FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTORS

The 6.625% Senior Notes were issued on December 16, 2010 and are guaranteed by certain of the Company's domestic subsidiaries and, therefore, the Company reports condensed, consolidating financial information in accordance with SEC Regulation S-X Rule 3-10, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. On January 15, 2014, Scotts Miracle-Gro redeemed all of its outstanding $200 million aggregate principal amount of 7.25% Senior Notes which were previously guaranteed by certain of its domestic subsidiaries. The 6.000% Senior Notes were issued subsequent to the end of fiscal 2015 on October 13, 2015 and are guaranteed by certain of the Company's domestic subsidiaries. The guarantees with respect to the 7.25% Senior Notes were, and the guarantees with respect to the 6.625% Senior Notes and the 6.000% Senior Notes are “full and unconditional,” as those terms are used in Regulation S-X Rule 3-10, except that a subsidiary’s guarantee will be automatically released in certain customary circumstances, such as (1) upon any sale or other disposition of all or substantially all of the assets of the subsidiary (including by way of merger or consolidation) to any person other than Scotts Miracle-Gro or any “restricted subsidiary” under the applicable indenture; (2) if the subsidiary merges with and into Scotts Miracle-Gro, with Scotts Miracle-Gro surviving such merger; (3) if the subsidiary is designated an “unrestricted subsidiary” in accordance with the applicable indenture or otherwise ceases to be a “restricted subsidiary” (including by way of liquidation or dissolution) in a transaction permitted by such indenture; (4) upon legal or covenant defeasance; (5) upon satisfaction and discharge of the 6.625% Senior Notes; or (6) if the subsidiary ceases to be a “wholly owned restricted subsidiary” and the subsidiary is not otherwise required to provide a guarantee of the 6.625% Senior Notes pursuant to the applicable indenture. The Hawthorne Gardening Company and Hawthorne Hydroponics LLC were added as guarantors effective in the three month period ending March 28, 2015 and have been classified as Guarantors for all periods presented. The following 100% directly or indirectly owned subsidiaries fully and unconditionally guarantee at September 30, 2015 the 6.625% Senior Notes on a joint and several basis: EG Systems, Inc.; Gutwein & Co., Inc.; Hyponex Corporation; Miracle-Gro Lawn Products, Inc.; OMS Investments, Inc.; Rod McLellan Company; Sanford Scientific, Inc.; Scotts Temecula Operations, LLC; Scotts Manufacturing Company; Scotts Products Co.; Scotts Professional Products Co.; Scotts-Sierra Investments LLC; SMG Growing Media, Inc.; Swiss Farms Products, Inc.; SMGM LLC; SLS Franchise Systems LLC; The Scotts Company LLC; The Hawthorne Gardening Company; and Hawthorne Hydroponics LLC (collectively, the “Guarantors”).

The following information presents Condensed Consolidating Statements of Operations, Condensed Consolidating Statements of Comprehensive Income (Loss) and Condensed Consolidating Statements of Cash Flows for each of the three years ended September 30, 2015, 2014 and 2013, and Condensed Consolidating Balance Sheets as of September 30, 2015 and 2014. The condensed consolidating financial information presents, in separate columns, financial information for: Scotts Miracle-Gro on a Parent-only basis, carrying its investment in subsidiaries under the equity method; Guarantors on a combined basis, carrying their investments in subsidiaries which do not guarantee the debt (collectively, the “Non-Guarantors”) under the equity method; Non-Guarantors on a combined basis; and eliminating entries. The eliminating entries primarily reflect intercompany transactions, such as interest expense, accounts receivable and payable, short and long-term debt, and the elimination of equity investments, return on investments and income in subsidiaries. Because the Parent is obligated to pay the unpaid principal amount and interest on all amounts borrowed by the Guarantors or Non-Guarantors under the credit facility (and was obligated to pay the unpaid principal amount and interest on all amounts borrowed by the Guarantors and Non-Guarantors under the previous senior secured five-year revolving loan facility), the borrowings and related interest expense for the loans outstanding of the Guarantors and Non-Guarantors are also presented in the accompanying Parent-only financial information, and are then eliminated. Included in the Parent Condensed Consolidating Statement of Cash Flows for fiscal 2015, fiscal 2014, and fiscal 2013 are $281.3 million, $422.8 million, and $87.8 million, respectively, of dividends paid by the Guarantors and Non-Guarantors to the Parent representing return on investments and as such are classified within cash flows from operating activities.

