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, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ___________
Commission file number 333-35942
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
The Scotts Company
Union 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 Union Retirement Savings Plan are being filed herewith:
Audited Financial Statements:
Report of Independent Accountants
Financial Statements:
Statements of Net Assets in Liquidation Available
for Benefits as of December 31, 2002 and 2001
Statements of Changes in Net Assets in Liquidation Available for
Benefits for the Years Ended December 31, 2002 and 2001
Notes to Financial Statements - December 31, 2002 and 2001
[SUPPLEMENTAL SCHEDULE:
SCHEDULE OF ASSETS HELD FOR INVESTMENT
PURPOSES AS OF DECEMBER 31, 2002]
The following exhibits are being filed herewith:
Exhibit No. Description
----------- -----------
23.1 Consent of Independent Public Accountants
99.1 Certification Pursuant to Title 18, United States Code,
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
-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 UNION
RETIREMENT SAVINGS PLAN
Date: June 27, 2003 By: /s/ George A. Murphy
----------------------------------------
Printed Name: George A. Murphy
-----------------------------
Title: Vice President
-------------------------------------
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
PAGE
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets in Liquidation Available for Benefits
as of December 31, 2002 and 2001 2
Statements of Changes in Net Assets in Liquidation Available for
Benefits for the Years Ended December 31, 2002 and 2001 3
Notes to Financial Statements 4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
The Scotts Company Union Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Scotts Company Union Retirement Savings Plan (the "Plan") at December 31,
2002 and 2001, 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 auditing standards generally accepted in the
United States of America, which 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.
As further discussed in Note 1 to the financial statements, The Scotts Company,
the Plan's sponsor, notified participants of its intent to terminate the Plan in
2003. In accordance with accounting principles generally accepted in the United
States of America, the Plan has changed its basis of accounting from the ongoing
basis used in presenting the 2001 financial statements to the liquidation basis
used in presenting the 2002 financial statements.
April 3, 2003
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS IN LIQUIDATION AVAILABLE FOR BENEFITS (SEE NOTE 1)
AS OF DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
2002 2001
Net assets available for benefits:
Investment in master trust $123,532 $163,975
Participant loans 2,918 6,090
Employer contribution receivable - 3,087
Employee contribution receivable - 5,056
-------- --------
Total net assets available for benefits $126,450 $178,208
======== ========
The accompanying notes are an integral part of the financial statements.
-2-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION AVAILABLE FOR
BENEFITS (SEE NOTE 1)
FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
2002 2001
Increases:
Employer contributions $ 24,767 $ 37,559
Participant contributions 43,769 72,012
Interest on participant loans 322 346
--------- ---------
Total increases 68,858 109,917
--------- ---------
Decreases:
Net loss from master trust 20,381 6,029
Benefits paid to participants 100,235 17,419
--------- ---------
Total decreases 120,616 23,448
--------- ---------
Net (decrease) increase in net assets available for benefits (51,758) 86,469
Net assets available for benefits, beginning of year 178,208 91,739
--------- ---------
Net assets available for benefits, end of year $ 126,450 $ 178,208
========= =========
The accompanying notes are an integral part of the financial statements.
-3-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
1. PLAN TERMINATION AND BASIS OF ACCOUNTING
In conjunction with the restructuring that took place in their fiscal
year ended September 30, 2001, The Scotts Company (the "Company"),
sponsor of The Scotts Company Union Retirement Savings Plan (the
"Plan"), made the decision to close the Sierra Horticultural Products
facility in Milpitas, California. During the plan year ended December
31, 2002, the Company decided to terminate the Plan as all participants
were employees at the Milpitas facility. As a result, the Plan adopted
the liquidation basis of accounting whereby assets are valued at fair
market value and liabilities are stated at their settlement amount.
Adoption of the liquidation basis of accounting had no effect on the
valuation of the Plan's assets or liabilities.
The accompanying financial statements of the Plan as of and for the
period ended December 31, 2002 have been prepared using the liquidation
basis of accounting. The accompanying financial statements of the Plan
as of and for the year ended December 31, 2001 have been prepared using
the accrual basis of accounting in conformity with accounting
principles generally accepted in the United States of America.
2. PLAN DESCRIPTION
Effective January 1, 2000, the Plan, a contributory defined
contribution plan, was established by the Company. The following brief
description of 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
Certain regular domestic Union employees of the Company are eligible to
participate in the Plan on the first day of the month immediately
following their date of employment. Certain temporary domestic Union
employees are eligible to participate on the January 1 or July 1
subsequent to completing one year of eligibility service and attaining
age 21.
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. The Company also matches participant
contributions $0.50 on the dollar for the first 2% of participant
contributions.
VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Matching contributions made by the Company vest
immediately. Until August 1, 2002, base contributions made by the
Company vest after three years of service or upon attainment of age 65
prior to terminating employment. On August 1, 2002, active employees
became immediately vested in base contributions.
-4-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
FORFEITURES
The nonvested portions of participant account balances are forfeitable
and used to reduce employer contributions to the Plan. Plan forfeitures
totaled $1,141 for the year ended December 31, 2002 and $3,883 for the
year ended December 31, 2001.
INVESTMENTS
All investments are participant-directed. Participants can change their
investment options on a daily basis. The following investment options
are available to participants:
- FIDELITY PURITAN FUND--assets are invested in high-yielding U.S.
and foreign securities, common and preferred stocks, and bonds of
any maturity.
