Welcome to The Scotts Miracle-Gro Company's fourth quarter 2008 earnings conference call. (Operator Instructions) Now I will turn the meeting over to Mr. Jim King, Senior Vice President of Investor Relations and Corporate Affairs.

Good morning everyone. Welcome to our fourth quarter and year end conference call. With me this morning in Marysville, Ohio is James Hagedorn, our Chairman and Chief Executive Officer, Mark Baker, President and Chief Operating Officer and Dave Evans, our Chief Financial Officer. By now I'm sure you've seen a copy of our fourth quarter financial results we issued this morning at 6:30, however if you don't have a copy you can find it on the investor relations section of our website, scotts.com. Before we get started, I want to attend to a little housekeeping. A few weeks ago, most of you received an email regarding our Analyst Day event scheduled for December 10, in New York. Given the recent addition of Mark Baker to our leadership team, we have decided to postpone this event until late January or early February. We are still working to navigate around the earnings calendar before setting a final date. I'll be communicating with you again with the next week or so once we've done so. Moving on to the business at hand, we're going to get started this morning with some prepared remarks from Jim who will comment on what we've been seeing with the consumer. He'll also share his thoughts on what we currently expect for next year. Mark will then share his early impressions of the company and Dave will walk you through the financials and expand a bit on our 2009 outlook. At the conclusion of our prepared remarks, we'll open the call to questions. To be fair to everyone and to keep the Q&A session manageable please refrain from asking more than two follow up question to your initial question. If there are issues left unanswered at the end of the call please feel free to call me directly at 937-578-5622. I would remind you this morning that our comments will indeed include forward-looking statements. As such, actual results may differ materially from what we discuss here today. We encourage investors to read the risk factors associated with our business which are outlined in today's press release and discussed in more detail in our filings with the SEC. As the operator stated, today's call is being recorded. In addition to any service you may subscribe to, you'll be able to find an audio archive of this call on our web site. And one final point, if we discuss any non-GAAP measures not covered in the press release, we will elaborate on those on the web site as well. With that, let me turn the call over to Jim Hagedorn.

I'll start by saying I'm satisfied with the results we announced today. Sales, net income and free cash flow all came in within the range we outlined two quarters ago even though it feels like two years ago. When you look at the underlying consumer trends that drove those results, I think you'll better understand why we're cautiously optimistic about 2009 as we shift gears and enter the off season. Before I go further, I want to acknowledge and thank each of our 6,000 associates for their hard work and dedication. There's no doubt that fiscal 2008 was the most challenging year I've ever been involved with. Despite a late start to the season, multiple product recalls, skyrocketing commodity costs and a deteriorating economy, our associates stayed focused. We kept our consumers engaged and our retailers in the game, and in the end we had on a relative basis, a decent outcome. I'm proud of their efforts and for those associates who are listening, thank you. Most of my intention this morning will focus on what lies ahead in 2009. I think we're well positioned which gives us optimism that will have solid results next season despite the challenging economic environment. Before I get there, let me spend a few minutes talking about consumer trends we saw in the fourth quarter. In the interest of time, I'll confine my comments to the performance of the consumer business in the United States. In a nutshell, we had outstanding results during the fourth quarter in our core legacy markets in the mid west and north east. I've said all year this is a resilient business even in a tough economy and we saw evidence of that again in the fourth quarter. In our home state of Ohio which has one of the…

There's one thing I know for sure entering Scott's. This is a great company and a great category with substantial opportunities in front of us. As a member of the Board, I've built strong relationships with the management team for the past several years. I feel fortunate to have such a talented group around me. From an investor relations perspective, I look forward to getting to know all of you in the months ahead as an experienced COO and CEO of two public companies. I understand and respect all relationships in the investment community. Some of you know me from my previous jobs and I think you'll find more of the same rule here at Scott's. As Jim mentioned, when I was at Home Depot, I was overseeing the largest lawn and garden retailer in the world. I also oversaw substantial marketing budget, so I think it's pretty natural to transition for me to move to a consumer focused lawn and garden company, especially one that I know and respect very well. My job description is pretty straightforward; to lead the operating groups and delivering results against our broader long term strategy and there's nothing complicated about how to do that. We'll structure our efforts with one goal in mind; to drive profitable growth that enhances shareholder value. I'll share specific initiatives with you in the months ahead. Here's one thing you can count on. Look for us to step up our efforts to drive sales on a more local and regional level beginning in 2009. If I learned one thing about the lawn and garden category from my previous life, it's that local solutions drive growth and that we, not the retailers alone are the ones most capable of driving that growth. Lawn care and pest problems facing consumers…

