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 March 31, 1996
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. 28,886,745 shares of Common
Stock as of April 19, 1996.
FORM 10-Q
CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
Condensed Consolidated Balance Sheets at March 31, 1996
and September 30, 1995
Condensed Consolidated Statements of Income for the Three
Months and Six Months Ended March 31, 1996 and 1995
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended March 31, 1996 and 1995
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
March 31, September 30,
1996 1995
------------- -------------
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,377,000 $ 9,656,000
Marketable securities 3,311,000 12,197,000
Accounts receivable, less allowance
for doubtful accounts 73,225,000 71,461,000
Contract costs and recognized
income not yet billed 32,527,000 31,490,000
Inventories (Note 2) 90,387,000 78,823,000
Prepaid expenses and other current
assets 7,918,000 8,419,000
------------ ------------
Total current assets 222,745,000 212,046,000
PROPERTY, PLANT AND EQUIPMENT
at cost, less accumulated depreciation
and amortization of $52,783,000 at
March 31, 1996 and $48,333,000 at
September 30, 1995 58,643,000 48,401,000
OTHER ASSETS 25,974,000 25,169,000
------------ ------------
$307,362,000 $285,616,000
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
1996 1995
------------ -------------
(Unaudited) (Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts and notes payable $ 49,901,000 $ 46,532,000
Other current liabilities 51,702,000 51,274,000
------------ ------------
Total current liabilities 101,603,000 97,806,000
------------ ------------
LONG-TERM DEBT (Notes 4 and 5) 45,475,000 16,074,000
------------ ------------
SHAREHOLDERS' EQUITY (Note 4):
Preferred stock, par value $.25 per share,
authorized 3,000,000 shares --
Second Preferred Stock, Series I,
authorized 1,950,000 shares, issued
1,662,356 shares at March 31, 1996
and 1,669,537 shares at September 30,
1995 (liquidation value $16,624,000
and $16,695,000, respectively) 416,000 417,000
Common stock, par value $.25 per share,
authorized 85,000,000 shares, issued
29,211,641 shares at March 31, 1996
and 31,081,499 shares at September 30,
1995, and 334,896 shares and 162,796
shares in treasury at March 31, 1996
and September 30, 1995, respectively 7,302,000 7,770,000
Other shareholders' equity 152,566,000 163,549,000
------------ ------------
Total shareholders' equity 160,284,000 171,736,000
------------ ------------
$307,362,000 $285,616,000
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
THREE MONTHS ENDED MARCH 31,
-----------------------------
1996 1995
------------ ------------
Net sales $150,427,000 $120,149,000
Cost of sales 115,070,000 88,834,000
------------ ------------
Gross profit 35,357,000 31,315,000
Selling, general and administrative
expenses 28,609,000 25,804,000
------------ ------------
Income from operations 6,748,000 5,511,000
------------ ------------
Other income (expense):
Interest expense (764,000) (532,000)
Interest income 279,000 219,000
Other, net 74,000 221,000
------------ ------------
(411,000) (92,000)
------------ ------------
Income before income taxes 6,337,000 5,419,000
------------ ------------
Provision for income taxes:
Federal 2,088,000 1,743,000
State and other 383,000 425,000
------------ ------------
2,471,000 2,168,000
------------ ------------
Net income $ 3,866,000 $ 3,251,000
============ ============
Net income per share of common stock (Note 3) $ .12 $ .10
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
SIX MONTHS ENDED MARCH 31,
-----------------------------
1996 1995
------------ ------------
Net sales $313,904,000 $253,711,000
Cost of sales 238,697,000 184,050,000
------------ ------------
Gross profit 75,207,000 69,661,000
Selling, general and administrative
expenses 58,442,000 51,415,000
------------ ------------
Income from operations 16,765,000 18,246,000
------------ ------------
Other income (expense):
Interest expense (1,536,000) (1,047,000)
Interest income 648,000 838,000
Other, net 71,000 252,000
------------ ------------
(817,000) 43,000
------------ ------------
Income before income taxes 15,948,000 18,289,000
------------ ------------
Provision for income taxes:
Federal 5,222,000 5,993,000
State and other 997,000 1,323,000
------------ ------------
6,219,000 7,316,000
------------ ------------
Net income $ 9,729,000 $ 10,973,000
============ ============
Net income per share of common stock (Note 3) $ .30 $ .32
============ ============
See notes to condensed consolidated financial statements.
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED MARCH 31,
--------------------------
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,729,000 $10,973,000
----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,033,000 4,139,000
Provision for losses on accounts receivable 609,000 406,000
Change in assets and liabilities:
Decrease in accounts receivable and contract
costs and recognized income not yet billed 8,259,000 8,657,000
Increase in inventories (1,850,000) (3,898,000)
Decrease in prepaid expenses and other assets 2,033,000 456,000
Decrease in accounts payable and accrued liabilities (7,675,000) (24,126,000)
Other changes, net (317,000) 263,000
----------- -----------
Total adjustments 6,092,000 (14,103,000)
----------- -----------
Net cash provided by (used in) operating
activities 15,821,000 (3,130,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in marketable securities 8,886,000 26,372,000
Acquisition of property, plant and equipment (4,365,000) (4,250,000)
Acquired businesses (21,884,000) (7,758,000)
Decrease in equipment lease deposits and other 5,000 439,000
----------- -----------
Net cash provided by (used in) investing
activities (17,358,000) 14,803,000
----------- -----------
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
SIX MONTHS ENDED MARCH 31,
--------------------------
1996 1995
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of common shares (21,574,000) (28,166,000)
Proceeds from issuance of long-term debt 30,000,000 ---
Payment of long-term debt (269,000) (9,264,000)
Increase (decrease) in short-term borrowings (1,000,000) 8,500,000
Other, net 101,000 (49,000)
----------- -----------
Net cash provided by (used in) financing
activities 7,258,000 (28,979,000)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,721,000 (17,306,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,656,000 28,659,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,377,000 $11,353,000
=========== ===========
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 and six-month periods ended March 31, 1996 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:
March 31, September 30,
1996 1995
----------- -------------
Finished goods . . . . . . . . . . $26,340,000 $22,824,000
Work in process . . . . . . . . . 32,628,000 31,048,000
Raw materials and supplies . . . . 31,419,000 24,951,000
----------- -----------
$90,387,000 $78,823,000
=========== ===========
(3) Net Income Per Share -
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 32,563,000
and 33,111,000 for the three months ended March 31, 1996 and 1995, respectively
and 32,830,000 and 34,203,000 for the six months ended March 31, 1996 and 1995,
respectively.
