QuickLinks -- Click here to rapidly navigate through this document

---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
or
o	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 incorporation or organization)		(I.R.S. Employer 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.          ý Yes          No o

        Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).          ý Yes          No o

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.          29,514,980 shares of Common Stock as of April 30, 2004.

---

---

---

FORM 10-Q
CONTENTS

				PAGE
PART I—		FINANCIAL INFORMATION (Unaudited)
		Condensed Consolidated Balance Sheets at March 31, 2004 and September 30, 2003		1
		Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended March 31, 2004 and 2003		3
		Condensed Consolidated Statements of Cash Flows for the Six Months ended March 31, 2004 and 2003		5
		Notes to Condensed Consolidated Financial Statements		6
		Management's Discussion and Analysis of Financial Condition and Results of Operations		10
		Quantitative and Qualitative Disclosure about Market Risk		14
		Controls & Procedures		14
PART II—		OTHER INFORMATION
		Item 1: Legal Proceedings		15
		Item 2: Changes in Securities and Use of Proceeds		15
		Item 3: Defaults upon Senior Securities		15
		Item 4: Submission of Matters to a Vote of Security Holders		15
		Item 5: Other Information		15
		Item 6: Exhibits and Reports on Form 8-K		15
		Signature		16

---

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

					March 31, 2004			September 30, 2003
					(Unaudited)			(Note 1)
ASSETS
	CURRENT ASSETS:
		Cash and cash equivalents			$	58,540,000		$	69,816,000
		Accounts receivable, less allowance for doubtful accounts				164,927,000			173,942,000
		Contract costs and recognized income not yet billed				31,675,000			46,642,000
		Inventories (Note 2)				134,019,000			114,003,000
		Prepaid expenses and other current assets				57,011,000			39,280,000
			Total current assets			446,172,000			443,683,000
	PROPERTY, PLANT AND EQUIPMENT at cost, less accumulated depreciation and amortization of $164,138,000 at March 31, 2004 and $148,493,000 at September 30, 2003					184,698,000			169,852,000
	OTHER ASSETS:
		Costs in excess of fair value of net assets of businesses acquired				50,245,000			49,983,000
		Other				15,178,000			15,212,000
						65,423,000			65,195,000
					$	696,293,000		$	678,730,000

See notes to condensed consolidated financial statements.

1

---

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

					March 31, 2004			September 30, 2003
					(Unaudited)			(Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
	CURRENT LIABILITIES:
		Accounts and notes payable			$	84,322,000		$	75,387,000
		Other current liabilities				109,885,000			118,676,000
			Total current liabilities			194,207,000			194,063,000
	LONG-TERM DEBT					152,824,000			155,483,000
	OTHER LIABILITIES AND DEFERRED CREDITS					29,622,000			27,539,000
			Total liabilities and deferred credits			376,653,000			377,085,000
	MINORITY INTEREST					20,101,000			17,591,000
	SHAREHOLDERS' EQUITY:
		Preferred stock, par value $.25 per share, authorized 3,000,000 shares, no shares issued				—			—
		Common stock, par value $.25 per share, authorized 85,000,000 shares, issued 37,917,039 shares at March 31, 2004 and 36,625,717 shares at September 30, 2003; 8,395,909 and 7,165,919 shares in treasury at March 31, 2004 and September 30, 2003, respectively				9,479,000			9,156,000
	Other shareholders' equity					290,060,000			274,898,000
			Total shareholders' equity			299,539,000			284,054,000
					$	696,293,000		$	678,730,000

See notes to condensed consolidated financial statements.

