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The Scotts Miracle-Gro Company (NYSE:SMG)

Annual Shareholder Meeting Conference Call

January 17, 2013, 09:00 am ET

Executives

Jim Hagedorn - Chairman & CEO

Vince Brockman - EVP & General Counsel, Corporate Secretary & Chief Ethics & Compliance Officer

Jim King - SVP, IR & Corporate Affairs

Bill Marsh - IVS Associates

Denise Stump - EVP, Global Human Resources

Dave Evans - CFO & EVP, Strategy & Business Development

Analysts

Jim Hagedorn

Good morning ladies and gentlemen and welcome to the Annual Meeting of the shareholders of the Scotts Company. I am Jim Hagedorn, Chief Executive Officer and Chairman of the Board. Before we begin the formal portion of this meeting, I would like to introduce other members of our Board of Directors who are with us today. Please stand and remain standing until the last person is called. Alan Barry, Adam Hanft, Steve Johnson, Jerry Jurgensen, Tom Kelly, Carl Kohrt, Kate Hagedorn Littlefield. It’s like we put all the tall guys on front; Nancy Mistretta, Stephanie Shern and John Shiely.

Also present today is the Board Nominee, Michael E. Porter of the Harvard Business School. Mike is not just a friend of the company, but widely considered one of the top academic minds in the world when it comes to business strategy and we are lucky to have him here with us today. I would like to recognize long-term former Board Member Joe Flannery, who recently retired from the Board after 25 years of distinguished service. Thank you, guys.

Adam, Steve and Kate are standing for reelection for this morning. Michael is standing for election to his first term on the Board.

Next, I would like to introduce all the members of the leadership team at Scotts Miracle-Gro, a group that plays a vital role in the success of your company. Barry Sanders, President and Chief Operating Officer; Vince Brockman, Executive Vice President, General Counsel, Corporate Secretary and Chief Ethics & Compliance Officer; Dave Evans, Chief Financial Officer and Executive Vice President of Strategy and Business Development; Jim Lyski, Executive Vice President and Chief Marketing Officer; Denise Stump, Executive Vice President, Global Human Resources.

I’ve got a few more introductions to make before we move on. First, I would like to introduce Bill Marsh from IVS Associates, who will serve as our Inspector of Elections. I would also like to recognize some special guests from our outside legal and accounting firms; Steve Patterson of Hunton & Williams.

Also in attendance are Tony Puckett and John McEwan from Deloitte & Touche. Please stand and be recognized. Thank you all for your attendance this morning. In addition, Tony and John on behalf of Deloitte will be available to answer any questions.

With that, the business portion of the meeting now comes to order. Vince Brockman, our General Counsel and Corporate Secretary will assume the chair to conduct the business as outlined in the proxy statement.

Vince Brockman

Thanks, Jim. I would like add my welcome to the annual shareholders meeting. This is the more formal part of the meeting where we address matters that are set forth in the proxy, sent to our shareholders. When we are finished, I'll turn the podium back over to Jim to discuss results of operations and other matters related to our recently completed fiscal year.

During the course of our discussion this morning, we may make forward-looking statements regarding the company’s future performance. I want to remind everyone that actual results could differ materially from what we discuss based on a variety of risk factors. We encourage investors to familiarize themselves with those risk factors which are scaled out in detail in our Form 10-K which is filed in the SEC. In addition, a copy of the company’s 2012 annual report are available now outside and after the meeting for a review by any shareholder or interested party.

We can now proceed with the business of our meeting. First, (inaudible) the last year’s annual shareholder’s meeting, I would like to reflect that the minutes of that meeting have been filed with the records of the company. Next I would like to recognize our Senior Vice President of Investor Relations and Corporate Affairs Jim King.

Jim King

Thank you, Vince. I would like to present that the affidavit of Broadridge Financial Solutions pursuant to which Broadridge has confirmed that the notice of the meeting, the proxy statement, the former proxy and the 2012 annual report were timely mailed to the shareholders of the company.

Vince Brockman

Thanks Jim. The affidavit and proxy materials are directed to be filed with the records of the company and I also like to present the list of shareholders of the company’s common shares as in the course of business in November 21, 2012 the record date for this meeting.

