UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D. C. 20549
FORM
11-K
(Mark
One)
|
R
|
ANNUAL REPORT PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR THE FISCAL YEAR ENDED DECEMBER
31, 2008
OR
£ TRANSITION REPORT PURSUANT TO SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE TRANSITION PERIOD FROM
________________ TO _________________
COMMISSION
FILE NUMBER 333-147397
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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:
|
Smith
& Hawken 401(k) Plan
4
Hamilton Landing
Novato,
California 94949
|
B.
|
Name
of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
|
The
Scotts Miracle-Gro Company
14111
Scottslawn Road
Marysville,
Ohio 43041
REQUIRED
INFORMATION
The following financial statements and
supplemental schedule for the Smith & Hawken 401(k) Plan are being
filed herewith:
Audited
Financial Statements
Report of Independent Registered Public
Accounting Firm
Financial Statements:
Statements of Net Assets Available for
Benefits as of December 31, 2008 and 2007
Statements of Changes in Net Assets
Available for Benefits for the Years Ended December 31, 2008 and
2007
Notes to Financial
Statements
Supplemental Schedule:
Schedule of Assets Held for Investment
Purposes at End of Year
Note: Other
supplemental schedules required by Section 252.103-10 of the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
The
following exhibit is being filed herewith:
Exhibit No.
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|
Description
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|
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23.1
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Consent
of Independent Registered Public Accounting Firm – Meaden & Moore,
Ltd.
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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.
Date:
June 18, 2009
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By:
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/s/ DAVID C. EVANS
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|
Printed
Name: David C. Evans
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|
|
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Title:
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Executive
Vice President and Chief
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Financial
Officer of The Scotts
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Miracle-Gro
Company
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SMITH
& HAWKEN 401(K) PLAN
INDEX
TO THE FINANCIAL STATEMENTS December 31, 2008 and
2007
|
|
PAGE NO.
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|
|
Report
of Independent Registered Public Accounting Firm
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5
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Financial
Statements:
|
|
|
|
Statements
of Net Assets Available for Benefits
|
6
|
Statements
of Changes in Net Assets Available for Benefits
|
7
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Notes
to Financial Statements
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8 –
16
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Supplemental
Schedule
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|
|
|
Schedule
of Assets Held for Investment Purposes at End of Year
|
17
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NOTE:
|
Other
supplement schedules required by Section 252.103-10 of the Department of
Labor’s Rules and Regulations for Reporting and Disclosure and ERISA have
been omitted because they are not
applicable.
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Trustees
or Plan Administrator
Smith
& Hawken 401(k) Plan
Novato,
California
We have
audited the accompanying Statements of Net Assets Available for Benefits of the
SMITH & HAWKEN 401(k) PLAN (the “Plan”) as of
December 31, 2008 and 2007 and the related Statements of Changes in Net Assets
Available for Benefits for the years then ended. 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
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The Plan
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Plan's internal control over
financial reporting. Accordingly, we express no such
opinion. 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 audits provide a reasonable basis for our opinion.
In 2008,
the Plan adopted Statement of Financial Accounting Standards ("SFAS") No. 157,
"Fair Value Measurements."
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the SMITH
& HAWKEN 401(k) PLAN as of December 31, 2008 and 2007, and the
changes in its net assets available for benefits for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
Our
audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule
of assets (held at end of year) as of December 31, 2008, is presented for the
purpose of additional analysis and is not a required part of the financial
statements but is supplemental information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is
the responsibility of the Plan's management. The supplemental
information has been subjected to the auditing procedures applied in our audits
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a
whole.
/s/
MEADEN & MOORE, LTD.
