Good morning and welcome to the First Quarter 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) Thank you. Jim King, you may begin your conference.

Thanks, Amber. Good morning, everyone, and welcome to our first quarter conference call. I am joined here in Ohio this morning by Jim Hagedorn, our Chairman and CEO; Dave Evans, our CFO, as well as Barry Sanders, our President and Chief Operating Officer. In a few moments, Jim and Dave will share some prepared remarks, and then Jim, Dave, and Barry, will be available to answer your questions. In the interest of time we request you ask one question and then one follow-up, so that we can move quickly through the queue. And I will share with you in advance that our comments this morning will be pretty much contained through our Q1 results, because our Analyst Day is only a week away, we will wait until then to provide more detail on our full year outlook and business plans. Speaking of our Analyst Day, if you have not registered yet, we would encourage you to do so. Our meeting will be held next Tuesday, February 14th, at the Waldorf Astoria in New York. Our presentations will start at 9:00 A.M and will continue shortly past noon. At that point our management team will host a lunch-in and we will close the day with an extended Q&A session. We are already very close to full capacity at this time, so if you have not registered, we would ask you to do so, by the end of the day, Thursday, you can do so one or two ways. You can call my line directly at 937-578-5622 or you can send us an email at investor@scotts.com. If you can’t attend the event in person, you can listen, and follow the slides of your webcast. The webcast would be available on our IR site, investor.scotts.com. If you subscribe to services from Thomson Financial, you can also listen to the webcast from your streetevent site. It also will be available on Thomson’s resale networks, which includes Yahoo Finance, Google Finance, and MarketWatch. With that, let’s move to the business in hand, our Q1 results. I want to remind everyone that our comments today will contain forward-looking statements. And as such, we recognize that our actual results could differ materially from what we discussed here today. We encourage investors to read the complete set of Risk Factors that are outlined in our Form 10-K, which is filed with the Securities and Exchange Commission. I also want to remind you that we will provide a reconciliation on our website, of any comments we make this morning related to non-GAAP financial measures that are not already discussed in today’s press release. With that, let me turn the call over to our Chairman and CEO, Jim Hagedorn.

Thanks, Jim. Good morning everyone. I’m going to keep my comments brief this morning for two reasons. First, Q1 represents less than 10% of our year, and we’ve already communicated the results we expected in the quarter, so there is not much new news in today’s release. And second, as Jim just mentioned, we have our Analyst Day, just a week from today in New York. I would rather wait until then to elaborate on how our plans are coming together and what it all means for the full year. But I will tell you we are operating the business hard right now in anticipation of a strong season. Our supply chain team is working non-stop on building product and getting it to the right place. Our sales teams is spending a lot of time in the stores working with our retail partners and getting displays up, and our marketing team is in the midst of launching one advertizing campaign and finalizing another. So while we are still a few weeks away from the peak of the season you would never know from walking around the halls here we are going at full throttle. As it relates to our Q1 results, I will tell you that I’m pleased with what we saw. The numbers came in just a bit better than we expected. On the top line you will notice that the global consumer segment was down 21% from last year. So let me provide some color. You all remember that our fall business last year was pretty weak. Hurricanes in September and snowstorms in October really shut down consumer activity. So there wasn’t a lot of replacement happening in the early part of the quarter. In addition to that, our retail partners worked to end their fiscal years clean…

Thanks Jim, and good morning everyone. As we’ve already said with our Analyst Day scheduled in one week, I’ll keep my comments brief, focusing on the quarter’s results, and then taking your questions. Next week, we will have a more robust discussion on 2012 and the longer-term outlook. The headline for the quarter, results are in line or even slightly bit ahead of what we guided to in early December, and on track with our full year plan. Overall, companywide sales for the first quarter were $211 million as compared with $230 million a year earlier, well down 8% to prior year. We are on track with internal plans, which assumed full year growth of at least 6%. Changes in currency rates had a small dilutive impact to the quarter, about 20 basis points. If current exchange rates remained unchanged for the balance of the year, they would reduce the planned rate of sales growth for the full year, by about 100 basis points, and negatively impact earnings by about $0.05 a share. Well, incorporating FX risk into our plan, we have no intent to revise our guidance at this early stage, given other modest cost tailwind. As you can see in our press release, global consumer sales were down 21%. Sales within the U.S. were down 25%, principally as an outcome of pushing shipments closer to the season. Sales outside the U.S. were down 10% or about 9% excluding the impact of FX. The decrease in international was primarily seen in France, where we’re increasingly shifting from two-step distribution through distributors to direct to retail distribution. This change, which will ultimately result in a more value efficient supply chain, results in shipments being moved closer to the season, following a pattern more similar to the U.S. Scotts LawnService sales…