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Operations

for the fiscal year ended September 30, 2015

(in millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	2,480.6		$	535.9		$	—		$	3,016.5
Cost of sales	—			1,558.3			386.7			—			1,945.0
Cost of sales - impairment, restructuring and other	—			3.1			3.5			—			6.6
Gross profit	—			919.2			145.7			—			1,064.9
Operating expenses:
Selling, general and administrative	—			556.4			140.3			1.7			698.4
Impairment, restructuring and other	—			71.0			7.0			—			78.0
Other income, net	—			(7.2		)	1.1			—			(6.1		)
Income (loss) from operations	—			299.0			(2.7		)	(1.7		)	294.6
Equity income in subsidiaries	(179.2		)	(6.1		)	—			185.3			—
Other non-operating income	(27.9		)	—			(23.5		)	51.4			—
Costs related to refinancing	—			—			—			—			—
Interest expense	55.2			44.1			2.6			(51.4		)	50.5
Income from continuing operations before income taxes	151.9			261.0			18.2			(187.0		)	244.1
Income tax (benefit) expense from continuing operations	(9.6		)	88.6			6.4			—			85.4
Income from continuing operations	161.5			172.4			11.8			(187.0		)	158.7
Income from discontinued operations, net of tax	—			—			—			—			—
Net income	$	161.5		$	172.4		$	11.8		$	(187.0	)	$	158.7
Net loss attributable to noncontrolling interest	—			—			—			1.1			1.1
Net income attributable to controlling interest	$	161.5		$	172.4		$	11.8		$	(185.9	)	$	159.8

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Comprehensive Income (Loss)

for the twelve months ended September 30, 2015

(In millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net income	$	161.5		$	172.4		$	11.8		$	(187.0	)	$	158.7
Other comprehensive income (loss), net of tax:
Net foreign currency translation adjustment	(14.2		)	—			(14.2		)	14.2			(14.2		)
Net change in derivatives	(2.1		)	(0.8		)	—			0.8			(2.1		)
Net change in pension and other post retirement benefits	(4.3		)	(5.4		)	1.1			4.3			(4.3		)
Total other comprehensive income (loss)	(20.6		)	(6.2		)	(13.1		)	19.3			(20.6		)
Comprehensive income	$	140.9		$	166.2		$	(1.3	)	$	(167.7	)	$	138.1

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Cash Flows

for the fiscal year ended September 30, 2015

(in millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH PROVIDED BY OPERATING ACTIVITIES^(a)	$	239.4		$	249.3		$	39.5		$	(281.3	)	$	246.9
INVESTING ACTIVITIES
Proceeds from sale of long-lived assets	—			5.5			—			—			5.5
Investments in property, plant and equipment	—			(56.6		)	(5.1		)	—			(61.7		)
Investing cash flows from (to) affiliates	(141.9		)	—			—			141.9			—
Investments in acquired businesses, net of cash acquired	—			(170.8		)	(9.4		)	—			(180.2		)
Investment in marketing and license agreement	—			(300.0		)	—			—			(300.0		)
Net cash used in investing activities	(141.9		)	(521.9		)	(14.5		)	141.9			(536.4		)
FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans	—			1,568.1			267.9			—			1,836.0
Repayments under revolving and bank lines of credit and term loans	—			(1,284.1		)	(173.9		)	—			(1,458.0		)
Financing and issuance fees	(0.4		)	(0.1		)	—			—			(0.5		)
Dividends paid	(111.3		)	(255.5		)	(25.8		)	281.3			(111.3		)
Purchase of Common Shares	(14.8		)	—			—			—			(14.8		)
Payments on seller notes	—			(1.5		)	—			—			(1.5		)
Excess tax benefits from share-based payment arrangements	4.7			—			—			—			4.7
Cash received from exercise of stock options	24.3			—			—			—			24.3
Financing cash flows from (to) affiliates	—			230.0			(88.1		)	(141.9		)	—
Net cash provided by (used in) financing activities	(97.5		)	256.9			(19.9		)	139.4			278.9
Effect of exchange rate changes on cash	—			—			(7.3		)	—			(7.3		)
Net increase (decrease) in cash and cash equivalents	—			(15.7		)	(2.2		)	—			(17.9		)
Cash and cash equivalents at beginning of year	—			23.1			66.2			—			89.3
Cash and cash equivalents at end of year	$	—		$	7.4		$	64.0		$	—		$	71.4

(a)

Cash received by the Parent from the Guarantors in the form of dividends in the amount of $255.5 million represent return on investments and are included in cash flows from operating activities. Cash received by the Guarantors from the Non-Guarantors in the form of dividends in the amount of $25.8 million represent return on investments and are included in the cash flows from operating activities.