Certified
Public Accountants
June 18,
2009
Cleveland,
Ohio
STATEMENTS
OF NET ASSETS AVAILABLE FOR BENEFITS
Smith
& Hawken
401(k)
Plan
|
|
December
31
|
|
|
|
2008
|
|
|
2007
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
10,292 |
|
|
$ |
1,059 |
|
|
|
|
|
|
|
|
|
|
Investments,
at Fair Value:
|
|
|
|
|
|
|
|
|
All/Bern
Balanced A
|
|
|
339,921 |
|
|
|
526,556 |
|
Columbia
Acorn A
|
|
|
443,557 |
|
|
|
567,188 |
|
Fidelity
Advisor Diversified International Fund
|
|
|
480,316 |
|
|
|
708,787 |
|
Fidelity
Advisor Dividend Growth Fund
|
|
|
5 |
|
|
|
16 |
|
Fidelity
Advisor International Small Cap T
|
|
|
294,845 |
|
|
|
453,127 |
|
Fidelity
Advisor Leveraged Common Stock Fund
|
|
|
3,579 |
|
|
|
- |
|
Fidelity
Advisor New Insights
|
|
|
730,433 |
|
|
|
1,004,839 |
|
Fidelity
Advisor Stable Value
|
|
|
884,478 |
|
|
|
577,618 |
|
Fidelity
Advisor Strategic Income Fund
|
|
|
425,967 |
|
|
|
665,235 |
|
JPM
Intrepid America Fund
|
|
|
513,529 |
|
|
|
822,928 |
|
JPM
Intrepid Value Fund
|
|
|
147,651 |
|
|
|
193,125 |
|
JPM
Equity Index Fund
|
|
|
586,488 |
|
|
|
870,929 |
|
Robertson
Stephens Partners
|
|
|
296,857 |
|
|
|
369,857 |
|
The
Scotts Company Common Shares
|
|
|
65,527 |
|
|
|
26,115 |
|
Participant
Loans
|
|
|
94,576 |
|
|
|
76,346 |
|
|
|
|
|
|
|
|
|
|
Total
Investments
|
|
|
5,307,729 |
|
|
|
6,862,666 |
|
|
|
|
|
|
|
|
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Total
Assets
|
|
|
5,318,021 |
|
|
|
6,863,725 |
|
|
|
|
|
|
|
|
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|
LIABILITIES
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits at Fair Value
|
|
|
5,318,021 |
|
|
|
6,863,725 |
|
|
|
|
|
|
|
|
|
|
Adjustment
from fair value to contract value for the Fidelity Advisor
|
|
|
|
|
|
|
|
|
Stable
Value Fund, a fully benefit-responsive investment contract
|
|
|
24,255 |
|
|
|
2,296 |
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits
|
|
$ |
5,342,276 |
|
|
$ |
6,866,021 |
|
See
accompanying notes.
STATEMENTS
OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Smith
& Hawken
401(k)
Plan
|
|
Year Ended December 31
|
|
|
|
2008
|
|
|
2007
|
|
Additions
to Net Assets Attributed to:
|
|
|
|
|
|
|
Contributions:
|
|
|
|
|
|
|
Employer
|
|
$ |
842,383 |
|
|
$ |
789,322 |
|
Employee
|
|
|
883,347 |
|
|
|
953,538 |
|
Rollovers
|
|
|
67,823 |
|
|
|
80,267 |
|
|
|
|
1,793,553 |
|
|
|
1,823,127 |
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income
|
|
|
157,442 |
|
|
|
422,258 |
|
|
|
|
|
|
|
|
|
|
Total
Additions
|
|
|
1,950,995 |
|
|
|
2,245,385 |
|
|
|
|
|
|
|
|
|
|
Deductions
from Net Assets Attributed to:
|
|
|
|
|
|
|
|
|
Benefits
paid to participants
|
|
|
1,063,408 |
|
|
|
808,856 |
|
Net
depreciation of investments
|
|
|
2,420,600 |
|
|
|
34,209 |
|
Administrative
expenses
|
|
|
18,929 |
|
|
|
22,866 |
|
|
|
|
|
|
|
|
|
|
Total
Deductions
|
|
|
3,502,937 |
|
|
|
865,931 |
|
|
|
|
|
|
|
|
|
|
Net
(Decrease) Increase before Plan Transfer
|
|
|
(1,551,942 |
) |
|
|
1,379,454 |
|
|
|
|
|
|
|
|
|
|
Plan
Transfer
|
|
|
28,197 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
Assets Available for Benefits:
|
|
|
|
|
|
|
|
|
Beginning
of Year
|
|
|
6,866,021 |
|
|
|
5,486,567 |
|
|
|
|
|
|
|
|
|
|
End
of Year
|
|
$ |
5,342,276 |
|
|
$ |
6,866,021 |
|
See
accompanying notes.
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
NOTE
1. DESCRIPTION OF PLAN
The
following description of The Smith & Hawken 401(k) Plan (the "Plan")
provides only general information. Participants should refer to the
Plan document for a complete description of the Plan's provisions.