2

---

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

			THREE MONTHS ENDED MARCH 31,
			2004			2003
Net sales			$	317,636,000		$	277,330,000
Cost of sales				225,607,000			201,486,000
	Gross profit			92,029,000			75,844,000
Selling, general and administrative expenses				70,841,000			63,845,000
	Income from operations			21,188,000			11,999,000
Other income (expense):
	Interest expense			(2,049,000	)		(987,000	)
	Other, net			209,000			224,000
				(1,840,000	)		(763,000	)
	Income before income taxes			19,348,000			11,236,000
Provision for income taxes				7,159,000			4,269,000
	Income before minority interest			12,189,000			6,967,000
Minority interest				(3,527,000	)		(2,350,000	)
	Net income		$	8,662,000		$	4,617,000
Basic earnings per share of common stock (Note 3)			$	..29		$	..14
Diluted earnings per share of common stock (Note 3)			$	..27		$	..14

See notes to condensed consolidated financial statements.

3

---

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

			SIX MONTHS ENDED MARCH 31,
			2004			2003
Net sales			$	656,138,000		$	579,484,000
Cost of sales				466,489,000			416,642,000
	Gross profit			189,649,000			162,842,000
Selling, general and administrative expenses				141,649,000			129,191,000
	Income from operations			48,000,000			33,651,000
Other income (expense):
	Interest expense			(4,090,000	)		(2,092,000	)
	Other, net			1,096,000			758,000
				(2,994,000	)		(1,334,000	)
	Income before income taxes			45,006,000			32,317,000
Provision for income taxes				16,652,000			12,280,000
	Income before minority interest			28,354,000			20,037,000
Minority interest				(6,577,000	)		(4,500,000	)
	Net income		$	21,777,000		$	15,537,000
Basic earnings per share of common stock (Note 3)			$	..73		$	..47
Diluted earnings per share of common stock (Note 3)			$	..69		$	..46

See notes to condensed consolidated financial statements.

4

---

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

						SIX MONTHS ENDED MARCH 31,
						2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income						$	21,777,000		$	15,537,000
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization					14,097,000			12,502,000
		Minority interest					6,577,000			4,500,000
		Provision for losses on accounts receivable					928,000			701,000
		Change in assets and liabilities:
			Decrease in accounts receivable and contract costs and recognized income not yet billed				24,211,000			23,587,000
			Increase in inventories				(19,339,000	)		(5,791,000	)
			Increase in prepaid expenses and other assets				(4,638,000	)		(3,378,000	)
			Decrease in accounts payable, accrued liabilities and income taxes				(3,285,000	)		(33,183,000	)
			Other changes, net				2,789,000			(1,987,000	)
Total adjustments							21,340,000			(3,049,000	)
				Net cash provided by operating activities			43,117,000			12,488,000
CASH FLOWS FROM INVESTING ACTIVITIES:
	Acquisition of property, plant and equipment						(24,333,000	)		(22,092,000	)
	Balance paid for acquired business						—			(13,112,000	)
	Proceeds from divestiture						—			3,826,000
	(Increase) decrease in equipment lease deposits						(10,831,000	)		2,490,000
				Net cash used in investing activities			(35,164,000	)		(28,888,000	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Purchase of treasury shares						(15,211,000	)		(6,921,000	)
	Proceeds from issuance of long-term debt						3,774,000			17,000,000
	Payments of long-term debt						(8,200,000	)		(12,336,000	)
	Increase in short-term borrowings						—			1,972,000
	Distributions to minority interests						(4,992,000	)		(5,072,000	)
	Exercise of stock options						4,610,000			56,000
	Other, net						(61,000	)		—
				Net cash used in financing activities			(20,080,000	)		(5,301,000	)
Effect of exchange rates on cash and cash equivalents							851,000			1,474,000
NET DECREASE IN CASH AND CASH EQUIVALENTS							(11,276,000	)		(20,227,000	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD							69,816,000			45,749,000
CASH AND CASH EQUIVALENTS AT END OF PERIOD						$	58,540,000		$	25,522,000

See notes to condensed consolidated financial statements.

5

---

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. 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 and six-month periods ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending September 30, 2004. The balance sheet at September 30, 2003 has been derived from the audited financial statements at that date. 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, 2003.