I'll take the next several minutes to provide some additional context for 2008 financial performance as well as share some thoughts on 2009. I'd like to begin by echoing what Jim said at the outset. While we started 2008 with plans to significantly exceed the results reported today, I'm pleased that in a very difficult year, we quickly recognized changes in our environment and early in the season, built a new plan, revised our guidance and then proceeded to deliver to those expectations in the face of tremendous adversity. Let me hit the head lines. The top line growth of 4% for the year was straight down the middle of our revised guidance. And by the way, the 7% growth we saw in the fourth quarter was in the middle of the original outlook we provided last December. SG&A growth grew for the year just 2%, demonstrates the diligence with which we managed the business throughout the year. It still incorporates some targeted investments in selling, research and development. Free cash flow of $141 million accomplished through an outstanding job of focusing on working capital exceeded our revised guidance. Adjusted net income of $2.05 per share was well within the range we outlined last spring. Before I walk through the P&L balance sheet, let me jump first to the bottom line. For the first time I can remember, we posted a net lost on a GAAP or reported basis. Our reported net loss for the year was $10.9 million or $0.17 per share. These reported results included two significant charges. $51 million for costs associated with product registration and recall issues, and $137 million for impairment charges. These two charges reduced reported net income by $145 million on an after tax basis. Because both of these items are unusual in…

(Operator Instructions) Your first question comes from William Chappell – SunTrust. William Chappell – SunTrust: Talk a little bit more about your commodity hedging on a go forward basis. With the drop off you've seen are you accelerating the hedging for 2009? Are you waiting to see how far it drops? How does this change your outlook?

In regard to Urea we're buying pretty hard and the prices are excellent, way better than budget so while we probably hedged out about half, call it roughly 750, we're buying in the $300 range. So that's pretty sweet. The other big variable that's very good compared to budget is diesel.

I'm looking at diesel every day and expect that we'll be making some decisions shortly on diesel. The key variable on diesel that makes it different from Urea for us is the type of accounting treatment we get. Urea we get hedge accounting, in diesel we do not. So we're keeping an eye on the volatility of diesel but we're going to be making a decision shortly on the strategy. William Chappell – SunTrust: I'm having a tough time understanding flat gross margin in 2009. It seems that costs at least will continue to go lower and unless there are plans to pull back on your pricing, I would think it more than offsets what you originally expected.

The three key variables that affect the margin rate is pricing, roughly $240 million, so 8% over $3 billion. Cost increases, given how much we've hedged already and given the fact that part of inventory we sell next year was manufactured in 2008 of around $200 million and that $200 million is offset by improved productivity and supply chain initiatives of about $40 million. So if you net the $40 million and the $200 million, it's about $160 million. With pricing at $240, that drops about $80 million to the bottom line or about a third of the pricing. So what you can see is the pricing, net of cost, net of supply chain, productivity enhancements, it retains about a flat margin rate.

What I would add a lot of it depends on volume. So I think the more we can load the plants, the more we can buy at lower costs and the better absorption will be. In large regard, especially in our very high margin fertilizer business, our lawn fertilizer business, the more units we can run through that plant. So a lot of it depends on consumer volume. We see better consumer volume, and remember what we're taking about is in the lawn fertilizer business, I wouldn't say significant but I would say we talked about in the script, which is a decline in unit volume. If that doesn't happen and we don't want it to happen, and we have Mark and Sanders have put together an excellent plan with the sales force and working with our retailers for hitting the market hard starting right off the get go in those early season markets, if we can show that we can actually be neutral or increase volume, I think you'll see a very significant positive affect from that. But a lot of it depends on volume. So I think there is upside potential but it's going to be based on volume.

Your next question comes from Eric Bossard – Cleveland Research. Eric Bossard – Cleveland Research: As you look at 2009 can you talk a little bit about what you're thinking in terms of the mix trend you're going to see in the business? I think about 90 days ago you had talked about some newer products that may have been a little bit less engineered or a little more straight fertilizer. What are your thoughts about mix and what the mix experience will be in light of how the consumer responds to a 30% price increase on a bag of fertilizer?