General:
The Plan,
which began February 28, 1999, is a defined contribution plan covering all
employees of Smith & Hawken, Ltd. (the "Company") who meet the hour and age
requirements. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
The Plan
was amended and restated effective January 1, 2006, in order to satisfy the
requirements of a “safe harbor” plan. The Plan was amended and
restated effective January 23, 2003, for provisions stated in the Economic
Growth and Tax Relief Reconciliation Act (EGTRRA).
The
Scotts Company, LLC, parent of the Company, pursued divesting Smith &
Hawken, Ltd. but was unable to negotiate economically reasonable
terms. The Scotts Company, LLC continues to evaluate options for
Smith & Hawken, Ltd. Any impact to the Plan is
unknown.
Eligibility:
All
employees of the Company age twenty-one and older, except nonresident aliens
working outside the United States and temporary/leased employees, and who have
completed two months of service in a twelve month period, are eligible to
participate in the Plan and to receive safe harbor matching contributions by the
Company. Employees of the Company age twenty-one and older and who
have completed 1,000 hours of service in a twelve month period are eligible to
receive discretionary non-elective employer contributions.
Employee
Contributions:
Each
participant may elect to contribute to the Plan, through salary deferrals, a
minimum of 1% to a maximum 75% of their pretax annual
compensation. Contributions are limited to the amounts defined by the
Internal Revenue Code (IRC) and indexed annually for inflation. The
Plan limits the salary deferral of a participant if the participant's annual
contribution limitations are exceeded, as described by the IRC. The
maximum pre-tax contributions for the years ended December 31, 2008 and 2007
were $15,500. The Plan also provides that participants who are
projected to be age 50 or older by the end of the calendar year and who are
making deferral contributions to the Plan may also make catch-up contributions
of up to $5,000 during each of the years ended December 31, 2008 and
2007.
Employer
Contributions:
With the
adoption of the 401(k) Safe-Harbor Provisions effective January 1, 2006, Company
matching contributions were mandatory. For the year ended December 31, 2008 and
2007, the Company matched 100% of each participant’s contribution, up to the
first 3% of covered compensation, plus 50% of the next 2% of covered
compensation. At its discretion, the Company may make discretionary
non-elective employer contributions to the Plan. The discretionary
non-elective employer contributions were $371,127 and $304,069 for the years
ended December 31, 2008 and 2007, respectively.
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
Participants'
Accounts:
401(k)
Accounts - Each participant's account is credited with the participant's
elective contributions, employer matching contributions, earnings and losses
thereon.
Rollover
contributions from other plans are also accepted provided certain specified
conditions are met.
Vesting:
For the
years ended December 31, 2008 and 2007, all participants are 100% vested in
elective deferrals, rollover contributions, safe harbor matching contributions
made by the Company, and any earnings thereon. Participants become
100% vested in the discretionary non-elective employer contributions after 3
years of service.
Forfeitures:
The
non-vested portions of participant account balances are forfeitable and used to
reduce employer contributions to the Plan. Forfeited non-vested
accounts totaled $36,919 and $37,929 for the years ended December 31,
2008 and 2007, respectively.
Participants'
Loans:
Loans are
permitted under certain circumstances and are subject to
limitations. Participants may borrow from their account up to a
maximum equal to the lesser of $50,000 or 50% of their account
balance. Loans are repaid over a period not to exceed 5 years with
exceptions for the purchase of a primary residence. The loans are
secured by the balance in the participant's account and bear interest at rates
established by Fidelity Pricing and Cash Management
Services. Principal and interest are paid ratably through monthly
payroll deductions.
Other
Plan Provisions:
Normal
retirement age is 65; however, the Plan provides for in-service withdrawals
for active employees under certain circumstances.
Payment
of Benefits:
Upon
termination of service by reason of retirement, death or total and permanent
disability, a participant receives a lump sum amount equal to the vested value
of his or her account.
Hardship
Withdrawals:
Hardship
withdrawals are permitted in accordance with Internal Revenue Service
guidelines.
Investment
Options:
Upon
enrollment in the Plan, a participant may direct his or her contributions in any
of the investment options offered by the Plan.
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Accounting:
The
Plan's transactions are reported on the accrual basis of accounting in
accordance with generally accepted accounting principles.
Investments:
The
Plan’s investments are stated at fair value. Quoted market prices are used to
value investments. Shares of mutual funds are valued at the net asset value of
shares held by the Plan at year-end.
