ITEM 3. LEGAL PROCEEDINGS



As noted in the discussion in "ITEM 1. BUSINESS - Environmental and
Regulatory Considerations" and "ITEM 1. BUSINESS - Regulatory Actions," we are
involved in several pending environmental matters. We believe that our
assessment of contingencies is reasonable and that related reserves, in the
aggregate, are adequate; however, there can be no assurance that the final
resolution of these matters will not have a material adverse affect on our
results of operations, financial position and cash flows.


Pending material legal proceedings are as follows:



AgrEvo Environmental Health, Inc.



On June 3, 1999, AgrEvo Environmental Health, Inc. ("AgrEvo") (which
subsequently changed its name to Aventis Environmental Health Science USA LP)
filed a complaint in the U.S. District Court for the Southern District of New
York (the "New York Action"), against The Scotts Company, a subsidiary of The
Scotts Company and Monsanto seeking damages and injunctive relief for alleged
antitrust violations and breach of contract by The Scotts Company and its
subsidiary and antitrust violations and tortious interference with contract by
Monsanto. The Scotts Company purchased a consumer herbicide business from AgrEvo
in May 1998. AgrEvo claims in the suit that The Scotts Company's subsequent
agreement to become Monsanto's exclusive sales and marketing agent for
Monsanto's consumer Roundup® business violated the federal antitrust laws.
AgrEvo contends that Monsanto attempted to or did monopolize the market for
non-selective herbicides and conspired with The Scotts Company to eliminate the
herbicide The Scotts Company previously purchased from AgrEvo, which competed
with Monsanto's Roundup®. AgrEvo also contends that The Scotts Company's
execution of various agreements with Monsanto, including the Roundup® marketing
agreement, as well as The Scotts Company's subsequent actions, violated
agreements between AgrEvo and The Scotts Company.


AgrEvo is requesting damages as well as affirmative injunctive relief, and
seeking to have the court invalidate the Roundup® marketing agreement as
violative of the federal antitrust laws. Under the indemnification provisions of
the Roundup® marketing agreement, Monsanto and The Scotts Company each have
requested that the other indemnify against any losses arising from this lawsuit.


On January 10, 2003, The Scotts Company filed a supplemental counterclaim
against AgrEvo for breach of contract. The Scotts Company alleges that AgrEvo
owes The Scotts Company for amounts that The Scotts Company overpaid to AgrEvo.
The Scotts Company's counterclaim is now part of the underlying litigation. A
trial date has been set for February 22, 2005.


The Scotts Company believes that AgrEvo's claims in these matters are
without merit and is vigorously defending against them. If the above actions are
determined adversely to The Scotts Company, the result could have a material
adverse effect on The Scotts Company's results of operations, financial position
and cash flows. Any potential exposure that The Scotts Company may face cannot
be reasonably estimated. Therefore, no accrual has been established related to
these matters.



Central Garden & Pet Company





The Scotts Company v. Central Garden, Southern District of Ohio




On June 30, 2000, The Scotts Company filed suit against Central Garden & Pet
Company ("Central Garden") in the U.S. District Court for the Southern District
of Ohio (the "Ohio Action") to recover approximately $24 million in accounts
receivable and additional damages for other breaches of duty.


Central Garden filed counterclaims including allegations that The Scotts
Company and Central Garden had entered into an oral agreement in April 1998
whereby The Scotts Company would allegedly share with Central Garden the
benefits and liabilities of any future business integration between The Scotts
Company and Monsanto. The court dismissed a number of Central Garden's
counterclaims as well as The Scotts Company's claims that Central Garden
breached other duties owed to The Scotts Company. On April 22, 2002, a jury
returned a verdict in favor of The Scotts Company of $22.5 million and for
Central Garden on





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its remaining counterclaims in an amount of approximately $12.1 million. Various
post-trial motions were filed. As a result of those motions, the trial court has
reduced Central Garden's verdict by $750,000, denied Central Garden's motion for
a new trial on two of its counterclaims and granted the parties pre-judgment
interest on their respective verdicts. On September 22, 2003, the court entered
a final judgment, which provided for a net award to The Scotts Company of
approximately $14 million, together with interest at 2.31% through the date of
payment. Central Garden has appealed and The Scotts Company has cross-appealed
from that final judgment.


Central Garden v. The Scotts Company & Pharmacia, Northern District of
California


On July 7, 2000, Central Garden filed suit against The Scotts Company and
Pharmacia in the U.S. District Court for the Northern District of California
(San Francisco Division) alleging various claims, including breach of contract
and violations of federal antitrust laws, and seeking an unspecified amount of
damages and injunctive relief. On April 15, 2002, The Scotts Company and Central
Garden each filed summary judgment motions in this action. On June 26, 2002, the
court granted summary judgment in favor of The Scotts Company and dismissed all
of Central Garden's then remaining claims. That judgment has been affirmed by
the United States Court of Appeals.


