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Unassociated Document
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 6, 2008

GRIFFON CORPORATION
(Exact Name of Registrant as Specified in Charter)

Delaware
1-06620
11-1893410
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(I.R.S. Employer
Identification Number)

 
100 Jericho Quadrangle
  
Jericho, New York
11753
(Address of Principal Executive Offices)
(Zip Code)

(516) 938-5544
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02. Results of Operations and Financial Condition.

On February 6, 2008, Griffon Corporation (the “Registrant”) issued a press release announcing the Registrant’s financial results for the first fiscal quarter ended December 31, 2007. A copy of the Registrant’s press release is attached hereto as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits.

99.1  Press Release, dated February 6, 2008

The information filed as an exhibit to this Form 8-K is being furnished in accordance with Item 2.02 and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
     
  GRIFFON CORPORATION
 
 		  
 		  
 
  By:   /s/ Patrick L. Alesia 
 
Patrick L. Alesia
Vice President, Chief Financial Officer
Treasurer and Secretary
   
 
Date: February 6, 2008
3

Exhibit Index

 
99.1
Press release, dated February 6, 2008
 
 
 
 
 
Unassociated Document
 
GRIFFON CORPORATION ANNOUNCES OPERATING RESULTS
FOR THE FIRST QUARTER OF FISCAL 2008
 
Jericho, New York, February 6, 2008 - Griffon Corporation (NYSE:GFF) today reported operating results for the first quarter of fiscal 2008, ended December 31, 2007. Net sales for the quarter decreased to $341,398,000 from $434,315,000 for the first quarter of fiscal 2007. Income (loss) before income taxes was $(2,393,000) compared to $14,358,000 last year. Net income (loss) was $(1,355,000) in the current quarter compared to $8,465,000 last year. Diluted earnings (loss) per share for the quarter were $(.05) compared to $.27 last year.
The decreases in sales and operating income were attributable to the Installation Services, Garage Doors and the Electronic Information and Communication Systems segments.
The company’s Garage Doors segment finished the quarter with disappointing results that were consistent with the sustained downturn in the housing market. Although we anticipated that weaker residential construction markets would have a continuing effect on Garage Doors’ operating results, we did not anticipate the duration and severity of the impact that weaker housing markets, particularly with respect to resale of existing houses, would have on this segment’s repair and renovate business. We continue to see mixed signals with respect to predicting the bottom of the housing market decline. The segment has been and will continue to focus on significant cost reduction programs including, but not limited to, reductions in force, reducing or eliminating certain sales and marketing programs and consolidating facilities where possible.
A decline in Installation Services’ operating results was anticipated, although not to the extent actually experienced, due to the continuing effect of the weakness in new home construction in the segment’s Las Vegas, Phoenix and Atlanta markets, including the loss of a major customer in Las Vegas. During the second quarter of fiscal 2008, the segment’s management has initiated a restructuring program in its efforts to reduce future operating losses by, among other things, undertaking a reduction in force, consolidation of facilities and optimizing its exit from certain markets. The company expects the restructuring program to result in charges that range between $12 million and $15 million in fiscal 2008.


The decline in sales and operating income of Telephonics Corporation, the company’s wholly-owned Electronic Information and Communication Systems subsidiary, is attributable to the wind down in late fiscal 2007 of substantial contracts with Syracuse Research Corporation (SRC). Excluding the impact of the SRC contracts in the respective first quarter periods, the Electronic Information and Communication Systems segment’s core business sales grew by approximately $9.2 million, or 15%. The segment had received approximately $340 million of funding from SRC for turnkey production of a Counter Improvised Explosive Device over the prior two fiscal years.
Specialty Plastic Films achieved improved results compared to last year’s first quarter. Higher sales and operating profit were favorably affected by improved operational efficiencies and product mix. To a lesser degree, results were favorably impacted by the translation of foreign exchange rates. On average, resin costs in the first quarter increased approximately 30% and 6% in North America and Brazil, respectively, but remained fairly constant in Europe. It is estimated that the effect of resin cost volatility had a negative impact on the segment’s operating results, when compared to the prior-year quarter, of approximately $3-4 million. The segment’s operating results were also unfavorably impacted by lower unit volumes primarily in Europe, resulting from a decline in sales to a certain customer. Specialty Plastic Films’ elastic laminates for the hygiene products market are qualified with the segment’s major customer and business development with other key target customers is in process. We anticipate that volume will ramp up for this product as the year progresses. 
Cash flow from operations was $41.2 million for the quarter, which funded capital expenditures of $6.5 million and payments on long-term debt of $13.8 million. Also during the quarter, $.6 million was used to acquire approximately 41,000 shares of the company's common stock under its buyback program. Additional purchases may be made from time to time, depending on market conditions and other factors, at prices deemed appropriate by management.
In December 2007, the company and a subsidiary modified their existing senior secured multicurrency revolving credit facility to revise certain financial covenants in effect for the first quarter of fiscal 2008 ended December 31, 2007. However, the company anticipates that it may not be in compliance with one or both of these quarterly covenants in the future. As a result of such possible non-compliance, and in accordance with applicable accounting standards, the company has reclassified $62.5 million of long-term debt as current debt in the Condensed Consolidated Balance Sheet at December 31, 2007. The company has commenced discussions with its bankers to further amend and/or refinance its Credit Agreement by March 31, 2008.