As
described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1
and SOP 94-4-1, "Reporting of Fully Benefit-Responsive Investment Contracts Held
by Certain Investment Companies Subject to the AICPA Investment Company Guide
and Defined-Contribution Health and Welfare and Pension Plans" (the "FSP"),
investment contracts held by a defined-contribution plan are required to be
reported at fair value. However, contract value is the relevant measurement
attribute for that portion of the net assets available for benefits of a
defined-contribution plan attributable to fully benefit-responsive investment
contracts because contract value is the amount participants would receive if
they were to initiate permitted transactions under the terms of the Plan. As
required by the FSP, the Statements of Net Assets Available for Benefits present
the fair value of the investment contracts as well as the adjustment of the
Fidelity Advisor Stable Value Fund, a fully benefit-responsive investment
contract from fair value to contract value. The Statements of Changes in Net
Assets Available for Benefits are prepared on a contract value
basis.
The fair
value of the wrapper investment is calculated by discounting the related cash
flows based on current yields of similar instruments with comparable
durations.
Participants’
loans are valued at their outstanding balance, which approximates fair
value.
Cash
equivalents include short-term investments with original term to maturity of 90
days or less. Cost approximates fair value.
The Plan
presents in the Statements of Changes in Net Assets Available for Benefits the
net appreciation or depreciation in the fair value of its investments, which
consists of the realized gains or losses and the unrealized appreciation or
depreciation on those investments. Gains and losses on sales of
investments are based on the average cost method.
Use
of Estimates:
The
preparation of 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 fiancial
statements. Actual results could differ from those
estimates.
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
Payment
of Benefits:
Benefits
are recorded when paid.
Administrative
Fees:
The fees
and expenses of administering the Plan are paid by the Plan sponsor, except for
fees relating to the investment management services of the Plan ($18,929 in 2008
and $22,866 in 2007).
Risks
and Uncertainties:
The
Plan's investments include investments in mutual funds and collective funds
holding investment contracts with varying degrees of risk, such as interest
rate, credit and overall market volatility risks. Due to the level of
risk associated with certain investment securities, it is reasonably possible
that changes in the values of investment securities will occur in the near-term
and such changes could materially affect the amounts reported in the Statements
of Net Assets Available for Benefits.
NOTE
3. INVESTMENTS
The
Plan's funds are invested in the various stock, bond and cash investments
through the Fidelity Pricing and Cash Management
Services. Investments which constitute more than 5% of the Plan's net
assets are:
|
|
2008
|
|
|
2007
|
|
Fidelity
Advisor Stable Value Fund
|
|
$ |
884,478 |
|
|
$ |
577,618 |
|
Fidelity
Advisor New Insights
|
|
|
730,433 |
|
|
|
1,004,839 |
|
JPM
Equity Index Fund
|
|
|
586,488 |
|
|
|
870,929 |
|
JPM
Intrepid America Fund
|
|
|
513,529 |
|
|
|
822,928 |
|
Fidelity
Advisor Diversified International Fund
|
|
|
480,316 |
|
|
|
708,787 |
|
Columbia
Acorn A
|
|
|
443,557 |
|
|
|
567,188 |
|
Fidelity
Advisor Strategic Income Fund
|
|
|
425,967 |
|
|
|
665,235 |
|
All/Bern
Balanced A
|
|
|
339,921 |
|
|
|
526,556 |
|
Robertson
Stephens Partners
|
|
|
296,857 |
|
|
|
369,857 |
|
Fidelity
Advisor International Small Cap T
|
|
|
294,845 |
|
|
|
453,127 |
|
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
NOTE
4. INVESTMENT CONTRACT WITH FIDELITY PRICING AND CASH MANAGEMENT
SERVICES
The Plan
holds a stable value investment contract, Fidelity Advisor Stable Value Fund
(the “Fund”), with Fidelity
Pricing and Cash Management Services, the Trustee. The Fund is an open-end
commingled pool dedicated exclusively to the management of assets of defined
contribution plans. The Fund invests in underlying assets (typically
fixed-income securities or bond funds and may include derivative instruments
such as futures contracts and swap agreements) and enters into "wrapper"
contracts issued by a third party. The account is credited with
earnings on the underlying investments and charged for participant withdrawals
and administrative expenses. The wrap issuer agrees to pay the Fund
an amount sufficient to cover unit holder redemptions and certain other payments
(such as fund expenses), provided all the terms of the wrappers have been met.