(Operator Instructions). Your first question comes from Leah Villalobos with Longbow Research.

This is Josh in for Leah. Just a quick question on commodities. Your urea cost has dropped significantly here in December and I think some people may be a little surprised it hold here out for commodity cost inflation for the year. Was that drop already built into your original assumptions?

Josh, recall that we had gotten ahead and locked 90% of our urea in the December timeframe. We are benefiting a bit from the continued decline, but I would say that if the decline continues or moderates at current levels its really going to be more of a benefit looking into '13 or '12 at this particular stage.

Okay, great and then just one follow up. Sticking with commodities on the birdseed products, rising costs to commodities there, how should we think about that product longer term? Do you think you will be able to achieve the same margin on those products as you do on the global consumer segment products?

Well, Josh --

That’s a hot potato, I'm not sure anybody wants it. My view is probably not. So, this is something that Barry and Dave and I talk about a bunch, which is ultimately where can we get the profitability, definitely more profitable than it is. Do I think we can get it up to our sort of consumer average? No, I don’t think so and I don’t think anybody else could either. Barry, you want to add on that?

No, there is going to be from a mix stand point, a substantial part of the business is big bag commodity business and so the mix will hurt it, but I do think we can drive some innovation that will improve the margins, but I don’t think it will get up to our average of what our consumer business is.

Your next question comes from Jeff Zekauskas with JPMorgan.

Can you tell me what your shares would have been if you had made money in the quarter, your diluted shares? And how much did you repurchase any shares in the quarter?

Jeff, the first I don’t have the data to answer your question, because we just don’t, we don’t calculate it, because it’s the last quarter so I don’t know the number of it off the top of my head. With respect to the number of shares purchased in the quarter, my recollection is around $17 million of share we purchases this quarter in Q1.

And then from my follow up, Jim began the call by saying that our pricing policies this year may not be the same as our pricing policies in future years. And I was wondering if you could elaborate on that that is why your pricing policies this year might be more mild and why your pricing policies in the future might be a more aggressive, if that’s what you meant?

That’s what I did mean. Well, I'll start with and I'll maybe hand it over to Barry, so if he can correct anything I screw up, but I start by saying I think we have been modestly aggressive. I think that where we are this year in regard to our advertising spend and our pricing decisions were really sort of my view coming out of the summer that I really wanted to basically work on consumer demand and I didn’t want to create any issues to it, and this would be particularly true in urea containing products like lawn fertilizer, where we have seen a decline over the time on our units sold. And, this is again not a share loss. This is not a sort of a dollar decline, but it is a unit volume decline and something that I’m just wanted to sort of put a stick in the sand and say look, when I’ve taken pricing and we’re increasing our advertising, and so far I feel pretty good about that, I feel confident that our sales force agreed that that was the right decision, that our marketers agreed it was the right decision, and that our retail partners. And that -- this is sort of in advance for the season, so we will see what the consumers think. But I’d say so far so good. Going forward, we do understand that gross margin is our -- our gross margin profit dollars is the gate-field we use to operate our business. And that when we talk about, what our advertising ought to be, one of the things we will talk about next week is, what I call, my core conditions. So just something I felt obliged to provide sort of to our internal community here, and one of…

Yeah just one thing is that Jeff this is the first year, we’re looking at pricing decoupling it from commodity cost that we’re looking at the value provided to the consumer, the elasticity demand, and what you heard Jim Lyski talk about next week is how we’re going to view, how we price for our brands the value that we provide for the consumer and our ability to price for innovation and continue to drive the innovation. If you look at historically where we’ve been, we’ve been in a secular increase in the cost of commodities over the last five years. And as Jim said, we’re breaking that mold lets say we’re going to drive unit volume, we’re going to drive share and we’re going to continue to drive margin and not look that our brands as just a cost plus basis, but look more at the premium nature by brands and how we can drive value to our shareholders that way.