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Balance Sheet

As of September 30, 2015

(in millions)



	Parent		Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	7.4	$	64.0	$	—		$	71.4
Accounts receivable, net	—		96.9		94.4		—			191.3
Accounts receivable pledged	—		152.9		—		—			152.9
Inventories	—		318.7		88.9		—			407.6
Prepaid and other current assets	—		90.7		34.7		—			125.4
Total current assets	—		666.6		282.0		—			948.6
Property, plant and equipment, net	—		397.6		56.1		—			453.7
Goodwill	—		408.8		12.0		11.6			432.4
Intangible assets, net	—		593.0		58.8		11.7			663.5
Other assets	16.3		15.0		15.0		(17.3		)	29.0
Equity investment in subsidiaries	461.3		—		—		(461.3		)	—
Intercompany assets	1,179.4		—		—		(1,179.4		)	—
Total assets	$	1,657.0	$	2,081.0	$	423.9	$	(1,634.7	)	$	2,527.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of debt	$	—	$	125.1	$	9.7	$	—		$	134.8
Accounts payable	—		141.5		56.4		—			197.9
Other current liabilities	15.5		191.9		73.0		—			280.4
Total current liabilities	15.5		458.5		139.1		—			613.1
Long-term debt	1,016.3		728.4		100.1		(816.3		)	1,028.5
Other liabilities	4.5		228.0		32.3		(12.3		)	252.5
Equity investment in subsidiaries	—		156.2		—		(156.2		)	—
Intercompany liabilities	—		296.6		47.5		(344.1		)	—
Total liabilities	1,036.3		1,867.7		319.0		(1,328.9		)	1,894.1
Total shareholders’ equity - controlling interest	620.7		213.3		104.9		(318.2		)	620.7
Noncontrolling interest	—		—		—		12.4			12.4
Total equity	$	620.7	$	213.3	$	104.9	$	(305.8	)	$	633.1
Total liabilities and equity	$	1,657.0	$	2,081.0	$	423.9	$	(1,634.7	)	$	2,527.2

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Operations

for the fiscal year ended September 30, 2014

(in millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	2,314.0		$	527.3		$	—		$	2,841.3
Cost of sales	—			1,440.5			369.4			—			1,809.9
Cost of sales - impairment, restructuring and other	—			—			—			—			—
Gross profit	—			873.5			157.9			—			1,031.4
Operating expenses:
Selling, general and administrative	—			535.3			145.2			—			680.5
Impairment, restructuring and other	—			48.2			2.8			—			51.0
Other income, net	—			(12.6		)	(2.1		)	—			(14.7		)
Income from operations	—			302.6			12.0			—			314.6
Equity income in subsidiaries	(193.2		)	(8.9		)	—			202.1			—
Other non-operating income	(21.3		)	—			(22.2		)	43.5			—
Costs related to refinancing	10.7			—			—			—			10.7
Interest expense	52.5			37.4			0.9			(43.5		)	47.3
Income from continuing operations before income taxes	151.3			274.1			33.3			(202.1		)	256.6
Income tax (benefit) expense from continuing operations	(14.9		)	94.6			11.5			—			91.2
Income from continuing operations	166.2			179.5			21.8			(202.1		)	165.4
Income from discontinued operations, net of tax	—			0.4			0.4			—			0.8
Net income	$	166.2		$	179.9		$	22.2		$	(202.1	)	$	166.2
Net loss attributable to noncontrolling interest	0.3			0.3			—			(0.3		)	0.3
Net income attributable to controlling interest	$	166.5		$	180.2		$	22.2		$	(202.4	)	$	166.5

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Comprehensive Income (Loss)

for the twelve months ended September 30, 2014

(In millions)



	Parent			Subsidiary Guarantors		Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	166.2		$	179.9	$	22.2		$	(202.1	)	$	166.2
Other comprehensive income (loss), net of tax:
Net foreign currency translation adjustment	(8.2		)	—		(8.2		)	8.2			(8.2		)
Net change in derivatives	4.6			1.3		—			(1.3		)	4.6
Net change in pension and other post retirement benefits	(4.8		)	0.7		(5.5		)	4.8			(4.8		)
Total other comprehensive income (loss)	(8.4		)	2.0		(13.7		)	11.7			(8.4		)
Comprehensive income (loss)	$	157.8		$	181.9	$	8.5		$	(190.4	)	$	157.8