Wrappers are normally purchased from issuers rated in the top three long-term
rating categories (A- or the equivalent and above). The purpose of
the wrappers is to preserve the investors’ principal investment while earning
interest income, providing more stabilization than a traditional
investment.
As
described in Note 2, because the stable value investment contract is fully
benefit-responsive, contract value is the relevant measurement attribute for
that portion of the net assets available for benefits attributable to the stable
value investment contract. Contract value, as reported by Fidelity
Pricing and Cash Management Services, represents contributions made under the
contract, plus earnings, less participant withdrawals and administrative
expenses. Participants may ordinarily direct the withdrawal or
transfer of all or a portion of their investment at contract value.
There are
no reserves against contract value for credit risk of the contract issuer or
otherwise. The crediting interest rate is based on a formula agreed upon with
the issuer. Such interest rates are reviewed on a quarterly basis for
resetting.
Certain
events limit the ability of the Plan to transact at contract value with the
issuer. Such events include the following: (1) amendments to the Plan documents
(including complete or partial plan termination or merger with another plan),
(2) changes to Plan’s prohibition on competing investment options or deletion of
equity wash provisions, (3) bankruptcy of the Plan sponsor or other Plan sponsor
events (for example, divestitures or spin-offs of a subsidiary) that cause a
significant withdrawal from the Plan, or (4) the failure of the trust to qualify
for exemption from federal income taxes or any required prohibited transaction
exemption under Employee Retirement Income Security Act of 1974. The Plan
administrator does not believe that the occurrence of any such value event,
which would limit the Plan’s ability to transact at contract value with
participants, is probable.
The
stable value investment contract does not permit Fidelity Pricing and Cash
Management Services to terminate the agreement prior to the scheduled maturity
date.
The
following are the average yields for the stable value investment contract for
2008 and 2007:
Average
Yields:
|
|
2008
|
|
|
2007
|
|
Based
on actual earnings
|
|
|
2.99 |
% |
|
|
3.96 |
% |
Based
on interest rates credited to participants
|
|
|
2.83 |
% |
|
|
4.15 |
% |
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
NOTE
5. TAX STATUS
The Plan
is an adoption of the standardized prototype plan written by Fidelity Management
& Research Company. The prototype sponsor received a favorable determination
letter dated October 9, 2003, in which the Internal Revenue Service stated that
the prototype plan, as then designated, was in compliance with applicable
requirements of the IRC. Therefore, the Plan Administrator believes
that the Plan is qualified and the related trust is tax exempt as of the
financial statement dates. Accordingly, no provision for federal
income taxes has been made.
NOTE
6. PLAN TERMINATION
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event the Plan is
terminated, participants will become fully vested in their
accounts.
The Scotts Company, LLC, parent of the Company, pursued divesting
Smith & Hawken, Ltd. but was unable to negotiate economically reasonable
terms. The Scotts Company, LLC continues to evaluate options for Smith &
Hawken, Ltd. Any impact to the Plan is unknown.
NOTE
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The
following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500, as of December 31:
|
|
2008
|
|
|
2007
|
|
Net
assets available for benefits per the financial statements
|
|
$ |
5,342,276 |
|
|
$ |
6,866,021 |
|
|
|
|
|
|
|
|
|
|
Adjustment
from contract value to fair value for fully benefit-responsive investment
contracts
|
|
|
(24,255 |
) |
|
|
(2,296 |
) |
|
|
|
|
|
|
|
|
|
Rounding
|
|
|
(2 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
assets available for benefits per the Form 5500
|
|
$ |
5,318,019 |
|
|
$ |
6,863,725 |
|
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
The
following is a reconciliation of investment income per the financial statements
to the Form 5500, as of December 31:
|
|
2008
|
|
|
|
|
|
|
Interest
and dividend income and net depreciation of investments per the financial
statements
|
|
$ |
(2,263,158 |
) |
|
|
|
|
|
Adjustment
from contract value to fair value for fully benefit-responsive investment
contracts-2008
|
|
|
(24,255 |
) |
|
|
|
|
|
Adjustment
from contract value to fair value for fully benefit-responsive investment
contracts-2007
|
|
|
2,296 |
|
|
|
|
|
|
Rounding
|
|
|
(3 |
) |
|
|
|
|
|
Net
investment loss per the Form 5500
|
|
$ |
(2,285,120 |
) |
NOTE
8. PARTY-IN-INTEREST TRANSACTIONS
Certain
Plan investments are shares of mutual funds managed by Fidelity Pricing and Cash
Management Services, the Trustee as defined by the Plan. These
transactions qualify as party-in-interest transactions. Usual and
customary fees were paid by the mutual fund for the investment management
services.