Griffon Corporation -
 
 
l
is a leading manufacturer and marketer of residential, commercial and industrial garage doors sold to professional installing dealers and major home center retail chains;
 
l
installs and services specialty building products and systems, primarily garage doors, openers, fireplaces and cabinets, for new construction markets through a substantial network of operations located throughout the country;
 
l
is an international leader in the development and production of embossed and laminated specialty plastic films used in the baby diaper, feminine napkin, adult incontinent, surgical and patient care markets; and
 
l
develops and manufactures information and communication systems for government and commercial markets worldwide.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation statements regarding the company’s financial position, business strategy and the plans and objectives of the company’s management for future operations, are forward-looking statements. When used in this release, words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, and similar expressions, as they relate to the company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the company’s management, as well as assumptions made by and information currently available to the company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, business and economic conditions, including, but not limited to, the housing market, results of integrating acquired businesses into existing operations, competitive factors and pricing pressures for resin and steel and capacity and supply constraints. Such statements reflect the views of the company with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the company as previously disclosed in the company’s Annual Report on Form 10-K for the year ended September 30, 2007 in response to Item 1A to Part I of Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements. The company does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.


 
OPERATING HIGHLIGHTS
  
(IN THOUSANDS)
  
            
PRELIMINARY
          
   
For the Three Months Ended
  
   
December 31,
  
           
   
2007
  
2006
  
           
Net sales:
             
    Garage Doors
 
$
111,046
  
$
128,640
  
    Installation Services
   
52,221
    
76,935
  
    Specialty Plastic Films
   
106,398
    
103,655
  
    Electronic Information and Communication Systems
   
75,860
    
129,850
  
    Intersegment eliminations
   
(4,127
)
  
(4,765
)
   
$
341,398
  
$
434,315
  
Operating income (loss):
             
    Garage Doors
 
$
(1,291
)
$
4,013
  
    Installation Services
   
(5,727
)
  
(893
)
    Specialty Plastic Films
   
5,997
    
4,338
  
    Electronic Information and Communication Systems
   
5,483
    
12,921
  
       Segment operating income
   
4,462
    
20,379
  
Unallocated amounts
   
(4,825
)
  
(3,697
)
Interest and other, net
   
(2,030
)
  
(2,324
)
    Income (loss) before income taxes
 
$
(2,393
)
$
14,358
  
 

GRIFFON CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
 
            
PRELIMINARY
          
   
FOR THE THREE MONTHS ENDED
  
   
DECEMBER 31,
  
   
2007
  
2006
  
Net sales
 
$
341,398
  
$
434,315
  
Cost of sales
   
264,205
    
341,111
  
      Gross profit
   
77,193
    
93,204
  
               
Selling, general and administrative expenses
   
78,400
    
77,140
  
      Income (loss) from operations
   
(1,207
)
  
16,064
  
               
Other income (expense):
             
      Interest expense
   
(2,915
)
  
(2,944
)
      Interest income
   
885
    
620
  
      Other, net
   
844
    
618
  
     
(1,186
)
  
(1,706
)
      Income (loss) before income taxes
   
(2,393
)
  
14,358
  
               
Provision (benefit) for income taxes
   
(1,038
)
  
5,893
  
               
      Net income (loss)
 
$
(1,355
)
$
8,465
  
               
Basic earnings (loss) per share of common stock:
 
$
(.05
)
$
.28
  
               
Diluted earnings (loss) per share of common stock:
 
$
(.05
)
$
.27
  
Weighted-average number of shares outstanding:
             
         Basic
   
30,051,000
    
29,952,000
  
         Diluted
   
30,051,000
    
31,067,000
  
 

GRIFFON CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(IN THOUSANDS)
 
           
PRELIMINARY
          
   
DECEMBER 31,
  
SEPTEMBER 30,
  
   
2007
  
2007
  
ASSETS
             
               
Current Assets:
             
