<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
<TABLE>
<S> <C>
Date of Report (Date of earliest event reported): March 31, 2000 (October 7, 1998)
--------------------------------
</TABLE>
THE SCOTTS COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
OHIO 1-11593 31-1414921
---------------------------- ---------------- -------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
41 South High Street, Suite 3500, Columbus, Ohio 43215
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 719-5500
--------------
NOT APPLICABLE
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
Index to Exhibits is on Page 26.
<PAGE> 2
This Current Report on Form 8-K/A of The Scotts Company (the
"Registrant") furnishes the financial statements and the pro forma financial
information which were omitted from the Current Report on Form 8-K of the
Registrant filed with the Securities and Exchange Commission (the "Commission")
on October 22, 1998 (the "Registrant's October 1998 Form 8-K") in accordance
with Items 7(a)(4) and 7(b)(2) of Form 8-K which allow the Registrant a 60-day
extension of the time for the filing of such financial statements and pro forma
financial information. The financial statements and pro forma financial
information relate to the purchase by Scotts France Holdings SARL and Scotts
France SARL, wholly-owned indirect subsidiaries of the Registrant, of all of the
outstanding shares of Rhone-Poulenc Jardin SAS from Rhone-Poulenc Agro ("RPA");
Scotts Celaflor GmbH & Co. KG, a wholly-owned indirect subsidiary of the
Registrant, of all of the outstanding shares of Celaflor GmbH from Rhone-Poulenc
Agro Europe GmbH ("RPAEG"); "David" Sechsundfunfzigste Beteiligungs und
Verwaltungsgesellschaft GmbH (now known as Scotts Holding GmbH), a wholly-owned
indirect subsidiary of the Registrant, of all of the outstanding shares of
Celaflor Handelsgesellschaft m.b.H.; and Scotts Belgium 2 B.V.B.A., a
wholly-owned indirect subsidiary of the Registrant, from Rhone-Poulenc Agro S.A.
("RPA S.A.") of the home and garden business of RPA S.A. in Belgium and the
assets related thereto (collectively, the "RPJ Acquisition"), as described in
Item 2 of the Registrant's October 1998 Form 8-K.
Item 7. Financial Statements and Exhibits.
------------------------------------------------
(a) Financial Statements of Businesses Acquired:
--------------------------------------------
Please see Index to Financial Statements and Pro Forma
Financial Information at page 5.
(b) Pro Forma Financial Information:
--------------------------------
Please see Index to Financial Statements and Pro Forma
Financial Information at page 5.
(c) Exhibits:
---------
The following documents were filed as exhibits to the
Registrant's October 1998 Form 8-K:
Exhibit No. Description
----------- -----------
2 Master Contract, dated September 30, 1998, by and between
Rhone-Poulenc Agro; The Scotts Company; Scotts Celaflor
GmbH & Co. K.G.; "David" Sechsundfunfzigste Beteiligungs
und Verwaltungsgesellschaft GmbH; Rhone-Poulenc Agro
Europe GmbH; Scotts France Holdings S.A.R.L.; Scotts
France S.A.R.L.; and Scotts Belgium 2 B.V.B.A. (the
"Master Contract")
23 Consent of Independent Accountants
99 Press Release issued October 7, 1998
Schedules to the Master Contract were not filed. A list of the omitted
Schedules was attached to the Master Contract briefly identifying their
content. The Registrant agreed, and hereby agrees, to furnish
supplementally a copy of any omitted Schedule to the Securities and
Exchange Commission upon its request.
2
<PAGE> 3
The following document is being filed as an additional exhibit to this
Current Report on Form 8-K/A:
Exhibit No. Description
----------- -----------
23 Consent of Independent Accountants
3
<PAGE> 4
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE SCOTTS COMPANY
Date: June 9, 2000 By: /s/ Christopher L. Nagel
-------------------------------------
Christopher L. Nagel
Vice President and Principal
Accounting Officer
4
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS
-----------------------------
Page(s)
-------
Item 7(a) Financial Statements of Businesses Acquired:
------------------------------------------------------
Report of Independent Accountants 6
Rhone-Poulenc Jardin Combined Balance Sheets 7
as of December 31, 1997, September 30,
1998 and September 30, 1997 (in
thousands of French Francs)
Rhone-Poulenc Jardin Combined Statements of 8
of Operations for the year ended
December 31, 1997 and the nine months
ended September 30, 1998 and September 30,
1997 (in thousands of French Francs)
Rhone-Poulenc Jardin Combined Statements of 9
Cash Flows for the year ended December
31, 1997 and the nine months ended
September 30, 1998 and September 30,
1997 (in thousands of French Francs)
Rhone-Poulenc Jardin Combined Statements of 10
Divisional Equity for the year ended
December 31, 1997 and the nine months
ended September 30, 1998 and September 30,
1997 (in thousands of French Francs)
Rhone-Poulenc Jardin Notes to Combined 11-20
Financial Statements
Item 7(b) Pro Forma Financial Information:
------------------------------------------
The Scotts Company Unaudited Pro Forma 21
Combined Financial Information
The Scotts Company Unaudited Pro Forma 22
Combined Statement of Operations for
the twelve months ended September 30,
1998 (in millions)
The Scotts Company Notes to the Unaudited 23
Pro Forma Combined Statement of
Operations (in millions)
The Scotts Company Unaudited Pro Forma 24
Combined Balance Sheet as of September
30, 1998 (in millions)
The Scotts Company Notes to the Unaudited 25
Pro Forma Combined Balance Sheet
(in millions)
5
<PAGE> 6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Rhone-Poulenc Jardin
We have audited the accompanying combined balance sheet of Rhone-Poulenc Jardin,
a business line of Rhone-Poulenc Agro, as of December 31, 1997, and the related
combined statements of operations, divisional equity, and cash flows for the
year then ended. These historical combined financial statements are derived from
the historical financial statements of Rhone-Poulenc Jardin SA, Celaflor GmbH
and Celaflor Handelsgesellschaft. Non-operating transactions with Rhone-Poulenc
Group Companies have been omitted. These combined financial statements are the
responsibility of Rhone-Poulenc Jardin's management. Our responsibility is to
express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, based on our audit, the combined financial statements referred
to above present fairly, in all material respects, the combined financial
position of Rhone-Poulenc Jardin as of December 31, 1997, and the combined
results of its operations and its cash flows for the year then ended in
conformity with United States generally accepted accounting principles.
