Ladies and gentlemen, thank you for standing by. Welcome to the Central Garden & Pet's Fourth Quarter and Fiscal Year 2013 Financial Results Conference Call. My name is Colton, and I will be your conference operator for today. [Operator Instructions] As a reminder, this conference is being recorded. And I would now like to turn the call over to Steven Zenker, Vice President of Investor Relations and Communications. Please go ahead.

Thank you, Colton. Good afternoon, everyone. Thank you for joining us. With me on the call today are John Ranelli, Central's President and Chief Executive Officer; Steve LaMonte, President of our Garden segment; and Lori Varlas, Central's Chief Financial Officer. As a reminder, our press release providing results for our fourth quarter and fiscal year 2000 period ending September 28, 2013 is available on our website at www.central.com in the Investor Relations section. Before I turn the call over to John, I would like to remind you that statements made during this conference call, which are not historical facts, including expectations for increased inventory turnover, new product introductions, borrowings, cost-reduction and improved profitability, are forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from those implied by forward-looking statements. These risks are described in our SEC filings. We undertake no obligation to publicly update forward-looking statements to reflect new information, subsequent events or otherwise. Now I will turn the call over to John Ranelli. John?

Thanks, Steve. Good afternoon, everyone. As we close out 2013, we recognize that our performance is not where it needs to be or even could be. Today, I want to share with you an overview of our performance and give you some color around the business. I also want to reiterate the key principles we are using to guide our decisions that we believe will make a significant difference in our future as we drive for profits. With respect to our performance, first, we are pleased with our Pet earnings, which were in line with our expectations and exceeded last year. We are disappointed with our Garden results. The Garden performance, coupled with higher-than-necessary levels of expenses and inefficiencies across the company, led to unsatisfactory results. A key reason for these elevated expenses was the change, which our organization has had to digest in the past few years. While we are in a transitional period and our financial results are unacceptable, we are taking deliberate actions to improve our company. We believe these actions will help us achieve its true potential. We will continue to focus on putting our customers first, cutting our costs and raising profitability to drive shareholder value. When I joined Central, what I saw was a company with great strength based on dedicated employees and a long history of pleasing customers. At the same time, I identified a number of issues that were getting in the way of success. Some of the most apparent issues were: First, inefficiencies and change-related confusion, which were hurting our execution, increasing our costs and reducing our margins; second, our shortage of innovative product in key areas of our business and, third, disappointed shareholders. I said that it would take time to develop a consistent approach, address these issues and restore…

Thank you, John. You've likely had the opportunity to read the press release we issued this afternoon that lays out our financial results for the quarter, but I'd like to provide some additional color on the results. As a reminder, our 2013 fourth quarter and fiscal year have 1 less week versus the same period a year ago. Fiscal 2012 included a 53rd week of results. Let me begin with the fourth quarter. On a consolidated basis, sales decreased 7% in the quarter, due primarily to the extra week of sales that was included in the fourth quarter of the prior year. When comparing to a like 13-week quarter, sales were about the same as last year. I'll speak to the individual segments in a minute. Our consolidated gross margin for the quarter decreased 450 basis points to 22% from 26.5% in the fourth quarter of 2012. The lower margin was due entirely to weakness in the Garden segment, which was impacted by lower profitability in our fertilizer and controls businesses, including the charge related to our 2 2013 Garden product introductions that John referred to earlier. Wild bird feed gross margins improved in both Garden and Pet. SG&A expenses as a percentage of sales was 29.2%, up from 28.6% a year ago and included a $7.7 million non-cash charge for the impairment of goodwill. Excluding the non-cash goodwill charge, SG&A as a percentage of sales improved to 27.1% from 28.6%, as cost-cutting initiatives resulted in lower SG&A expenses in both our Garden and our Pet segment. Our consolidated operating margin declined for the quarter due to lower gross margin in Garden, as well as the goodwill impairment charge in the Garden segment. Pet operating margins increased for the quarter. Let's move onto our segment results, starting with Pet. In…