(4) Self-Tender Offer -
In March 1996, the Company completed a self-tender offer for 2,000,000
shares of the Company's Common Stock, which were then retired, at a price of
$9.75 per share. During the six months ended March 31, 1996, approximately
$21.6 million was used to acquire 2,172,100 shares of Common Stock. The self-
tender was primarily funded by borrowings under the Company's revolving credit
loan agreement.
(5) Acquisitions -
During the first 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. The acquisitions have been accounted for as purchases.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996
Net sales were $150.4 million for the three-month period ended March 31,
1996, an increase of $30.3 million or 25.2% over last year.
Net sales of the building products business were $79.5 million, an
increase of $20.8 million or 35.4% over last year primarily due to acquired
businesses. Net sales of the specialty plastic films business were $32.5
million, an increase of $4.9 million or 17.6% 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 and lower selling prices. Net sales of the
electronic information and communication systems business were $27.1 million, an
increase of $3.8 million or 16.4% compared to last year principally due to new
program awards.
Income from operations for the three-month period ended March 31, 1996 was
$6.7 million compared to $5.5 million last year. Operating income of the
building products business, in what is historically its weakest quarter, was
approximately the same as last year. Operating income of the specialty plastic
films business showed improvement from the first quarter, and increased by
approximately $.9 million compared to last year's comparable quarter. The
increase was attributable to the new product sales and raw material cost
decreases in excess of selling price decreases, partly offset by new product
start-up costs. Operating income of the electronic information and
communication systems business increased by approximately $.5 million
principally due to the sales increase.
Net interest expense increased by $.2 million compared to last year's
comparable quarter. The increase was due to higher borrowings in connection
with the acquisitions made in the first quarter and the Company's second quarter
self-tender offer for 2,000,000 shares of its Common Stock.
Six Months Ended March 31, 1996
Net sales were $313.9 million for the six-month period ended March 31,
1996, an increase of $60.2 million or 23.7% over last year.
Net sales of the building products business were $177.9 million, an
increase of $39.3 million or 28.4% over last year primarily due to acquired
businesses. Net sales of the specialty plastic films business were $64.2
million, an increase of $10.0 million or 18.5% 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 and lower selling prices. Net sales of the
electronic information and communication systems business were $50.4 million, an
increase of $9.6 million or 23.5% compared to last year principally due to new
program awards.
Income from operations for the six-month period ended March 31, 1996 was
$16.8 million compared to $18.2 million last year. Operating income of the
building products business decreased $2.3 million compared to last year, all of
such reduction occurring in the first quarter. Lower garage door unit sales due
to weakness in the construction and related retail markets, severe winter
weather conditions, 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 increased by $.3
million compared to last year, and operating income of the electronic
information and communication systems business increased by $1.0 million due to
the reasons discussed above.
Net interest expense increased by $.7 million compared to last year's
comparable period due to the higher borrowings incurred to consummate
acquisitions of building products companies for approximately $22 million and
for purchases of Common Stock for approximately $22 million during the six
months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow provided by operations for the six months was $15.8 million and
working capital was $121.1 million at March 31, 1996.
During the six months, $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.
In March 1996, the Company completed a self-tender offer for 2 million
shares of its Common Stock at a price of $9.75 per share. During the six
months, $21.6 million was used to acquire approximately 2.2 million shares of
Common Stock. Approximately 7.5 million shares of the Company's Common Stock
have been purchased under its stock repurchase program covering 9 million shares
of the Company's Common and Preferred Stock. The self-tender was primarily
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 other than as follows:
Department of Environmental Conservation with Lightron Corporation
(Peekskill). As previously reported, Lightron Corporation, a
wholly-owned subsidiary of the Company, once conducted operations at
a location in Peekskill in the Town of Cortlandt, New York owned by
ISC Properties, Inc., also a wholly-owned subsidiary of the Company
(the "Peekskill Site"). ISC Properties, Inc. sold the Peekskill
Site in November 1982. Subsequently, the Company was advised by the
New York State Department of Environmental Conservation ("DEC") that
random sampling at the Peekskill Site and in a creek near the
Peekskill Site indicated concentrations of solvents and other
chemicals common to Lightron's prior plating operations.
After negotiation with the DEC, in April 1996 ISC Properties, Inc.
signed a Consent Order which, if approved by the Commissioner of the
DEC, provides for the performance of a field investigation and
feasibility study at the Peekskill Site.
Item 2 Changes in Securities
None
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
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: April 29, 1996
5
6-MOS
SEP-30-1996
MAR-31-1996
15,377,000
3,311,000
110,861,000
5,109,000
90,387,000
222,745,000
111,426,000
52,783,000
307,362,000
101,603,000
45,475,000
0
416,000
7,302,000
152,566,000
307,362,000
313,904,000
313,904,000
238,697,000
238,697,000
0
609,000
1,536,000
15,948,000
6,219,000
9,729,000
0
0
0
9,729,000
.30
0