NOTE
9. FAIR VALUE MEASUREMENTS
The Plan
adopted Statement of Financial Accounting Standards ("SFAS") No. 157, “Fair
Value Measurements” ("SFAS 157"), effective January 1, 2008, with respect to the
fair value measurement and disclosure of assets and liabilities. SFAS 157
defines fair value, establishes a framework for measuring fair value, and
expands disclosures about fair value measurements. SFAS 157 defines fair value
as the exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or the most advantageous market for
the asset or liability in an orderly transaction between market participants at
the measurement date. SFAS 157 establishes a three-level fair value hierarchy
that prioritizes the inputs used to measure fair value. The hierarchy requires
entities to maximize the use of observable inputs and minimize the use of
unobservable inputs. The three levels of inputs in the fair value hierarchy
under SFAS 157 are as follows:
·
|
Level
1 – Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets that the Plan has the
ability to access.
|
·
|
Level
2 – Inputs to the valuation methodology
include:
|
-
|
Quoted
prices for similar assets or liabilities in active
markets;
|
-
|
Quoted
prices for identical or similar assets or liabilities in inactive
markets;
|
-
|
Inputs
other than quoted prices that are observable for the asset or
liability;
|
-
|
Inputs
that are derived principally from or corroborated by observable market
data by correlation or other means.
|
If the
asset or liability has a specified (contractual) term, the Level 2 input must be
observable for substantially the full term of the asset or
liability.
·
|
Level
3 – Inputs to the valuation methodology are unobservable and significant
to the fair value
measurement.
|
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
The
asset’s or liability’s fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to the
fair value measurement.
Following
is a description of the valuation methodologies used for assets measured at fair
value. There have been no changes in the methodologies used at
December 31, 2008 and 2007.
·
|
Mutual
funds: Valued at the net asset value of shares held by the Plan
at year end.
|
·
|
Common
stocks: Valued at the closing price reported on the active
market on which the individual securities are
traded.
|
·
|
Participant
loans: Valued at amortized cost, which approximates fair
value.
|
·
|
Guaranteed
investment contracts: Valued at fair value by discounting the related cash
flows based on current yields of similar instruments with comparable
durations considering the credit worthiness of the issuer (See Note
2).
|
The
methods described above may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair values.
Furthermore, while the Plan believes its valuation methods are appropriate and
consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could
result in a different fair value measurement at the reporting date.
The
following table presents the Company’s investments measured at fair value
on a recurring basis at December 31, 2008:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Mutual
funds
|
|
$ |
4,263,148 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
4,263,148 |
|
Common
stocks
|
|
|
65,527 |
|
|
|
- |
|
|
|
- |
|
|
|
65,527 |
|
Stable
value investment contracts
|
|
|
- |
|
|
|
884,478 |
|
|
|
- |
|
|
|
884,478 |
|
Participant
loans
|
|
|
- |
|
|
|
- |
|
|
|
94,576 |
|
|
|
94,576 |
|
Total investments
at fair value
|
|
$ |
4,328,675 |
|
|
$ |
884,478 |
|
|
$ |
94,576 |
|
|
$ |
5,307,729 |
|
The table below
sets forth a summary of changes in the fair value of the Plan’s level 3 assets
for the year ended December 31, 2008:
|
|
Level 3 Assets
|
|
|
|
Year Ended December 31, 2008
|
|
|
|
Participant Loans
|
|
Balance,
beginning of year
|
|
$ |
76,346 |
|
Purchases,
sales, issuances and settlements (net)
|
|
|
18,230 |
|
Ending
Balance
|
|
$ |
94,576 |
|
NOTES TO
FINANCIAL STATEMENTS
Smith
& Hawken
401(k)
Plan
NOTE
10. RECENT ACCOUNTING PRONOUNCEMENTS
In March
2008, the FASB issued SFAS No. 161, "Disclosure about Derivative Instruments and
Hedging Activities" ("SFAS 161"), which amends the disclosure requirements of
SFAS No. 133, “Accounting for Derivative
instruments and Hedging Activities.” SFAS
161 requires increased disclosures about derivative instruments and hedging
activities and their effects on an entity's financial position, financial
performance, and cash flows. SFAS is effective for fiscal years
beginning after November 15, 2008, with early adoption
permitted. SFAS 161 is not expected to have a material impact on the
Plan's financial statements.