Jim King

Thank you. The list of shareholders is directed to be filed with the records of the company. Next I would like to offer the opportunity to any shareholder present to which is the vote by ballot at this time to please raise his or her hand. Mr. Marsh, please present your report regarding the number of common shares presented in today’s meeting.

Bill Marsh

There are present today in either in person or by proxy 57,943,766 shares which is in excess of 94% of the voting stock.

Vince Brockman

Thank you, Mr. Marsh. The proxies or substitution of proxies in ballots presented at the meeting are hereby ordered to be filed with the records of the company, according to Mr. Marsh’s report a quorum in his presence of the business maybe properly conducted.

As set forth in the proxy statement the business of this meeting includes four proposals: Proposal number one is to elect four directors each to serve for a three year term expiring at the annual shareholders meeting to be held in 2016. Proposal number two is to conduct an advisory vote on the compensation of the company's named executive officers. Proposal number three is to approve an amendment and restatement of The Scotts Miracle-Gro Company amended and restated 2006 long term incentive plan few among other things increase the maximum number of common shares available to grant to participants under the plan. Proposal number four is to ratify the audit committee’s selection of Deloitte & Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending September 30, 2013.

Proceeding to proposal number one, I recognize Denise Stump, Executive Vice President Global Human Resources for the purpose of nominating the four directors.

Denise Stump

Thank you, Vince. I hereby move that the following person to be elected as directors of the company, each to hold office until the annual meeting of shareholders to be held in the year 2016 and until their successors are duly elected and qualified or until their earlier death, resignation or removal; Adam Hanft, Steve Johnson, Kate Hagedorn Littlefield and Michael Porter.

Bill Marsh

This is second in the motion.

Vince Brockman

I second in the motion moves according to the election of directors to be closed.

Bill Marsh

Is there a second to the motion to close the voting?

Denise Stump

I second in the motion.

Vince Brockman

Voting for the election of directors is hereby closed. As the person appointed as an official proxy, I report that I voted in accordance with the proxy received from shareholders. Mr. Marsh may I have your report of the vote regarding the election of the four directors?

Bill Marsh

Mr. Brockman, I report that each of the four nominees for election as a director received not less than 50,173,712 votes.

Vince Brockman

I hereby declare that Adam Hanft, Steve Johnson, Kate Hagedorn Littlefield and Michael Porter have been duly elected as directors of the company. The meeting will now proceed to consideration of proposal number two, I recognize Denise Stump for the purpose of presenting the proposal.

Denise Stump

I hereby move that the compensation of the company's named executive officers be approved.

Vince Brockman

Is there a second to the motion? A second of motion moves that voting on proposal number two be closed. Is there a second to the motion to close the voting?

Denise Stump

I second the motion.

Vince Brockman

Voting on proposal number two is hereby closed as a person appointed as an official proxy I report that I voted in accordance with the proxies received from shareholders. Mr. Marsh may I have your report of advisory vote regarding the compensation of the company's named executive officers.

Bill Marsh

Yes, Mr. Brockman I report that not less than 48,059,626 advisory votes were received for approval of the compensation of the company's named executive officers.

Vince Brockman

I hereby declare that the compensation of the company's named executive officers has been approved. The meeting will now proceed into consideration of proposal number three. I recognize Denise Stump for the purpose of presenting the proposal.

Denise Stump

I hereby move that the amendment and restatement of the Scotts Miracle-Gro company amended and restated 2006 long-term incentive plan be approved.

Vince Brockman

Is there a second to the motion?

Bill Marsh

I second the motion and move the voting on proposal number three be closed.

Vince Brockman

Is there a second to the motion to close the voting?

Denise Stump

I second the motion.

Vince Brockman

Voting on proposal number three is hereby closed. As a person appointed as an official proxy, I report that I have voted in accordance with the proxies received from shareholders. Mr. Marsh may I have your report on the vote regarding the amendment and restatement of the Scotts Miracle-Gro amended and restated 2006 long-term incentive plan?

Bill Marsh

Mr. Brockman, I report that the amendment and restatement of the Scotts Miracle-Gro Company amended and restated 2006 long-term incentive plan received not less than 50,585,627 votes.