Coopers & Lybrand Audit
Lyons, France
September 11, 1998
6
<PAGE> 7
Item 7(a) Financial Statements of Businesses Acquired
-------------------------------------------
RHONE-POULENC JARDIN
COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1997,
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(in thousands of French Francs)
<TABLE>
<CAPTION>
September 30, September 30,
ASSETS December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ----------- -----------
<S> <C> <C> <C>
Cash 780 1,703 6,156
Cash pool amounts due from affiliates 142,189 191,147 138,304
Marketable securities 525 0 480
Trade accounts receivable, net 201,464 92,186 86,334
Receivable from Rhone-Poulenc Group companies 2,089 2,437 1,986
Inventories, net 179,662 165,555 164,544
Deferred tax asset 8,116 23,808 10,456
Other current assets 38,546 32,688 39,081
--------- -------- --------
Total current assets 573,371 509,524 447,341
Property, plant and equipment, net 26,810 24,642 26,753
Intangible assets, net 471,779 459,659 476,232
Deferred tax assets 21,200 4,667 26,860
Other assets 8,021 7,778 7,235
--------- -------- --------
Total assets 1,101,181 1,006,270 984,421
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities 179,379 13,916 55,896
Cash pool amounts due to affiliates 94,808 136,096 168,781
Trade accounts payable 114,595 115,187 75,996
Payable to Rhone-Poulenc Group companies 6,618 11,141 6,417
Other current liabilities 54,985 67,002 35,667
--------- -------- --------
Total current liabilities 450,385 343,342 342,757
Deferred tax liability 48,556 51,601 48,647
Accrued pension liability 51,869 58,183 51,427
Other provisions and long-term liabilities 19,242 19,935 15,861
--------- -------- --------
Total liabilities 570,052 473,061 458,692
Commitments and contingent liabilities
Divisional equity 536,186 537,616 529,620
Cumulative foreign translation adjustment (5,057) (4,407) (3,891)
--------- -------- --------
Total divisional equity 531,129 533,209 525,729
--------- -------- --------
Total liabilities and divisional equity 1,101,181 1,006,270 984,421
========= ======== ========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
7
<PAGE> 8
RHONE-POULENC JARDIN
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(in thousands of French Francs)
<TABLE>
<CAPTION>
Nine Months ended Nine Months ended
Year ended September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
-------- -------- ---------
<S> <C> <C> <C>
Net sales 824,357 670,521 633,686
Cost of sales 426,466 352,509 328,979
-------- -------- ---------
Gross profit 397,891 318,012 304,707
Selling, general and administrative expenses 292,196 239,124 217,035
Research and development expenses 15,571 13,111 10,600
Amortization of intangibles 13,996 10,487 10,501
Restructuring expenses 2,044 8,977 456
-------- -------- ---------
Income from operations 74,084 46,313 66,115
Interest expense, net 4,033 485 3,327
Net foreign currency transaction gains (52) (97) 7
Other expense, net 2,450 2,293 2,005
-------- -------- ---------
Income before income taxes 67,653 43,632 60,776
Income taxes 33,386 23,052 22,802
-------- -------- ---------
Net income 34,267 20,580 37,974
======== ======== =========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
8
<PAGE> 9
RHONE-POULENC JARDIN
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(in thousands of French Francs)
<TABLE>
<CAPTION>
Nine Months ended Nine Months ended
Year ended September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
-------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 34,267 20,580 37,974
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 24,804 20,803 18,481
Change in reserve for inventory 514 (503) (3,303)
Change in allowance for doubtful accounts (164) 590 121
Changes in long-term provisions 12,371 6,522 8,519
Deferred income taxes 30,312 3,779 20,157
Loss on sales of property, plant and equipment 4 43 4
Increase/decrease in operating assets and liabilities:
(Increase) decrease in trade accounts receivable (4,069) 108,688 110,776
(Increase) in receivable from affiliates (1,962) (348) (1,859)
Decrease in inventories 17,945 14,610 36,880
(Increase) decrease in other current assets (5,572) 5,858 (6,933)
Increase (decrease) in trade accounts payable 17,491 592 (21,108)
Increase (decrease) in payable to Rhone-Poulenc Group companies (5,333) 4,523 (5,534)
Increase in other current liabilities 19,780 12,017 462
-------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 140,388 197,754 194,637
-------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of marketable securities (52) 0 0
Acquisitions of property, plant and equipment (4,048) (3,487) (2,019)
Acquisitions of intangible assets (5,109) (2,302) (4,571)
Proceeds from sales of marketable securities 0 525 2
Proceeds from sales of property, plant and equipment 18 84 18
Proceeds from sale of investment in Rhone-Poulenc Group companies 41,407 0 0
Disbursement for loans (3,574) (200) (1,736)
Reimbursements of loans 1,730 1,286 1,333
Reimbursement of French value added taxes 570 288 570
-------- --------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 30,942 (3,806) (6,403)
-------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in short-term borrowings 7,042 (165,463) (116,441)
Decrease in cash pool amounts due to affiliates (92,144) 41,288 (18,171)
Increase in cash pool amounts due from affiliates (52,009) (48,958) (48,124)
Dividends paid (24,616) (10,650) 0
Withholding tax paid on dividends (9,049) (8,500) 0
-------- --------- ---------
NET CASH (USED IN) FINANCING ACTIVITIES (170,776) (192,283) (182,736)
-------- --------- ---------
Net effect of exchange rate changes on cash (1,013) (742) (581)
-------- --------- ---------
NET INCREASE (DECREASE) IN CASH (459) 923 4,917
Cash, beginning of period 1,239 780 1,239
-------- --------- ---------
CASH, END OF PERIOD 780 1,703 6,156
======== ========= =========
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
9
<PAGE> 10
RHONE-POULENC JARDIN
COMBINED STATEMENTS OF DIVISIONAL EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1997 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(in thousands of French Francs)
<TABLE>
Cumulative
Foreign
Divisional Translation
Equity Adjustment Total
---------- ----------- -----
<S> <C> <C> <C>
Year ended December 31, 1997
Balance as of December 31, 1996 535,376 (2,739) 532,637
Net income 34,267 0 34,267
Dividends paid (33,457) 0 (33,457)
Change in foreign translation adjustment 0 (2,318) (2,318)
------- ----- -------
Balance as of December 31, 1997 536,186 (5,057) 531,129
Nine months ended September 30, 1998 (unaudited)
Net income for nine month period (unaudited) 20,580 0 20,580
Dividends paid (unaudited) (19,150) 0 (19,150)
Change in foreign translation
adjustment (unaudited) 0 650 650
------- ----- -------
Balance as of September 30, 1998 (unaudited) 537,616 (4,407) 533,209
======= ===== =======
</TABLE>
The accompanying notes are an integral part of the combined financial
statements.