- FIDELITY CONTRAFUND--assets are primarily invested in U.S. and
foreign common stocks that are believed to be undervalued.
- 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 WORLDWIDE FUND--assets are invested in stocks and other
securities of companies located around the world.
- 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 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.
- 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.
- BARON ASSET FUND--assets are invested in stocks with prices
perceived as low relative to the related companies' profits,
assets, and other value measures.
- 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).
- THE SCOTTS COMPANY SHARES--assets consist entirely of The Scotts
Company common shares and cash equivalents.
-5-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
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.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
Excluding participant loans, investments are stated at quoted market
prices. Participants' loans are valued at cost, which approximates fair
value.
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.
RECLASSIFICATION
Certain balances in the December 31, 2001 statements have been
reclassified to conform with the December 31, 2002 presentation. These
changes had no impact on previously reported results of operations.
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 in liquidation available for benefits.
4. MASTER TRUST
Effective January 1, 2000, a master trust was established to invest
certain assets of the Plan and certain assets of the Company's other
defined contribution plan The Scotts Company Retirement Savings Plan.
Each plan's accounting is maintained separately; the respective plan's
value is a
-6-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
percentage of the master trust. Plan activities, such as contributions
and benefit payments, are recorded in the individual plan's accounting
records. 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, 2002
and 2001 are as follows:
NET
APPRECIATION
(DEPRECIATION)
INTEREST AND IN FAIR VALUE ADMINISTRATION
2002 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 Company Common Shares - 636,447 (1,626) $ 634,821
------------------------------------ ------------------ -----------------
Total $2,652,711 $ (19,319,370) $ (21,629) $(16,688,288)
==================================== ====================================
NET
APPRECIATION
(DEPRECIATION)
INTEREST AND IN FAIR VALUE ADMINISTRATION
2001 DIVIDENDS OF SECURITIES EXPENSES TOTAL
------------------------------------ ------------------ -----------------
Mutual funds $3,201,181 $ (15,290,778) $ (14,345) $(12,103,942)
Common trust fund 858,935 - (3,431) 855,504
The Scotts Company Common Shares 23,687 2,054,105 (1,750) 2,076,042
------------------------------------ ------------------ -----------------
Total $4,083,803 $ (13,236,673) $ (19,526) $ (9,172,396)
------------------------------------ ------------------ -----------------
Total assets held in the master trust at December 31, 2002 and 2001
were as follows:
2002 2001
Cash and cash equivalents $ 517,001 $ 486,922
Investments
Mutual funds, at fair value 94,709,701 112,359,577
Common trust fund, at fair value 21,081,383 15,190,528
The Scotts Company Common Shares, at fair value 7,015,025 6,786,189
------------------ ------------------
Total investments 122,806,109 134,336,294
------------------ ------------------
Receivable from broker 303,773 1,076
Accrued expenses (236,220) -
Total master trust net assets $ 123,390,663 $ 134,824,292
================== ==================
The Scotts Company Union Retirement Savings Plan
interest in master trust net assets 0.100% 0.123%
================== ==================
Accounting policies discussed in Note 3 also apply to the master trust.
-7-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
Cash equivalents include short-term, highly liquid investments with
original term to maturity of 90 days or less. Cost approximates fair
value.
At December 31, 2002 and 2001, the Plan 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 ERISA.
5. INVESTMENTS IN THE SCOTTS COMPANY
At December 31, 2002 and 2001, the master trust had investments in The
Scotts Company common shares, as follows:
2002 2001
----------------------------------- ----------------------------------
FAIR MARKET FAIR MARKET
SHARES VALUE SHARES VALUE
----------------- --------------- --------------- ----------------
143,047 $ 7,015,025 142,567 $ 6,786,189
================= =============== =============== ================
The Company's common shares are valued at quoted market prices, which
were $49.04 per share at December 31, 2002 and $47.60 per share at
December 31, 2001.
6. TAX STATUS
The Plan has not yet obtained a determination letter from the Internal
Revenue Service stating that the Plan is in compliance with the
applicable requirements of the Internal Revenue Code. However, the plan
administrator (the Company) and the Plan's legal counsel believe that
the Plan is currently designed and being operated in compliance with
the applicable requirements of the Internal Revenue Code, and is
therefore not subject to income taxes.
7. RECONCILIATION TO FORM 5500
The following is a reconciliation of net assets available for benefits
per the financial statements to the Form 5500:
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2002 2001
--------- ---------
Net assets available for benefits per
the financial statements $ 126,450 $ 178,208
Amounts allocated to withdrawing
participants - (1)
--------- ---------
Net assets available for benefits
per Form 5500 $ 126,450 $ 178,207
========= =========
-8-
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
--------------------------------------------------------------------------------
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2002 2001
--------- ---------
Benefits paid to participants per
the financial statements $ 100,235 $ 17,419
Amounts allocated to withdrawing
participants at December 31, 2001 (1) 1
Amounts allocated to withdrawing
participants at December 31, 2000 - (29)
--------- ---------
Benefits paid to participants per
the Form 5500 $ 100,234 $ 17,391
========= =========
-9-
THE SCOTTS COMPANY
UNION RETIREMENT SAVINGS PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2002
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
23.1 Consent of Independent Public Accountants
99.1 Certification Pursuant to Title 18, United States Code,
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002