Scotts Company (SMG)

 

Cash provided by operating activities decreased from $246.6 million in fiscal 2007 to $200.9 million in fiscal 2008. Net income (loss) plus non-cash impairment charges, non-cash costs related to refinancing, stock-based compensation expense, depreciation and amortization declined by $41.8 million from $250.5 million in fiscal 2007 to $208.7 million in fiscal 2008, primarily due to product registration and recall costs of approximately $51.1 million.

 

Cash provided by operating activities increased from $182.4 million in fiscal 2006 to $246.6 million in fiscal 2007. Net income plus non-cash impairment charges, non-cash costs related to refinancing, stock-based compensation expense, depreciation and amortization declined by $31.3 million from $281.8 million in fiscal 2006 to $250.5 million in fiscal 2007, primarily due to higher interest expense after our February 2007 recapitalization and lower operating income in our Global Consumer segment. Fiscal 2006 operating cash flows were unfavorably impacted by inventory and accounts receivable increases, which did not impact fiscal 2007. Furthermore, fiscal 2006 reflects a $43.0 million usage of cash to fund the Roundup^® deferred contribution payment in October 2005.

 

The seasonal nature of our operations generally requires cash to fund significant increases in working capital (primarily inventory) during the first half of the year. Receivables and payables also build substantially in the second quarter of the year in line with the timing of sales to support our retailers’ spring selling season. These balances liquidate during the June through September period as the lawn and garden season unwinds. Unlike our core retail business, Scotts LawnService^® typically has its highest receivables balances in the fourth quarter because of the seasonal timing of customer applications and extra service revenues.

 

 

Cash provided by operating activities decreased from
$246.6 million in fiscal 2007 to $200.9 million in
fiscal 2008. Net income (loss) plus non-cash impairment charges,
non-cash costs related to refinancing, stock-based compensation
expense, depreciation and amortization declined by
$41.8 million from $250.5 million in fiscal 2007 to
$208.7 million in fiscal 2008, primarily due to product
registration and recall costs of approximately
$51.1 million.

 

Cash provided by operating activities increased from
$182.4 million in fiscal 2006 to $246.6 million in
fiscal 2007. Net income plus non-cash impairment charges,
non-cash costs related to refinancing, stock-based compensation
expense, depreciation and amortization declined by
$31.3 million from $281.8 million in fiscal 2006 to
$250.5 million in fiscal 2007, primarily due to higher
interest expense after our February 2007 recapitalization and
lower operating income in our Global Consumer segment. Fiscal
2006 operating cash flows were unfavorably impacted by inventory
and accounts receivable increases, which did not impact fiscal
2007. Furthermore, fiscal 2006 reflects a $43.0 million
usage of cash to fund the
Roundup^®

deferred contribution payment in October 2005.

 

The seasonal nature of our operations generally requires cash to
fund significant increases in working capital (primarily
inventory) during the first half of the year. Receivables and
payables also build substantially in the second quarter of the
year in line with the timing of sales to support our
retailers’ spring selling season. These balances liquidate
during the June through September period as the lawn and garden
season unwinds. Unlike our core retail business, Scotts
LawnService^®

typically has its highest receivables balances in the fourth
quarter because of the seasonal timing of customer applications
and extra service revenues.

 

 

Cash provided by operating activities decreased from $246.6 million in fiscal 2007 to $200.9 million in fiscal 2008. Net income (loss) plus non-cash impairment charges, non-cash costs related to refinancing, stock-based compensation expense, depreciation and amortization declined by $41.8 million from $250.5 million in fiscal 2007 to $208.7 million in fiscal 2008, primarily due to product registration and recall costs of approximately $51.1 million.

 

Cash provided by operating activities increased from $182.4 million in fiscal 2006 to $246.6 million in fiscal 2007. Net income plus non-cash impairment charges, non-cash costs related to refinancing, stock-based compensation expense, depreciation and amortization declined by $31.3 million from $281.8 million in fiscal 2006 to $250.5 million in fiscal 2007, primarily due to higher interest expense after our February 2007 recapitalization and lower operating income in our Global Consumer segment. Fiscal 2006 operating cash flows were unfavorably impacted by inventory and accounts receivable increases, which did not impact fiscal 2007. Furthermore, fiscal 2006 reflects a $43.0 million usage of cash to fund the Roundup^® deferred contribution payment in October 2005.