10
<PAGE> 11
RHONE-POULENC JARDIN
NOTES TO COMBINED FINANCIAL STATEMENTS
(All amounts are in thousands of French Francs unless otherwise noted)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF COMBINATION
The combined financial statements of Rhone-Poulenc Jardin (the "Division")
include the "carve-out" financial position, results of operations and cash flows
of Rhone-Poulenc Jardin SA, Celaflor GmbH and Celaflor Handelsgesellschaft.
These financial statements have been prepared as if the Division had operated as
a stand-alone entity for the period presented, and include those assets,
liabilities, and revenues and expenses directly attributable to the Division's
operations. Non operating transactions with Rhone-Poulenc Group companies,
outside the Division, have been omitted.
All significant intercompany transactions and balances are eliminated in
consolidation.
NATURE OF OPERATIONS
The Division is in the lawn and garden care business. The Division's principal
markets are in France, Germany and Austria.
INVENTORIES
Inventories are stated at average cost.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Maintenance costs are
charged to operations as incurred. Depreciation is computed using the
straight-line method over the estimated useful lives, as follows:
Buildings 20 years
Office furniture and equipment 10 years
Machinery and equipment 8 years
Upon sale or retirement of property, plant and equipment, the related cost and
accumulated depreciation are removed from the accounts and any gain or loss is
reflected in the statement of operations.
11
<PAGE> 12
INTANGIBLE ASSETS AND GOODWILL
Intangible assets are recorded at cost. Amortization is calculated using the
straight-line method over the estimated useful lives as follows:
Goodwill 40 years
Patents, licenses and trademarks 8 years
Software 5 years
The Division investigates potential impairments of intangible assets on an
exception basis where there is evidence that events or changes in circumstances
have made recovery of an asset's carrying value unlikely. An impairment loss is
recognized when the sum of the expected future net cash flows is less than the
carrying amount of the asset.
DEFERRED INCOME TAXES
The Division recognizes deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount "more
likely than not" to be realized in future tax returns.
REVENUE RECOGNITION
Revenue from products is recognized when the products are shipped.
TRANSLATION OF FOREIGN CURRENCIES
The translation of the financial statements has been completed as follows:
- assets and liabilities are translated at year-end exchange rates;
- shareholders' equity is translated at historical exchange rates;
- statement of operations items are translated at average exchange rates for the
year;
- translation gains and losses are recorded in a separate component of
shareholders' equity.
EARNINGS PER SHARE
As there is no separate capitalization, nor are there any shares of stock
specifically attributable to the Division upon which an earnings per share
calculation can be based, earnings per share data is not presented in the
accompanying combined financial statements.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
12
<PAGE> 13
2. CASH POOL DUE FROM OR TO AFFILIATES
Rhone-Poulenc Jardin SA and Celaflor GmbH have cash pooling arrangements with
the Rhone-Poulenc Group. Debit balances with the Rhone-Poulenc Group are liquid
and readily convertible. Detail of the cash pool amount is as follows:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Celaflor GmbH cash pool with Rhone-Poulenc
Deutschland GmbH, debit balance 142,189 191,147 138,304
Rhone-Poulenc Jardin SA cash pool with Rhone-
Poulenc Agro SA, credit balance (94,808) (136,096) (168,781)
------ -------- ----------
Total cash pool 47,381 55,051 (30,477)
====== ======== ==========
</TABLE>
Details of the cash pooling agreements are as follows:
- Celaflor GmbH has a cash pooling agreement with Rhone-Poulenc Deutschland
GmbH whereby Celaflor GmbH will advance funds to Rhone-Poulenc Deutschland
GmbH as necessary up to the amount available at Celaflor GmbH. Interest
accrues on the outstanding balance at the average monthly FIBOR rate (3.45%
at December 31, 1997, September 30, 1998 and September 30, 1997).
- Rhone-Poulenc Jardin SA has a cash pooling agreement with Rhone-Poulenc
Agro SA whereby Rhone-Poulenc Agro SA will advance funds to Rhone-Poulenc
Jardin SA as necessary up to the amount available at Rhone-Poulenc Agro SA.
Interest accrues on the outstanding balance at the TJJ daily rate + 0.1%
(3.475% at December 31, 1997, and September 30, 1998 and 3.29% at September
30, 1997).