(2) Inventories—

        Inventories, stated at the lower of cost (first-in, first-out or average) or market, are comprised of the following:

(3) Earnings per share (EPS) and accounting for stock-based compensation—

        Basic EPS is calculated by dividing income by the weighted average number of shares of common stock outstanding during the period. The weighted average number of shares of common stock used in determining basic EPS was 29,900,000 and 32,934,000 for the three months ended March 31, 2004 and 2003, respectively, and 29,860,000 and 33,028,000 for the six months ended March 31, 2004 and 2003, respectively.

        Diluted EPS is calculated by dividing income by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with potentially dilutive securities. Holders of the company's 4% convertible subordinated notes are entitled to convert their notes into the company's common stock upon the occurrence of certain events described in Note 2 of Notes to Consolidated Financial Statements in the company's annual report to shareholders for the year ended September 30, 2003. Shares potentially issuable upon conversion are not included in the calculation of diluted EPS because the conditions for conversion had not been met. The weighted average number of shares of common stock used in determining diluted EPS was 31,773,000 and 34,009,000 for the three months ended March 31, 2004 and 2003, respectively, and 31,753,000 and 34,025,000 for the six months ended March 31, 2004 and 2003, respectively, and reflects additional shares issuable in connection with stock option and other stock based compensation plans.

6

---

        Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation", as amended by Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure", permits an entity to continue to account for employee stock-based compensation under APB Opinion No. 25, "Accounting for Stock Issued to Employees", or adopt a fair value based method of accounting for such compensation. The company has elected to continue to account for stock-based compensation under Opinion No. 25. Accordingly, no compensation expense has been recognized in connection with options granted. Had compensation expense for options granted been determined based on the fair value at the date of grant in accordance with Statement No. 123, the company's net income and earnings per share would have been as follows:

			Three Months Ended March 31,						Six Months Ended March 31,
			2004			2003			2004			2003
Net income, as reported			$	8,662,000		$	4,617,000		$	21,777,000		$	15,537,000
Deduct total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects				(496,000	)		(653,000	)		(1,083,000	)		(1,279,000	)
Pro forma net income			$	8,166,000		$	3,964,000		$	20,694,000		$	14,258,000
Earnings per share:
	Basic—as reported		$	..29		$	..14		$	..73		$	..47
	Basic—pro forma		$	.27		$	.12		$	.69		$	.43
	Diluted—as reported		$	.27		$	.14		$	.69		$	.46
	Diluted—pro forma		$	.25		$	.12		$	.65		$	.42

(4) Business segments—

       The company's reportable business segments are as follows—Garage Doors (manufacture and sale of residential and commercial/industrial garage doors, and related products); Installation Services (sale and installation of building products primarily for new construction, such as garage doors, garage door openers, manufactured fireplaces and surrounds, flooring and cabinets); Electronic Information and Communication Systems (communication and information systems for government and commercial markets) and Specialty Plastic Films (manufacture and sale of plastic films and film laminates for baby diapers, adult incontinence care products, disposable surgical and patient care products and plastic packaging).

7

---

        Information on the company's business segments is as follows:

			Garage Doors			Installation Services			Specialty Plastic Films			Electronic Information and Communication Systems			Totals
Revenues from external customers—
Three months ended
	March 31, 2004		$	91,457,000		$	72,307,000		$	106,613,000		$	47,259,000		$	317,636,000
	March 31, 2003			77,928,000			66,661,000			92,129,000			40,612,000			277,330,000
Six months ended
	March 31, 2004		$	207,650,000		$	148,975,000		$	210,614,000		$	88,899,000		$	656,138,000
	March 31, 2003			184,691,000			138,949,000			179,471,000			76,373,000			579,484,000
Intersegment revenues—
Three months ended
	March 31, 2004		$	4,636,000		$	25,000		$	—		$	—		$	4,661,000
	March 31, 2003			4,958,000			11,000			—			—			4,969,000
Six months ended
	March 31, 2004		$	10,303,000		$	62,000		$	—		$	—		$	10,365,000
	March 31, 2003			11,658,000			43,000			—			—			11,701,000
Segment profit—
Three months ended
	March 31, 2004		$	3,964,000		$	1,692,000		$	15,142,000		$	3,669,000		$	24,467,000
	March 31, 2003			2,966,000			528,000			9,156,000			2,894,000			15,544,000
Six months ended
	March 31, 2004		$	17,224,000		$	4,698,000		$	28,082,000		$	5,699,000		$	55,703,000
	March 31, 2003			13,883,000			2,207,000			19,822,000			4,616,000			40,528,000

        Following is a reconciliation of segment profit to amounts reported in the consolidated financial statements:

		Three Months Ended March 31,						Six Months Ended March 31,
		2004			2003			2004			2003
Profit for all segments		$	24,467,000		$	15,544,000		$	55,703,000		$	40,528,000
Unallocated amounts			(3,360,000	)		(3,450,000	)		(7,088,000	)		(6,584,000	)
Interest expense, net			(1,759,000	)		(858,000	)		(3,609,000	)		(1,627,000	)
Income before income taxes		$	19,348,000		$	11,236,000		$	45,006,000		$	32,317,000

        Goodwill at March 31, 2004 includes $12.9 million attributable to the garage doors segment, $14.3 million to the electronic information and communication systems segment and $23.1 million to the specialty plastic films segment.

(5) Comprehensive income and defined benefit pension expense—

        Comprehensive income, which consists of net income and foreign currency translation adjustments, was $7.7 million and $6.2 million for the three-month periods and $24.0 and $19.6 million for the six-month periods ended March 31, 2004 and 2003, respectively.

8

---

        Defined benefit pension expense was recognized as follow:

		Three Months Ended March 31,						Six Months Ended March 31,
		2004			2003			2004			2003
Service cost		$	357,000		$	261,000		$	714,000		$	522,000
Interest cost			576,000			517,000			1,152,000			1,034,000
Expected return on plan assets			(264,000	)		(218,000	)		(528,000	)		(436,000	)
Amortization of net actuarial loss			227,000			135,000			454,000			270,000
Amortization of prior service cost			2,000			3,000			4,000			6,000
Amortization of transition obligation			78,000			78,000			156,000			156,000
		$	976,000		$	776,000		$	1,952,000		$	1,552,000

9

---

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

        Net sales for the quarter ended March 31, 2004 increased to $317,636,000, up from $277,330,000 for the second quarter of fiscal 2003. Income before income taxes increased to $19,348,000 from $11,236,000 last year. Each segment of the company achieved improved operating results in the second quarter, with increases in sales, operating income and operating margins. The building products operations performed particularly well in what has historically been their weakest quarter due to seasonality, and specialty plastic films continued its positive operating trend. Garage doors, specialty plastic films and electronic information and communication systems contributed equally to the sales growth, each with increases of approximately 16%. Specialty plastic films contributed a substantial portion of the consolidated operating profit improvement by achieving a 65% increase over its operating profit in last year's second quarter.

        In October 2003, the electronic information and communication system segment received a $35 million contract for ground surveillance radar providing protection of U.S. Air Force bases. Most or all of this project will be completed in the last half of fiscal 2004 resulting in sales and earnings for this segment substantially above last year.

        During the second quarter the specialty plastic films segment continued to add film capacity in its North American operations and additional printing capacity in Europe and North America. Substantial additional film capacity to be added over the balance of the year and into fiscal 2005 is planned for operations in Germany and in Brazil. These investments, which will incorporate engineering and technology upgrades, are expected to provide for future geographic expansion and development of new markets.

RESULTS OF OPERATIONS

        See Note 4 of Notes to Condensed Consolidated Financial Statements.