Your next question comes from Joe Altobello with Oppenheimer.

Just a couple of quick ones. I guess first you said a number of times that weather accounted for only about a half of the top-line shortfall that you had last year. Could you guys give us an update on any other issues that you saw last year at least at this early stage? And then secondly, and somewhat related if you could breakdown POS maybe between mass versus home center?

Joe, I would say we don’t break it down that way in respect to our customers. But I can speak specifically. We said about 50% weather-related and we said we had some difficulties with a couple of our customers. I would say the weather is turned around and I think we’re in great shape with all of our customers and I think you’re seeing the outcome of us having better account plans with some of our bigger customers this year.

Okay, thanks Barry. But just doesn’t from the POS, I wasn’t looking for specific number but in general are you seeing…

A divergence no. I would say all of our customers the numbers Jim talked about there was plus or minus a few points of each other so.

Let me just add a little bit to this because we were -- we've been sort of pressing for next week with you all, and as we prep for this call, we got into quite a bit the detail. If you look at like Florida in particular, Texas as well, all channels are doing well. I mean we’ve put a lot of time into sort of correcting I think issues that we felt on both sides at Wal-Mart and I think we’re in a way better track and the performance we’re seeing year-to-date call it in mass but that’s code for Wal-Mart is, is really good. So, I think things so far are going well, and I think we’re all much more confident than we sort of felt sort of midway though last year.

Gotcha okay. And secondly, in terms of the timing shift you saw this quarter, obviously you did talk about back in December, so it wasn’t a surprise. But you guys have been talking about timing shifts in terms of delivering product later or actually closure to the start of the season for a number of years now. So I’m just curious are we almost at just-in-time at this point or still opportunities to push those shipments back even further?

Look that’s a hard one to predict. Because about the time you say it’s this word should they will say want to scan-based. So, and we are not in discussions on going scan-based. But look I think as long as Scotts can excel in our supply chain and deliver on time in the vendor community. If you want to call it that and especially in big box DYI to provide in a very violent sort of season really pristine performance without losing any sales. So in don’t know. I think that probably it doesn’t, probably it continues to go until they’re sitting on sort of $0.00 in the off-season. But we feel fine about it.

Your next question comes from the line of Carla Cassela with JPMorgan

Hi just a couple of quick ones. One on the marketing spend that you’re up in this year. How much of that is going to be the regionalization saw in the regions that they just charge you versus the national marketing?

Hi, and it’s Jim, but I think it’s probably both. I think what we learned big time last year was there is a more efficient way to do it than we did last year. And so I think we can sort of do both. But Jim you want to…

I’d say right now we anticipate somewhere between 30% to 40% of our immediate spend to have regional massaging flexibility. That doesn’t necessarily mean we bought it regionally. It just means that we can vary the message to match the POS curves in each region.

Okay great. And then just giving how poor the weather was last year, are you seeing much a pickup in the -- I guess the competitive situation as everyone tries to build for a better 2012 season?

Listen from my point of view when I was on the road yesterday, I think lawn and garden probably is looking pretty good. And so I think everybody is kind of ready for it. Do I think the world is more competitive than it probably was two, three years ago? Yeah I do. But I think that’s helping us and it’s making us a better competitor as well. So do I think that there is big gaps where certain people look terrible? No I think everybody is looking pretty good in the departments especially in the warm season markets look pretty well set. So I think the whole environment is good. Listen maybe other people showing the POS gains that we’re seeing. So I think we’re doing really very well. What I don’t know is we’re outperforming sort of those markets down south. I suspect we are, but I don’t know that for sure.

Okay. But new retailers you think have cutback any of their space given how bad last year was?