We've seen it trade down to straight fertilizer so we're going to be focused on driving where the consumer's going to go. So we have pricing and promotions in line to drive it to that straight fertilizer volume. But also, from a trend standpoint, Turf Builder Plus Two showed really strong in the later half of the year which means that we believe that that franchise is good shape and it was just delayed due to the weather that we saw in March and May last year. We're going to hit the early markets hard with the Bonus S Max, the Bonus S down in the southern markets early and we're going to drive to straight fertilizer in the spring with the Turf Builder so we think we're in pretty good shape. Eric Bossard – Cleveland Research: In terms of the fourth quarter, the sales were better than you thought 90 days and the margins were worse than you thought 90 days ago, and it seemed like the commodity prices got better versus 90 days ago. In 4Q what drove the gross margin down side relative to what you thought and could you comment on what the pricing and mix trend might have been in 4Q and if that contributed to it?

From a cost perspective, while we saw costs decline, that wasn't until about September time frame when we really started to see the costs tumble. And remember, we're selling products that we manufacture one, two, three months prior to the date we recognize the sale. So it's a little bit moving through the python, these costs. So I'd say the combination of purchases we were making in July and August being higher than we thought was really what contributed to lower margin rate than what we had expected. From a mix perspective, mix continued to be fairly small story for us in Q4. While we see some mix shifts, for example we described in fertilizers going to a negative this year, they're offset by other positive mix shifts which we discussed in the last call which is in the growing segment seeing higher growth in the value added products and then the commodity admit to your products. So it was really more a cost story than a mix story.

This gets back to the timing of the year and weather, because if you look at our dirt business performed really well. Bird seed is doing awesomely well. I think that part of the year, March and April that struggled a little bit with the weather, that's lawn season and that's high margin season. So I think for the year, part of the negativity on margin is the fact that we got toasted on our lawn season due to weather and a lot of that other product that sells tends to be lower margin after that. Eric Bossard – Cleveland Research: Anything in terms of incremental pricing insights in the fourth quarter? Do you see anything different? Did you get any price in 4Q or how did that shake out?

We took serious pricing for next year and that's a story in itself. I'm just glad I didn't have to go down there and announce this. I have a lot of respect for the sales force who had to implement historic pricing and need to hang on to it based on what Dave talked about. When the retailers are seeing costs go down, I think they have to look at the whole picture as Dave described it and understand that for us to maintain our strength we need that pricing and that needs to be passed through. Eric Bossard – Cleveland Research: For specific Q4 itself?

The only incremental pricing we would have seen would have been our Pro business for the quarter itself. Eric Bossard – Cleveland Research: Was the consumer price flat or down in the fourth quarter?

The consumer price at retail, I think it was up on a consistent basis in Q4 as it was in Q3 and Q2.

Your next question comes from Joseph Altobello – Oppenheimer. Joseph Altobello – Oppenheimer: On your outlook for '09, I'm trying to figure out what you're assuming for a couple of different variables. In terms of the economy, I would imaging you're thinking we're going to be in a recession but is it sort of the 2002 variety, the '82 variety or the 1932 variety?

It feels pretty bad. That being said, from our point of view, if we look at the vortex of the tornado hit the ground in Maryville, Ohio, I felt like it was about six months ago. To me, there's a lot of positives going here, and that's what I was really trying to get through was that there's a lot of positives going for us right now. The big unknown is the consumer. I don't know. I look at the fourth quarter and say, not so bad, and therefore it feels more like what we at Miracle-Gro saw in the '80's and early '90's. That's how it feels to me. I think a lot of it depends on what's happening to home values and the value of the equity market where it's just where people have their retirement plans. There's a lot of psychology here. When the market was completely flipped out, you didn't see a lot of cars in parking lots of retailers. I think if we have where it feels normal in the context of what it is today, I think we feel positive about that. Joseph Altobello – Oppenheimer: But the world seems to have changed a little bit since September and October is relatively a small month for you in terms of seasonality, but what are you seeing in October thus far in terms of trends post September.