      Cash and cash equivalents
 
$
69,752
  
$
44,747
  
      Accounts receivable, net
   
171,121
    
210,340
  
      Contract costs and recognized income not yet billed
   
71,133
    
77,184
  
      Inventories
   
165,569
    
161,775
  
      Prepaid expenses and other current assets
   
51,151
    
50,889
  
          Total current assets
   
528,726
    
544,935
  
Property, plant and equipment, at cost less
             
      depreciation and amortization
   
230,173
    
233,449
  
Goodwill
   
116,917
    
114,756
  
Intangible and other assets
   
75,028
    
66,718
  
   
$
950,844
  
$
959,858
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
             
               
Current Liabilities:
             
      Notes payable and current portion of long-term debt
 
$
66,834
  
$
3,392
  
      Accounts payable
   
100,388
    
105,324
  
      Accrued liabilities
   
81,743
    
79,001
  
      Income taxes
   
696
    
14,153
  
          Total current liabilities
   
249,661
    
201,870
  
    Long-term debt
   
153,027
    
229,438
  
    Other liabilities and deferred credits
   
80,836
    
61,611
  
            Total liabilities and deferred credits
   
483,524
    
492,919
  
               
Shareholders' Equity:
             
    Preferred stock
   
-
    
-
  
    Common stock
   
10,582
    
10,582
  
    Capital in excess of par
   
180,625
    
180,022
  
    Retained earnings
   
455,141
    
461,163
  
    Treasury shares, at cost
   
(213,310
)
  
(212,731
)
    Accumulated other comprehensive income
   
35,767
    
29,522
  
    Deferred compensation
   
(1,485
)
  
(1,619
)
Shareholders' equity
   
467,320
    
466,939
  
   
$
950,844
  
$
959,858
  
 
 
GRIFFON CORPORATION AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(IN THOUSANDS)
 
           
PRELIMINARY
  
For the Three Months Ended
 
   
December 31,
 
   
2007
 
2006
 
   
 
  
 
  
 CASH FLOWS FROM OPERATING ACTIVITIES: 
          
 Net income (loss) 
  
$
(1,355
)
$
8,465
  
    Adjustments to reconcile net income (loss) to net cash 
              
      provided by operating activities: 
              
      Depreciation and amortization 
    
11,046
   
9,301
 
      Stock-based compensation 
    
624
   
590
 
      Provision for losses on accounts receivable 
    
876
   
382
 
      Deferred income taxes 
    
412
   
441
 
    Change in assets and liabilities: 
              
        Decrease in accounts receivable and contract  
              
          costs and recognized income not yet billed 
    
45,302
   
48,547
 
        Increase in inventories 
    
(3,183
)
  
(4,020
)
        Increase in prepaid expenses and other assets 
    
(5,448
)
  
(1,899
)
        Decrease in accounts payable, accrued liabilities and income taxes payable 
    
(5,540
)
  
(27,678
)
        Other changes, net 
    
(1,578
)
  
(90
)
     
42,511
   
25,574
  
          Net cash provided by operating activities 
    
41,156
   
34,039
 
               
 CASH FLOWS FROM INVESTING ACTIVITIES: 
              
 Acquisition of property, plant and equipment 
    
(6,540
)
  
(10,092
)
 Acquisition of business 
    
(1,750
)
  
-
 
 Decrease in equipment lease deposits 
    
4,332
   
500
 
 Funds restricted for capital projects 
    
-
   
(4,347
)
 Other, net 
    
1,000
   
-
 
          Net cash used in investing activities 
    
(2,958
)
  
(13,939
)
               
 CASH FLOWS FROM FINANCING ACTIVITIES: 
              
 Purchase of shares for treasury 
    
(579
)
  
(1,127
)
 Proceeds from issuance of long-term debt 
    
-
   
20,891
 
 Payments of long-term debt 
    
(13,818
)
  
(283
)
 Increase (decrease) in short-term borrowings 
    
787
   
(6,044
)
 Exercise of stock options 
    
-
   
387
 
 Tax benefit from exercise of stock options 
    
-
   
156
 
 Other, net 
    
177
   
(1,041
)
          Net cash provided by (used in) financing activities 
    
(13,433
)
  
12,939
 
               
 Effect of exchange rate changes on cash and cash equivalents 
    
240
   
198
 
               
 NET INCREASE IN CASH AND CASH EQUIVALENTS        
    
25,005
   
33,237
  
 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 
    
44,747
   
22,389
  
 CASH AND CASH EQUIVALENTS AT END OF PERIOD 
  
$
69,752
  
$
55,626