Thanks, Lori. Let me begin by saying our Garden results were unacceptable. While sales on a 13-week comparative basis were relatively flat and SG&A as a percentage of sales excluding the goodwill charge improved, Garden margins fell well below acceptable levels. Working with John and the management team, we've developed a plan and are taking action to increase gross margin, further reduce SG&A and improve overall operating results. We believe, over time, our planned actions will improve Garden segment operating earnings to far more acceptable levels. Now turning to new products. As we discussed on prior calls, we introduced 2 new products in the spring of 2013, the AMDRO PowerFlex and the Pennington Smart Feed Sprayer. As we stated then, the adoption curve for new -- market-disruptive new products can be slow to build. While we had strong retailer enthusiasm and support for these new products, consumer takeaway fell well short of expectations. In hindsight, our expectations were just too high. Several factors contributed to poor year 1 consumer takeaway. Our belief in the products and our retailers' enthusiasm led us to ship them in 2013 versus waiting till the following season. However, the new products were late in the retailers' planning process for normal shelf placement. This resulted in products being placed in high-traffic locations in stores, but, importantly, away from the specific areas where consumers would normally shop for these types of products. We now know the in-store placement in 2013 was suboptimal. In addition, our overall go-to-market efforts fell short of driving consumers' willingness to move from their current brand solution to try a new unfamiliar one. Finally, the product did not reach retailer shelves until the garden season was already underway. Over the past few months, we've worked diligently to better understand the obstacles to driving consumer adoption. We have leverage lessons learned from our initial launch year. We've made significant improvements to our products, packaging and positioning. In addition, we've made changes to certain marketing strategy and tactics to be even more focused on driving consumer conversion to these new products going forward. Importantly, we've worked closely with our retail partners to strengthen performance. We continue to have strong support from our 2 largest retailers. As a result, they provided more favorable shelf position, where consumers are seeking specific solution for their garden needs. This allows for better visibility and stronger comparisons to competing products. While the investments in performance surrounding these 2 new products came at a high cost to 2013 Garden results, we believe that the changes we have made will generate improved sales going forward. With that, I'll turn it over to Lori.

Thanks, Steve. Turning back to our consolidated results. Our Q4 effective tax rate was 38% compared to 40% in the fourth quarter of 2012. Our fourth quarter net loss, including the $7.7 million non-cash goodwill impairment charge, saw $22.6 million or a loss of $0.47 per diluted share compared to $10.1 million or $0.21 per diluted -- loss per share in Q4 2012. Turning to our fiscal year 2013 results. Sales declined 3%, partly due to 1 less week in the year. Excluding the extra week, Garden sales were up slightly and Pet sales declined 3%, with the majority of the decline coming in the flea and tick and small animal categories. As we outlined in our third quarter call, we had difficult comparisons in 2013 for flea and tick versus last year, when we benefited from the initial sell-in of products to the club channel and favorable weather. Consolidated operating margin in fiscal year 2013 was 2.4% of sales versus 4.4% a year ago, reflecting the weakness in Garden. Our gross margins declined, while our SG&A as a percentage of sales improved when excluding the goodwill impairment charge. Our full year tax rate was 74% compared to 37% in fiscal 2012. The tax rate in fiscal 2013 was impacted by tax credits available in the current year applied to fiscal 2013 loss. We had a loss of $0.04 per diluted share for fiscal year 2013 versus income of $0.44 per diluted share in 2012. Moving to our balance sheet. We ended the year with $33 million in cash and short-term investments and $23 million of borrowings on our revolving credit facility. We were in compliance with our debt covenants at the end of the fiscal year. Net debt was $440 million, up from $339 million a year ago. Our…

[Operator Instructions] And our first question comes from the line of William Reuter with Bank of America Merrill Lynch.

I'm curious whether, with all the initiatives underway, there could be any that are more transformative, such as either the sale of brands or anything strategic in terms of kind of separating Pet or Garden, anything that you guys are looking at in those areas.

As always, we're looking at our portfolio. And we're in the process of developing our longer-range plans. But our focus right now is to improve our business, as we've just outlined. Our focus is to increase our sales, improve our margins and reduce our expenses as we go forward. Having said that, we're always in the opportunity for acquisitions. It's been historical and a significant contributor to our growth, the acquisitions that we've done, and we look forward to continuing our pursuit of acquisitions, but really in a disciplined way that we have established over the last couple of years. We are a very disciplined buyer and we'll only do an acquisition if it's at the right price, fits into the -- our portfolio and is done at the right time.