I had some experience locally when I ran Garden Centers in Florida during the late '80's and housing prices crashed in the early '90's in California, the same issue. The strength of the home improvement retailers is all about lawn and garden and driving the units, taking care of the back yards for those consumers. The retailers understand you can get that footstep into the store by advertising lawn and garden and driving variable demand. This certainly is a worse circumstance national than regional ones were 15 to 20 years ago, it would suggest, and what we've seen so far in the year, consumers are still going to take care of their back yards. If unemployment goes dramatically higher or something really changes on the macro, that would change the bed a bit, but I'm actually pretty bullish on the consumer responding to all the marketing that's going to be thrown at them for taking care in a relatively small expenditure, their back yard. Joseph Altobello – Oppenheimer: In terms of price increase, you're talking about plus 8% overall next year. How much leakage are you assuming in terms of volumes? Are you pricing plus 12% and assume you lose 4% from volumes?

We looked at each and every one of our product lines and the amount of pricing we've taken on each has been different. I'd say we looked at the pricing. We've made some judgment in terms of what will happen on shelf relative to price gaps. We've looked at our new produce initiatives and I'd say we also gave some serious consideration to our more aggressive promotional campaigns and net net, I think we're still assuming that in the Hertz category which is where we focused a lot of our discussion last quarter, we're going to see volume loss that's not that inconsistent with our history on pricing. But then we're assuming much less modest increases in all the other categories. So overall, I think in the North America consumer business, we're assuming low to mid single digit type of loss there as an outcome of the pricing.

We're trying to budget conservatively on the top line. So I think what you're going to see when we talk in detail about it is a small single digit unit decline and a single digit dollar increase. I think that's pretty conservative based on what we saw in the fourth quarter, but it's like who knows in this market? That's how we're budgeting. It sounds like you think we know what's going on. I would say we're taking our best shot. We're trying to be conservative. We're looking at historical, trying to look at what happened last year. The problem is, it's not that simple because we had a very significant month in both '07 and '08, April in '07 and March in '08 which were historic catastrophes where unit volume for the entire industry this March was down 30%. That's factored into what we said. And what Dave said is, if you actually look at fourth quarter volume, it's about what we said it was going to be when we talked to you before we knew any of this stuff was going down last year. I would say we think we're taking a conservative outlook, but who knows? Joseph Altobello – Oppenheimer: In terms of the pay for performance metric you've got this year on the $2.00 number, how do you manage making decisions that might be good short term but may not be good long term?

I think balance. It's probably just one word. We're trying to balance that. That does not mean that we're not making some short term decisions because at the end of the day, when it came to $2.00 we established a very regular sit down with the management team as we went through the last half of this year. Very clear communications, a lot of detail, who controls what, how we're doing, what we need to do going forward, and I think we did what we had to do. That's doesn't mean we did stupid things, but it means that we're trying to balance the near and long term because at the end of the day, it's a pretty squirrely time and there is a near term issue which is we made commitments to you. I was watching CNBC as I was exercised this morning and L'Oreal is in multiple call downs and they're calling down again. When we sat down and said, here's what we're going to do, we worked pretty hard to get there and I think what we said about next year, is we've drawn a line in the sand. We have a very interesting incentive plan because it's not all on the down side. There's a lot of opportunity if we can exceed our numbers where you're happy. The management team will also be happy. I do think that it's balanced.

Your next question comes from Olivia Tong – Merrill Lynch. Olivia Tong – Merrill Lynch: I want to try to put together a couple of statements that you said. You've got the worsening consumer downturn, but you're sticking with your pricing even though you're seeing trade down and conceptually I agree with you that consumers are not going to abandon the back yard, but you're seeing trade down in the most staple of staples categories and delayed purchases. Can you kind of marry some of those statements you made?

You bet because the biggest opportunity for trade down, probably the only place we really saw it this year was in our lawn business and it really wasn't a mix between us and private label. It was a move into commodities where there was a pretty significant move in units into commodities, this being the 10-10-10's. The reason I brought it up is, is trade down opportunity for the consumer? The commodities are selling next year for more than Turf Builder because of the component ingredients in those products. I think we view this as a really good opportunity for straight fords and we're seeing a lot of ion flow out of the commodity 10-10-10's where we pick up that volume next year, not lose that volume, which is what happened in the environment we were in in '08. So we think '09 is a good opportunity for us. Actually I'm not that worried about it. In the second half of the year, we didn't see market share loss. We saw market share gain across the business. Actually it's a really good story for us in this case.