Vince Brockman

I hereby declare that the amendment and restatement of the Scotts Miracle-Gro amended and restated 2006 long-term incentive plan has been approved. The meeting will now proceed to consideration of proposal number four. I recognize Dave Evans, the Chief Financial Officer and Executive Vice President, Strategy and Business Development for purpose of presenting the proposal.

Dave Evans

Thank you, Vince. I hereby move that the audit committee selection of Deloitte and Touche LLP as the company's independent registered public accounting firm for the fiscal year ending September 30, 2013 be ratified.

Vince Brockman

Is there a second to the motion?

Jim King

Second to motion move that voting on proposal number four be closed.

Vince Brockman

Is there a second to the motion to close the voting?

Dave Evans

I second the motion.

Vince Brockman

Voting on proposal number four is hereby closed as a person appointed as an official proxy I report that I voted in accordance with the proxies received from shareholders. Mr. Marsh may I have your report of the vote regarding the ratification of the audit committee’s selection of Deloitte and Touche LLP as the company's registered public accounting firm?

Bill Marsh

Mr. Brockman, I report that the ratification of the audit committee’s selection of Deloitte and Touche LLP as the company's independent registered public accounting firm for the fiscal year ending September 30, 2013 received not less than 56,283,072 votes.

Vince Brockman

I hereby declare that the audit committee selection of Deloitte and Touche LLP as the company’s independent registered public accounting firm for the fiscal year ending September 30, 2013 has been ratified. Mr. Chairman, this concludes the formal portion of the meeting.

Jim Hagedorn

Well done, Vincent.

Vince Brockman

Thank you, sir.

Jim Hagedorn

I want to pick up now by thanking you guys again for being here and for your support. I also want to thank you for continuing to give me and the entire management team the privilege of directing the company, your company. We understand, perhaps better than anyone the unique connection our business makes with consumers every day.

While our annual meeting tends to be a bit of a formality, I still consider it an important event; an opportunity to discuss the state of our company and our prospects for the future. It also allows us to talk about the unique qualities of our business. The lawn and garden industry is like any other consumer business.

Only here can we help consumers connect with the earth and nurture their backyard, to transform it into their own special place. That philosophy is embedded in our vision statement and is part of what makes Scott so special.

But our mission goes beyond that. It also includes providing our shareholders with the rate of return that you deserve. While I continue to feel confident in our business and the plans we have in place, I also know that our results in each of the past two years have been disappointing and we can do better and you should accept no less than that and you have my commitment that we will do better.

A year ago, I used this meeting to share with you a singular goal for 2012 to grow the lawn and garden category as we did we would take market share. Because of that goal, we made a big bet in 2012.

We increased our advertising budget in the United States by 50% and decided to absorb $70 million in higher product costs instead of passing them on to an already stressed consumer. We knew these decisions would essentially cap our earnings last year, but we believe we could still report earnings that we are in line with what we saw in 2011.

So what happened? On many fronts, we succeeded. We did drive unit volume and we did gain market share. The combination of our advertising efforts, our sales force, new product innovation resulted in a 2% increase in consumer purchases of our products in dollars, measured in units the increase was 4% and when you exclude commodity and private label looking just at our branded products unit volume was up 6%.

Our market share improved by nearly 200 basis points as we posted gains in nearly every category. But these improvements as good as they were, were not good enough. After a strong start to the season, the economy and the weather had a major impact on consumer behavior in May and June. Those facts coupled with the reduction of retail inventory levels meant that our sales for the year were flat.

The impact of lower than expected sales, higher than expected cost and product mix resulted in a 280 point decline in our gross margin rate and that resulted in the earnings of $2.1 per share, roughly $0.70 short of our plan and at a level consistent with 2008.

Some shareholders and analysts have argued that we set our expectations too high in 2012, in hindsight, it’s hard to disagree. Some have also questioned whether the changes in the execution of our strategy from 2011 to 2012 and from 2012 to 2013 are too much change over too short a period of time.

It’s an appropriate question whether you agree or disagree with the answer let me explain. I want to start by stressing that our strategy to drive our business to be more consumer focused and less retailer focused have not changed at all.

