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 MARYSVILLE, Ohio, Nov. 22 /PRNewswire/ -- The Scotts Company (NASDAQ: SCTT) announced today that for the fiscal year ended Sept. 30, 1993, net sales increased 12.7 percent to $466.0 million. Excluding the November 1992 acquisition of Republic Tool & Manufacturing Corporation, sales increased 8.4 percent. Overall, income from operations increased 11.1 percent to $46.9 million, and earnings per share increased 35.7 percent to $1.14 before giving effect to current period and cumulative non-cash charges to reflect new accounting regulations and extraordinary items.
 Sales of consumer products for fiscal 1993 compared to fiscal 1992 increased 14.8 percent to $370.3 million, reflecting the introduction of more than 100 new products in fiscal 1993 and increased sales through some of the nation's largest retailers. Sales of professional products increased 4.0 percent to $93.7 million for the year, reflecting steadily growing momentum after product introductions by competitors slowed sales in the first half. Professional products sales, which had declined approximately 11 percent in fiscal 1993's first quarter, approximately equaled the prior year period in the second quarter, and then rebounded to an 11 percent increase in the third quarter and a 13 percent increase in the fourth quarter.
 Scotts' new composting business grew to $2.1 million in net sales in fiscal 1993 compared to $0.8 million in fiscal 1992. Scotts currently has 13 composting facilities in operation, compared to 6 at the end of fiscal 1992. The company has won bids on 2 additional facilities and is participating in bids on an additional 10 facilities. The composting contracts are awarded by municipalities and involve Scotts in recycling area yard waste into organic materials for lawn and garden care.
 Before giving effect to the adoption of new accounting changes mandated by the Financial Accounts Standards Board (FASB), Scotts cut total operating expenses in fiscal 1993 to 37.5 percent of sales from 38.3 percent in fiscal 1992, reflecting increased efficiencies in distribution and in general and administrative expenses, which more than offset the company's planned increase in research and development spending. Partially offsetting these operating margin gains was a decline in gross margins to 47.6 percent in fiscal 1993, from 48.5 percent in fiscal 1992, reflecting start-up costs for Scotts' new controlled-release fertilizer technology as well as the acquisition of Republic Manufacturing.
 "Both of these items had a temporary depressive effect on gross margins," said Tadd C. Seitz, chairman and chief executive officer of Scotts. "The start-up of the new technology was completed mid-year and is expected to contribute to expanding gross margins going forward. Most of the Scotts fertilizer spreaders that we bought from outside suppliers for all of fiscal 1993 will be switched to production at Republic Manufacturing in fiscal 1994, allowing us to capture additional gross margin."
 In the fourth quarter of fiscal 1993, Scotts adopted FASB No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions" and FASB No. 109, "Accounting for Income Taxes." These new accounting policies resulted in a current period non-cash charge of $2.4 million ($1.4 million or $.07 per share after tax) to general and administrative expense that reduced income from $22.5 million ($1.14 per share) to $21.1 million ($1.07 per share). The company said that the current year's impact would be allocated over the four quarters of fiscal 1993 and that it did not expect there to be any significant recurring charges from the accounting changes in fiscal 1994 and beyond.
 To reflect the cumulative impact of the new accounting policies, a non-recurring non-cash after-tax charge of $13.2 million ($.67 per share) was recorded in fiscal 1993, further reducing reported income to $7.9 million ($.40 per share). The company said that both the current year and cumulative charges were for accounting purposes only and had no impact on actual cash flow.
 Net income and earnings per share benefited from lower interest expense and related charges, which declined to $9.1 million in fiscal 1993 compared to $16.0 million in fiscal 1992. Interest expense declined primarily as a result of using the net proceeds of an initial public offering completed in January 1992 to reduce outstanding debt and renegotiating more favorable terms for the remaining debt.
 Reflecting the increasing momentum in sales and profitability as the year progressed, 1993 fiscal fourth quarter sales increased 14.0 percent to $80.9 million, income from operations increased 107.9 percent to $5.9 million, and earnings per share increased to $.16 from $.06 before non- cash charges to reflect the new accounting regulations discussed above. Fourth quarter results in fiscal 1993 reflected the continuing trend of increased efficiency in operating expenses, with total operating expenses as a percent of sales declining to 39.33 percent from 44.33 percent in the comparable fiscal 1992 period.
 Scotts is the country's leading producer and marketer of consumer do-it-yourself lawn care and professional golf course turf care products. The company's Turf Builder(R) products are the nation's most popular lawn care fertilizers and fertilizer/control combinations. The company's Pro Turf(R) products are the nation's leading line of fertilizer/control combinations for golf courses throughout the nation. The company's Hyponex(R) products are the nation's leading line of organic products, including top soil, potting soils, composted manures, and bark mulches. Through Republic Tool and Manufacturing Company, Scotts offers a full line of lawn spreaders and other lawn and garden equipment under the "EZ" label and under retailers' private brands.
 -0- 11/22/93
 /CONTACT: Thomas C. Franco or William J. Jenks, both of Broadgate Consultants, Inc., 212-229-2222/

CO: The Scotts Company ST: Ohio IN: CHM SU: ERN

TM -- NY004 -- 6675 11/22/93 08:34 EST
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Publication:PR Newswire
Date:Nov 22, 1993

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