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Cash Flows

for the fiscal year ended September 30, 2014

(in millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH PROVIDED BY OPERATING ACTIVITIES^(a)	$	388.8		$	254.5		$	21.7		$	(424.1	)	$	240.9
INVESTING ACTIVITIES
Proceeds from sale of long-lived assets	—			3.7			—			—			3.7
Proceeds from sale of business, net of transaction costs	—			6.6			0.6			—			7.2
Investments in property, plant and equipment	—			(81.0		)	(6.6		)	—			(87.6		)
Proceeds from sale and leaseback transaction	—			35.1			—			—			35.1
Investments in acquired businesses, net of cash acquired	—			(58.9		)	(55.1		)	—			(114.0		)
Net cash used in investing activities	—			(94.5		)	(61.1		)	—			(155.6		)
FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans	—			1,596.1			336.7			—			1,932.8
Repayments under revolving and bank lines of credit and term loans	—			(1,184.7		)	(340.6		)	—			(1,525.3		)
Repayment of 7.25% senior notes	(200.0		)	—			—			—			(200.0		)
Financing and issuance fees	(6.1		)	—			—			—			(6.1		)
Dividends paid	(230.8		)	(404.9		)	(19.2		)	424.1			(230.8		)
Purchase of Common Shares	(120.0		)	—			—			—			(120.0		)
Payments on seller notes	—			(0.8		)	—			—			(0.8		)
Excess tax benefits from share-based payment arrangements	—			5.9			—			—			5.9
Cash received from exercise of stock options	20.0			—			—			—			20.0
Intercompany financing	148.1			(151.1		)	3.0			—			—
Net cash used in financing activities	(388.8		)	(139.5		)	(20.1		)	424.1			(124.3		)
Effect of exchange rate changes on cash	—			—			(1.5		)	—			(1.5		)
Net increase (decrease) in cash and cash equivalents	—			20.5			(61.0		)	—			(40.5		)
Cash and cash equivalents at beginning of year	—			2.6			127.2			—			129.8
Cash and cash equivalents at end of year	$	—		$	23.1		$	66.2		$	—		$	89.3

(a)

Cash received by the Parent from its subsidiaries in the form of dividends in the amount of $422.8 million represent return on investments and are included in cash flows from operating activities. Cash received by the Guarantors from the Non-Guarantors in the form of dividends in the amount of $1.3 million represent return on investments and are included in the cash flows from operating activities.

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Balance Sheet

As of September 30, 2014

(in millions)



	Parent		Subsidiary Guarantors		Non- Guarantors		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	23.1	$	66.2	$	—		$	89.3
Accounts receivable, net	—		124.6		99.4		—			224.0
Accounts Receivable, pledged	—		113.7		—		—			113.7
Inventories	—		282.1		103.0		—			385.1
Prepaid and other current assets	—		85.2		37.7		—			122.9
Total current assets	—		628.7		306.3		—			935.0
Property, plant and equipment, net	—		371.3		65.7		—			437.0
Goodwill	—		344.3		6.6		—			350.9
Intangible assets, net	—		256.8		45.9		—			302.7
Other assets	23.8		14.7		28.5		(34.3		)	32.7
Equity investment in subsidiaries	368.3		—		—		(368.3		)	—
Intercompany assets	878.8		—		—		(878.8		)	—
Total assets	$	1,270.9	$	1,615.8	$	453.0	$	(1,281.4	)	$	2,058.3
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of debt	$	—	$	85.8	$	6.1	$	—		$	91.9
Accounts payable	—		134.4		58.9		—			193.3
Other current liabilities	16.7		161.9		80.9		—			259.5
Total current liabilities	16.7		382.1		145.9		—			544.7
Long-term debt	681.8		480.0		12.4		(481.8		)	692.4
Other liabilities	5.1		235.7		47.4		(34.2		)	254.0
Equity investment in subsidiaries	—		106.5		—		(106.5		)	—
Intercompany liabilities	—		305.2		91.8		(397.0		)	—
Total liabilities	703.6		1,509.5		297.5		(1,019.5		)	1,491.1
Total shareholders’ equity - controlling interest	553.8		92.8		155.5		(248.4		)	553.7
Noncontrolling interest	$	13.5	$	13.5	$	—	$	(13.5	)	$	13.5
Total equity	567.3		106.3		155.5		(261.9		)	567.2
Total liabilities and equity	$	1,270.9	$	1,615.8	$	453.0	$	(1,281.4	)	$	2,058.3