Okay. And it sounds like your positioning in terms of the 2 new products for 2013, you have better shelf space or at least more advantageous, not being in the high-traffic areas. I was wondering if you could talk a little bit about your pipeline for other products for 2014; and then, just in general, how your line reviews went for your, kind of, space from some of your major retailers.

So this is Steve, and I'll be happy to answer that from a Garden perspective. First of all, our pipeline for 2014 is robust, and it is robust with close in-line extension activities that, quite frankly, are less disruptive to the marketplace overall. In terms of looking at our line review progress, we're generally pleased with the results that we achieved with net gains across our largest retailers.

Okay. And then, just -- my last one is, I think, for Lori. You talked about bringing inventory down at a gradual pace. Do you anticipate that inventory will be a use of cash in 2014 or a source?

Our plans on the inventory front -- as I've mentioned, we brought them up because in 2012 we had some disruption in our supply chain, and we did not want to have fill rate issues. And so, we brought them out in 2013. As we move forward into 2014, our intent is to bring those down gradually, and timing will certainly be a factor in that as well. If you look at the garden season, it's primarily in the second and the third quarters. And so, we'd expect to see, obviously, sales of most inventories during the high season. As far as moving forward, we're going to bring those inventories down, but we certainly see looking forward -- our plan going forward to bring those down over time.

And our next question comes from the line of Jill Nelson with Johnson Rice. Jill R. Caruthers - Johnson Rice & Company, L.L.C., Research Division: A follow-up on the last question. If you could talk about -- maybe break down that 19% inventory growth between your 2 segments of Pet and Garden where you see the biggest increases in that inventory growth?

Sure. So if you look at our inventory balances, as I've mentioned, we grew them in 2013. As we think about the composition, we have -- we're impacted by some strategic buys where we've had some opportunities to buy some of our inputs at favorable costing. We've taken advantage of that. We have products in place for our go-forward plans for innovation. And as I think about some of the commodity costs for those commodities that have increased year-over-year, while the volumes certainly stayed the same, it certainly would impact the dollar value. So again, I think, if you look at the composition across Garden and Pet, we intended to bring those levels down in both segments. But again, when there's an opportunity for strategic buys, we'd certainly include those as well. Jill R. Caruthers - Johnson Rice & Company, L.L.C., Research Division: Okay. And then, you talked about $9 million of cost reductions made in the second half of fiscal '13. If you could give us any type of quantification of those savings you expect going into 2014 you think are possible.

Sure. And as John has described those in the previous quarters, there are some actions that we've taken and it's primarily in SG&A, both headcount and program-related. As we think about going forward, the headcount reduction certainly would contribute, and we'll make some strategic judgment on where we invest the dollars going forward. So I think the headcount, and we've had a couple of quarters now under our belt, would have some impact to that in 2014. We'll make some strategic judgments about where we invest going forward as well.

And our next question comes from the line of Joe Altobello with Oppenheimer Funds. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Just wanted to follow up on the cost savings. I think, Lori, you mentioned that you got the $5 million you're looking for in the fourth quarter, and I guess that did get you to the $9 million for the back half of the year. Can you help us try to quantify what the incremental cost savings we should expect in '14 because I think that was sort of gist the previous question?

Yes. So again, I think, as it relates to the headcount, that will continue. As it relates to the program costs, we're making strategic decisions where we invest in marketing and brand building and highest use of cash, and then we'll quantify going forward what the savings would mean for 2014. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. So in terms of the SG&A, again, if you look at it this year, actually, it was down pretty significantly, about $24 million, this year versus last year. How much of that was advertising?

You'll see in our K, which will be published in a couple of days, next couple of days, and that our advertising spend, it shows it for '11, '12 and '13. And for '13, it's slightly down from '12, but still at elevated levels to '11. So the specific numbers in 2011 were $39.6 million. And again, if you may remember back to 2011, we were stepping up our brand building and advertising efforts. And in '12, it went to $54 million and then $44 million in '13. So you'll see those in the K in the next couple of days. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. So about $10 million of the drop was advertising related. But -- so looking forward to '14, would you expect advertising to be up this year?

