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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 2001
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
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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
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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PAGE
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000 2
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 2001 and 2000 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") as of December
31, 2001 and 2000, and the changes in net assets available for benefits for the
year 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 audit. We conducted our audit 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
audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
April 9, 2002
THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2001 AND 2000
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2001 2000
Net assets available for benefits:
Investment in master trust $170,065 $ 80,491
Employer contribution receivable 3,087 4,135
Employee contribution receivable 5,056 7,113
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Total net assets available for benefits $178,208 $ 91,739
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The accompanying notes are an integral part of the financial statements.
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2001 AND 2000
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2001 2000
Increases:
Employer contributions $ 37,559 $ 39,193
Participant contributions 72,012 60,794
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Total increases 109,571 99,987
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Decreases:
Net loss from master trust 5,683 2,739
Benefits paid to participants 17,419 5,509
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Total decreases 23,102 8,248
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Net increase in net assets available for benefits 86,469 91,739
Net assets available for benefits, beginning of year 91,739 --
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Net assets available for benefits, end of year $178,208 $ 91,739
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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, 2001 AND 2000
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1. PLAN DESCRIPTION
Effective January 1, 2000, The Scotts Company Union Retirement Savings
Plan (the "Plan"), a contributory defined contribution benefit plan,
was established by the Plan's sponsor, The Scotts Company (the
"Company"). The Plan is a contributory defined contribution benefit
plan sponsored by The Scotts 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 or coincident with 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 15% 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. However, base contributions made by the Company vest after
three years of service, or upon attainment of age 65 prior to
terminating employment.
FORFEITURES
The nonvested portions of participant account balances are forfeitable
and used to reduce employer contributions to the Plan. Plan forfeitures
totaled $3,883 for the year ended December 31, 2001 and $427 for the
year ended December 31, 2000.
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.
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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- 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.
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.
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting
principles.
INVESTMENTS
Excluding participant loans, investments are stated at quoted market
prices. Participants' loans are valued at cost, which approximates fair
value.
ADMINISTRATIVE EXPENSES
The Company pays for all administrative fees except those that are
participant specific, such as loan establishment and maintenance fees.
PAYMENTS OF BENEFITS
Benefits are recorded when paid.
USE OF ESTIMATES
The preparation of the Plan's financial statements in conformity with
generally accepted accounting principles requires the Plan to make
estimates and assumptions that affect the reported amounts of net
assets available for benefits at the date of the financial statements,
changes in net assets available for benefits during the reporting
period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results
could differ from those estimates.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options, which are subject to
various risks, such as interest rate, market, and credit risks. Due to
the level of risk associated with certain investment securities, it is
at least reasonably possible that changes in the values of investment
securities will occur in the near term and that such changes could
materially affect participant account balances and the amounts reported
in the statement of net assets available for benefits.
3. 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 percentage of the master trust. Plan activities, such as
contributions and benefit payments, are recorded in the individual
plan's accounting records.
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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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, 2001 and
2000 are as follows:
NET
APPRECIATION
(DEPRECIATION)
INTEREST AND IN FAIR VALUE ADMINISTRATION
2001 DIVIDENDS OF SECURITIES EXPENSES TOTAL
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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
Loans to participants 255,679 -- -- $ 255,679
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Total 4,339,482 (13,236,673) (19,526) $ (8,916,717)
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NET
APPRECIATION
(DEPRECIATION)
INTEREST AND IN FAIR VALUE ADMINISTRATION
2000 DIVIDENDS OF SECURITIES EXPENSES TOTAL
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Mutual funds $ 7,548,026 $(12,332,300) $ (14,347) $ (4,798,621)
Common trust fund 698,257 -- (2,681) $ 695,576
The Scotts Company Common Shares 31,542 (179,130) (1,451) $ (149,039)
Loans to participants 212,344 -- -- $ 212,344
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Total $ 8,490,169 $(12,511,430) $ (18,479) $ (4,039,740)
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Total assets held in the master trust at December 31, 2001 and 2000
were as follows:
2001 2000
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Cash and cash equivalents $ 486,922 $ 439,536
Investments
Mutual funds, at fair value 112,359,577 119,120,168
Common trust fund, at fair value 15,190,528 12,901,238
The Scotts Company Common Shares, at fair value 6,786,189 8,538,029
Loans to participants, at cost 3,031,510 2,938,128
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Total investments 137,367,804 143,497,563
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Receivable from broker
1,076 226,447
Total master trust net assets 137,855,802 144,163,546
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The Scotts Company Union Retirement Savings Plan
interest in master trust net assets 0.123% 0.058%
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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Accounting policies discussed in Note 1 also apply to the master trust.
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, 2001 and 2000, 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.
4. INVESTMENTS IN THE SCOTTS COMPANY
At December 31, 2001 and 2000, the master trust had investments in The
Scotts Company common shares, as follows:
2001 2000
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FAIR MARKET FAIR MARKET
SHARES VALUE SHARES VALUE
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142,567 $ 6,786,189 231,148 $ 8,538,029
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The Company's common shares are valued at quoted market prices, which
were $47.60 per share at December 31, 2001 and $36.94 per share at
December 31, 2000.
5. 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 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.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to terminate the Plan or its contributions subject
to the provisions of the Employee Retirement Income Security Act of
1974, and the Company's collective bargaining agreement with the Union.
In the event the Plan is terminated, participants will become fully
vested in their accounts.
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
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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,
2001 2000
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Net assets available for benefits per
the financial statements $ 178,208 $ 91,739
Amounts allocated to withdrawing
participants (1) (29)
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Net assets available for benefits
per Form 5500 $ 178,207 $ 91,710
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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,
2001 2000
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Benefits paid to participants per
the financial statements $ 17,419 $ 5,509
Amounts allocated to withdrawing
participants at December 31, 2001 1 -
Amounts allocated to withdrawing
participants at December 31, 2000 (29) 29
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Benefits paid to participants per
the Form 5500 $ 17,391 $ 5,538
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-9-
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 18, 2002 By: /s/ HADIA LAFAVRE
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Printed Name: Hadia Lefavre
Title: Executive Vice President,
Human Resources Worldwide
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THE SCOTTS COMPANY UNION RETIREMENT SAVINGS PLAN
ANNUAL REPORT ON FORM 11-K
FOR FISCAL YEARS ENDED DECEMBER 31, 2001 AND 2000
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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23 Consent of Independent Public
Accountants
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