Interest paid or received for the period is as follows:
<TABLE>
<CAPTION>
Nine months ended Nine months ended
Year ended September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------------ -----------------
<S> <C> <C> <C>
Interest received by Celaflor GmbH from
Rhone-Poulenc Deutschland GmbH 3,296 3,692 2,259
Interest paid by Rhone-Poulenc Jardin SA to
Rhone-Poulenc Agro SA 7,590 3,869 5,738
</TABLE>
3. TRADE ACCOUNTS RECEIVABLE, NET
Trade accounts receivable, net consist of the following components:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Trade accounts receivable 210,617 101,929 95,772
Less: Allowance for doubtful accounts (9,153) (9,743) (9,438)
------- ------- ------
Trade accounts receivable, net 201,464 92,186 86,334
======= ======= ======
</TABLE>
4. INVENTORIES
Inventories consist of the following components:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Raw materials 46,488 51,922 51,414
Work in progress 12,821 6,691 5,605
Finished goods 127,505 113,591 110,860
------- ------- -------
186,814 172,204 167,879
Less: Provisions (7,152) (6,649) (3,335)
------- ------- -------
Total inventories, net 179,662 165,555 164,544
======= ======= =======
</TABLE>
13
<PAGE> 14
5. OTHER CURRENT ASSETS
Other current assets consist of the following components:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Receivable from the state 27,482 25,439 25,799
Prepaid expenses 7,483 2,347 9,535
Other 3,581 4,902 3,747
------ ------ ------
Total other current assets 38,546 32,688 39,081
====== ====== ======
</TABLE>
6. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Land 2,550 2,550 2,550
Buildings 28,420 31,081 28,420
Machinery and equipment 43,377 42,793 40,977
Office furniture and equipment 15,618 16,396 17,653
Construction in progress 1,656 737 92
------- ------- -------
91,621 93,557 89,692
Less: Accumulated depreciation (64,811) (68,915) (62,939)
------- ------- -------
Total property, plant and equipment, net 26,810 24,642 26,753
======= ======= =======
</TABLE>
Depreciation expense was FF 7,587 thousand during the year ended December 31,
1997, FF 5,529 thousand during the nine months ended September 30, 1998 and FF
4,438 thousand during the nine months ended September 30, 1997.
14
<PAGE> 15
7. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Rhone-Poulenc Jardin (former SOVILO) goodwill 342,790 342,790 342,790
Celaflor GmbH goodwill 205,510 205,964 206,308
Other goodwills 2,949 2,955 2,959
Software 12,360 13,800 11,864
Patents, licenses and trademarks 11,881 11,892 11,871
-------- -------- -------
575,490 577,401 575,792
Less: Accumulated amortization (103,711) (117,742) (99,560)
-------- -------- -------
Total intangible assets, net 471,779 459,659 476,232
======== ======== =======
</TABLE>
In 1991, Rhone-Poulenc Jardin SA acquired goodwill of FF 342,790 thousand in
connection with the purchase of the Sovilo Company. Accumulated amortization was
FF 63,000 thousand at December 31, 1997.
In 1991, Celaflor GmbH was purchased by Rhone-Poulenc. The corresponding
consolidation goodwill amounts to FF 205,510 thousand. Accumulated amortization
was FF 34,250 thousand at December 31, 1997, FF 38,007 thousand at September 30,
1998 and FF 33,154 thousand at September 30, 1997. Most of this goodwill
amortization is deductible for tax purposes at the German level (useful life of
15 years for tax purposes).
8. CURRENT LIABILITIES
Current liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Short term borrowings 12,075 13,916 6,143
Other short term borrowings 167,304 0 49,753
------- ------ ------
179,379 13,916 55,896
======= ====== ======
</TABLE>
Short term borrowings consist of bank overdrafts and various lines of credit,
with initial maturity of less than three months.
Rhone-Poulenc Jardin SA's parent company has an arrangement with its
financial institutions which allows the parent company and its subsidiaries to
borrow up to FF 150,000 thousand. Rhone-Poulenc Jardin has amounts outstanding
under this agreement of FF 11,459 thousand at December 31, 1997; FF 13,916
thousand at September 30, 1998; and FF 6,143 thousand at September 30, 1997.
Interest accrues at TMP +0.4%.
Celaflor GmbH has line of credit agreements with its financial institutions
which allow Celaflor GmbH to borrow up to FF 10,000 thousand. At December 31,
1997 and September 30, 1998 and 1997, there were no borrowings under these
agreements. Interest accrues at rates between 5.75% and 7.0%. At December 31,
1997, Celaflor GmbH had a bank overdraft of FF 616 thousand.
Other short term borrowings represent the amounts lent by the BNP bank as a
consequence of the sale of receivables described in Note 11.
9. OTHER CURRENT LIABILITIES
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ------------- -------------
<S> <C> <C> <C>
Accrued salaries and benefits 18,461 25,054 20,229
Amounts payable to state 15,406 27,075 5,806
Restructuring provision 842 7,309 218
Other 20,276 7,564 9,414
------ ------ ------
Total intangible assets, net 54,985 67,002 35,667
====== ====== ======
</TABLE>
15
<PAGE> 16
10. LEASES
The Division leases certain office and research facilities, computer services
and vehicles under operating leases. Total rental expense for the year ended
December 31, 1997 was approximately FF 3,023 thousand. Total rental expense for
the nine months ended September 30, 1998 and September 30, 1997 was
approximately FF 1,047 thousand and FF 2,267 thousand, respectively. Future
minimum lease payments are as follows:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
1998 2,873
1999 501
2000 376
2001 151
2002 -
-----
3,901
=====
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
The Division has a number of commitments and contingencies including operating
leases as described in Note 10. In addition, Rhone-Poulenc Jardin SA has, from
time to time, sold selected accounts receivable to a bank. The company has not
recognized this transaction as a sale because the transaction does not meet all
the conditions for surrendering control over the transferred assets. The amount
of receivables sold was FF 167,304 thousand and FF 49,753 thousand at
December 31, 1997 and September 30, 1997. There were no receivables sold as of
September 30, 1998.