[indiscernible] So if we think about 2014, the programs and where we spend, we'll continue to build master brands. We will likely move dollars around, but not ready to comment right now whether up or down. But again, I think the effort is really is making sure we spend those dollars to the most advantageous areas possible. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. Okay. And just one last one, I guess, if I could. In terms of the inventory, you mentioned it was up $60 million year-over-year. The $11 million charge that you took in the Garden segment with regard to inventory, that was a net deduction from the inventory. So x that inventory, it would still have been up, what, $73 million? Is that fair to say?

I think, year-over-year, yes. If you look at to the third quarter, it's come down slightly.

And our next question comes from the line of Carla Casella with JPMorgan. Paul A. Simenauer - JP Morgan Chase & Co, Research Division: It's Paul Simenauer on the line for Carla Casella. I just have a few questions for you guys. Branded Pet was down 8%. [indiscernible] discontinue any brands and is there a customer shift towards store brands at all?

I'm sorry. We -- you're getting in -- coming in garbled. Paul A. Simenauer - JP Morgan Chase & Co, Research Division: Sorry. Is this better?

Much better. Paul A. Simenauer - JP Morgan Chase & Co, Research Division: There you go. Sorry about that. Okay. All right. I'll start again. Ready? Okay. Branded Pet was down 8%. Are you guys discontinuing any brands? And is there a customer shift towards store brands at all?

No. In fact our strategy is to go forward in both directions, both branded and on a private label basis. And we're very comfortable. We're developing strategies and develop, in fact, set up a team to look more to look more at the private label business. So we're very aggressively pursuing both ends of the business. Paul A. Simenauer - JP Morgan Chase & Co, Research Division: Great. And just one other question, do you guys lose shelf space in the quarter in any particular channel?

When you look at shelf space and you go back and look at our sales, it's really very difficult to tell because you win some and you essentially lose some. When you go back and look at our sales over the last quarter, our sales were relatively flat on the Pet side. So I would argue that we didn't lose any significant space that we didn't offset by gains. If you go back and look at the last year or 2013, the sales decline that we had was primarily due to approximate $40 million. About half of it was due to the extra week in the year and the rest of it was due to a rollout that happened in 2012 and was not recurring in 2013. The remainder was primarily due to our business in Adams and the rollout that I just mentioned.

And our next question comes from the line of Bill Chappell with SunTrust Robinson Humphrey.

I guess, John, trying to understand maybe your outlook and coupling it with the quarter. And when I say that, it's -- am I oversimplifying it of we're seeing the end of a tough Garden season where you carried too much inventory, couple, kind of, unfortunate product rollouts that didn't pan out and all the charges kind of fell this quarter and you still actually had flat sales. And I mean, that seems all very short-term in nature yet at the same point, you're saying it's going to take a couple of years, I think, is the quote, to fully fix. So I'm trying to understand what carries forward that really impacts 2014?

Well, for 2014 for Garden, I do believe that the events that we saw this year were costly and unfortunate as related to the new products. As we said, a large driver of us taking the charge was to take corrective action and to strengthen those new products for the next season, in 2014. As we look at a macro basis for Garden, this was not a wonderful Garden season, by any stretch of imagination. There were some challenges in it for everyone competing in the category overall. And from what we're seeing today based on syndicated weather forecasting services looking to the next year, there's an expectation of mid-single-digit growth driven by weather as being more favorable year-on-year, and I say that as generic to the category overall.

But I mean, so just again tying into, like, what takes 1 to 2 years to fully fix? It seems like a lot of this is kind of short term in nature.

The big key that is going to take us 1 year or 2 to develop is over the last 2 years, we have not fully developed a product line that we would be bringing into the market in 2014 as over the last 2 years, we spent our time focused internally. But as we go forward, we are very focused on improving the amount of new product that we're developing in the marketplace. We're very focused on making our customers very satisfied with our customer service. We're very focused on making our customers understand where we are going to be taking our product to make sure that our product ties with the retail strategies that they have and will be putting into place over the next 2 years. So as we develop our strategy and it takes 1 year or 2 to essentially put new product on the shelf, given the time that it takes to go from design to development to sell in to putting it on the shelf. So it is going to take a while for us to renew our product pipeline to get the levels and to get our consistency as to where we wanted to be.

Okay. And then as you look at the 2 new products, I mean, I think we've gone through the spring 2014 kind of listing process, will you have the same kind of shelf space that you would expected? Did you lose any bid just because they didn't perform as well in this past season?