In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"), which is intended to improve financial
reporting by identifying the sources of accounting principles and the consistent
framework, or hierarchy, for selecting principles to be used in preparing
financial statements that are presented in conformity with U.S. GAAP for
nongovernmental entities. SFAS 162 will be effective 60 days after
the U.S. Securities and Exchange Commission approves the Public Company
Accounting Oversight Board's amendments to AU section 411, "The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting
Principles". SFAS 162 is not expected to have a material impact on
the Plan's financial statements.
In April
2009, the FASB issued three FASB Staff Positions, which provide additional
guidance and enhance disclosures regarding fair value measurements and
impairment of securities, FASB Staff Position No. FAS 107-1 and APB 28-1, “Interim
Disclosures about Fair Value Financial Instruments,” FASB Staff
Position No. FAS 115-2 and FAS 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments,” and FASB Staff
Position No. FAS 157-4, “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly.” These
staff positions 1) require that the fair value of all financial instruments be
disclosed in both interim and annual reporting periods; 2) modify the criteria
used to assess other-than-temporary impairments (OTTI) of debt securities and
collectability of cash flows; 3) bifurcate the recognition of OTTI between
earnings and other comprehensive income; 4) require expanded and more frequent
disclosures about OTTI; 5) permit adjustments to estimated fair values when, due
to significant decrease in the volume and level of market activity or evidence
that a market is not orderly, the valuation technique does not fairly present
the price at which willing market participants would transact at the measurement
date; and 6) require disclosure about inputs and valuation techniques used to
measure fair value for both interim and annual reporting periods. The
staff positions are effective for interim reporting periods ending after June
15, 2009, with early adoption permitted. The sponsor has not
determined the effect of adopting the staff positions on the net assets
available for benefits and changes in those net assets.
SCHEDULE
OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
Form
5500, Schedule H, Part IV, Line 4i
Smith
& Hawken
401(k)
Plan
EIN
06-1359589
Plan
Number 001
December
31, 2008
|
|
(b)
|
|
( c )
|
|
|
|
|
|
|
|
|
Identity of Issue,
|
|
Description of Investment Including
|
|
|
|
|
(e)
|
|
|
|
Borrower, Lessor,
|
|
Maturity Date, Rate of Interest,
|
|
(d)
|
|
|
Current
|
|
(a)
|
|
or Similar Party
|
|
Collateral, Par or Maturity Value
|
|
Cost
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All/Bern
Balanced A
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
$ |
339,921 |
|
|
|
Columbia
Acorn A
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
443,557 |
|
*
|
|
Fidelity
Advisor Diversified International Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
480,316 |
|
*
|
|
Fidelity
Advisor Dividend Growth Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
5 |
|
*
|
|
Fidelity
Advisor International Small Cap T
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
294,845 |
|
*
|
|
Fidelity
Advisor Leveraged Common Stock Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
3,579 |
|
*
|
|
Fidelity
Advisor New Insights
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
730,433 |
|
*
|
|
Fidelity
Advisor Stable Value
|
|
Common
Collective Trust
|
|
|
N/A
|
|
|
|
884,478 |
|
*
|
|
Fidelity
Advisor Strategic Income Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
425,967 |
|
|
|
JPM
Intrepid America Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
513,529 |
|
|
|
JPM
Intrepid Value Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
147,651 |
|
|
|
JPM
Equity Index Fund
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
586,488 |
|
|
|
Robertson
Stephens Partners
|
|
Mutual
Fund
|
|
|
N/A
|
|
|
|
296,857 |
|
|
|
The
Scotts Company Common Shares
|
|
Employer
Securities
|
|
|
N/A
|
|
|
|
65,527 |
|
*
|
|
Participant
Loans
|
|
Notes
receivable (interest at prevailing local rate)
|
|
|
N/A
|
|
|
|
94,576 |
|
|
|
|
|
|
|
|
|
|
|
$ |
5,307,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Party-in-interest
to the Plan.
|
|
|
|
|
|
|
|
|
|
|
SMITH
& HAWKEN 401(K) PLAN
ANNUAL
REPORT ON FORM 11-K
FOR
FISCAL YEAR ENDED DECEMBER 31, 2008
INDEX TO
EXHIBITS
EXHIBIT NO.
|
|
DESCRIPTION
|
|
|
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm – Meaden & Moore,
Ltd.
|