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These excerpts taken from the SMG 10-K filed Dec 3, 2008. Master Accounts
Receivable Purchase Agreement
On April 11, 2007, the Company entered into a one-year
Master Accounts Receivable Purchase Agreement (the
“Original MARP Agreement”). On April 9, 2008, the
Company terminated the Original MARP Agreement and entered into
a new Master Accounts Receivable Purchase Agreement (the
“New MARP Agreement”) with a termination date of
April 8, 2009, or such later date as may be extended by
mutual agreement of the Company and its lenders. The terms of
the New MARP Agreement are substantially the same as the
Original MARP Agreement. The New MARP Agreement provides for the
discounted sale, on a revolving basis, of accounts receivable
generated by specified account debtors, with seasonally adjusted
monthly aggregate limits ranging from $10 million to
$300 million. The New MARP Agreement also provides for
specified account debtor sublimit amounts, which provide limits
on the amount of receivables owed by individual account debtors
that can be sold to the banks.
The New MARP Agreement provides that although the specified
receivables are sold, the purchaser has the right to require the
Company to repurchase uncollected receivables if certain events
occur, including the breach of certain covenants, warranties or
representations made by the Company with respect to such
receivables. However, the purchaser does not have the right to
require the Company to repurchase any uncollected receivables if
nonpayment is due to the account debtor’s financial
inability to pay. Under certain specified conditions, the
Company has the right to repurchase receivables which have been
sold pursuant to the New MARP Agreement. The purchase price paid
by the purchaser reflects a discount on the
Table of Contents
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
adjusted amount (primarily reflecting historical dilution and
potential trade credits) of the receivables purchased, which
effectively is equal to the
7-day LIBOR
rate plus a margin of .85% per annum. The Company continues to
be responsible for the servicing and administration of the
receivables purchased.
The Company accounts for the sale of receivables under the New
MARP Agreement as short-term debt and continues to carry the
receivables on its consolidated balance sheet, in accordance
with SFAS 140, “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities,”
primarily as a result of the Company’s right to repurchase
receivables sold. The caption “Accounts receivable
pledged” on the accompanying Consolidated Balance Sheets in
the amounts of $146.6 million and $149.5 million as of
September 30, 2008 and 2007, respectively, represents the
pool of receivables that have been designated as
“sold” and serve as collateral for short-term debt in
the amount of $62.1 million and $64.4 million as of
those dates, respectively.
The Company was in compliance with the terms of all borrowing
agreements at September 30, 2008. Management continues to
monitor the Company’s compliance with the leverage ratio
and other covenants contained in the credit facilities and,
based upon the Company’s current operating assumptions, the
Company expects to remain in compliance with the permissible
leverage ratio throughout fiscal 2009. However, an unanticipated
charge to earnings or an increase in debt could materially
affect our ability to remain in compliance with the financial
covenants of our credit facilities, potentially causing us to
have to seek an amendment or waiver from our lending group.
While the Company believes it has good relationships with its
banking group, given the adverse conditions currently present in
the global credit markets, the Company can provide no assurance
that such a request would be likely to result in a modified or
replacement credit facility on reasonable terms, if at all.
In fiscal 1995, The Scotts Company merged with Stern’s
Miracle-Gro Products, Inc. (“Miracle-Gro”). At
September 30, 2008, the former shareholders of Miracle-Gro,
including Hagedorn Partnership L.P., owned approximately 32% of
Scotts Miracle-Gro’s outstanding common shares and, thus,
have the ability to significantly influence the election of
directors and approval of other actions requiring the approval
of Scotts Miracle-Gro’s shareholders.
Under the terms of the merger agreement with Miracle-Gro, the
former shareholders of Miracle-Gro may not collectively acquire,
directly or indirectly, beneficial ownership of Voting Stock (as
that term is defined in the Miracle-Gro merger agreement)
representing more than 49% of the total voting power of the
outstanding Voting Stock, except pursuant to a tender offer for
100% of that total voting power, which tender offer is made at a
price per share which is not less than the market price per
share on the last trading day before the announcement of the
tender offer and is conditioned upon the receipt of at least 50%
of the Voting Stock beneficially owned by shareholders of Scotts
Miracle-Gro other than the former shareholders of Miracle-Gro
and their affiliates and associates.