No, it’s been really one of the really important and gratifying things is that as we’ve spoken to these retailers and I’ve been meeting with many more senior management of our biggest retailers is that almost to a person they are extremely committed to on a garden as a category that really leads them into the New Year and not at all sort of diminished, sort of presence or commitment as a result of a poor season. I think they see it for what it was. I mean most people who have been in lawn and garden recognize as if, if the weather sucks, it’s just going to be as hard to have a great year.

The only thing I would add is, what Jim said is they were positive going in and what these early good results, it’s just gaining momentum and everybody has a renewed focus on it. So I think it’s all good.

Your next question comes from Eric Bossard with Cleveland Research.

Two things. One, your comment that for the year you thought POS would be up high single-digits I guess 7% to 9% and your sales would be up 6 plus. And I just understand the difference between that and what the assumption is in regards to inventory and the channels through the year and then also what the assumption is for either your market share or the category performance?

Eric, this is Barry Sanders. As continued and Jim already fielded one of these questions is, we believe that we need to take -- continue to take inventory down at year-end and for them not to over win at the inventory. So our calculation would say that POS would be up higher but then we would take the inventory out at the end of the year. And part of that’s what happened in Q1 as well as we made sure that they were in good shape going into Q2.

And then your thoughts of the POS is the 7% to 9%, your POS or the industry POS, how do you feel about? I guess I will ask differently, do you think you hold gain or lose share relative to the industry this year?

You’re correct. So our plan would say that 7% to 9% is our POS. And then put in that would be some growth or gain in market share by Scotts this year.

And then the last question I know you affirmed that $80 million or reaffirmed that $80 million input cost pressure for the year up, can you just remind us of what the assumption is about, how you offset that? I know that you’re talking about less price than normal but can you give us a little sense on what’s on the other side of that to get you to what sounds like a little bit of gross margin pressure for the year?

Well I’ll have a lot more detail to that next week. I think what we said so far is that we do expect gross margin rate pressure because as we’ve been very public about. Well we took some pricing and we did drive some increased productivity, as trade parameter wasn’t sufficient to cover the commodity. So there will be margin rate pressure relative to that commodity cost increase. And I’ll talk more to that next week, as well as kind of our longer-term outlook for that.

Your next question comes from Olivia Tong Bank of America, Merrill Lynch.

Why don’t you talk a little about the POS improvement? Well small numbers at the beginning of this season. What do you think it drove growth? Is it more the cycle, the weather has been better or there -- early signs from have you already launched some programs associated with the marketing expenditure increase? And then, further on top of that in mass, can you give us -- you mentioned that the rates of growth between the home center and mass is sort of normalized, can you give some color and some specifics on what you’re doing differently to drive that turnaround?

All right. You want to -- which one do you want to do first Barry? Why don’t you do the mass one first and then we’ll go into the second one?

Question on -- could you repeat the question on mass?

Sure. Just what you’re doing differently at mass just to norm -- to get those results better this year?

I think they’ve had a -- they have a new management team in place that we’re very pleased with. They’re very aggressively driving sales. We’re partnering with them very well and I think we both come to terms with what the opportunity is for us to grow the business this year. And they’re as aggressive as we are of going after it. So, I think it’s a good plan, it’s a good partnership, and our goals are lined and I think the results are further inline with what we expected.

No, but I’d add on that, but I think our off-shelf display is going to be significantly better that it was last year and our tab support. And so this is, support we’re putting behind it and then support that Wal-Mart is putting lawn and garden in general is going to be enhanced more or less last year. So I think that a lot of this stuff is all to come. So based on the POS we’re seeing now, plus what we know is coming down the road, in regard to sort of tab support and display support, it’s good reason to be optimistic. In regard to just generally what’s happening, because Olivia I’d say that these are not small numbers right now, to be 25% into the sort of seasonal year in Florida and to be up more than 25%, you’re starting to get into the point where we think it might actually mean something. And so what do I think, hey listen, I think things economically are like somewhat better in Florida. I mean, I think people are feeling a little more relaxed. I think that a lot of the cheapest foreclosure stuff has been sort of swept out. But I think the weather has been superb. And this, given the fact that our advertising we had wanted to pull it up hard, but based on the amount of political activity that was occurring in the state of Florida prior to the Republican Primary we basically we just couldn’t compete with that. And so we went into the market and are in the market now right after the Primaries were over. So that the results we’re seeing really have not had any impact from advertising and the advertising is going to be substantially higher. So, if you believe, and we do advertising works, and I think most of it just due to somewhat more favorable economics just generally out there, and two, just terrific weather. And now with the advertising going up, it’s a little bit like the discussion about Wal-Mart. There is a lot of good things coming down the pike and what we do is really coming to effect now. So far so good.