So I think it's a great question, and we've been working very, very closely with our retail partners looking at what worked and what didn't work in 2013. And as a result of the collaboration and the changes that we've made, which we invested in quite frankly with the charges that we took this year, we're actually getting improved shelf space at our 2 largest customers and being put in the aisle where these products are sold. So that should provide for better visibility to people looking for solutions such as these and also more direct comparison to competing products.

Okay. And then switching quick to just Pet, can you maybe just give us a state of the category? I mean, I know you said you're pleased with how it's turning. But are you also seeing how the end markets really start to rebound, and not just companion pet, but are you seeing that with aquatics and bird and even equine?

As you've seen in some other companies reporting, they're reporting essentially low-single-digit sales improvements. And then if you look at the balance of the categories that are in fact selling, you'll see that most of it is in the dog food or I should say premium dog food category. So we are -- I'm very pleased with the results of where we are and the results of our programs that we're planning to put in place. One of the areas that has been very weak has been the aquatics category, which I think you can see confirmed in just about all of the pet retailers. But other than that category and maybe a little bit of weakness in the small animal, we're looking forward to growth in our businesses.

And our next question comes from the line of Karru Martinson with Deutsche Bank.

Yes, I wanted to get a sense on the fertilizer margins were down. I mean, was that an input cost issue, or was it a product -- a question of the product not selling through?

So as it relates to the margins in Garden, certainly our controls in fertilizer contributed to that. A lot of that is mix. Just a couple examples of that, we've talked before about some of our private label. We've had some change in customer mix there as far as one being slightly more profitable than the other. That certainly impacted. If you think about grass seeds, sales of different varieties, the mix there impacted us. And then in controls and fertilizer, we've got some mix changes going on as far as different SKUs delivering different profitability. So the combination of those certainly impacted our margins for controls and fertilizers in the fourth quarter.

And then in terms of the private label fertilizer business, I mean, this is, I believe, a business that was exited by one of your competitors previously, I think for many of the same reasons. I mean, what is your outlook on the fertilizer business as we go forward?

So this is Steve, I'll take that. Number one, our private label portfolio is important to the total Garden business, and we continue to look for ways to grow all segments of our private label business. On the fertilizer side of the business, we are -- continue to be committed to expanding that space, as Lori mentioned. We did have one retailer business at higher margin that we lost and picked up another piece of business that was at lower margin. Our intent, obviously, is to continue to look for products and go-to market solutions with private label fertilizers to our customer base that has us improving profitability over time.

Right. When you talk about starting to bring those inventories down, getting more comfortable with putting the customer first, I mean, where are you right now on fulfillment rates, and where do you feel that the business needs to be?

We're at the best-in-class level right now, and I would be very happy just maintaining our fill rates where they are. I think our customers, from having met them over the last month, could -- are extremely surprised and extremely pleased with the fill rates that we are now providing. And that has provided us the credibility as well as some of the changes in our management team, so that the customers now are very aggressive in working with us to include our new products on their shelves as we start to develop and introduce them to the marketplace.

[Operator Instructions] And our next question comes from the line of Rob Longnecker with Jovetree.

Could you guys just give an overview, now that the year is over, of what your expenditures were on transformational costs throughout the year?

So we talked a few quarters ago when John came on board that we were altering our approach slightly from the programs we had in place in 2012 to a much more balanced approach. And so I'm measuring it the way we measure it before. We shifted from that. And so from a transformational cost, I don't know if I can specifically call those out. But I can tell you that in the first quarter of the year, we were working on a lot of areas around -- we've completed an ERP implementation. We were doing clean up on some of the tail with consolidating facilities, and the year has really been about improving our operating efficiencies. So we haven't tracked it the same way we have historically and are taking a different philosophy and approach under John's leadership.