While you add the Plus 30, is this spread between the private label names? Is that shrinking or is that expanding while you're doing that? Tong – Merrill Lynch: While you add the Plus 30, is this spread between the private label names? Is that shrinking or is that expanding while you're doing that?

In percentage terms, it's staying the same. In dollars it's expanding and it's just something we're going to watch. One of the things that we spent a lot of time talking to North America about, and it's their excitement that's bleeding over to corporate here, is the opportunity for this regional promotion. Mark is saying the right stuff and the sales team is really enthusiastic about this. It's driving the business at a local level as it rolls out and serve a lot of power and moving money to our regional advertising, radio, weather dependent advertising, stuff that we've done before. I think this is a big, big opportunity for us if we do this properly and therefore I think we can overcome the fact that the dollar difference is expanding and there's massive change winds underway right now with what's happening with private label anyway, based on what's happening with Spectrum brands. I don't know any more than anyone else does except it smells like opportunity to me. Olivia Tong – Merrill Lynch: I understand that lawn and garden is obviously becoming a much more important category for your retailers and probably two out of three cases of your most important retailers, you're going to see lower foot traffic this year. How are you changing your messaging? How are you working with your retailers to stem that to some extent?

I'd say that the good news this year is that all of our key retailers recognize the fact of the value of this brand to get customers to react and I think you'll see more promotions of the national brands which we are lead of all the retailers. As Dave pointed out, more of the listings on shelf are Scotts Miracle-Gro than ever before. I actually would differ with you that the foot steps in certain categories may be down. My experience is in retail for a long time, but this category can drive foot steps as can also paint and fix up items, because people are still going to take care of their largest investment, even if it's down 30% from it's peak, they're going to make those investment to protect the lifestyles may be more at home than ever. I'm bullish that the retailers are going to use our brand to drive footsteps that can make them more net neutral. I think big home improvement projects are going to be very difficult and that may be some issues for them in terms of their top line, but I think they're going to lean very strongly on Scotts Miracle-Gro to drive traffic.

Your next question comes from Sam Darkatsh – Raymond James. Sam Darkatsh – Raymond James: You mentioned, I'm getting back to gross margins in '09. $240 million benefit from pricing, $200 million head wind from inflation, $40 million tail wind from productivity, as you said added up to $80 million. What was the offset to that $80 million besides fixed cost under absorption from lower unit volume?

If you do the math here, you've got your top line grow through pricing is $240 million. Your net costs which is the cost increases offset by productivity improvements as $160 million, so you ought to roll $80 million down to your $80 million in gross margin is the outcome. So $80 million on the base of $240 million in pricing is roughly in line. As a percent, $80 million out of $240 million is consistent with our overall gross margin percent. Sam Darkatsh – Raymond James: You're getting $80 million incremental gross profit dollars on flat sales aren't you?

No. Remember the sales are going to grow by $240 million because of pricing. Sam Darkatsh – Raymond James: But sales and dollars you said are basically flat because you have 8% price increases and FX is down 5% and units are low single. So if you're looking at gross profit dollars, aren't you up by $80 million?

No, because remember when I talked about the volume increase, we started off with about 8% growth due to pricing, but then that got reduced to nearly zero through FX and through organic volume losses. What's off setting the $80 million is the organic volume decline. Sam Darkatsh – Raymond James: I'm trying to get a little bit of a walk between when you were looking at $2.00 a quarter ago and when you're looking at $200 now, and what's changed. What we see has changed is obviously some benefit in raw material inflation incrementally, by my math maybe $30 million or $40 million just from Urea alone. What else has changed to offset that in your mind from where we were three months ago to maintain the $2.00 and not to basically raise it?

I'm not sure it's an easy walk. It largely depends on what we input as our unit volume number and if our unit volume is flat, it's super positive for us. We have just basically gone through a process of saying we're going to set our number at a negative unit growth, and I'm not sure it's because we know. I think it's because we don't know, and I don't think we want to get out ahead of the basic rule, my view of dealing with you guys which is don't promise more than you can deliver. This is an environment and I know you understand us, where who the heck knows what's what? I'm not sure that David, even if you spend two hours with him this afternoon, we're going to make that walk easy for you. And it's not because he's trying to. It's just because we don't know and it's largely volume based. He can come up with all kinds of fancy stuff to try to make the lines work for you, but at the end of the day, it's all going to be based on volume.