And I would add to what Jim said is this a year three of regionalization in the Southeast and Southwest. So our teams are doing an excellent job. You coupled good, what exactly what Jim said, good account plans and then what I would say is the best execution we’ve ever had in those regions. You put that scenario together; it all combines to get the result.

Barry is totally right and I neglected to mention the sort of really good efforts that are happening. Because regionalization if anything occurred last year and sort of the stress of just complete crap weather, the result of it was I think a much better execution plan going into ‘12 then we’ve had in a much more aggressive leadership profile from the Regional President. And so that’s also happening and I neglected to say that.

Got it, thanks. And then just following up on that you mentioned in the press release you’re doing an updated look at your longer-term financial goals and objectives. Should we be reading into that, anything into that, or is that just well at the Analyst Day we’re obviously going to update you on the longer-term?

We’ll save the sort for headlines but it’s exciting. That’s what I would say is that Dave in addition to the financial side of the house, the strategic side has also reported to him and as Barry and I have really been focused on sort of our operating profile call it, Dave has been highly focused on what our financial objectives ought to be as we try to create value. And so really what you’re going to hear is a emerging of I think a really good sort of operational strategy tied to, I’m going to say some modestly to maybe more modestly I mean to more aggressive financial objectives that I think drive value. So I think we will view it as a positive and we will find out next week.

Your next question comes from Bill Chappell with SunTrust.

This is Mike filling in for Bill. Good morning.

Good morning.

Hey I just wanted to ask question around advertising. I mean I know you’re going to provide more color next week, but given some of the commentary in you prepared remarks about moving the timing, you’re shifting the timing of your ads then forward due to some of the favorable weather you’re seeing. Could you maybe give us some more color on the cadence of our advertising marketing spend this year? Is that how that differs maybe from prior years?

Mike, this is Jim Lyski. What we’re trying to do at this year is to lead our POS curbs by geography approximately two weeks out, so that we’re building both their awareness and recognition levels that we need, as you get into the peak environment. And so that it’s kind like leading the bird when you go out shooting and that’s kind of what we’re doing as far as the cadence goes. And then, trying to be able to massed out through the season. So I say I would that’s what we meant by change in a cadence.

Okay, great. And then, a follow-up…

I want to just add on that because remember what we had by weather we had a very significant portion of our spend last year, weather triggered. And the problem is the weather was so long pour that it really ended up delaying that spend instead sort of leading the bird we kind of trailed the bird. And what we found out was that, while weather triggered I think still is a important sort of arrow in a quiver, you can’t go 100% that or majority of that or you’re going to find out in sort of a poor season that you just none of that brand building effort and advances the season could hurt you. And, I think that this is really a move back to what Jim described, which is not that new for Scotts, but we had moved very much in this sort of weather trigger.

Okay great. And then a follow-up on advertising, I mean, given what you’re seeing with PSO thus far, and understanding that, we’re only a month into the season, and we haven’t hit the heart of the season, if you continue to see kind of strong double-digit POS this season, would you have the ability or the opportunity to maybe rollback or scale back some of the advertising spend or is that something that’s already booked for the year regardless of how POS does?

Hey, you’re talking the wrong path.

Hey man, it’s like if it was me I would spend more. Just pour gasoline on the fire; I don’t know if Jim would say that.

I would absolutely agree with my CEO on that one.

All right great. Thanks guys.

Your next question comes from Sam Darkatsh with Raymond James.