We're really in a completely different time and place than they were 2.5 to 3 years ago when they implemented the transformation. We are, as Lori outlined, totally focused on a balanced approach of going after sales, gross margins, while at the same time, reducing costs. And I think as you can see, we were able to do the gross margin improvement as you saw that, that gross margin improved. And you saw our SG&A go down in Pet in the quarter as a percent of sales. And you saw, if you exclude the charge of the goodwill charge, you will see that the Garden group had a reduction in SG&A. And if you look at our total for the year, our total SG&A as a percent of sales declined. So we are taking a much more balanced approach than we have in the past. We are making continuous improvements as we go along, but we're not doing it on a rigid timeframe just to be on a rigid timeframe. We're doing it when it makes sense for our customers, and the ideas that we're implementing may or may not have been involved in the transformation. So the cost cutting that you see going on is not related to the transformation in any way, and we are not tracking any of the transformation as having been included -- any of the costs as having been included in the transformation or not. The cost cutting that you see, the $9 million that we've talked to, is new cost savings as we've identified opportunities because we are in the process of challenging each and every one of our costs. We're involved in looking at the return on each and every one of our investments. They are not based on getting efficiencies out of computer systems, which take a while or have some risk to them. What we're doing is we are looking at each and every one of our costs and measuring the return that we are getting it on that and then evaluating whether that cost should go forward or not.

Okay. And could you also please give more information on the goodwill that was impaired and what acquisition that was related to and what happened?

The impairment on the goodwill intangible in Garden really was -- all I can tell you is how it came about. And what we do is on an annual basis, we go back and value our intangibles and goodwill and compare that to book value. In the -- unless there's something that happens within the year that would cause us to do it earlier. And so when we did that valuation here in the fourth quarter, resulted in impairment in the Garden segment.

So that's not for some specific business?

It's not related to any specific business. It's more of an overall valuation and comparison to book value.

Got you. Okay. And in the context of that and impaired goodwill, I guess, probably implies that, that -- it was some issue with acquisitions. I'm surprised you guys are talking about doing more acquisitions given that you seem to be kind of struggling with the business as it currently stands. So I'm wondering why you would put any energy into acquisitions when you're still kind of fixing what you've got going on right now.

Well, I think if you go back in history, the company was built around acquisitions, and we've had some very, very successful acquisitions. The way the accounting rules work when you've had earnings, and especially in the Garden segment, over the last couple of years, the valuation results in an impairment. I think we continue to believe in the business as we -- a part of our portfolio.

And also it's the timing of acquisitions, so companies being available. We're always in the market to take advantage of any opportunities, and an acquisition that you might look at today might not be available for another 2 or 3 years or maybe never. So that's why you have to be constantly in the marketplace. You have to be growing in your business. And a way that we have grown in the past has been through acquisitions. But also, historically, we have been very disciplined in our acquisition process that to make sure that we do it at a price that we think makes sense in our portfolio to give us the returns that we believe are necessary for that and give us the growth opportunities that we seek...

So how do you measure those returns, I mean, when you're looking at an acquisition opportunity? What are acceptable returns?

Again, I wouldn't say that there is a specific number. There is an acceptable return. It's really the -- what we can do with the company. And as you know, we have a significantly different approach to acquisitions than a private equity company that might be looking at more fixed 3-year returns. We'd look at them over a significantly longer term. We'd look at how they can be consolidated into our group and how they can fill some needs that we have in our product lines. So there are multiple, multiple reasons that we would do an acquisition. But again, having said that, that we also know where we are from the business perspective and we take that into account when we're looking at acquisitions. So there's a lot of things that get involved in looking at an acquisition, and we do a lot of diligence on our acquisitions and always make ourselves very comfortable before we do them.

And our next question comes from the line of Kevin Ziets [ph] with ZT [ph].

So this year you had a difficult comp on the sell-in -- or I'm sorry, on the Pet side in the third quarter. Is there anything similar, not necessarily in Pet but across the portfolio, that we should look out for 2014? Was it when the 2 Garden products were sold in, or anything else?

As I think about 2014 and kind of go through the portfolio in my head, nothing springs to mind. Again, in the Garden business, as we think about our second and third quarter, oftentimes, the Garden season shifts. Sometimes it starts earlier in the second quarter and other times it starts -- is much more aggressive in the third quarter. So sounds we have [ph] shifting quarter-to-quarter, and so the comps aren't quite comparable on a -- during the season.

Okay. But nothing specifically related to the 2 Garden launches?

No.

No.

Okay. And then I guess with the underperformance of the product, is there a product that's still sitting at the retailers in any significant amount? Does that create a little bit of a sort of pig in the pipeline that needs to move out?