The sale of receivables is made in compliance with French law No 81-1 dated
January 2, 1981 (also called "Loi Dailly"). Rhone-Poulenc Jardin SA has signed
a contract with BNP on March 24, 1997, whereby both parties agree that
Rhone-Poulenc Jardin SA can sell a selected list of trade receivables to the
bank. The bank credits Rhone-Poulenc Jardin SA's bank accounts with the cash
corresponding to the amount of receivables sold. Rhone-Poulenc Jardin SA is
entitled by the bank to collect the receivables on its behalf and releases the
cash collected to the bank on a date specified in the contract. As regards
trade receivables that turn out to be doubtful, the bank has a recourse limited
to 10% of the total list of receivables sold where the doubtful ones are
included in.
The Division is also involved in various lawsuits, claims and regulatory
proceedings incidental to its business. Celaflor GmbH and Celaflor
Handelsgesellschaft are currently involved in litigation related to a defective
product. The product is an oil evaporator against insects which is manufactured
by the supplier Perrycut Chemie AG. It was discovered in 1997 that the
evaporator is corroded by the oil and both the evaporator and the oil cannot be
used after corrosion. No harm to the public or damage to the environment has
occurred. An examination of the product has been conducted by a testing
institute which concluded that the design and manufacture of the product were
faulty. The companies are in the process of negotiating with Perrycut Chemie AG
in order to have them indemnify the companies for the evaporators held in
inventory and for possible costs of products returned by the distributors. As of
December 31, 1997, no provision has been recorded by the companies. It is the
opinion of the Division's legal counsel and management that the ultimate
resolution of the various lawsuits, claims and regulatory proceedings incidental
to Rhone-Poulenc Jardin's business, including the specific litigation described
above, will not have a material adverse effect on the Division's financial
position, results of operations or cash flows.
12. RESTRUCTURING
The following is a rollforward table of the Division's restructuring charges:
<TABLE>
<CAPTION>
Balance
December 31,
1996 Year ended December 31, 1997 9 months ended September 30, 1998
------------ ---------------------------- ---------------------------------
Charge Payment Balance Charge Payment Balance
------ ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Severance costs 1,100 1,421 (2,221) 300 7,314 (1,814) 5,800
Early retirement 249 623 (330) 542 1,663 (696) 1,509
----- ----- ------ --- ----- ------ -----
Total 1,349 2,044 (2,551) 842 8,977 (2,510) 7,309
===== ===== ====== === ===== ====== =====
</TABLE>
The provision as of December 31, 1997 is mainly made of the costs for one
employee made redundant in France and several early-retired employees in
Germany.
The restructuring provision recorded in the nine months ended September 30, 1998
is mainly made up of termination costs for 15 salesmen of Rhone-Poulenc Jardin
SA (FF 5,800 thousand) who are laid off as part of a reorganization plan of the
salesforce. The remaining part of the restructuring provision corresponds to
early retirement costs for three sales employees of Celaflor GmbH.
13. INTEREST EXPENSE, NET
<TABLE>
<CAPTION>
Nine months ended Nine months ended
Year ended September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ----------------- -----------------
<S> <C> <C> <C>
Interest income (3,805) (3,999) (2,595)
Interest expense 7,838 4,484 5,922
------ ------ ------
Interest expense, net 4,033 485 3,327
====== ====== ======
</TABLE>
16
<PAGE> 17
14. INCOME TAXES
<TABLE>
<CAPTION>
Nine months ended Nine months ended
Year ended September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ----------------- -----------------
<S> <C> <C> <C>
Current income tax provision 3,074 19,273 2,645
Deferred income tax provision 30,312 3,779 20,157
------ ------- -------
Total 33,386 23,052 22,802
====== ======= =======
</TABLE>
Deferred income taxes:
Deferred income taxes reflect the impact of temporary differences between the
amounts of assets and liabilities reported for financial reporting purposes and
such amounts measured in accordance with tax laws.
The tax effect of temporary differences which give rise to significant deferred
tax assets (liabilities) is as follows:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Net current deferred tax asset:
Net operating loss carry forwards 3,884
Compensate absences 1,774
Provisions not currently deductible for
tax purposes 1,688
Other, net 770
-------
Total net current deferred tax asset 8,116
Net long term deferred tax asset:
Net operating loss carryforwards 18,290
Pension liability not currently deductible
for tax purposes 3,172
Other, net (262)
-------
Total net long term deferred tax asset 21,200
Net long term deferred tax liability:
Celaflor GmbH goodwill depreciation (52,016)
Pension liability not currently deductible
for tax purposes 3,460
-------
Total net long term deferred tax liability (48,556)
</TABLE>
Net operating loss carryforwards of FF 60,420 thousand as of December 31, 1997
are available at Rhone-Poulenc Jardin SA. Realization of these assets is
contingent on future taxable earnings. Tax loss carryforwards in the amount of
FF 10,497 thousand will expire in 1998 whereas FF 49,923 thousand do not have
expiration dates.
In accordance with SFAS 109, the Division has evaluated the recoverability of
the deferred tax assets and determined there was no need to record a valuation
allowance. Management believes that future revenues will provide sufficient
future income to realize the deferred tax assets.
17
<PAGE> 18
Effective tax rate
The difference between the Division's income tax expense and that which would be
calculated using the statutory income tax rate of 41.66% on income is as
follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1997
-----------------
<S> <C>
Tax at statutory rate 28,191
Effect of tax rate differences 3,867
Goodwill amortization not tax deductible 3,778
Changes in tax rates (1,972)
Miscellaneous other (478)
------
Effective tax 33,386
======
</TABLE>
15. DIVIDENDS
In 1997, Celaflor GmbH declared and paid a cash dividend of FF 33,457 thousand
to Rhone-Poulenc Agro Holding GmbH. In conjunction with this dividend, there was
a withholding tax in the amount of FF 9,033 thousand.
