UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission File Number: 1-6620
GRIFFON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 11-1893410
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 JERICHO QUADRANGLE, JERICHO, NEW YORK 11753
(Address of principal executive offices) (Zip Code)
(516) 938-5544
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 30,778,647 shares of Common
Stock as of January 31, 1996.
FORM 10-Q
CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
Condensed Consolidated Balance Sheets at December 31, 1995
and September 30, 1995
Condensed Consolidated Statements of Income for the Three
Months Ended December 31, 1995 and 1994
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended December 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 1: Legal Proceedings
Item 2: Changes in Securities
Item 3: Defaults upon Senior Securities
Item 4: Submission of Matters to a Vote of Security Holders
Item 5: Other Information
Item 6: Exhibits and Reports on Form 8-K
Signature
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1995 1995
------------ -------------
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 26,163,000 $ 9,656,000
Marketable securities 5,294,000 12,197,000
Accounts receivable, less allowance
for doubtful accounts 73,286,000 71,461,000
Contract costs and recognized
income not yet billed 32,139,000 31,490,000
Inventories (Note 2) 88,994,000 78,823,000
Prepaid expenses and other current
assets 8,902,000 8,419,000
------------ ------------
Total current assets 234,778,000 212,046,000
PROPERTY, PLANT AND EQUIPMENT
at cost, less accumulated depreciation
and amortization of $50,485,000 at
December 31, 1995 and $48,333,000 at
September 30, 1995 57,977,000 48,401,000
OTHER ASSETS 25,970,000 25,169,000
------------ ------------
$318,725,000 $285,616,000
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1995 1995
------------ -------------
(Unaudited) (Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and notes payable $ 51,470,000 $ 46,532,000
Other current liabilities 57,121,000 51,274,000
------------ ------------
Total current liabilities 108,591,000 97,806,000
------------ ------------
LONG-TERM DEBT 33,225,000 16,074,000
------------ ------------
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.25 per share,
authorized 3,000,000 shares --
Second Preferred Stock, Series I,
authorized 1,950,000 shares, issued
1,669,507 shares at December 31, 1995
and 1,669,537 shares at September 30,
1995 (liquidation value $16,695,000
and $16,695,000, respectively) 417,000 417,000
Common Stock, par value $.25 per share,
authorized 85,000,000 shares, issued
31,094,028 shares at December 31, 1995
and 31,081,499 shares at September 30,
1995, and 259,896 shares and 162,796
shares in treasury at December 31, 1995
and September 30, 1995, respectively 7,774,000 7,770,000
Other shareholders' equity 168,718,000 163,549,000
------------ ------------
Total shareholders' equity 176,909,000 171,736,000
------------ ------------
$318,725,000 $285,616,000
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1995 1994
------------ ------------
Net sales $163,477,000 $133,562,000
Cost of sales 123,627,000 95,216,000
------------ ------------
Gross profit 39,850,000 38,346,000
Selling, general and administrative
expenses 29,833,000 25,611,000
------------ ------------
Income from operations 10,017,000 12,735,000
------------ ------------
Other income (expense):
Interest expense (772,000) (515,000)
Interest income 369,000 619,000
Other, net (3,000) 31,000
------------ ------------
(406,000) 135,000
------------ ------------
Income before income taxes 9,611,000 12,870,000
------------ ------------
Provision for income taxes:
Federal 3,134,000 4,250,000
State and other 614,000 898,000
------------ ------------
3,748,000 5,148,000
------------ ------------
Net income $ 5,863,000 $ 7,722,000
============ ============
Net income per share of common stock (Note 3) $ .18 $ .22
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1995 1994
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,863,000 $ 7,722,000
----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,460,000 2,068,000
Provision for losses on accounts receivable 272,000 302,000
Change in assets and liabilities:
Decrease in accounts receivable and contract
costs and recognized income not yet billed 8,814,000 6,741,000
Increase in inventories (488,000) (3,134,000)
(Increase) decrease in prepaid expenses and other
assets 504,000 (779,000)
Increase (decrease) in accounts payable and accrued
liabilities 591,000 (15,425,000)
Other changes, net 50,000 684,000
----------- -----------
Total adjustments 12,203,000 (9,543,000)
----------- -----------
Net cash provided by (used in) operating
activities 18,066,000 (1,821,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in marketable securities 6,903,000 25,585,000
Acquisition of property, plant and equipment (1,294,000) (1,498,000)
Acquired businesses (21,884,000) (7,758,000)
Increase in equipment lease deposits and other (315,000) (17,000)
----------- -----------
Net cash provided by (used in) investing
activities (16,590,000) 16,312,000
----------- -----------
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1995 1994
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of common shares (862,000) (28,166,000)
Proceeds from issuance of long-term debt 17,000,000 ---
Payment of long-term debt (135,000) (9,127,000)
Increase (decrease) in short-term borrowings (1,000,000) 9,000,000
Other, net 28,000 4,000
----------- -----------
Net cash provided by (used in) financing
activities 15,031,000 (28,289,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,507,000 (13,798,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,656,000 28,659,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $26,163,000 $14,861,000
=========== ===========
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation -
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The balance sheet at September 30, 1995 has
been derived from the audited financial statements at that date. In the opinion
of management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended December 31, 1995 are not necessarily
indicative of the results that may be expected for the year ended September 30,
1996. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report to shareholders
for the year ended September 30, 1995.
