Central Garden & Pet Company 2008 ANNUAL REPORT

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1 2008 ANNUAL REPORT Central Garden & Pet Company

2 Central Garden & Pet Company is a leading innovator, marketer and producer of quality branded products for consumer and professional use in the lawn and garden and pet supplies markets. For years, we have successfully helped consumers beautify their outdoor living spaces A M D R O B R E E D E R S C H O I C E P E N N I N G T O N L I L L Y M I L L E R F A R N A M T F H / N Y L A B O N E F O U R P A W S O C E A N I C K A Y T E E and promote healthy interaction with their pets. The foundation of our success is our dedication to Innovation, Quality and Service. Our strategy is to continue to Strengthen and Build our branded products portfolio for consumers; to be both Effective and Efficient for our retail partners; and to deliver Superior Returns for our shareholders.

3 To Our Fellow Shareholders William E. Brown CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER At Central Garden & Pet, we know that the home is the heart of activity. Our focus is to provide consumers with high-quality, innovative products that improve the quality and beautify outdoor living, and create fun and healthy interaction between pets and their owners. Fiscal 2008 was a transitional year for our company, as we said it would be. On returning as CEO in October 2007, I set out a number of priorities for 2008, including strengthening our balance sheet, reducing expenses and improving the operating results of several of our underperforming units. Thanks to the hard work of our dedicated employees, I m pleased to say that we made solid progress on all fronts. Of course, the macroeconomic climate and consumer concerns over the unprecedented turmoil in our country s financial markets have created strong headwinds for almost any business, ours included. While we are monitoring carefully to see what 2009 brings, I believe that our people are appropriately focused on those things we can measure and control. With continued discipline on expenses, margins and expected returns on assets, we are confident that we can weather this economic downturn and emerge from it stronger than ever. We had many accomplishments in the year. Among them, we launched a host of new products and won six new product awards across five categories at

4 Products that enhance outdoor living and lifestyles. The Garden Group is focused on developing innovative, easy to use, highly efficacious products. We are a leading provider of grass seed, wild bird feed, insect, weed and other garden control products and decorative outdoor pottery. the 2008 Global Pet Expo show. Central was also named Vendor of the Year by a leading pet retailer, underscoring our commitment to our retail partners. Also during the year, we launched our Smart Seed line of grass seed. This seed develops stronger and deeper root systems and requires up to 30% less water. The results of the Smart Seed launch were impressive, and in this and other areas we continue to invest in innovative new products that meet the needs of our customers. From a financial performance perspective, we began and ended the year with an intense focus on all the factors that impact the generation and consumption of cash. For example, we achieved a $25 million reduction in inventories compared to fiscal 2007 and vastly improved how we manage working capital. We also improved our discipline on capital spending and paid down $87 million or 15% of our total outstanding debt. With extreme commodity price volatility during the year, a major imperative was to put in place a framework for passing on input cost increases more quickly. We worked diligently with our customers to make the necessary

5 Deepening the bond between pets and their owners. The Pet Group is a leading provider of aquariums and related supplies, products for birds and small animals, dog & cat food, supplies and treats, insect control and other animal health products for companion animals and the equine industry. adjustments and are confident that our improved system will yield significant benefits for Central in the future. We spent considerable time and energy in 2008 on those of our units that had not been performing to their potential. For example, Kaytee s margins and profitability improved dramatically under a new management team, and we achieved similar success at Breeder s Choice, our premium, natural pet food line. We also took steps to improve performance in aquatics, scaling back the size of the business to reflect reduced demand. And, in pottery, we reduced inventories and cut costs to improve performance in that business. I feel much better about Central today compared to a year ago. The management team, the board of directors and I are fully committed to getting the company back on profile. Our products are being well received in the marketplace and we have a strong pipeline for Regardless of the economic environment, we will remain disciplined and build on the foundation we established in 2008.

6 Our competitive advantage stems from six decades of research and experience. Deeper root structures are key toward creating lush, green, environmentally friendly lawns and professional playing fields. Our competitive edge was developed through decades of research and experience into our technologically advanced and environmentally friendly seed. Central s pursuit of operating excellence depends on the efforts of our employees. We are fortunate to have an incredible number of talented, committed people who are willing and prepared to make change and do so quickly in a positive and constructive way. On behalf of all of Central s employees, thank you for your continued support. Sincerely, William E. Brown CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER

7 CORPORATE INFORMATION Central Garden & Pet Company BOARD OF DIRECTORS William E. Brown Chairman and Chief Executive Officer Brooks M. Pennington, III Former, Pennington Seed, Inc. John B. Balousek Self-employed Consultant; Former CEO/ of True North Technologies, Digital and Interactive Services Company; Former / Chief Operating Officer, Foote, Cone & Belding Communications, Global Communications Company David N. Chichester Partner, Tatum CFO Partners, LLP; Former CFO, Starbucks Coffee Japan, Ltd.; Former Senior Vice of Finance, Starbucks Corporation Alfred A. Piergallini Consultant, Desert Trail Consulting; Former Chairman, and CEO, Gerber Products Company; Former Chairman, and CEO, Novartis Consumer Health Worldwide EXECUTIVE OFFICERS William E. Brown Chairman and Chief Executive Officer Stuart W. Booth Executive Vice, Chief Financial Officer and Secretary James V. Heim Pet Products Michael A. Reed Executive Vice CORPORATE EXECUTIVES Stan Bulger Director Human Resources and Administrative Services John Casella Vice Chief Information Officer Timothy J. Kane Director of Tax and Assistant Secretary Howard Machek Corporate Controller and Assistant Secretary Carl Peterson Vice Operations Improvement Paul J. Warburg Vice, Treasurer, and Assistant Secretary OPERATIONAL EXECUTIVES Glen S. Axelrod T.F.H. Publications, Inc. Eric N. Blomquist Farnam Companies, Inc. Mark S. Cavanaugh Aquatics Bruce Cazenave Garden Décor Marilyn Choi Chief Financial Officer Garden Group Paul Duval Senior Vice of Sales Garden Group Chris Mings Avian and Small Animal SBU Dean Morrison Garden Distribution Randy Sieve Chief Financial Officer Pet Products Dan Pennington Executive Vice Chief Operating Officer Pennington Seed, Inc. Kay M. Schwichtenberg Central Life Sciences Allen J. Simon Four Paws Products Ltd. Ronnie Stapp Executive Vice Seed Division Pennington Seed, Inc. Jeff Sutherland Distribution Pet Products Rick S. Taylor Breeder s Choice Fredric W. Vogelgesang Vice Product Development CORPORATE OFFICE Central Garden & Pet Company 1340 Treat Boulevard, Suite 600 Walnut Creek, California (925) INDEPENDENT AUDITORS Deloitte & Touche LLP San Francisco, California TRANSFER AGENT Mellon Investor Services 525 Market Street, Suite 3500 San Francisco, CA (800) STOCK LISTING Over-the-Counter NASDAQ/NMS Symbol CENT/CENTA ANNUAL MEETING The annual meeting of shareholders will be held at 10:30 a.m. Monday, February 9, 2009 at: The Lafayette Park Hotel 3287 Mt. Diablo Boulevard Lafayette, California For additional information, please visit the Company s website: or contact Investor Relations: (925) INSIDE FORM 10-K

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