THREE MONTHS ENDED MARCH 31, 2004

        Operating results (in thousands) by business segment were as follows for the three-month periods ended March 31:

		Net Sales						Segment Operating Profit
		2004			2003			2004			2003
Garage doors		$	96,093		$	82,886		$	3,964		$	2,966
Installation services			72,332			66,672			1,692			528
Specialty plastic films			106,613			92,129			15,142			9,156
Electronic information and communication systems			47,259			40,612			3,669			2,894
Intersegment revenues			(4,661	)		(4,969	)		—			—
		$	317,636		$	277,330		$	24,467		$	15,544

Garage Doors

        Net sales of the garage door segment increased by $13.2 million or 15.9% compared to last year. Higher unit sales ($12.4 million) in all channels of distribution from continued strength in the repair and remodeling segment of the economy and favorable product mix accounted for the increase.

        Operating profit of the garage doors segment increased $1.0 million compared to last year, principally due to the higher sales. Gross margin percentage was 32.1% for the quarter compared to 31.9% last year. Selling, general and administrative expenses increased to support the sales growth, but due to effective expense control declined to

10

---

28.0% from 28.4% as a percentage of sales. This segment has continued to see higher market prices for raw material (steel) and, effective in the third fiscal quarter, has instituted selling price increases to pass increased costs to customers.

Installation Services

        Net sales of the installation services segment increased by $5.7 million or 8.5% compared to last year due to higher housing starts in new construction markets served by the segment.

        Operating profit of the installation services segment increased $1.2 million compared to last year. Gross margin percentage increased to 27.7% from 26.7% last year. Selling, general and administrative expenses as a percentage of sales decreased to 25.5% compared to 26.0% last year. The increased profitability was due to the sales growth, the recognition last year of costs in connection with eliminating an underperforming location and the positive effect of that realignment on current year operations.

Specialty Plastic Films

        Net sales of the specialty plastic films segment increased $14.5 million or 15.7% compared to the prior year. The effect of a weaker U.S. dollar on translated foreign sales accounted for $8 million of the increase. The remainder of the sales increase was principally due to the effect of favorable product mix and selling price adjustments to pass through raw material (resin) cost increases to customers.

        Operating profit of the specialty plastic films segment increased $6.0 million compared to last year. Gross margin percentage increased to 26.7% from 22.0% last year. The increased margin was principally due to the favorable product mix, increased manufacturing efficiencies and the recognition last year of costs associated with manufacturing facility expansion. Segment operating profit was also positively affected by a benefit from resin price changes and exchange rate differences. Resin price changes are not expected to significantly impact operating results in the second half of the year. Selling, general and administrative expenses as a percentage of sales was 12.5% compared to 12.2% last year.

Electronic Information and Communication Systems

        Net sales of the electronic information and communication systems segment increased $6.6 million or 16.4% compared to last year. The increase was primarily due to recently awarded contracts and higher volume in military production programs.

        Operating profit of the electronic information and communication systems segment increased $.8 million. Gross margin percentage decreased to 26.0% from 27.2% last year. The positive effect on gross margin percentage of improved performance in military production programs was offset by a lower margin product mix in commercial programs. The effect of the lower gross margin percentage was offset by the sales increase. Selling, general and administrative expenses grew slightly, but as a percentage of sales was 18.4% compared to 20.9% due to the sales increase.

Interest Expense

        Interest expense increased by $1.1 million compared to last year principally due to the sale in July 2003 of $130 million of 4% convertible subordinated notes.