Most of my questions have been asked and answered; there's only so much we can ask here in February. Couple of things. At the things of, again, paying so much attention to only maybe 2% or 3% of the season sales, if you mention Florida and Texas very strong POS, you didn’t mentioned southern California which as it looks like the weather has been fairly normal out there, and are there issues there with POS early in the season?

Well, let's start with we think we know that our national POS is up 20% since January 1st. So, within that, the numbers are not as good as Florida and Texas. The whole national program is not bad.

Sam, southern California is around flat and as you go north it gets a little worse than that. I would say that’s primarily driven by replacement strategy of trying to get closer to the season plus they had a little bit of rain out there. So, California not as good as Florida and Texas but I would as good a shape as we've seen California in, and I think from a marketing plan standpoint we have expectations that California will be equal or better to what we're seeing is which is high single digits for the year.

All right, so let me just -- a little bit of color at people who are sort of walking around the table here. Arizona is plus 22. So, Arizona is good. To me, California is we can tap dance around it or we can say, have we really figured out how to big time move the needle in California like we have in the east or for that matter has anyone figured out how to really move the needle in California. I think everybody is challenged a little bit with California, and I want to make sure that our Regional President out there Phil Jones has the tools to get it done because part of what we're looking to do this year is show that we can drive top-line numbers. California I think has been, as part of being the whole regional approach to the business is saying have we seen the kind of growth we've seen in the east, is it as responsive to advertising or the same messages, and the answer is no. So, it is a challenge. I'm not going to sort of walk away from it. The west is not doing poorly. Southern California is not terrible, its not great but its one of those things where we're really focused on it and making sure that our folks out there have the tools to get the job done. And I think four months from now, we will be talking about this and saying, okay, how did we do out there.

My second question would be it looks, if my memory serves, your comparisons on mix and volumes do not begin to get easy until April and beyond. And with the higher marketing spend and with the higher discretionary spend, would there be a reason why Q2 wouldn’t be down on a year-on-year in earnings?

So, Sam, here's what I would is I think directionally you're correct. As we have done in the past we're not going to try to start calling guidance by quarter but what I think we will tell you and I think we'll talk a little more next week is that if you look at our historic pattern of shipments and take it over a four-year average, if you apply that to our expectations to full year sale this year, I think you get to a reasonably good outlook for what we're planning for this year which is kind of average weather. So, you are correct in that we have more challenging comps from last year over the next several handful of weeks. And then as you probably remember from last year then they get the season just kind of tailed off and got to be -- it will easier comps then for the balance of the year. That would be the kind of direction I'd provide you on that.

Yeah, the only thing I would add, Sam, this is Barry, is that it wasn’t April. It went negative comps last year started in week 11 in March and it was downhill from there. So, it starts getting better kind of mid-March from easily comps going forward.

Your next question comes from Reza Vahabzadeh with Barclays Capital.

Just following up on the last question, so would you generally anticipate for the entire fiscal year sales of mix to be favorable for you?

This year so, if you are talking the product mix, we would expect it to be positive because, as Jim said, we're going to grow units and fertilizer and last year was not a very good fertilizer season given the mid-west and the northeast all the rains that we had. So, what we're seeing in the southern markets is it’s kicking off in fertilizers positive and we expect the same thing as the season rolls south to north.

Would that sales mix being favorable, would that also contribute to better gross margin, but not necessarily?

Yeah, that in isolation should. So, if you remember last year, there were -- we did talk about mix from a negative perspective and it was -- what we said was last year where we saw the greatest declines was in lawn products, the lawn fertilizer and weed control as well as non-selective weed control was related to Roundup. Those are all things last year we were providing as explanations for our margin rate deterioration. If we have a normal year which is what the plan is we would see some tailwind this year to our margin rate from a positive mix. So, there is a lot of other variables affecting rate this year but that in isolation should be a positive.

And then as far as use of free cash flow to be generated this year, any updated thoughts on how would -- you would apply that?