 

The seasonal nature of our operations generally requires cash to fund significant increases in working capital (primarily inventory) during the first half of the year. Receivables and payables also build substantially in the second quarter of the year in line with the timing of sales to support our retailers’ spring selling season. These balances liquidate during the June through September period as the lawn and garden season unwinds. Unlike our core retail business, Scotts LawnService^® typically has its highest receivables balances in the fourth quarter because of the seasonal timing of customer applications and extra service revenues.

 

 

Cash provided by operating activities decreased from
$246.6 million in fiscal 2007 to $200.9 million in
fiscal 2008. Net income (loss) plus non-cash impairment charges,
non-cash costs related to refinancing, stock-based compensation
expense, depreciation and amortization declined by
$41.8 million from $250.5 million in fiscal 2007 to
$208.7 million in fiscal 2008, primarily due to product
registration and recall costs of approximately
$51.1 million.

 

Cash provided by operating activities increased from
$182.4 million in fiscal 2006 to $246.6 million in
fiscal 2007. Net income plus non-cash impairment charges,
non-cash costs related to refinancing, stock-based compensation
expense, depreciation and amortization declined by
$31.3 million from $281.8 million in fiscal 2006 to
$250.5 million in fiscal 2007, primarily due to higher
interest expense after our February 2007 recapitalization and
lower operating income in our Global Consumer segment. Fiscal
2006 operating cash flows were unfavorably impacted by inventory
and accounts receivable increases, which did not impact fiscal
2007. Furthermore, fiscal 2006 reflects a $43.0 million
usage of cash to fund the
Roundup^®

deferred contribution payment in October 2005.

 

The seasonal nature of our operations generally requires cash to
fund significant increases in working capital (primarily
inventory) during the first half of the year. Receivables and
payables also build substantially in the second quarter of the
year in line with the timing of sales to support our
retailers’ spring selling season. These balances liquidate
during the June through September period as the lawn and garden
season unwinds. Unlike our core retail business, Scotts
LawnService^®

typically has its highest receivables balances in the fourth
quarter because of the seasonal timing of customer applications
and extra service revenues.

 

 

Although net income plus noncash impairment charges, stock-based compensation expense, depreciation and amortization declined by $49.6 million from $281.8 in fiscal 2006 to $232.2 million in fiscal 2007, net cash provided from operating activities for fiscal 2007 increased by $64.2 million over fiscal 2006. Factors that negatively impacted operating cash flow in fiscal 2006 were the utilization of $63.9 million in cash plus $34.3 million in accounts payable to fund an increase of $98.2 million of accounts receivable and inventories. We undertook an inventory build in North America in the fourth quarter of fiscal 2006 to take advantage of a historical trough in urea costs and to increase the predictability of fiscal 2007 costs. Smith & Hawken^® inventories also increased in fiscal 2006 as a result of a conscious early season effort to improve customer service; however, sales subsequently did not meet expectations. By comparison, there were only modest changes in outstanding amounts of accounts receivable, inventories, and accounts payable at the end of fiscal 2007 versus 2006. Fiscal 2006 also used $43.0 million of operating cash flows to fund the Roundup^® deferred contribution payment in October 2005. Lastly, fiscal 2007 operating cash flow includes the add back of $18.3 million of financing costs related to the recapitalization that are reflected as a financing cost.

 

The seasonal nature of our operations generally requires cash to fund significant increases in working capital (primarily inventory) during the first half of the year. Receivables and payables also build substantially in the second quarter of the year in line with the timing of sales to support our retailers spring selling season. These balances liquidate during the June through September period as the lawn and garden season unwinds. Unlike our core retail business, Scotts LawnService^® typically has its highest receivables balances in the fourth quarter because of the seasonal timing of customer applications and extra service revenues.