So the plans that we developed for 2014, having optimized our product offerings, we're comfortable based on the sales forecast that we built in the inventories that we plan on having in the marketplace in 2014. Now obviously, they're new products and the changes that we've made are informed changes, including the input of our customers. There are no guarantees. But based on our sales forecast, based on the changes that we've made, we're comfortable with the inventory levels that we will have in 2014.

Okay. I guess I'm thinking more about what's sitting out there now. Is there going to be a change product that's going to get sold in the springtime, early spring?

Part of what we've done is to look at product that was at retail and optimize that product as we get ready for the new season. That's embedded in part of the charge that Lori detailed earlier. There's not much out there right now, and we will be reloading the pipeline for the next season with the optimized products.

Okay. Is the profitability, I'm not sure I would [ph] say acceptable, but is it in line with historical profitability for the segment even after the changes that you're making?

Yes, we don't typically provide input on subsegments of the business. So I'm going to have to take a pass on that.

Okay. Can you speak about overall pricing for 2014 Garden and Pet?

Yes, our view with regard to pricing is that it's a significantly important issue in our competitive position. We are constantly looking for opportunities to improve our pricing and that is shown by the fact that we increased our pricing in Garden last year. We increased our pricing in Pet twice last year. So we are constantly in the process of reviewing our costs, looking at our pricing, looking at our competitors and looking at the marketplace. But we don't discuss whether we are going to be having a pricing increase or not as it could be a competitive advantage for the people that are selling against us.

I guess the grain complex in general is a bit lower going into '14 than it was coming into this year. Can you speak to your overall inflation expectations?

Sure. So as we think about input costs, for instance, in our birdseed business, as you probably recall, it's been pretty interesting a couple of years with prices in '12 -- starting in '11, '12, '13 increase. And in fact, our input costs for birdseed were actually up 15% this year versus last year. In more recent months, we're starting to see some of the commodity prices moderate somewhat. Some are going up, some are going down. It will take a while to work through our inventory, but we'll see how the commodities play themselves out.

Okay. And did you give or can you give a CapEx forecast for '14?

I did not. Our normalized capital -- CapEx is typically in the $25 million to $30 million range. We're elevated last year in 2012, it's about around $40 million. This year, we are much more normalized in the $25 million range. I wouldn't expect it to be too far from the norm.

Okay. And then can you say with the new revolver at your peak working capital, how much more room you think you would have this year? I know you -- I think you said, what September would be, but I'm curious more at the peak need.

Yes, typically, we think of having around $200 million market peak.

That's under the new facility?

Yes, more under the new facility. That is more than the previous facility. As I've mentioned in my earlier comment, had the facility been in place at September 28, at the end of our fiscal year, we would've had in excess of $300 million available.

Right. With the discussion about acquisitions and understanding you're going to be disciplined, is it -- would it be your intention to use this facility to execute acquisitions? Or how do you think about the capital structure that you would employ to do acquisitions?

We do not -- or we would have disclosed if we have an acquisition that was right now on the front burner that we would be using this for. Basically, the reason that we did it was to give us the flexibility going forward that we would need, should an acquisition become available at the right price, at the right time. So the whole key to the revolver was the savings in interest, the flexibility in the covenants and the increased availability.

And we only have one more question left for today, and that question comes from the line of Hale Holden with Barclays.

I'll make it really quick. Can you give us the governing covenants of the new revolver?

The what covenant?

What the main sort of governing covenants of the new ABL revolver is? Is it leverage-based? Is it asset-based? Is there any restriction on availability going forward if things change?

Sure. So -- yes, the primary covenant is the fixed charge ratio. If our borrowings get to greater than 85% of the line, we are required to have a one point -- 1:1 fixed charge ratio, and that's calculated by taking EBITDA divided by our fixed charges and those are primarily [ph] interest in CapEx and that's the primary covenant.

And I had a little bit of a request. As you go through your plans, I think your story would benefit from greater clarity, and if you wanted to do an investor day, I think there'd be a bunch of us that certainly would be open to attending.

Yes. Thank you.

Thank you.

Thank you. And this does conclude the question-and-answer session. I would now like to turn the call back over to John Ranelli for closing comments.

Well, thank you very much for your very interesting and thoughtful questions and for joining us on the call. We look forward to the next one. Thank you. Bye.

Ladies and gentlemen, this concludes the Central Garden & Pet fiscal 2013 year-end results conference call. Thank you for using ACT Conferencing. You may now disconnect.