Really no updates. It would be consistent with what we've articulated in the past. And I would say the guidepost that we've laid out in the past is first from a capital structure. We're going to keep one eye on our debt leverage and then in our guidelines are 2 to 2.5 times. And then on the other hand, we are going to focus on a third of our operating cash flow to shareholders and two-thirds for growth, both organic and inorganic. Short of finding value accretive inorganic opportunities we would choose to return that to shareholders as well, but our first would be to dedicate two-thirds of our cash to growth. So, I would say those are our general guidelines, not something that we live and die by but it certainly directs how we think about this on a quarter-to-quarter basis.

Your next question comes from Jason Gere with RBC Capital Markets.

Just a couple of questions. I guess one, just thinking about the international outlook with a very weak macro backdrop there, you had some positive comments earlier in the call but I was just wondering how you are thinking about that market and what you're seeing out there right now?

What we're seeing right now is the economic background is not affecting lawn and garden sales. That’s not to say that it won't -- something won't happen going forward but I think culturally in the biz, the geographies that we compete we are not seeing any impact from our sales at all.

The second question really is the role of promotions and last year obviously there were some inefficient promotions out there. You guys had pledged we don’t want to go back that route again. Just in terms of thinking about the rest of the year and hopefully, god-willing, we don’t ever see the type of weather we saw last year, but how do you think about the balance of promotions in there if weather doesn’t cooperate, is not as normal as what we hope it could be this year? Just kind of thinking about that role in there? Thanks.

So Barry is looking at me like who's going to take this one. Look, when you say inefficient promotions I assume it can mean we spent money and got like nothing for it. I guess that qualifies as inefficient. Yeah, but isn’t everybody here on here is even laughing. I sort of can’t believe this guys, no laughing. The sort of that we were chasing this, is we were trying to basically make the most of the year and invest behind promotions to drive the business. The hope was that the weather would improve and we would be in a position to have this through this place and promotional activity that would drive the business. That didn’t play out and therefore it qualifies as around here we say chasing the business and inefficient promotional activity that we do want to work away from, and we’re not planning to repeat. Now if you’re saying will the same thing happen -- if the same thing was to happen again, I think we would try to be much more careful about it. And I’m not sure what else to say expect to say we were trying to operate the business realtime and this is the best we can. It didn’t play out, and I think we could do and have -- I think we could more effective promotional spend and I start the same with our advertising. Instead of relying completely on sort of on the floor display activity I think we go to advertising and we could do it much more real time depending on the weather and if the weather didn’t play not invest that money. I don’t know Barry, what would you do? It’s kind of what would you differently if the whole thing happened again.

So going back to where we started on pricing. We didn’t take pricing this year. In the promotions that we’ve done are an indirect form of pricing action. So we didn’t take the pricing. We think, we have the right pricing. And the mix of the spend that we’re going to spend and you’re going to hear more of this from Jim Lyski next week is, it’s going to be spent more on brand building activities and driving the longer-term and getting participation rates up this year, more so than what Jim termed as chasing the business last year. And so, I think we’ve a much better marketing plan that’s integrated with our customers better. The cadence of it is not only to get it up in advance but we have a very good marketing plan all the way through our fall business next year. And I would say this year will probably be a little more patient lift providing the marketing plans layout and focusing more on brand building activities than more so pricing action.

Your next question comes from Connie Maneaty with BMO Capital.

I think I’ve question on the first quarter. What would be you imagine a normalized gross margin is in the first quarter given all things moving forward? I mean ICL anniversary sales keep moving into the second quarter, so capacity utilization is going to be probably not as high as the rest of the year and it could be plus or minus the impact of commodity. So what’s normalized now for the first quarter?

Connie, so as I think about your question, in many respects I would say that what we saw this quarter probably is more normalized because if you consider the fact that the sales shift is something is something that we wouldn’t anticipate to return back to Q1 next year. So that’s permanent. ICL is now embedded in our financials for nearly a full 12 months. So from the perspective of the first quarter that won’t go away. The one thing that we will benefit from next year would be the professional grass seed business that we said we’re intending to exhaust the inventories and exit. So that would be kind of one adjustment I would say would need to be thought through to call what’s normal. But I really think then the big question then is going to be commodity assumptions in terms of what’s normal in the future for commodities. So if you say, well, this year the anomaly or was the past the anomaly, in many respects I’d say this year might reflect more the new normal giving the pacing of the season and the composition of our sales in this quarter.