How we execute against that plan has changed given the economy and other factors. I also want to say that since the merger of Scotts and Miracle-Gro in 1995, this is been the company that's been hardwired for growth and we make no apologies for that. It’s in our DNA to fight for growth, to invest behind in our brands and to continue to adjust our plans to perfect a winning formula.

With that said, some things are just beyond our control. In this environment, the consumer is fragile. And constant choppiness of the economy and consumer behavior makes this reality even more challenging, simply put it’s a damn tough environment right now. When things line up right, consumer confidence improves and they open their wallets. Whether its fuel prices, the stock market or the nonsense in Washington, when consumers get stressed today they shut down.

As for Scotts Miracle-Gro, for years we felt we are largely immune to a negative economy, but in the last year or so the economy has definitely impacted the lawn and garden industry. In 2012, our sales moved up and down with broader retail trends. We were driving foot traffic, we were part of foot traffic. While this is a new reality for Scotts Miracle-Gro, it really isn't different from other discretionary categories. We are now seeing what they have been seeing for several years. So as a result, we are budgeting for no unit volume growth in our core business in 2013 and perhaps 2014 as well.

If you think we are being too conservative, I hope you are right. But holiday spending was up only one half of a percent this year, hardly a strong performance. And as we prepare for the peak week for the lawn and garden season the Congress and the Whitehouse are bickering again over the economy, the debt ceiling and the credit rating of the United States is once again being threatened.

None of us here know what will happen with the economy this spring. But its not farfetched to see a scenario in which the consumer gets spooked again. If you believe in media reports over the last week even Apple which has defied economic gravity for years is beginning to feel the pinch as consumers pull in their horns. The good news for shareholders and associates and business partner of Scotts Miracle-Gro is that we can show meaningful improvement in earnings and cash flow in a low growth environment.

So let me briefly explain the route we are taking. I want to start by stressing that we believe the fundamentals of our business remains strong. Our research tells us that while there maybe structural issues with the consumer there are not structural issues with our brands which continue to outperform the industry and are some of the strongest in the world. Our research also tells us our category and our brands remain relevant with both younger and older consumers. It tells us they continue to love gardening and that they want to participate in the category. But even with those facts our industry is not in a growth made right now.

As we benchmarked ourselves against other discretionary companies, its obvious we are not alone. In nearly every category driving unit volume in the United States has been pretty hard lately. So we have a choice. We can continue to make big bets and hope for different outcome or we can embrace the reality of the marketplace and develop a more conservative plan. We’ve chosen the latter. And I'm confident in saying the entire management team is convinced that this is the right move. In fact our team has been working over the past several months on a more conservative plan that we believe is appropriate for at least the next two years. During that time, we believe the consumers in both the United States and Europe will continue to be under stress. As a result, we believe that economic growth will be modest.

Over the past several months, we’ve created a cross functional team that work toward an effort that we called Project Max. And as part of that effort review at every part of the organization, every business unit, every support function and every dollar that we spent. To drive an improved level of financial performance in a low growth environment, we focused on six work streams; sales optimization, marketing and media, product cost out, pricing and trade, cash flow improvement and organizational effectiveness.

The outcome of this ongoing effort gives us greater confidence in these initiatives, some new and some that had already been in place, to drive gross margin improvement, to reduce SG&A, to improve cash flow and strengthen the overall enterprise. In reducing our expenses, we're taking a balanced approach. While the environment is a tough one right now, we still must invest for long-term growth. And so I am not interested in removing work from the organization, only to reinvest in those same areas two years from now. That’s why we’ve got to make smart changes to keep cost from creeping back in to the system. And I believe that our team has struck the right balance.

For example, here are some of the changes we're making. We recommitted to a regional operating model but reduced expenses by moving from four regional offices to three. We’ve made adjustments to our field sales force to reflect operational changes implemented by some of our largest retailers. We’ve made changes in our marketing spending with the decision to trim back from the levels of advertising we saw in 2012, but remain committed to supporting our brands. The investment in 2013 will be substantially higher than it was in 2011 and will result in a second highest level of spend ever. We are also in the midst of a reexamination of our international business with an understanding that the current cost structure of Europe is simply not sustainable. We are also closely watching corporate expenses like consulting and other outside services.

