: June 25, 2004 By: /s/ George A. Murphy
---------------------------------------
Printed Name: George A. Murphy
-----------------------------
Title: Vice President
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THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
PAGE
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Report of Independent Registered Public Accounting Firm 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2003 and 2002 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2003 and 2002 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Schedule H, Line 4i--Schedule of Assets (Held at End of Year) 10
Note: Other Supplemental schedules required by Section 252.103-10 of the
Department of Labor's Rules and Regulations for Reporting and
Disclosure under ERISA have been omitted because they are not
applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
The Scotts Company Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Scotts Company Retirement Savings Plan (the "Plan") at December 31, 2003
and 2002, and the changes in net assets available for benefits for the years
then ended in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States) and auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Assets (Held
at End of Year) is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan's management. This
supplemental schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
June 18, 2004
1
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2003 2002
NETS ASSETS AVAILABLE FOR BENEFITS
Investment in master trust $ 160,253,715 $ 123,269,016
Participant loans 3,619,444 2,945,054
Employer contribution receivable - 748,013
Employee contribution receivable - 541,524
------------- -------------
Total net assets available for benefits $ 163,873,159 $ 127,503,607
============= =============
The accompanying notes are an integral part of the financial statements.
2
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2003 2002
INCREASES
Employer contributions $ 8,767,066 $ 8,943,178
Participant contributions 9,502,254 9,379,811
Net gain from master trust 28,002,305 -
Interest on participant loans 197,669 236,633
------------- -------------
Total increases 46,469,294 18,559,622
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DECREASES
Net loss from master trust - 16,667,907
Benefits paid to participants 10,072,477 13,853,291
Other 27,265 13,515
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Total decreases 10,099,742 30,534,713
------------- -------------
Net increase (decrease) in net assets
available for benefits 36,369,552 (11,975,091)
------------- -------------
Net assets available for benefits,
beginning of year 127,503,607 139,478,698
------------- -------------
Net assets available for benefits,
end of year $ 163,873,159 $ 127,503,607
============= =============
The accompanying notes are an integral part of the financial statements.
3
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2003 AND 2002
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1. PLAN DESCRIPTION
The plan is a contributory defined contribution plan sponsored by The
Scotts Company (the "Company"). The following brief description of The
Scotts Company Retirement Savings Plan (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of Plan provisions, such as eligibility, vesting,
allocation and funding.
ELIGIBILITY
Regular domestic employees of the Company are eligible to participate in
the Plan on the first day of the month immediately following their date of
employment. Regular employees of E.G. Systems, Inc. doing business as
Scotts Lawn Service, a subsidiary of the Company, are eligible to receive
base retirement contributions on the first day of the month after
completing one year of eligibility service and are eligible to make
contributions and receive matching contributions on the first day of the
month after completing 60 days of service. In 2002, temporary employees
were eligible to participate on the January 1 or July 1 subsequent to
completing one year of eligibility service and attaining age 21. Effective
January 1, 2003, temporary employees are not eligible to participate in the
Plan.
EMPLOYEE CONTRIBUTIONS
The Plan provides for a participant to make pre-tax or after-tax
contributions up to 75% of eligible wages, not to exceed the annual
Internal Revenue Service ("IRS") maximum deferral amount.
EMPLOYER CONTRIBUTIONS
The Plan provides a base retirement contribution for all eligible
employees. Generally, eligible employees receive an allocation equal to 2%
of monthly compensation. This percentage increases to 4% when employees'
year-to-date compensation exceeds 50% of the social security taxable wage
base. The Company also matches participant pre-tax contributions dollar for
dollar for the first 3% of pay, and matches $0.50 on the dollar for the
next 2% of participant pre-tax contributions. Additionally, the Company
remitted transitional contributions for the years 1998 to 2002 to certain
participants who were also participants of certain retirement plans
previously sponsored by The Scotts Company or its subsidiaries.
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Matching and transition contributions made by the Company
vest immediately. However, base contributions made by the Company vest
after three years of service, or immediately upon death or disability.
FORFEITURES
The nonvested portions of participant account balances are forfeitable and
used to reduce employer contributions to the Plan. Plan forfeitures totaled
$147,011 for the year ended December 31, 2003 and $98,148 for the year
ended December 31, 2002.
4
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
INVESTMENTS
All investments are participant-directed. Participants can change their
investment options on a daily basis. The following investment options are
available to participants:
- DODGE AND COX STOCK FUND - assets are invested in a broadly
diversified portfolio of common stocks. At least 80% of this fund's
total assets invest in common stock.
- EUROPACIFIC GROWTH FUND - CLASS A - assets are invested primarily in
companies with most of their business outside of the U.S. At least 80%
of the fund's total assets will be invested in securities of companies
from Europe or the Pacific Basin.