Scotts Miracle-Gro reacquired no common shares in fiscal 2008
and 4.5 million common shares during fiscal 2007, to be
held in treasury. Common shares held in treasury totaling
0.6 million and 2.0 million were reissued in support
of share-based compensation awards and employee purchases under
the employee stock purchase plan during fiscal 2008 and fiscal
2007, respectively.
See “NOTE 5. RECAPITALIZATION” for a
discussion of the Company’s fiscal 2007 recapitalization
transactions.
Table of Contents
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Master Accounts Receivable Purchase Agreement On April 11, 2007, the Company entered into a one-year Master Accounts Receivable Purchase Agreement (the “Original MARP Agreement”). On April 9, 2008, the Company terminated the Original MARP Agreement and entered into a new Master Accounts Receivable Purchase Agreement (the “New MARP Agreement”) with a termination date of April 8, 2009, or such later date as may be extended by mutual agreement of the Company and its lenders. The terms of the New MARP Agreement are substantially the same as the Original MARP Agreement. The New MARP Agreement provides for the discounted sale, on a revolving basis, of accounts receivable generated by specified account debtors, with seasonally adjusted monthly aggregate limits ranging from $10 million to $300 million. The New MARP Agreement also provides for specified account debtor sublimit amounts, which provide limits on the amount of receivables owed by individual account debtors that can be sold to the banks. The New MARP Agreement provides that although the specified receivables are sold, the purchaser has the right to require the Company to repurchase uncollected receivables if certain events occur, including the breach of certain covenants, warranties or representations made by the Company with respect to such receivables. However, the purchaser does not have the right to require the Company to repurchase any uncollected receivables if nonpayment is due to the account debtor’s financial inability to pay. Under certain specified conditions, the Company has the right to repurchase receivables which have been sold pursuant to the New MARP Agreement. The purchase price paid by the purchaser reflects a discount on the Table of ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS adjusted amount (primarily reflecting historical dilution and potential trade credits) of the receivables purchased, which effectively is equal to the 7-day LIBOR rate plus a margin of .85% per annum. The Company continues to be responsible for the servicing and administration of the receivables purchased. The Company accounts for the sale of receivables under the New MARP Agreement as short-term debt and continues to carry the receivables on its consolidated balance sheet, in accordance with SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” primarily as a result of the Company’s right to repurchase receivables sold. The caption “Accounts receivable pledged” on the accompanying Consolidated Balance Sheets in the amounts of $146.6 million and $149.5 million as of September 30, 2008 and 2007, respectively, represents the pool of receivables that have been designated as “sold” and serve as collateral for short-term debt in the amount of $62.1 million and $64.4 million as of those dates, respectively. The Company was in compliance with the terms of all borrowing agreements at September 30, 2008. Management continues to monitor the Company’s compliance with the leverage ratio and other covenants contained in the credit facilities and, based upon the Company’s current operating assumptions, the Company expects to remain in compliance with the permissible leverage ratio throughout fiscal 2009. However, an unanticipated charge to earnings or an increase in debt could materially affect our ability to remain in compliance with the financial covenants of our credit facilities, potentially causing us to have to seek an amendment or waiver from our lending group. While the Company believes it has good relationships with its banking group, given the adverse conditions currently present in the global credit markets, the Company can provide no assurance that such a request would be likely to result in a modified or replacement credit facility on reasonable terms, if at all.