As I previously stated, we are budgeting for flat unit volume in our core business this year. Modest price increases in the core business coupled with the continued good performance of Scotts Lawn Service should allow us to see company wide sales growth of 1% to 3% in 2013. That level of growth coupled with the outcome of Project Max should allow us to drive earnings in a range of $2.50 to $2.75 per share this year. We also expect operating cash flow of at least $250 million. By year end, we expect our leverage ratio to decline below 2.5 times giving us the flexibility to appropriately fund capital needs of the business and return cash to shareholders.

Back to the question about the changes we are making in executing our strategy in 2013. I want to make one final point, sure, we might be able to grow unit volume and take more share by running the same game plan as last year, but growth for the sake of growth is not what we are after and I don’t think that’s what our shareholders want either. In fact, we’ve had direct conversations face-to-face with shareholders who collectively own nearly 75% of our shares, each of them has been supportive of the approach we are taking. They want us to do exactly what we are trying to do; improve the profitability and cash flow of this business and take other actions that drive total shareholder return. Some shareholders have asked about the impact of back-to-back years of disappointing results on the company's culture and associate morale, another fair question. Indeed it’s hard for an organization to succeed if its associates are not engaged and confident in where we are going.

So without warning or prompting or talking points to help them give the right answer, we walked up to dozens of our associates over the last few weeks and asked them how they felt about the business. Frankly, we weren’t sure of what they say, but we were please with what we heard and let me share a little bit of that with you right now.

Unidentified Company Representative

I think we are on the right course and we have very much more a nimble organization and I think there is a different mindset that's being created here.

Unidentified Company Representative

Every plant is like its own little family, I mean for example in the city, one of the oldest plant, probably one of the plants with the most senior associates and you know they care about what they do. Scotts Miracle-Gro is a challenging environment, its great to be a market leader, but as a market leader we have to kind to be ahead of the curve and we have to lead the category.

Unidentified Company Representative

In the environment that we’re in, economically right now, there is always challenges to keep the cost down, keep your consumer engaged, I mean we don't want price people out of the market, so that's always going to be challenge.

Unidentified Company Representative

We have a lot of smart motivated individuals that work together and we are constantly bringing new ideas to one another. We are reaching out across functions to what we think about how we can make the business better.

Unidentified Company Representative

If you are always going in one direction, you don't exercise the kind of muscles that actually force you to go in different directions so if you look from the outside in I view Scotts as a very dynamic company and very fast paced. So while we maybe a $3 billion company I think at times we operate very much like a $30 million company because it requires an enormous amount of entrepreneurship and enormous amount of personal drive.

Unidentified Company Representative

People stay at Scotts in my experience and I'm going on my seventh year here because they like a fast paced environment where there are strong core values but there's also a lot of focus on creative entrepreneurship. In think that's fundamentally why I like being here and I think it’s fundamentally why people who have been here a long time have continued to stay.

Unidentified Company Representative

We prepare for the future by really reaching out and understanding of what's happening. It’s about knowing kind of the macro environment as well as the micro environment of our categories. It’s using the data that we have and continually getting smarter about our own business and about the world around us. We need to continue to support the consumer to have supported our products for so long and we need to continue to reach them and show them why our products are still better than the competition.

Unidentified Company Representative

I think historically we've viewed; we grow plants twice as big. Now that's a real benefit for the plant. We haven't thought about what do we do for consumers? So how do people grow when they use Miracle-Gro. So the more we can keep it consumer central, I think we have a much more vibrant business and the opportunity to grow the business.

Unidentified Company Representative

Well, one thing I have always said is I never get bored coming here everyday and sometimes that's not all friendly work, it’s a lot of hard work but you come in everyday and its not the same old ways in figuring out what's going on to our new developments. There are new challenges. There's new ways of doing things and new ways of improving things and I have been here for 23 years and that's a long time to not get bored about anything.

Unidentified Company Representative

All of my career I have had the opportunity to work in a lot of different organizations and truly sky is the limit for what you can do here. I think that's the beauty of our organization and I hope that something that never changes.