11

---

SIX MONTHS ENDED MARCH 31, 2004

        Operating results (in thousands) by business segment were as follows for the six-month periods ended March 31:

		Net Sales						Operating Profit
		2004			2003			2004			2003
Garage doors		$	217,953		$	196,349		$	17,224		$	13,883
Installation services			149,037			138,992			4,698			2,207
Specialty plastic films			210,614			179,471			28,082			19,822
Electronic information and communication systems			88,899			76,373			5,699			4,616
Intersegment revenues			(10,365	)		(11,701	)		—			—
		$	656,138		$	579,484		$	55,703		$	40,528

Garage Doors

        Net sales of the garage doors segment increased by $21.6 million or 11.0% compared to last year. Higher unit sales ($19.8 million) in all channels of distribution from continued strength in the repair and remodeling segment of the economy and favorable product mix accounted for the increase.

        Operating profit of the garage doors segment increased approximately $3.3 million compared to last year. Gross margin percentage increased to 33.2% from 32.3% last year. The increased margin was principally due to the higher volume and improved product mix. Selling, general and administrative expenses as a percentage of sales was 25.3% compared to 25.2% last year.

Installation Services

        Net sales of the installation services segment increased by $10.0 million or 7.2% compared to last year. The increase was principally due to stronger new construction markets.

        Operating profit of the installation services segment increased $2.5 million compared to last year. Gross margin percentage was 27.8% compared to 27.0% last year. Selling, general and administrative expenses as a percentage of sales was 24.7% compared to 25.5% last year. The increased profitability was due to the sales growth and the elimination last year of an underperforming location.

Specialty Plastic Films

        Net sales of the specialty plastic films segment increased $31.1 million or 17.4% compared to the prior year. The increase was principally due to the impact ($11 million) of favorable product mix and higher unit volumes and the effect of a weaker U.S. dollar on translated foreign sales ($18 million).

        Operating profit of the specialty plastic films segment increased $8.3 million compared to last year. Gross margin percentage increased to 25.6% from 23.1% last year. The increased margin was principally due to the favorable product mix, increased manufacturing efficiencies, exchange rate differences and the recognition last year of costs associated with manufacturing facility expansion, partly offset by the effect of higher raw material (resin) costs in the first quarter of this year. Selling, general and administrative expenses as a percentage of sales was 12.5% compared to 12.2% last year. Selling, general and administrative expenses increased in connection with the sales growth and higher product development expenditures.

12

---

Electronic Information and Communication Systems

        Net sales of the electronic information and communication systems segment increased $12.5 million or 16.4% compared to last year due primarily to new contract awards and higher volume in military production programs.

        Operating profit of the electronic information and communication systems segment increased $1.1 million compared to last year. Gross margin percentage decreased to 24.1% from 26.3% last year. The positive effect on gross margin percentage of improved performance in military production programs was offset by a lower margin mix and cost growth in certain commercial programs in the early part of the year. The effect of the lower gross margin percentage was offset by the sales increase. Selling, general and administrative expenses were flat compared to last year but as a percentage of sales was 18.1% compared to 21.1% last year due to the sales increase.

Interest Expense

        Interest expense increased by $2.0 million compared to last year principally due to the sale in July 2003 of $130 million of 4% convertible subordinated notes.

LIQUIDITY AND CAPITAL RESOURCES

        Cash flow generated by operations for the six months ended March 31, 2004 was $43.1 million compared to $12.5 million last year and working capital was $252.0 million at March 31, 2004. Operating cash flows increased compared to last year due primarily to higher profitability and changes in operating assets and current liabilities.

        During the six months ended March 31, 2004 the company had capital expenditures of approximately $24.3 million and an increase of $10.8 million for deposits on equipment to be leased, both principally in connection with the specialty plastic films segment's capital expansion program that began in 2003. During the remainder of the year additional expenditures will be made under the program to add capacity both domestically and internationally.

        Financing cash flows included treasury stock purchases of $15.2 million to acquire approximately 730,000 shares of the company's common stock. Approximately 1,600,000 additional shares are available for purchase pursuant to the company's previously announced stock buyback program, and additional purchases under the plan will be made, depending upon market conditions, at prices deemed appropriate by management. Other financing cash flows consisted of net repayments of bank borrowings totaling approximately $4.4 million, distributions to minority shareholders of $5.0 million and proceeds of $4.6 million from stock option exercises.