Okay, that’s helpful. And then on the accelerated procurements of long lead time inventory, what’ that about?

Well, so there’s a handful of items that we really source from China -- not from China, from Asia I’ll say more broadly. The core which is the key part of some of our highest growing items, soils and easy seeds, sourced from that region is well, some of our new innovations that we’re launching this year in our Ortho product line has components that are sourced from Asia. So from the perspective that its both related to innovation that we want to make sure we have good service on, and I would include in that innovation snap as well; some of the components of snap come from Asia. So it’s coming from innovation in our higher growth product lines. The decision was made this year to more aggressively source those materials ahead of the season to simply de-risk any issue later in the season from a service perspective.

We think that these long lead time items sourced in the first quarter are also part of a new normal?

I would think that a couple of things, one is the key drivers. So the order that I explain them in would be representative of the order of significance in terms of the growth of $88 million. So, the increase in cost was the largest. The second would be the more rapid build in production plan anticipation growth from the back part of the year. I would tell you on that, I think we will progressively get better as we drive from (inaudible) to returns year in year out. And then, I guess I look to Barry in terms of the supply chain from a sourcing perspective to these components.

Connie, this year, which is pretty remarkable given this time of the year, the conversations that I'm having with our customers are about already when the product start moving make sure I am the one that gets the allocation. And so, what we wanted to do this year given this new innovations we don’t really know how high-high is with these. And we didn’t want to do is kill the innovation in a full national launch year. And so, we took a pretty aggressive approach on the inventory. I would say those products next year will have a much better feel and I think we can do a more regular flow. But any of these new innovations that were coming out that have long lead time items given the seasonal nature and the flow of how our sales goes at the retailers we could really damage our sales by missing a week. And so, I think you won’t this exact same repeat, but as we have new products we will evaluate that and make sure that you guys understand how we are going to mange that.

Amber, listen, in the interest of time I think we are going to take two more questions and we are going to rap things up.

Your next question comes from Jim Barrett with C.L. King & Associates.

Jim, could you talk about your lead market. How are your regional and private label competitors pricing your product relative two year ago?

Maybe I'll just let Barry with.

Yes. We haven’t seen really any change Jim, so I don’t think anybody has really taken pricing which is consistent with where we are at and we think it’s the right thing to do.

Okay. And Barry, on a follow-up any change in the promotional efforts by the mass merch retailers in support of private label or store brand, or is it unchanged from last year?

I would say, on the private label side unchanged, but I think you are going to see a much more aggressive branded approach.

By your competitors.

By us.

Yes, by Scotts.

By Scotts.

Well, I also think that you are going to see I mean if we are taking mass, I think the tab support is a very welcome change for I think the whole category. And I think its in my understanding is its very focused on branded products.

Branded products, correct.

Okay, well, thank you both.

Jim, just to thrown in there because I think is important is that I think us not taking price drove a lot of the fact that even in the increasing commodity period other people weren’t pricing. Just remember the effect on their margin is much more disruptive than it is to us.

The last question comes from Jon Andersen with William Blair

Just a question on the cost side. The restructuring benefit for the full year, what you’re expecting there and maybe how much to that impacted the first quarter.

Jon, going back to trying to recall the exact number I provided on the fourth quarter call. I think what I described as close to $20 million full year benefit, and that’s a fully loaded cost. So, what we saw in the first quarter was probably order of magnitude around I recall $6 million benefit first quarter.

Is that separate and distinct from the ongoing supply chain saving associated with the multi-year program that you had going on there?

Yes. It’s absolutely distinct from those savings.

I’ll now turn the call back over to Jim King for any closing remarks.

Okay, thanks, Amber. Again, thanks for joining us this morning and we look forward to seeing you all next Tuesday in New York. Again, if you want to register and you still haven’t you can call my office directly today, 937-578-5622 or send us an email at investor@scotts.com. And we ask that you haven’t registered to do so by the end of the day on Thursday. Other than that we look forward to seeing you next week. Thanks guys. See you guys later.

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