Jim Hagedorn

That was random and unscripted. I have been walking the halls of this company for 17 years. After the merger in 1995, we had discussions about moving the corporate headquarters to New York where Scotts Miracle-Gro was based. But those conversations were never really very long lived. That's because there's something about the culture of this company that's palpable. And you have to spend time here in Marysville to understand that.

Our associates love the company. They are inherently optimistic, they believe in our future and they are just as committed as the management team to driving profitable growth and enhancing shareholders value. The power of our people, the power of our brands, the power of our market position, the power and importance of the lawn and garden category to both consumers and retailers means this is the company that should not be operating with a gross margin of 34%.

This is the company that should be operating with a gross margin of 40%. This is the company that should not be operating with a 9% operating margin. It’s a company that should be operating at a 15% operating margin. And so this is the company that's putting a line in the sand to make strides against those goals.

We're going to leverage our cost structure with an eye toward margin improvement and total shareholder return. I am confident of the plan we're put in place and I believe that shareholders will again to see strong improvement starting in the second half of this year.

I want to close this message, keeping with how I’ve done so in the past, and that’s to talk a little bit about our history. This year, we will celebrate the 145th anniversary and some within our ranks have already been discussing the ways we should celebrate the 150th anniversary of the Scotts Miracle-Gro Company.

Companies don’t exist a 150 years in this ever evolving, global economy like taking a short-term approach. You succeed by balancing the near-term challenges and the opportunities that are farther down the road. We're committed to growing this business, to grow in our people and to supporting our future.

I am convinced that we're striking the right balance. I am convinced that we will be equipped to the next generation of leaders and shareholders in even stronger company than the one we inherited.

On a final note, there is a person in the room who understands the great history and legacy of this company and it's Joe Flannery. And so I want to close my comments by acknowledging Joe, who’s been a member of the Board of Directors for 25 years and who has officially step aside after this meeting.

With no disrespect to any of the current or former directors of this company, I consider Joe to be the strongest director Scotts has ever had. As a former CEO himself, he understands the role a board should play in providing oversight and counsel without crossing the line to the day-to-day operations of the business.

Joe’s service to this company is without equal and the wisdom and the counsel he has shared with me personally over the years has helped me evolve and grow as Chief Executive Officer. On behalf of every director, associate and shareholder of Scotts Miracle-Gro I want to thank you Joe for everything you have done for us. Your presence in the boardroom will be deeply, deeply missed.

So I want to thank everybody for being here this morning and if there is any questions I will be happy to take them I think with a hand for Joe. I thought you were going to ask me questions.

Question-and-Answer Session

Unidentified Analyst

It's a little bit tough one tough. It’s a job for people who are coming back from Afghanistan and Iraq. Going out, finding them, recruiting them, getting them before they fall between the cracks and then bringing them in.

Jim Hagedorn

I wish we were hiring more people and I wish the economy was better that would justify that and if I had sure one thing to say to the President of the United States, I would be saying that which is we got to grow this economy that all that been said, I think given a choice of hiring somebody who is a veteran compared to someone who is not with me they would have an edge. I think lot of you know my younger son heads off to the army to go to ranger school on February 25. So and I am a veteran as well. And I know your boys in Marine Corps.

So I would say we are biased toward the military and I know Barry feels the same way, and I applaud Wal-Mart for taking the move they did which is any veteran coming out who wants a job at Wal-Mart is going to get it. So, any other questions you all. Yes, sir.

Unidentified Analyst

Couple of product questions. Occasionally in the magazines I see reference to the Roundup tolerance turf grasses where we are, is at a continuing project?

Jim Hagedorn

Can I ask you a question?

Unidentified Analyst

Sure.

Jim Hagedorn

You for or against?

Unidentified Analyst

I am for.