In fiscal 1995, The Scotts Company merged with Stern’s Miracle-Gro Products, Inc. (“Miracle-Gro”). At September 30, 2008, the former shareholders of Miracle-Gro, including Hagedorn Partnership L.P., owned approximately 32% of Scotts Miracle-Gro’s outstanding common shares and, thus, have the ability to significantly influence the election of directors and approval of other actions requiring the approval of Scotts Miracle-Gro’s shareholders. Under the terms of the merger agreement with Miracle-Gro, the former shareholders of Miracle-Gro may not collectively acquire, directly or indirectly, beneficial ownership of Voting Stock (as that term is defined in the Miracle-Gro merger agreement) representing more than 49% of the total voting power of the outstanding Voting Stock, except pursuant to a tender offer for 100% of that total voting power, which tender offer is made at a price per share which is not less than the market price per share on the last trading day before the announcement of the tender offer and is conditioned upon the receipt of at least 50% of the Voting Stock beneficially owned by shareholders of Scotts Miracle-Gro other than the former shareholders of Miracle-Gro and their affiliates and associates. Scotts Miracle-Gro reacquired no common shares in fiscal 2008 and 4.5 million common shares during fiscal 2007, to be held in treasury. Common shares held in treasury totaling 0.6 million and 2.0 million were reissued in support of share-based compensation awards and employee purchases under the employee stock purchase plan during fiscal 2008 and fiscal 2007, respectively. See “NOTE 5. RECAPITALIZATION” for a discussion of the Company’s fiscal 2007 recapitalization transactions. Table of ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS These excerpts taken from the SMG 10-K filed Nov 25, 2008. Master Accounts
Receivable Purchase Agreement
On April 11, 2007, the Company entered into a one-year
Master Accounts Receivable Purchase Agreement (the
“Original MARP Agreement”). On April 9, 2008, the
Company terminated the Original MARP Agreement and entered into
a new Master Accounts Receivable Purchase Agreement (the
“New MARP Agreement”) with a termination date of
April 8, 2009, or such later date as may be extended by
mutual agreement of the Company and its lenders. The terms of
the New MARP Agreement are substantially the same as the
Original MARP Agreement. The New MARP Agreement provides for the
discounted sale, on a revolving basis, of accounts receivable
generated by specified account debtors, with seasonally adjusted
monthly aggregate limits ranging from $10 million to
$300 million. The New MARP Agreement also provides for
specified account debtor sublimit amounts, which provide limits
on the amount of receivables owed by individual account debtors
that can be sold to the banks.
The New MARP Agreement provides that although the specified
receivables are sold, the purchaser has the right to require the
Company to repurchase uncollected receivables if certain events
occur, including the breach of certain covenants, warranties or
representations made by the Company with respect to such
receivables. However, the purchaser does not have the right to
require the Company to repurchase any uncollected receivables if
nonpayment is due to the account debtor’s financial
inability to pay. Under certain specified conditions, the
Company has the right to repurchase receivables which have been
sold pursuant to the New MARP Agreement. The purchase price paid
by the purchaser reflects a discount on the adjusted amount
(primarily reflecting historical dilution and potential trade
credits) of the receivables purchased, which effectively is
equal to the
7-day LIBOR
rate plus a margin of .85% per
Table of Contents
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
annum. The Company continues to be responsible for the servicing
and administration of the receivables purchased.
The Company accounts for the sale of receivables under the New
MARP Agreement as short-term debt and continues to carry the
receivables on its consolidated balance sheet, in accordance
with SFAS 140, “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities,”
primarily as a result of the Company’s right to repurchase
receivables sold. The caption “Accounts receivable
pledged” on the accompanying Consolidated Balance Sheets in
the amounts of $146.6 million and $149.5 million as of
September 30, 2008 and 2007, respectively, represents the
pool of receivables that have been designated as
“sold” and serve as collateral for short-term debt in
the amount of $62.1 million and $64.4 million as of
those dates, respectively.
The Company was in compliance with the terms of all borrowing
agreements at September 30, 2008. Management continues to
monitor the Company’s compliance with the leverage ratio
and other covenants contained in the credit facilities and,
based upon the Company’s current operating assumptions, the
Company expects to remain in compliance with the permissible
leverage ratio throughout fiscal 2009. However, an unanticipated
charge to earnings or an increase in debt could materially
affect our ability to remain in compliance with the financial
covenants of our credit facilities, potentially causing us to
have to seek an amendment or waiver from our lending group.
While the Company believes it has good relationships with its
banking group, given the adverse conditions currently present in
the global credit markets, the Company can provide no assurance
that such a request would be likely to result in a modified or
replacement credit facility on reasonable terms, if at all.
In fiscal 1995, The Scotts Company merged with Stern’s
Miracle-Gro Products, Inc. (“Miracle-Gro”). At
September 30, 2008, the former shareholders of Miracle-Gro,
including Hagedorn Partnership L.P., owned approximately 32% of
Scotts Miracle-Gro’s outstanding common shares and, thus,
have the ability to significantly influence the election of
directors and approval of other actions requiring the approval
of Scotts Miracle-Gro’s shareholders.
Under the terms of the merger agreement with Miracle-Gro, the
former shareholders of Miracle-Gro may not collectively acquire,
directly or indirectly, beneficial ownership of Voting Stock (as
that term is defined in the Miracle-Gro merger agreement)
representing more than 49% of the total voting power of the
outstanding Voting Stock, except pursuant to a tender offer for
100% of that total voting power, which tender offer is made at a
price per share which is not less than the market price per
share on the last trading day before the announcement of the
tender offer and is conditioned upon the receipt of at least 50%
of the Voting Stock beneficially owned by shareholders of Scotts
Miracle-Gro other than the former shareholders of Miracle-Gro
and their affiliates and associates.