In 1998, Celaflor GmbH and Celaflor Handelsgesellschaft declared and paid cash
dividends of FF 8,887 and FF 1,763 thousand, respectively, to Rhone-Poulenc Agro
Holding GmbH. In conjunction with this dividend, there was a withholding tax in
the amount of FF 8,500 thousand. These dividends have been eliminated in the
combined financial statements.
16. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest and income taxes paid are as follows:
<TABLE>
<CAPTION>
Nine months ended Nine months ended
Year ended September 30, September 30,
December 31, 1998 1997
1997 (unaudited) (unaudited)
------------ ----------------- -----------------
<S> <C> <C> <C>
Interest paid 7,762 4,475 5,874
Income taxes paid 1,867 1,470 1,775
</TABLE>
17. EMPLOYEE BENEFIT PLAN
The Division has pension plans which cover all of its employees. The plans are
defined benefit plans and provide pension benefits for employees at their
retirement. The following table sets forth the plans' funded status and amounts
recognized in the Division's combined financial statements at December 31, 1997:
<TABLE>
<CAPTION>
December 31,
1997
------------
<S> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation 34,236
======
Accumulated benefit obligation 42,989
======
Projected benefit obligation 52,751
Plan assets at fair value 0
------
Projected benefit obligation in excess of plan assets 52,751
Unrecognized prior service costs (4,434)
Unrecognized net gain 3,588
Adjustment required to recognize minimum liability 51
------
Accrued pension liability 51,956
======
Net pension cost for the year ended December 31, 1997
included the following components:
Service cost 2,521
Interest cost 3,600
Amortization of unrecognized prior service cost 481
Amortization of unrecognized net loss 53
------
Net periodic pension cost 6,655
======
</TABLE>
18
<PAGE> 19
The projected benefit obligation was determined using an assumed discount rate
ranging between 6.25% and 7.50% and an assumed compensation rate ranging between
3.00% and 4.50%.
18. STOCK OPTION PLAN
Rhone-Poulenc Jardin directors and key executive were offered stock options in
1994, 1996 and 1998 under the terms of a stock option plan that permits the
company to grant options for up to 5% of Rhone-Poulenc Jardin SA's outstanding
shares, or 18,000 shares.
The arrangement provides that the beneficiaries have a put option to sell the
shares back to Rhone-Poulenc Jardin at a price based on the option exercise
price and the company's market price at that date of the sale back. The exercise
price of each option equals the market price of the company's stock on the date
of the grant. The options maximum term is 10 years. Options are vested after a
four-year service period.
The liability incurred by the company and corresponding to the put option (award
settlement in cash) is measured each period based on the update of the stock buy
back formula price. The effects of changes in this formula price, due to changes
in the company's stock market price, are recognized as compensation cost over
the service period. Changes in the amount of the liability due to stock market
price changes after the service period are recognized as compensation cost in
the period the changes occur.
The following table details the options that have been granted and the related
compensation cost for the year and cumulative compensation as of December 31,
1997.
<TABLE>
<CAPTION>
TOTAL CUMULATIVE
EXERCISE CUMULATIVE COMPENSATIONS COMPENSATION
NUMBER OF PRICE COMPENSATION AS ACCRUED AS OF EXPENSE FOR
OPTIONS GRANTED (IN FF) OF DEC 31, 1997 DEC 31, 1997 THE YEAR
--------------- ------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1994 900 632 404 303 182
1996 950 587 437 182 132
--- --- --- ---
Total 1,850 841 485 314
</TABLE>
Under the plan terms, if Rhone-Poulenc Jardin's parent company (Rhone-Poulenc
Agro SA) disinvests its shares in Rhone-Poulenc Jardin SA, the selling price of
the shares held at that date by the directors and key executives will be the
highest of the selling price as per the plan or the purchase price paid by the
acquirer.
Cumulative compensation accrued is less than the total cumulative compensation
as of December 31, 1997 because a portion of the total compensation has not yet
been earned due to vesting provisions of the options.
19. TRANSACTIONS WITH RHONE-POULENC GROUP COMPANIES
The Rhone-Poulenc Jardin Division companies entered into various business
transactions with Rhone-Poulenc Group companies mainly comprising of sales and
purchases of active ingredients and finished goods. The combined financial
statements do not include any expenses allocated by the Parent. However, the
combined financial statements do include actual costs incurred by the Parent on
behalf of Rhone-Poulenc Jardin SA (mainly salaries of employees). They result in
a receivable from Rhone-Poulenc Group companies amounting to FF 2,089 thousand
(of which FF 1,157 thousand receivable by Rhone-Poulenc Jardin SA from
Rhone-Poulenc Agro Belgium) and a payable to Rhone-Poulenc Group companies
amounting to FF 6,618 thousand (of which FF 6,592 thousand payable by
Rhone-Poulenc Jardin SA to Rhone-Poulenc Agro SA).
As at September 30, 1998, they result in a receivable from Rhone-Poulenc Group
companies amounting to FF 2,437 thousand (of which FF 867 thousand receivable by
Celaflor GmbH from Rhone-Poulenc Rhodic SA and FF 618 thousand receivable by
Rhone-Poulenc Jardin SA from Rhone-Poulenc Agro Belgium) and in a payable to
Rhone-Poulenc Group companies amounting to FF 11,141 thousand (of which FF 7,973
thousand payable by Rhone-Poulenc Jardin SA to Rhone-Poulenc Agro SA).