(2) Inventories -
Inventories, stated at the lower of cost (first-in, first-out or average)
or market, are comprised of the following:
December 31, September 30,
1995 1995
------------ -------------
Finished goods . . . . . . . . . . $25,608,000 $22,824,000
Work in process . . . . . . . . . 30,796,000 31,048,000
Raw materials and supplies . . . . 32,590,000 24,951,000
----------- -----------
$88,994,000 $78,823,000
=========== ===========
(3) Net Income Per Share and Stock Repurchase Program -
Net income per share is calculated using the weighted average number of
shares of common stock, and where dilutive, common stock equivalents outstanding
during each period. Shares used in computing per share results were 33,097,000
and 35,294,000 for the three months ended December 31, 1995 and 1994,
respectively. On February 6, 1996, the Company announced a self-tender offer
for up to 2,000,000 shares of its common stock. See Management's Discussion and
Analysis of Financial Condition and Results of Operations.
(4) Acquisitions -
During the quarter, $21.9 million was used to acquire two companies for
the building products business, including a manufacturer of heavy rolling doors,
sectional garage doors, grilles and other door products for commercial,
industrial and residential applications with annual sales of $60 million. These
acquisitions were primarily funded by borrowings under the Company's revolving
credit loan agreement with two banks. The acquisitions have been accounted for
as purchases.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales were $163.5 million for the three-month period ended
December 31, 1995, an increase of $29.9 million or 22.4% over last year.
Net sales of the building products business were $98.4 million, an
increase of $18.5 million or 23.2% over last year primarily due to acquired
businesses. Net sales of the specialty plastic films business were $31.7
million, an increase of $5.1 million or 19.3% over last year. The increase is
primarily due to sales of new laminated products to its major customer,
partially offset by the previously reported phase-out of the thin laminate
program with this customer. Net sales of the electronic information and
communication systems business were $23.3 million, an increase of $5.8 million
or 33.0% compared to last year principally due to new program awards.
Income from operations for the three-month period ended December 31, 1995
was $10.0 million compared to $12.7 million last year. Operating income of the
building products business decreased $2.3 million compared to last year. Lower
garage door unit sales due to weakness in the construction and related retail
markets, severe weather conditions in December 1995, additional costs to phase-
out an unprofitable product line and raw material cost increases in excess of
selling price increases, offset by the earnings of acquired companies were the
principal reasons for the decrease. Operating income of the specialty plastic
films business decreased by $.6 million compared to last year primarily due to
the phase-out of the thin laminate program and start-up costs relating to the
segment's new laminate products for its major customer, offset by the effect of
the sales increase and lower raw material costs for polyethylene resin. It is
anticipated that new laminate products will positively impact operating results
of this division in subsequent periods. Operating income of the electronic
information and communication systems business increased by $.5 million
principally due to the sales increase offset by increased bid and proposal
expenditures.
Liquidity and Capital Resources
Cash flow provided by operations for the quarter was $18.1 million and
working capital was $126.2 million at December 31, 1995.
During the quarter, $21.9 million was used to acquire two companies for
the building products business, including a manufacturer of heavy rolling doors,
sectional garage doors, grilles and other door products for commercial,
industrial and residential applications with annual sales of $60 million. These
acquisitions were primarily funded by borrowings under the Company's revolving
credit loan agreement with two banks. The Company also expended $.9 million to
purchase its Common Stock in connection with the Company's stock repurchase
program.
On February 6, 1996, the Board of Directors authorized a self-tender offer
for up to an additional 2,000,000 shares of the Company's Common Stock at prices
between $9.50 and $10.25. The Company will determine the per share price within
that range that will allow it to purchase 2,000,000 shares or such lesser number
as may be tendered. The offer expires in March 1996 and increases the stock
buyback program to a total of 9,000,000 shares of the Company's Common and
Preferred Stock, under which approximately 5,500,000 shares of Common Stock have
been purchased. The self-tender will be funded by borrowings under the
Company's existing bank loan agreement.
Anticipated cash flows from operations, together with existing cash and
lease line availability, should be adequate to finance presently anticipated
working capital and capital expenditure requirements.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
There are no material changes in the information previously
reported under this item.
Item 2 Changes in Securities
None
Item 3 Defaults upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
(a) The Registrant held its Annual Meeting of Stockholders on
February 6, 1996.
(b) Not applicable.
(c) Four directors were elected at the Annual Meeting of
Stockholders to serve until the Annual Meeting of Stockholders
in 1999 or until their successors are chosen and qualified.
The names of these Directors and votes cast in favor of their
election and shares withheld are as follows:
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
Bertrand M. Bell 27,579,575 206,045
Robert Bradley 27,577,266 208,354
Martin S. Sussman 27,581,532 204,088
Lester L. Wolff 27,577,412 208,208
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
27 -- Financial Data Schedule (for electronic submission only)
SIGNATURE
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 thereunto duly authorized.
GRIFFON CORPORATION
By Robert Balemian
-----------------------------
Robert Balemian
President
(Principal Financial Officer)
Date: February 8, 1996
5
3-MOS
SEP-30-1996
DEC-31-1995
26,163,000
5,294,000
111,215,000
5,790,000
88,994,000
234,778,000
108,462,000
50,485,000
318,725,000
108,591,000
33,225,000
0
417,000
7,774,000
168,718,000
318,725,000
163,477,000
163,477,000
123,627,000
123,627,000
0
272,000
772,000
9,611,000
3,748,000
5,863,000
0
0
0
5,863,000
.18
0