Although The Scotts Company has prevailed consistently and extensively in
the litigation with Central Garden, some of the decisions in The Scotts
Company's favor are subject to appeal and possible further proceedings. If, upon
appeal or otherwise, the above actions are determined adversely to The Scotts
Company, the result could have a material adverse affect on The Scotts Company's
results of operations, financial position and cash flows. The Scotts Company
believes that it will continue to prevail in the Central Garden matters and that
any potential exposure that The Scotts Company may face cannot be reasonably
estimated. Therefore, no accrual has been established related to the claims
brought against The Scotts Company by Central Garden, except for amounts ordered
paid to Central Garden in the Ohio Action. The Scotts Company believes it has
adequate reserves recorded for the amounts it may ultimately be required to pay.



U.S. Horticultural Supply, Inc. (F/ K/ A E.C. Geiger, Inc.)



On February 7, 2003, U.S. Horticultural Supply ("Geiger") filed suit against
The Scotts Company in the U.S. District Court for the Eastern District of
Pennsylvania. Geiger alleged claims of breach of contract, promissory estoppel,
and a violation of federal antitrust laws, and seeks an unspecified amount of
damages. Geiger's promissory estoppel claims have been dismissed. The parties
have commenced discovery on the antitrust and breach of contract claims. No
trial date has been set.


On February 2, 2004, Geiger filed for bankruptcy protection pursuant to
Chapter 11 of the United States Bankruptcy Code. Geiger has filed an adversary
proceeding as part of the bankruptcy alleging that The Scotts Company interfered
with an agreement between Geiger and the purchaser of its operating assets and
seeks damages in an unspecified amount.


On November 5, 2004, Geiger filed another suit against The Scotts Company in
the U.S. District Court for the Eastern District of Pennsylvania. This complaint
alleges that Scotts conspired with another distributor, Griffin Greenhouse
Supplies, Inc., to restrain trade in the horticultural products market, in
violation of Sections 1 and 57 of the Sherman Antitrust Act.


The Scotts Company believes that all of Geiger's claims are without merit
and intends to vigorously defend against them. If any of the above actions are
determined adversely to The Scotts Company, the result could have a material
adverse effect on The Scotts Company's results of operations, financial position
and cash flows. Any potential exposure that The Scotts Company may face cannot
be reasonably estimated. Therefore, no accrual has been established related to
this matter.



The Scotts Company v. Aventis S.A. and Starlink Logistics, Inc.



On August 9, 2002, The Scotts Company filed suit against Aventis S.A. and its
wholly-owned subsidiary Starlink Logistics, Inc. in the U.S. District Court for
the Southern District of Ohio. In the complaint, The Scotts Company alleges it
is entitled to injunctive and monetary relief arising from Aventis' and
Starlink's interference with The Scotts Company's contractual right to purchase
a company called TechPac, L.L.C. from one of Aventis' former subsidiaries,
Aventis CropScience. The complaint alleges that





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pursuant to a contract between The Scotts Company and a predecessor-in-interest
to Aventis CropScience, Aventis CropScience was obligated to make a bona fide
offer to sell its interest in TechPac to The Scotts Company. The complaint
further alleges that Aventis directed Aventis CropScience to make a belated sham
offer to The Scotts Company and that later, upon the sale of Aventis CropScience
to Bayer AG, Aventis transferred ownership of TechPac to Starlink, an act which
has made it impossible for Aventis CropScience's successor-in-interest to make a
bona fide offer to sell TechPac to The Scotts Company.


In this suit, The Scotts Company seeks to ensure that it is able to exercise
its right to receive a bona fide offer to acquire TechPac, and The Scotts
Company seeks to recover compensatory and punitive damages in an amount as yet
undetermined for Aventis' and Starlink's interference with The Scotts Company's
right to receive such an offer. On October 4, 2002, Starlink filed a motion to
dismiss the complaint on jurisdictional grounds. On December 17, 2002, Aventis
filed a similar motion. On April 23, 2004, the court dismissed the action
without prejudice.


The Scotts Company appealed the dismissal to the United States Court of
Appeals for the Sixth Circuit, where the appeal remains pending. In addition,
The Scotts Company and certain subsidiaries filed an action against Aventis,
Starlink and others, in the Court of Common Pleas of Union County, Ohio. The
defendants removed that action to the United States District Court for the
Southern District of Ohio, where it is currently pending as Civil Action No.
04-CV-352.



Other



The Scotts Company has been named a defendant in a number of cases alleging
injuries that the lawsuits claim resulted from exposure to asbestos-containing
products, apparently based on The Scotts Company's historic use of vermiculite
in certain of its products. The complaints in these cases are not specific about
the plaintiffs' contacts with The Scotts Company or its products. The Scotts
Company in each case is one of numerous defendants and none of the claims seeks
damages from The Scotts Company alone. The Scotts Company believes that the
claims against it are without merit and is vigorously defending them. It is not
currently possible to reasonably estimate a probable loss, if any, associated
with the cases and, accordingly, no accrual or reserves have been recorded in
The Scotts Company's consolidated financial statements. There can be no
assurance that these cases, whether as a result of adverse outcomes or as a
result of significant defense costs, will not have a material adverse effect on
The Scotts Company, its financial condition or its results of operations.


The Scotts Company is reviewing agreements and policies that may provide
insurance coverage or indemnity as to these claims and is pursuing coverage
under some of these agreements, although there can be no assurance of the
results of these efforts.


We are involved in other lawsuits and claims which arise in the normal
course of our business. In our opinion, these claims individually and in the
aggregate are not expected to result in a material adverse effect on our results
of operations, financial position or cash flows.





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