        Anticipated cash flows from operations, together with existing cash, bank lines of credit and lease line availability, should be adequate to finance presently anticipated working capital and capital expenditure requirements and to repay long-term debt as it matures.

CRITICAL ACCOUNTING POLICIES

        The company's significant accounting policies are set forth in Note 1 of Notes to Consolidated Financial Statements in the company's annual report to shareholders for the year ended September 30, 2003. A discussion of those policies that require management judgment and estimates and are most important in determining the company's operating results and financial condition are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the 2003 Annual Report.

FORWARD-LOOKING STATEMENTS

        All statements other than statements of historical fact included in this report,

13

---

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 report, 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, competitive factors and pricing pressures, 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. Readers are cautioned not to place undue reliance on these forward-looking statements. The company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        Management does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that is required to be disclosed.

CONTROLS AND PROCEDURES

        Under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), the company's disclosure controls and procedures were evaluated as of the end of the period covered by this report. Based on that evaluation, the company's CEO and CFO concluded that the company's disclosure controls and procedures were effective.

        During the period covered by this report there were no changes in the company's internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information.

14

---

PART II—OTHER INFORMATION

Item 1    Legal Proceedings

        None

Item 2    Changes in Securities and Use of Proceeds

(e)

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

---

(1)

All purchases were made in open market transactions. The company's stock buyback program has been in effect since 1993, under which a total of 14.4 million shares have been purchased for $169.9 million. In February 2004 the company's Board of Directors authorized a 1,000,000 share increase in the program.

Item 3    Defaults upon Senior Securities

        None

Item 4    Submission of Matters to a Vote of Security Holders

        None

Item 5    Other Information

        None

Item 6    Exhibits and Reports on Form 8-K

(a)

Exhibit 31.1—Certification pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2—Certification pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act 2002.

Exhibit 32—Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

Reports on Form 8-K—Current Report on Form 8-K dated April 29, 2004 covering information furnished pursuant to Item 12.

15

---

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	/s/ Robert Balemian Robert Balemian President and Chief Financial Officer (Principal Financial Officer)

Date: May 7, 2004

16

---

QuickLinks

FORM 10-Q CONTENTS
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
GRIFFON CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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 and Use of Proceeds
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

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 31.1

CERTIFICATION

I, Harvey R. Blau, Chairman of the Board and Chief Executive Officer of Griffon Corporation, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Griffon Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2004

By

/s/ Harvey R. Blau Harvey R. Blau Chairman of the Board and Chief Executive Officer (principal executive officer)

---

QuickLinks

Exhibit 31.1

CERTIFICATION

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 31.2

CERTIFICATION

I, Robert Balemian, President and Chief Financial Officer of Griffon Corporation, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Griffon Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2004

By

/s/  Robert Balemian       Robert Balemian President and Chief Financial Officer (principal financial officer)

---

QuickLinks

Exhibit 31.2

CERTIFICATION

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 32

CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        I, Harvey R. Blau, Chief Executive Officer of Griffon Corporation, hereby certify that the Form 10-Q of Griffon Corporation for the period ended March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Griffon Corporation.

/s/  Harvey R. Blau       Name: Harvey R. Blau Date: May 7, 2004

        I, Robert Balemian, Chief Financial Officer of Griffon Corporation, hereby certify that the Form 10-Q of Griffon Corporation for the period ended March 31, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Griffon Corporation.

/s/  Robert Balemian       Name: Robert Balemian Date: May 7, 2004

        These certifications are being furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and, except to the extent required by the Sarbanes-Oxley Act, shall not be deemed to be filed as part of the periodic report described herein nor shall they be deemed filed by Griffon Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 has been provided to Griffon Corporation and will be retained by Griffon Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

---

QuickLinks

Exhibit 32

CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002