Jim Hagedorn

This company and I am sure I am going to get in trouble. We submitted almost a dozens years ago an application to deregulate Roundup Ready turf grass , where the only difference was the same gene, that's in most of the food you eat, definitely was not a weed issue and that permit that application has never come out of the United States government after more than a decade; without any evidence that there's a problem with the product. Effectively it destroyed our commercial relationship with Monsanto to exploit their genetic library for consumer lawn and garden; while I think a lot of people maybe would have abandoned ship at that point, we've continued to do research and development on ways that would not require a deregulation petition from the United States government and I think Scotts is one of the few companies in the entire world to develop a very robust grass portfolio that will be we think ready for the consumer in the next couple of years.

We've gotten an opinion from the United States that it doesn't require a deregulation petition. It does not require us to have a relationship with the big Ag companies who I think are sensitive to the politics of biotech and it gives consumers a grass that grows slower is highly resistant to Glyphosate, the active ingredient in Roundup and we believe it require significantly less water. And so this is a major innovative step forward that Barry and his team have continued to fund and we believe that is an important product for the future of the company and for the industry.

Unidentified Analyst

Second question, occasionally I go around and I see Whitney Farms products just scattered around, you know is that going to be developed more or…?

Jim Hagedorn

I am looking at the Chief Marketing - I couldn’t quite tell what signal he'd give me yes or no. let me talk a little bit about what Whitney Farms is about.

Unidentified Analyst

That's fine.

Jim Hagedorn

Whitney Farms was a brand that we acquired when we did an acquisition some years ago on the West Coast. It’s a brand that's really focused on natural and organic lawn garden. While the natural and organic lawn and garden products are not a big number today, we believe a little bit like non regulated biotech that its an important thing going forward for us to continue to participate in and as part of figuring out how this company can progress in natural and organic products, Whitney Farms is today an important part of that. But its one piece of an effort that I think we probably all would agree it's taking too long, but isn't important as we look to engage with women and younger homeowners who have a higher level of sensitivity toward more chemically based products. And so this is an important effort for the company then I know Barry and Jim share and Whitney Farms is a piece of that; frankly I couldn’t tell you if Whitney Farms would be a major part of the business five years from now, but natural lawn and garden products will be an important part of this company and as we figure out how to do it properly, I think that brand will continue to exist. Did I say anything wrong Jim? Hold on, we have folks on the phone.

Jim Lyski

You are correct. The focus is on that category and on the brand we have decisions to make that you need to briefed out on over the next year. So, which brands are we going to pursue most heavily in that category?

Jim Hagedorn

Anything else, sir? Thank you for asking the questions. Anybody else? Alright.

Unidentified Analyst

The question that I am formulating. We have a foundation works in the intercity with the (inaudible) and we see a lot of attempts by Scotts to fund neighborhood gardens. I believe, we also appreciate your area the Franklin Park Conservatory. How or what can you do to force the products into intercity where people also need to have that recognition of value, what are you doing I think is a question I have?

Jim Hagedorn

I guess I would start by saying as much as we can. You know, everybody has, like memories that are important, the things that you remember. This goes back early days. My brother was running public relations when Miracle-Gro was the private company. We had a very significant relationship in New York with the [Green Guerillas] and at the time I think many people, in spite of I think things for a lot of poor urban people are not much better.

There was a lot of abandoned buildings especially in the New York, a lot of abandoned buildings that have been taken over and were being misused by and infested by drugs and etcetera. And we would give sort of everything we could to this outfit called the Green Guerillas and I know Rob and I were pretty involved in to see what a community can do with a piece of land and a little bit of help to sort of develop the garden that not only puts the land to productive use but provides output to help feed folks it’s just a really wonderful thing, and we have a I think it’s GRO1000, I think we are trying to get up to a 1,000 community gardens what I’d like it to be 10,000; yes I just don’t know that Jim’s going to get the funding out of Barry for 10,000.

So I would I guess I have to underline which is the thank you for the work you are doing, but also say that the effort for us to do as much as we can and community gardens are hugely important and I think Barry has led an effort with a coalition of urban mayors that I mean I think there was some pretty scary neighborhoods down, (inaudible) Baltimore but we have been doing them sort of all of the United States and just unfortunately I wish we had five, ten times as much money as put to it.

Any other questions? All right, I want to thank everybody for coming out here it’s actually great to see some civilians. So you are more than welcome to join us. And I meant what I said in that speech, we put a lot of time into it. So thank you all.

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