If volume is flat, we are super good, and if unit volume is positive, it's super, super good. Sam Darkatsh – Raymond James: If it's super good or super, super good, how much of that super actually goes to the bottom line and how much would you reinvest to try and put the squeeze on your competitors which are in a lot of pain right now?

First, I don't think we have to help them very much. I think most will go to the bottom line, but some will go clearly into piling it on.

Your next question comes from Connie Maneaty – BMO Capital Markets. Connie Maneaty – BMO Capital Markets: On the 30% price increase you took on fertilizer, what exactly are consumers going to see? Are they going to see a 30% price increase or are they going to see a bag that's a little bit smaller or takes care of a bigger lawn? What will the message be next year that will help mitigate what might be some sticker shock?

You've got a couple of questions in there which is what do you think will be realized by the consumer and what are we doing when the consumer is faced with a more expensive product, which by way, everybody is going up that percent and the commodity is going up even more. Personally, I don't think they'll see 30% at the shelf because I think the retailers are going to be competitive as all get out next year. I personally think you're going to see a lot of promotion and we're going to encourage and to some extent, help that happen. And this gets back to our regional promotion plan that we start out early on. I think that retailers will see this as a category they have to fight hard in to get consumers into their parking lot. What are we going to do differently? We're clearly going to market differently than we did last year. I liked our advertising last year. Our advertising is very much about the psychic benefit of a green lawn and gardening and flower power and all that sort of thing. I think faced with a consumer that has to make a decision to buy a more expensive product in this environment, we've got to say why our product is better, why it represents a value. I think you're going to see way more competitive advertising, way more reasons why you should buy the premium product than you have seen before. I'm not sure it'll all end up at the consumer, that's up to the retailers, but we're trying to encourage promotion and I think we'll see that, and I think you'll see a much more focused advertising on why you should spend the money for the premium product than you have in the past. Connie Maneaty – BMO Capital Markets: You also said that you might give greater support to retailers for private label in the future? Does that mean you would consider making private label for them, and what are the pros and cons of that decision?

The answer is yes, and we already do so we already do a lot of private label, and I think if you ask Mike Glutemier, he's say, "Bring me your unit volume. Volume is good." It helps keep his plants going and it keeps trucks full. I know there's other people and I've got to say when I started out in this business, Chuck Berger and I were not that interested in private label. I think we can run our business better with more volume. We can manage these categories better. We can offset our, remember we're not a low cost business model. We're a very high service business model in a very unique trade which is DIY. So we have a lot of elements of what you might call DIY seasonal distribution company with brands. So the more units we run, the more dollars we run, I think we tend to be pretty happy. I also believe from a competitive position that nobody really likes to be in the private label business. Remember, we are the brand, and those people who run private label businesses generally covet branded business, because that's where the margin is at. By the way, we wouldn't do it for free. I would say that weakness on a private labeler, I think from a competitive point of view is good because they covet our business all the time. Their misery is not lost on us as something that we think about. Connie Maneaty – BMO Capital Markets: Given that so much planning needs to be done for next season so far ahead of time, are you already taken share from spectrum and private labels?

I really don't want to comment on that at this point. Connie Maneaty – BMO Capital Markets: Could you just describe again what happened in last year's December Scotts Lawn Service business so that if you report a big decline in sales in the December quarter, why am I not surprised?

The One Service business that we told you about last Q1 was that we had shifted and changed the shape of our season and it was not going to be one time. We expect that shape to continue and we feel quarters should be comparable. Connie Maneaty – BMO Capital Markets: Last year your first quarter sales in total were up by 13%.

Two things happened last year in the first quarter. One was we kind of changed the shape of the season and moved service back to later in the season where it's more agronomically appropriate. We would expect to continue that this year, so on a year over year basis, we'd expect no change. The other aspect of last year that gave us a real boost in sales is that we had an acquisition that also accelerated that growth. That's now embedded in our year over year numbers. So we wouldn't expect to see any dramatic change this year from last year as we saw in '08 versus '07.

Your next question comes from Doug Lane – Jefferies & Company. Doug Lane – Jefferies & Company: On the global consumer sales were up 2% and then you mentioned organic growth was down 4% so I assume that's unit volumes. Can you break out the pricing and currency contribution from the positive 6% difference?