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Operations

for the fiscal year ended September 30, 2013

(in millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	2,280.4		$	493.3		$	—		$	2,773.7
Cost of sales	—			1,446.7			346.6			—			1,793.3
Cost of sales — impairment, restructuring and other	—			—			2.2						2.2
Gross profit	—			833.7			144.5			—			978.2
Operating expenses:
Selling, general and administrative	—			515.3			144.3			—			659.6
Impairment, restructuring and other	—			11.2			6.9			—			18.1
Other income, net	—			(6.9		)	(3.1		)	—			(10.0		)
Income from operations	—			314.1			(3.6		)	—			310.5
Equity income in subsidiaries	(180.9		)	1.3			—			179.6			—
Other non-operating income	(20.4		)	—			—			20.4			—
Interest expense	52.4			25.2			2.0			(20.4		)	59.2
Income (loss) from continuing operations before income taxes	148.9			287.6			(5.6		)	(179.6		)	251.3
Income tax (benefit) expense from continuing operations	(12.2		)	105.8			(1.7		)	—			91.9
Income (loss) from continuing operations	161.1			181.8			(3.9		)	(179.6		)	159.4
Income (loss) from discontinued operations, net of tax	—			0.8			0.9			—			1.7
Net income (loss)	$	161.1		$	182.6		$	(3.0	)	$	(179.6	)	$	161.1

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Comprehensive Income (Loss)

for the twelve months ended September 30, 2013

(In millions)



	Parent		Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
Net income (loss)	$	161.1	$	182.6		$	(3.0	)	$	(179.6	)	$	161.1
Other comprehensive income (loss), net of tax:
Net foreign currency translation adjustment	—		—			(5.2		)	—			(5.2		)
Net change in derivatives	7.2		(2.1		)	—			—			5.1
Net change in pension and other post retirement benefits	—		10.6			(1.0		)	—			9.6
Total other comprehensive income (loss)	7.2		8.5			(6.2		)	—			9.5
Comprehensive income (loss)	$	168.3	$	191.1		$	(9.2	)	$	(179.6	)	$	170.6

THE SCOTTS MIRACLE-GRO COMPANY

Condensed, Consolidating Statement of Cash Flows

for the fiscal year ended September 30, 2013

(in millions)



	Parent			Subsidiary Guarantors			Non- Guarantors			Eliminations			Consolidated
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	69.8		$	245.9		$	114.1		$	(87.8	)	$	342.0
INVESTING ACTIVITIES
Proceeds from sale of long-lived assets	—			0.2			3.4			—			3.6
Investments in property, plant and equipment	—			(44.6		)	(15.5		)	—			(60.1		)
Investment in unconsolidated affiliate	—			(4.5		)	—			—			(4.5		)
Investment in acquired businesses, net of cash acquired	—			(3.2		)	—			—			(3.2		)
Net cash used in investing activities	—			(52.1		)	(12.1		)	—			(64.2		)
FINANCING ACTIVITIES
Borrowings under revolving and bank lines of credit and term loans	—			1,130.4			344.4			—			1,474.8
Repayments under revolving and bank lines of credit and term loans	—			(1,078.5		)	(603.6		)	—			(1,682.1		)
Dividends paid	(87.8		)	(87.8		)	—			87.8			(87.8		)
Payments on seller notes	—			(0.8		)	—			—			(0.8		)
Excess tax benefits from share-based payment arrangements	—			2.0			—			—			2.0
Cash received from exercise of stock options	13.3			—			—			—			13.3
Intercompany financing	4.7			(159.1		)	154.4			—			—
Net cash used in financing activities	(69.8		)	(193.8		)	(104.8		)	87.8			(280.6		)
Effect of exchange rate changes on cash	—			—			0.7			—			0.7
Net increase (decrease) in cash and cash equivalents	—			—			(2.1		)	—			(2.1		)
Cash and cash equivalents at beginning of year	—			2.6			129.3			—			131.9
Cash and cash equivalents at end of year	$	—		$	2.6		$	127.2		$	—		$	129.8