- FIDELITY BLUE CHIP FUND--assets are primarily invested in common stock
of established and/or rapidly growing companies. Approximately 65% of
this fund's total assets invest in common stock of blue chip
companies.
- FIDELITY CONTRAFUND--assets are primarily invested in U.S. and foreign
common stocks that are believed to be undervalued.
- FIDELITY FREEDOM INCOME FUND--assets are primarily invested in bond
and money market funds. A smaller percentage of assets are invested in
equity mutual funds.
- FIDELITY FREEDOM 2000 FUND--assets are invested in a combination of
equity, fixed income and money market mutual funds of Fidelity
Investments. Assets are allocated among these funds according to an
asset allocation strategy which becomes more conservative over time.
- FIDELITY FREEDOM 2010 FUND--assets are invested in a combination of
equity, fixed income and money market mutual funds of Fidelity
Investments. The asset mix becomes more conservative as year 2010
approaches.
- FIDELITY FREEDOM 2020 FUND--assets are invested in a combination of
equity, fixed income and money market mutual funds of Fidelity
Investments. The asset mix becomes more conservative as year 2020
approaches.
- FIDELITY FREEDOM 2030 FUND--assets are invested in a combination of
equity, fixed income and money market mutual funds. The asset mix
becomes more conservative as year 2030 approaches.
- FIDELITY FREEDOM 2040 FUND - assets are invested primarily in mutual
funds of Fidelity Investments. The mix of funds becomes more
conservative as year 2040 approaches.
- FIDELITY LOW PRICE STOCK FUND - assets are invested primarily in small
and medium sized companies. At least 80% of this fund's total assets
invest in low-priced stock (at or below $35 per share).
- FIDELITY MANAGED INCOME PORTFOLIO--assets are invested in investment
contracts of major insurance companies and other approved financial
institutions, and in other fixed income securities. A small percentage
of assets are invested in money market funds to provide daily
liquidity.
- FIDELITY PURITAN FUND--assets are invested in high-yielding U.S. and
foreign securities, common and preferred stocks, and bonds of any
maturity.
- MANAGERS SPECIAL EQUITY FUND - assets are invested primarily in common
and preferred stocks of small and medium sized US Companies that are
believed to have superior growth potential.
- PIMCO TOTAL RETURN FUND--assets are invested in various types of
bonds, including U.S. government, corporate, mortgage, and foreign
bonds with an average portfolio duration of three to six years
(approximately equal to an average maturity of five to twelve years).
- SPARTAN U.S. EQUITY INDEX FUND--assets are invested in stocks and in
approximately the same proportions as the Standard & Poor's 500 Stock
Index.
- THE SCOTTS COMPANY COMMON SHARES--assets consist entirely of The
Scotts Company common shares and cash equivalents.
5
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
BENEFIT PAYMENTS
Participants are eligible to receive benefit payments upon termination,
retirement, death or disability equal to the vested balance of the
participant's account as of the business day the trustee processes the
distribution. The Plan also provides for hardship and in-service
withdrawals for active employees under certain circumstances.
PARTICIPANT LOANS
Loans are available to participants from their individual accounts subject
to the terms of the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
INVESTMENTS
Excluding participant loans, investments are stated at quoted market
prices. Participants' loans are valued at cost, which approximates fair
value.
The Plan presents in the statement of changes in net assets available for
benefits its proportionate share of the net gain or loss of master trust
investments (Note 3). The net gain or loss includes the net appreciation in
the fair value of investments, which consists of the realized gains or
losses and the unrealized appreciation (depreciation) on those investments.
Gains and losses on sales of investments within the master trust are based
on the average cost method.
ADMINISTRATIVE EXPENSES
The Company pays for all administrative fees except those that are
participant specific, such as loan establishment and maintenance fees.
PAYMENTS OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the Plan to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial statements, changes in
net assets available for benefits during the reporting period and, when
applicable, disclosures of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options, which are subject to
various risks, such as interest rate, market, and credit risks. Due to the
level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect
participant account balances and the amounts reported in the statement of
net assets available for benefits.
6
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
3. MASTER TRUST
Effective January 1, 2000, a master trust was established to commingle
certain assets of the Plan and certain assets of the Company's other
defined contribution plan, The Scotts Company Union Retirement Savings Plan
("Union Plan"). Each plan's accounting is maintained separately. The Plan's
proportionate share of master trust investments and gains and losses is
displayed on the accompanying financial statements. Plan activities, such
as contributions and benefit payments, are recorded in the individual
plan's accounting records.
The Union Plan has been terminated. The distribution of the Union Plan's
assets was completed during 2003. Therefore, The Scotts Company Retirement
Savings Plan has a 100% interest in the master trust assets at December 31,
2003.