Scotts Miracle-Gro reacquired no common shares in fiscal 2008
and 4.5 million common shares during fiscal 2007, to be
held in treasury. Common shares held in treasury totaling
0.6 million and 2.0 million were reissued in support
of share-based compensation awards and employee purchases under
the employee stock purchase plan during fiscal 2008 and fiscal
2007, respectively.
See “NOTE 5. RECAPITALIZATION” for a
discussion of the Company’s fiscal 2007 recapitalization
transactions.
Table of Contents
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
Master Accounts Receivable Purchase Agreement On April 11, 2007, the Company entered into a one-year Master Accounts Receivable Purchase Agreement (the “Original MARP Agreement”). On April 9, 2008, the Company terminated the Original MARP Agreement and entered into a new Master Accounts Receivable Purchase Agreement (the “New MARP Agreement”) with a termination date of April 8, 2009, or such later date as may be extended by mutual agreement of the Company and its lenders. The terms of the New MARP Agreement are substantially the same as the Original MARP Agreement. The New MARP Agreement provides for the discounted sale, on a revolving basis, of accounts receivable generated by specified account debtors, with seasonally adjusted monthly aggregate limits ranging from $10 million to $300 million. The New MARP Agreement also provides for specified account debtor sublimit amounts, which provide limits on the amount of receivables owed by individual account debtors that can be sold to the banks. The New MARP Agreement provides that although the specified receivables are sold, the purchaser has the right to require the Company to repurchase uncollected receivables if certain events occur, including the breach of certain covenants, warranties or representations made by the Company with respect to such receivables. However, the purchaser does not have the right to require the Company to repurchase any uncollected receivables if nonpayment is due to the account debtor’s financial inability to pay. Under certain specified conditions, the Company has the right to repurchase receivables which have been sold pursuant to the New MARP Agreement. The purchase price paid by the purchaser reflects a discount on the adjusted amount (primarily reflecting historical dilution and potential trade credits) of the receivables purchased, which effectively is equal to the 7-day LIBOR rate plus a margin of .85% per Table of ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS annum. The Company continues to be responsible for the servicing and administration of the receivables purchased. The Company accounts for the sale of receivables under the New MARP Agreement as short-term debt and continues to carry the receivables on its consolidated balance sheet, in accordance with SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” primarily as a result of the Company’s right to repurchase receivables sold. The caption “Accounts receivable pledged” on the accompanying Consolidated Balance Sheets in the amounts of $146.6 million and $149.5 million as of September 30, 2008 and 2007, respectively, represents the pool of receivables that have been designated as “sold” and serve as collateral for short-term debt in the amount of $62.1 million and $64.4 million as of those dates, respectively. The Company was in compliance with the terms of all borrowing agreements at September 30, 2008. Management continues to monitor the Company’s compliance with the leverage ratio and other covenants contained in the credit facilities and, based upon the Company’s current operating assumptions, the Company expects to remain in compliance with the permissible leverage ratio throughout fiscal 2009. However, an unanticipated charge to earnings or an increase in debt could materially affect our ability to remain in compliance with the financial covenants of our credit facilities, potentially causing us to have to seek an amendment or waiver from our lending group. While the Company believes it has good relationships with its banking group, given the adverse conditions currently present in the global credit markets, the Company can provide no assurance that such a request would be likely to result in a modified or replacement credit facility on reasonable terms, if at all.