On a global consumer basis for the full 12 months, global consumer is up 2%. Of that, you have pricing of 4% offset by organic decline by 4%, and then 2% in positive FX. Doug Lane – Jefferies & Company: You touched on innovation next year, but I wondered if you could drill down. Maybe what are the top two news items in each of the four key categories, fertilizer, growing media, bird seed and the controls business for next season?

In our growing media business we have some extensions coming out in the new garden soils so we're taking the moisture control to garden soils and we expect some good news there. We have a new mulch coming out, some extensions on the Nature Scape that just keeps growing like crazy, so we're very bullish on that. Bird food, we're going to continue to drive a new proprietary line of bird food under the Scotts brand that has received very good feedback so far and we're very positive on that. In our controls line we have some new extensions coming out on home defense. We're getting into new categories like rodenticides and there should be a lot of positive news from that. Round Up, we are extending in the Pump and Go applicator to some other products, and Pump and Go is the largest new product launch that we've had and so that has been received very well. And then in the lawn category we have two new grass seed skews coming out. We have some proprietary technology that we're rolling out and that has been very well received. We also have a new fertilizer called Ablomo which is a new formulation, a new approach that we're taking to lawn fertilizers that will position at a lower price point that should help us with that trade down business as well. Each category we have some new things coming out and they've all been well received, they've all been listed, and those are baked into our numbers. Doug Lane – Jefferies & Company: On the bird seed, how are viewing distribution expansion? What increase in number of stores do you think that Scotts brand will be in in '09 versus '08?

I think primarily when you look at the mass retailers, I think we're going to pretty consistent there from the store count that we have some new listings. We're seeing new store counts as what I would call an independent garden center type accounts where we've picked up a lot of volumes through our distributors. At a mass level, it's relatively consistent but more on those regional retailers where we're picking up a lot of volume.

Your next question comes from John Anderson – William Blair. John Anderson – William Blair: Could you comment on your retail inventory levels at season end and how those relate to historical levels and your comfort level there moving into 2009?

Overall we think retail is up about 3% in dollars which means that they're down in units which is a good story. As we talked about from a unit volume, we think they're positioned well and what we work with retailers is, because of the price increases, you really need to look at this more from a unit level standpoint. So units are down and the plan we're going to try to achieve this year is at least flat volume to last year. Instead of looking at it from a dollar perspective, manage it on units going forward, which is a different way of looking at it. At the end of the day, the retailers are very happy with where they're at from an inventory perspective going forward. John Anderson – William Blair: You had mentioned earlier your approach to field operations may change somewhat in moving ahead to give you greater flexibility. Can you talk a little bit more about that and how that might help you in 2009?

What we just did was reconfigure our field service organization a bit. We were primarily focused on what I would call fixed waiver so full time associates calling on the stores. We have downsized that field sales group and are going to more of a variable model which will have fewer full times associates but more part time, seasonal associates. What that allows us to do is not only put more dollars in overall when the season is appropriate, it also allows us to move it around on a regional level more. If it's going to be raining in the mid west, we don't want to have associates in the store on the weekend, so we can move those with a little more flexibility with where we need to be moving it. More hours in the store, more flexibility when we put it in, and more flexibility on a regional level to match it up to weather and when the consumers are going to be in the store.

This was not about saving money. This was about spending more.

We're spending more. We're actually going to spend more money and put more hours in the store overall, so this is just to drive our business. One of those things we said last year, we're making an investment into the field sales force. We're not quite at the same level we thought we'd be investing, but we're still investing in more and we're going to drive the number of hours where we want it to be.

Your next question comes from Jim Barrett – CL King & Associates. Jim Barrett – CL King & Associates: Can you tell me how many different institutions own your debt? How much is owned by banks versus hedge funds? Any color on that at all?

We have a consortium of approximately 40 different banking institutions that participate in our facility. We're not held by hedge funds and I'd say the largest bank participating in our facility are highly recognized names that have really been coming out as the winners throughout this process. Names like Bank of America, J.P. Morgan, Citi are the largest participants in our facility right now. Jim Barrett – CL King & Associates: To amend a covenant, does it require a majority of these 40 banks or does it require a unanimous vote? How does that work?