As at September 30, 1997, they result in a receivable from Rhone-Poulenc Group
companies amounting to FF 1,986 thousand (of which FF 1,110 thousand receivable
by Rhone-Poulenc Jardin SA from Rhone-Poulenc Agro SA and FF 541 thousand
receivable by Celaflor GmbH from Rhone-Poulenc Agro SA) and in a payable to
Rhone-Poulenc Group companies amounting to FF 6,417 thousand (of which FF 6,069
thousand payable by Rhone-Poulenc Jardin SA to Rhone-Poulenc Agro SA).
These financial statements do not include a FF 34,755 thousand gain realized in
December 1997 by Celaflor GmbH on the sale of the Celaflor Handelsgesellschaft
shares. These shares have been sold to a Rhone-Poulenc affiliate, Rhone-Poulenc
Agro Holding GmbH. This amount has not been included in the financial
statements as the parties to the transaction are under common control.
19
<PAGE> 20
20. SUBSEQUENT EVENTS
i) LITIGATIONS
At December 31, 1997, Celaflor GmbH and Celaflor Handelsgesellschaft were
involved in litigation related to a defective product as described in Footnote
11. During 1998, based on more current information, the companies have
estimated their maximum liability to be FF 3,100 thousand.
In December 1997, the Company received an expert report concluding the supplier,
Perrycut Chemie AG, was responsible for the defective product. Celaflor GmbH
filed claim for damaged inventory on hand and for possible costs of products
returned by their distributors. In January 1998, Perrycut Chemie AG hired
another expert who sited unfavorable conclusions against Celaflor GmbH. In
February 1998, a third independent expert concluded Perrycut Chemie AG was
responsible for the defective product. Finally, in March 1998, a settlement was
reached whereby both parties agreed to bear half the costs for damaged and
returned products. Based on this, a provision of FF 3,100,000 was recorded in
the combined balance sheet in 1998.
ii) STOCK OPTION PLAN
In March 1997, the company offered 1,300 additional stock options to its
directors and key executives at an exercise price of FF 1,214.
In spring-summer 1998, the Rhone-Poulenc Jardin's parent company entered into
discussions with a potential acquirer. Based on the selling price of the
company's stock agreed upon by the two parties, and total options granted in
1994, 1996 and 1998 the total cumulative compensation would amount to FF 2,142
thousand.
20
<PAGE> 21
Item 7(b) Pro Forma Financial Information:
--------------------------------
THE SCOTTS COMPANY
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The accompanying unaudited pro forma combined financial information gives effect
to the acquisition of Rhone-Poulenc Jardin ("RPJ") by The Scotts Company (the
"Company") which occurred on October 7, 1998. RPJ includes the assets and
liabilities of Rhone-Poulenc Jardin SA, Celaflor GmbH and Celaflor
Handelsgesellschaft. The initial estimated purchase price was approximately
$193 million, however subsequent adjustments for reductions in acquired working
capital resulted in a final purchase price of approximately $147 million. In
consideration for the acquired businesses, the Company issued non-interest
bearing notes with a present value of approximately $12.5 million to the
seller. The remaining purchase price was paid to the seller from funds
borrowed under the Company's revolving credit facility.
In connection with the acquisition, the Company entered into a Research and
Development Access Rights Agreement with Rhone-Poulenc. In exchange for the
rights provided under the agreement, the Company will make four annual payments
of 39 million French Francs each beginning on October 1, 1999 (the present
value of the payments is approximately $23.2 million).
The historical financial statements of RPJ were prepared in
French francs and translated to U.S. dollars for inclusion in the unaudited pro
forma combined statement of operations and balance sheet.
The unaudited pro forma combined statement of operations for the twelve months
ended September 30, 1998 gives effect to the acquisition of RPJ as if it had
occurred on October 1, 1997. The financial data for RPJ included in the pro
forma combined statement of operations is based on the unaudited results for
the twelve months ended September 30, 1998. The results of operations for RPJ
are not included in the Company's historical results for the year ended
September 30, 1998. The unaudited pro forma combined balance sheet as of
September 30, 1998 gives effect to the acquisition of RPJ as if it had occurred
on that date. The adjustments, which are based on available information and upon
certain assumptions which management believes are reasonable, are described in
the accompanying notes. The pro forma combined financial information does not
purport to represent what the financial position or results of operations of the
Company actually would have been had the acquisition of RPJ occurred on the
assumed dates or to project the financial position or results of operations of
the Company for any future period or date.
21
<PAGE> 22
THE SCOTTS COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1998
(in millions)
<TABLE>
<CAPTION>
Scotts RPJ (a) Adjustments Pro forma
------ ------- ----------- ---------
<S> <C> <C> <C> <C>
Sales $1,113.0 $144.3 $1,257.3
Cost of sales 715.0 75.4 790.4
------- ------ ------
Gross profit 398.0 68.9 466.9
Selling, general and administrative expenses 271.6 55.7 327.3
Amortization of goodwill and other intangibles 12.9 2.3 2.0(b) 18.7
1.5(c)
Restructuring and other charges 15.4 1.8 17.2
Other expense 4.0 0.4 4.4
------- ------ ----- ------
Income from operations 94.1 8.7 (3.5) 99.3
Interest expense 32.2 0.2 11.8(d) 44.2
------- ------ ------ ------
Income before income taxes 61.9 8.5 (15.3) 55.1
Income taxes 24.9 5.3 (8.0)(e) 22.2
------- ------ ------ ------
Income before extraordinary item 37.0 3.2 (7.3) 32.9
Preferred stock dividends 9.8 9.8
Income before extraordinary item
available to common shareholders $ 27.2 $ 3.2 $ (7.3) $ 23.1
Income before extraordinary item per share:
Basic $ 1.24
Diluted $ 1.09
Number of shares used in per share calculation:
Basic 18.7
Diluted 30.3
</TABLE>
22
<PAGE> 23
THE SCOTTS COMPANY
NOTES TO THE UNAUDITED PRO FORMA
COMBINED STATEMENT OF OPERATIONS
(in millions)
(a) The statement of operations for RPJ has been translated from French francs
to U.S. dollars using the average exchange rate for the twelve months ended
September 30, 1998 of FF 5.97: USD 1.