Net earnings of the master trust are allocated between the plans based on a
weighted average of assets related to each plan. Total net earnings for the
master trust for the year ended December 31, 2003 and 2002, are as follows:
2003
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NET APPRECIATION
INTEREST AND IN FAIR VALUE ADMINISTRATION
DIVIDENDS OF SECURITIES EXPENSES TOTAL
Mutual funds $ 2,189,222 $ 23,614,605 $ (16,698) $ 25,787,129
Common trust fund 872,067 - (7,655) 864,412
The Scotts Stock
Fund - 1,364,621 (2,617) 1,362,004
------------ ------------ ----------- ------------
Total $ 3,061,289 $ 24,979,226 $ (26,970) $ 28,013,545
============ ============ =========== ============
2002
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NET APPRECIATION
(DEPRECIATION)
INTEREST AND IN FAIR VALUE ADMINISTRATION
DIVIDENDS OF SECURITIES EXPENSES TOTAL
Mutual funds $ 1,757,539 $(19,955,817) $ (15,319) $(18,213,597)
Common trust fund 895,172 - (4,684) 890,488
The Scotts Stock
Fund - 636,447 (1,626) 634,821
------------ ------------ ----------- ------------
Total $ 2,652,711 $(19,319,370) $ (21,629) $(16,688,288)
============ ============ =========== ============
7
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
Total assets held in the master trust at December 31, 2003 and 2002, were
as follows:
2003 2002
CASH AND CASH EQUIVALENTS $ - $ 517,001
INVESTMENTS
Mutual funds, at fair value 130,949,241 94,709,701
Common trust fund, at fair value 20,299,693 21,081,383
The Scotts Stock Fund, at fair value 9,004,781 7,015,025
------------- -------------
Total investments 160,253,715 122,806,109
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Receivable from broker - 303,773
Payable to broker - (236,220)
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Total master trust net assets $ 160,253,715 $ 123,390,663
============= =============
The Scotts Company Retirement Savings Plan interest
in master trust net assets 100.000% 99.900%
============= =============
Accounting policies discussed in Note 2 also apply to the master trust.
Cash equivalents include short-term investments with original term to
maturity of 90 days or less. Cost approximates fair value.
At December 31, 2003 and 2002, the master trust held certain investments in
mutual funds managed by the Trustee. Purchases and sales of these mutual
funds are open market transactions at fair value. Consequently, such
transactions are permitted under the provisions of the Plan and exempt from
prohibition of party-in-interest transactions under the IRS Code and the
Employee Retirement Income Security Act of 1974 ("ERISA").
4. INVESTMENTS IN THE SCOTTS COMPANY
At December 31, 2003 and 2002, the master trust had investments in The
Scotts Stock Fund, which invests in the common stock of the Company, as
follows:
2003 2002
---------------------------- ----------------------------
Fair Market Fair Market
Units Value Units Value
523,230 $ 9,004,781 522,078 $ 7,015,025
======= ============ ======= ============
8
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
5. TAX STATUS
The Plan obtained a determination letter dated September 24, 2003, in which
the Internal Revenue Service stated that the Plan, as amended through
February 4, 2002, was in compliance with the applicable requirements of the
Internal Revenue Code ("IRC"). The plan administrator, the Company, and the
Plan's legal counsel believe that the Plan is designed and has been
operated in compliance with the applicable requirements of the IRC.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan or its contributions subject to
the provisions of ERISA. In the event the Plan is terminated, participants
will become fully vested in their accounts.
7. RECONCILIATION TO FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
2003 2002
Net assets available for benefits per the
financial statements $ 163,873,159 $ 127,503,607
Amounts allocated to withdrawing participants (224,485) (128,732)
------------- -------------
Net assets available for benefits per Form 5500 $ 163,648,674 $ 127,374,875
============= =============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
2003 2002
Benefits paid to participants per the
financial statements $ 10,072,477 $ 13,853,291
Amounts allocated to withdrawing participants
at December 31, 2003 224,485 -
Amounts allocated to withdrawing participants
at December 31, 2002 (128,732) 128,732
Amounts allocated to withdrawing participants
at December 31, 2001 - (649)
------------- -------------
Benefits paid to participants per the Form 5500 $ 10,168,230 $ 13,981,374
============= =============
9
THE SCOTTS COMPANY RETIREMENT SAVINGS PLAN
SCHEDULE H, LINE 4i--SCHEDULE OF ASSETS (HELD AT END OF YEAR)
YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
SECURITY SHARES/PAR VALUE HISTORICAL CURRENT
DESCRIPTION COST VALUE
*Participant Loan $3,619,444 principal amount, interest $ - $ 3,619,444
rates ranging from 5.0% to 10.5%
due through January 12, 2009
*Party-in-interest
10
THE SCOTTS COMPANY
RETIREMENT SAVINGS PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2003
INDEX TO EXHIBITS
Exhibit No. Description
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1 Consent of Independent Registered Public Accounting Firm