It requires basically, they all get votes that are equivalent to the level of participation and what we require is a simple 51% vote to get an amendment. Jim Barrett – CL King & Associates: And is there anything in the debt agreements that indicate that if you break a covenant by Y, you pay X, or is everything subject to negotiation?

For the financial covenants are subject to renegotiation.

We've got as we've been describing it internally, a very sweet deal. I think we're LIBOR plus 125 basis points. That is not even close to the market today. That's the biggest issue, would be you'd get re-priced back to dollar one. We're working hard and we have a plan to get through the year without needing any help from the banks.

Jim talked about if we fall below $2.00, the top 25 don't get paid. If we drop below $1.90 it expands to a much larger pool. So we've constructed a plan that there's no guarantees at all in life, but we've constructed what we think is a pretty responsible plan and that gives us an extra circuit breaker as well if the worst would happen, we'd be able to release those accruals and give us more comfort before we have to go back and have that conversation with our banks. Jim Barrett – CL King & Associates: Any body language from the EPA as to whether they will find the company and if the do what the magnitude of the fine will be? Any color on that at all?

No. I would say that right now we're in a co-operative phase of working the EPA to get our stuff online. I think they'll go through another process on the enforcement side to make a determination on how that's going to affect us and what the consequences of what happened are. But that's not a process that's happening right now that I'm aware of. On the DOJ side, that's something that could take months or longer as they conclude their investigation into what primarily I believe are the actions of Sheila Kendrick.

Your next question comes from Alice Longley – Buckingham Research. Alice Longley – Buckingham Research: Since you're saying that unit volume is key going ahead, and since you said the business is weakened in September and we know that October has been bad for the consumer, what has your volume performance been in the North American consumer business in September and October?

It's been consistent. We've seen it slightly down in some categories but it's been good in other categories, so I would say it's down slightly but very consistent with where we think we are. When you look relative to our budget and what our plan is, I think we're in pretty good shape.

It means something, but the problem is the news has been debilitating to consumers and Americans in general and when I visit with our retail partners, I know this is what they're seeing in the stores. I think we tried to address that in the script by saying assuming things are consistent and we're not in the midst of everything crashing, then I think we're looking more like we did in Q4 during the bigger months. Remember as we move in, those months get smaller. Alice Longley – Buckingham Research: You're guiding down 3% in volume next year company wide so is your volume is down 3% in the North American business in those two months, September, October?

The volume was down a fraction of that, and I don't think we're guiding down 3%. I think we just said low single digit unit decline and a mid single digit dollar increase for '09. Alice Longley – Buckingham Research: On marketing, you said that advertising you switched from advertising to marketing at retail or to the retailers. Can you quantify this for the fourth quarter in fiscal '08? How much advertising up or whatever and how much was the increment in marketing that comes off sales?

For fiscal year '08, we moved roughly $8 million to $10 million from media up to on our P&L to geography in net sales. So we did that through changing the nature of our parameters becoming more promotional, more consumer rebates for programs and things like that. I think directionally, for next year, we'd be looking at spending a roughly equivalent dollar amount to '08, so roughly flat dollars. What you can't do, because of the accounting conventions that we use, the expense doesn't necessarily occur when the media is actually run, because we expense dollars over the full year sales curve. So it's a little bit hard to say what specifically are the activities you're going to do in Q4, because there's very little activity in Q4 with the exception of some early October promotions. It would be roughly a similar percent sales as it was in '08 in the first quarter of 2009. Alice Longley – Buckingham Research: It doesn't sound as if the increment of sales from deal to the trade was that much in '08. It was less than half a percentage point, so just sticking with fiscal '08, was advertising flat or down as a percentage of sales?

Advertising dollars were relatively flat, so as a percentage of sales they came down a little bit. Alice Longley – Buckingham Research: And that's true also for '09 for the budget, flat dollars as a percentage of sales?

It will be fairly flat again because we're calling for very nominal top line growth, and we're saying our media dollars would be relatively flat. So without getting more precise than that, I think directionally it's what we expect. Alice Longley – Buckingham Research: So the ratio is actually flat in '09.

Yes.

At this time there are no further questions.

I guess that wraps things up. As I mentioned at the outset, we'll be getting a note out to all of you in the next couple of weeks as we reset out Analyst call for January and February. Have a great day.