(b) Reflects increased amortization of goodwill and other intangibles resulting
from an allocation of the purchase price of the RPJ business:
<TABLE>
<S> <C>
Purchase price $147.0
Less amounts allocated to tangible
assets and liabilities (13.1)
------
Amount allocated to goodwill and
other intangibles 133.9
Average useful life (in years) 31.0
------
4.3
Less amortization included in historical
RPJ financial statements 2.3
------
$ 2.0
</TABLE>
The average useful life of 31.0 years reflects the valuation of the RPJ
business assigning a useful life of 40 years to intangibles such as
tradenames and goodwill and shorter lives to intangibles such as customer
relationships, workforce and supply agreements.
(c) Represents amortization of amounts to be paid under the Access Rights
Agreement over the minimum term of the agreement (15 years).
(d) Represents additional interest expense incurred to finance the RPJ
acquisition. Borrowings under the Company's revolving credit facility of
$134.5 million bear interest at an average rate of 6.37%. Non-interest
bearing notes issued to the seller of $12.5 million and amounts to be paid
under the Access Rights Agreement of $23.2 million are assumed to bear
interest at 9.1%.
(e) Represents estimated provision for income taxes on a pro forma basis using
the effective tax rate for the Company on a stand-alone basis for fiscal
1998 of 40.3%.
23
<PAGE> 24
THE SCOTTS COMPANY
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(in millions)
<TABLE>
<CAPTION>
Scotts RPJ (a) Adjustments Pro forma
------ ------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash $ 10.6 $ 0.3 $ 10.9
Cash pool amounts due from affiliates - 34.1 34.1
Accounts receivable 146.6 16.9 163.5
Inventory 177.7 29.6 207.3
Other current assets 32.3 10.1 42.4
-------- -------- --------
Total current assets 367.2 91.0 458.2
Plant, property and equipment 197.0 4.4 201.4
Goodwill and other intangibles 435.1 82.2 51.7(b) 592.2
23.2(c)
Other assets 35.9 2.2 38.1
-------- -------- ----- --------
Total assets 1,035.2 179.8 74.9 1,289.9
LIABILITIES AND EQUITY
Current portion of long-term debt 13.3 - 13.3
Cash pool amounts due to affiliates - 24.3 24.3
Bank overdrafts - 2.5 2.5
Accounts payable 77.8 22.6 100.4
Accrued liabilities 140.8 12.0 152.8
-------- -------- --------
Total current liabilities 231.9 61.4 293.3
Long-term debt 359.2 147.0(d) 529.4
23.2(e)
Other long-term liabilities 40.2 23.1 63.3
-------- -------- ----- --------
Total liabilities 631.3 84.5 170.2 886.0
Preferred stock 177.3 177.3
Common shares 0.2 0.2
Capital in excess of par 208.7 208.7
Retained earnings 76.6 76.6
Divisional equity 87.4 (87.4)(d) 0
Cumulative foreign currency translation
adjustment (3.0) 7.9 (7.9)(d) (3.0)
Treasury stock (55.9) (55.9)
-------- -------- ----- --------
Total equity 403.9 95.3 (95.3) 403.9
-------- -------- ----- --------
Total liabilities and equity $1,035.2 $ 179.8 74.9 $1,289.9
</TABLE>
24
<PAGE> 25
THE SCOTTS COMPANY
NOTES TO THE UNAUDITED PRO FORMA
COMBINED BALANCE SHEET
(in millions)
(a) The balance sheet for RPJ as of September 30, 1998 has been translated from
French francs to U.S. dollars. Assets and liabilities were translated using
the exchange rate as of September 30, 1998 of FF 5.60: USD 1. The
divisional equity account was translated using an historical exchange rate
of FF 6.15: USD 1.
(b) Reflects net adjustment to goodwill and other intangibles as a result of
the RPJ acquisition as follows:
<TABLE>
<S> <C>
Net amount of purchase price allocated to
Goodwill and other intangibles (see note
(b) to the pro forma statement of operations) $133.9
Goodwill and other intangibles included in
historical RPJ balance sheet 82.2
------
Pro forma adjustment $ 51.7
</TABLE>
(c) Reflects intangible asset for payments to be made under the Access Rights
Agreement.
(d) Reflects additional borrowings under the Company's revolving credit
facility of $134.5 million and notes due to the seller of $12.5 million in
consideration for the RPJ acquisition.
(e) Reflects present value of amounts to be paid under the Access Rights
Agreement.
(f) Reflects elimination of historical equity accounts of RPJ.
25
<PAGE> 26
<TABLE>
INDEX TO EXHIBITS
-----------------
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE NO.
-------------- ----------- --------
<S> <C> <C>
2 Master Contract, dated September 30, 1998, by and Incorporated herein by
between Rhone-Poulenc Agro; The Scotts Company; reference to the Registrant's
Scotts Celaflor GmbH & Co. K.G.; "David" Current Report on Form 8-K
Sechsundfunfzigste Beteiligungs und filed on October 22, 1998 (File
Verwaltungsgesellschaft GmbH; Rhone-Poulenc Agro No. 1-11593) [Exhibit 2]
Europe GmbH; Scotts France Holdings S.A.R.L.;
Scotts France S.A.R.L.; and Scotts Belgium 2
B.V.B.A.
23 Consent of Independent Accountants *
99 Press Release issued October 7, 1998 Incorporated herein by
reference to the Registrant's
Current Report on Form 8-K
filed on October 22, 1998 (File
No. 1-11593) [Exhibit 99]
</TABLE>
----------------------
Filed herewith.
26