In fiscal 1995, The Scotts Company merged with Stern’s Miracle-Gro Products, Inc. (“Miracle-Gro”). At September 30, 2008, the former shareholders of Miracle-Gro, including Hagedorn Partnership L.P., owned approximately 32% of Scotts Miracle-Gro’s outstanding common shares and, thus, have the ability to significantly influence the election of directors and approval of other actions requiring the approval of Scotts Miracle-Gro’s shareholders. Under the terms of the merger agreement with Miracle-Gro, the former shareholders of Miracle-Gro may not collectively acquire, directly or indirectly, beneficial ownership of Voting Stock (as that term is defined in the Miracle-Gro merger agreement) representing more than 49% of the total voting power of the outstanding Voting Stock, except pursuant to a tender offer for 100% of that total voting power, which tender offer is made at a price per share which is not less than the market price per share on the last trading day before the announcement of the tender offer and is conditioned upon the receipt of at least 50% of the Voting Stock beneficially owned by shareholders of Scotts Miracle-Gro other than the former shareholders of Miracle-Gro and their affiliates and associates. Scotts Miracle-Gro reacquired no common shares in fiscal 2008 and 4.5 million common shares during fiscal 2007, to be held in treasury. Common shares held in treasury totaling 0.6 million and 2.0 million were reissued in support of share-based compensation awards and employee purchases under the employee stock purchase plan during fiscal 2008 and fiscal 2007, respectively. See “NOTE 5. RECAPITALIZATION” for a discussion of the Company’s fiscal 2007 recapitalization transactions. Table of ContentsNOTES TO CONSOLIDATED FINANCIAL STATEMENTS This excerpt taken from the SMG 10-K filed Nov 29, 2007. Master Accounts
Receivable Purchase Agreement
On April 11, 2007, the Company entered into a Master
Accounts Receivable Purchase Agreement (the “MARP
Agreement”). The facility terminates on April 10,
2008, or such later date as may be extended by mutual consent of
the Company and lenders. The Company currently intends to
request an extension. The MARP Agreement provides for the
discounted sale, on a revolving basis, of accounts receivable
generated by specified account debtors, with seasonally adjusted
monthly aggregate limits ranging from $55 million to
$300 million. The MARP Agreement also provides for
specified account debtor sublimit amounts, which provide limits
on the amount of receivables owed by individual account debtors
that can be sold.
The MARP Agreement provides that although the specified
receivables are sold, the purchaser has the right to require the
Company to repurchase uncollected receivables if certain events
occur, including the breach of certain covenants, warranties or
representations made by the Company with respect to such
receivables. However, the purchaser does not have the right to
require the Company to repurchase any uncollected receivables if
nonpayment is due to the account debtor’s financial
inability to pay. Under certain specified conditions, the
Company has the right to repurchase receivables which have been
sold pursuant to the MARP Agreement. The purchase price paid by
the purchaser reflects a discount
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
on the adjusted amount (primarily reflecting historical dilution
and potential trade credits) of the receivables purchased, which
effectively is equal to the
30-day LIBOR
rate plus a margin of .65% per annum. The Company continues to
be responsible for the servicing and administration of the
receivables purchased.
The Company accounts for the sale of receivables under the MARP
Agreement as short-term debt and continues to carry the
receivables on its Consolidated Balance Sheet, in accordance
with SFAS 140, “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities,”
primarily as a result of the Company’s right to repurchase
receivables sold. The caption “Accounts receivable pledged
under MARP Agreement” in the amount of $149.5 on the
accompanying Consolidated Balance Sheet as of September 30,
2007, represents the pool of receivables that have been
designated as “sold” and serve as collateral for
short-term debt in the amount of $64.4 million as of that
date.
The Company was in compliance with the terms of all borrowing
agreements at September 30, 2007.
In fiscal 1995, The Scotts Company merged with Stern’s
Miracle-Gro Products, Inc. (Miracle-Gro). At September 30,
2007, the former shareholders of Miracle-Gro, including Hagedorn
Partnership, L.P., owned approximately 33% of Scotts
Miracle-Gro’s outstanding common shares and, thus, have the
ability to significantly influence the election of directors and
approval of other actions requiring the approval of Scotts
Miracle-Gro’s shareholders.
Under the terms of the Miracle-Gro merger agreement, the former
shareholders of Miracle-Gro may not collectively acquire,
directly or indirectly, beneficial ownership of Voting Stock (as
that term is defined in the Miracle-Gro merger agreement)
representing more than 49% of the total voting power of the
outstanding Voting Stock, except pursuant to a tender offer for
100% of that total voting power, which tender offer is made at a
price per share which is not less than the market price per
share on the last trading day before the announcement of the
tender offer and is conditioned upon the receipt of at least 50%
of the Voting Stock beneficially owned by shareholders of Scotts
Miracle-Gro other than the former shareholders of Miracle-Gro
and their affiliates and associates.
Scotts Miracle-Gro reacquired 4.5 million and
2.0 million common shares during fiscal 2007 and fiscal
2006, respectively, to be held in treasury. Common shares held
in treasury totaling 2.0 million and 0.5 million have
been reissued in support of share-based compensation awards and
employee purchases under the employee stock purchase plan during
fiscal 2007 and fiscal 2006, respectively. See Note 2 for a
discussion of the Company’s fiscal 2007 recapitalization
transactions.
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