UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported): November 3, 2005
GRIFFON CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-6620 11-1893410
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
100 Jericho Quadrangle
Jericho, New York 11753
(Address of Principal (Zip Code)
Executive Offices)
(516) 938-5544
(Registrant's telephone number, including area code)
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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):
_Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
_Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
_Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17CFR 240.14d-2(b))
_Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On November 3, 2005, Griffon Corporation (the "Registrant") issued a press
release announcing the Registrant's financial results for the fourth fiscal
quarter and year ended September 30, 2005. A copy of the Registrant's press
release is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release, dated November 3, 2005
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
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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/Eric Edelstein
--------------------------------
Eric Edelstein
Executive Vice President and
Chief Financial Officer
Date: November 3, 2005
3
Exhibit Index
99.1 Press release, dated November 3, 2005
GRIFFON CORPORATION ANNOUNCES RECORD FOURTH QUARTER
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OPERATING RESULTS, 2005 FISCAL YEAR RESULTS
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AND ENTRY INTO RULE 10b5-1 TRADING PROGRAM
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Jericho, New York, November 3, 2005 - Griffon Corporation (NYSE:GFF) today
announced operating results for the fiscal year ended September 30, 2005,
including a record fourth quarter. Net sales for the fourth quarter increased to
$388,442,000, up from $369,723,000 for the fourth quarter of fiscal 2004. Pretax
income for the quarter increased to $35,358,000 from $34,983,000 for last year's
fourth quarter. Net income for the current quarter was $22,623,000 compared to
$18,925,000 for the last quarter of 2004. Diluted earnings per share increased
to $.71 for the fourth quarter of fiscal 2005 compared to $.61 in last year's
fourth quarter.
The increase in sales in the fourth quarter was primarily attributable to
the garage doors, electronic information and communication systems and
installation services segments, which all achieved significant revenue growth.
Fourth quarter earnings in the garage doors segment were approximately the same
as last year while the electronic information and communication systems and
installation services segments enjoyed higher profitability in the quarter
compared to 2004. Telephonics, the company's electronic information and
communication systems segment, had an outstanding fourth quarter, and as a
result an excellent year. With its recently announced military contract awards
Telephonics is poised for another strong year in fiscal 2006.
Net sales for the fiscal year ended September 30, 2005 were $1,401,993,000
compared to $1,393,809,000 for fiscal 2004. Pretax income for fiscal 2005 was
$78,945,000 compared to $104,749,000 last year. Net income for fiscal 2005 was
$48,813,000 compared to last year's record earnings of $53,859,000. Diluted
earnings per share was $1.55 compared to $1.71 a year earlier.
Escalating raw material costs in our garage doors and specialty plastic
films segments made fiscal 2005 a difficult year. The improved operating results
in the third and fourth quarters demonstrated that the Company was able to
respond to the challenges created by these cost increases. That response has
also resulted in the Company being well positioned for continued improvement in
operating performance.
Cash generated from operations for the year was $58,000,000 which funded
capital expenditures of $40,000,000, the majority of which was for the specialty
plastic films segment. The company also used $96,000,000 for strategic
acquisitions, purchasing the 40% minority interest in specialty plastics'
largest European operation for $82,000,000 and making additional investments in
the specialty plastics and electronic information and communication systems
segments. A portion of the acquisitions was funded with bank borrowings of
$60,000,000 under the company's existing revolving credit facility. Also, the
company continued its stock buyback program, using approximately $26,000,000
during the year to acquire approximately 1,100,000 shares of common stock.
The company also announced today that its Board of Directors approved the
entry into a Rule 10b5-1 trading plan with a broker to facilitate the repurchase
of its shares of common stock under its previously announced stock repurchase of
its shares of common stock. Under such program, Griffon currently may purchase
up to 2,400,000 shares of common stock. Rule 10b5-1
allows a company to purchase its shares at times when it otherwise might be
prevented from doing so under the insider trading laws or because of
self-imposed blackout periods, provided, among other considerations, that
repurchases are made pursuant to a plan adopted when the company is not aware of
material nonpublic information or is not otherwise prohibited from acquiring its
own shares. Rule 10b5-1 purchases are expected to commence December 2005.
In October 2005, the company announced that Telephonics Corporation, the
company's electronic information and communication systems subsidiary, received
a subcontract award from Syracuse Research Corporation (SRC) for the turnkey
production of an SRC product. The initial release on this subcontract could
exceed $20 million in value. Under the structure of the joint cooperation
agreement with SRC, Telephonics total share of all production for the program
will exceed $150 million.
The total contract award announced by the U.S. Army to Syracuse Research
Corporation (SRC) of approximately $550 million, makes Telephonics share of the
program substantial. The award to SRC is to produce, field and support a
next-generation capability against Remote Control Improvised Explosive Devices
(RCIED) known as Counter RCIED Electronic Warfare Increment Two (CREW-2).
RCIEDs, better known as roadside bombs, are the number one killer used by enemy
insurgents in Iraq today. Crew-2 will provide an affordable capability against a
broad spectrum of RCIED threats with a design that is sufficiently flexible to
allow for future capability growth.
The contract is intended to meet a Multinational Corps Iraq urgent
operational need for a field-programmable electronic countermeasures system
designed to provide force protection against RCIED detonation ambushes.
Griffon Corporation -
o is a leading manufacturer and marketer of residential, commercial and
industrial garage doors sold to professional installing dealers and
major home center retail chains;
o 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;
o 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
o 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, results of integrating acquired
businesses into existing operations, competitive factors and pricing pressures
for resin and steel, 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 to release publicly any revisions to these
forward-looking statements to reflect future events or circumstances or to
reflect the occurrence of unanticipated events.
GRIFFON CORPORATION
OPERATING HIGHLIGHTS
(in thousands except for per share amounts)
PRELIMINARY
For the Three Months Ended For the Twelve Months Ended
September 30, September 30,
--------------------------- ---------------------------
2005 2004 2005 2004
---------- ----------- ---------- -------------
Net sales:
Garage Doors $ 149,027 $ 138,103 $ 532,348 $ 476,581
Installation Services 84,154 78,055 300,041 306,992
Specialty Plastic Films 93,686 100,667 370,158 411,346
Electronic Information and Communication Systems 67,234 58,473 220,993 220,674
Intersegment eliminations (5,659) (5,575) (21,547) (21,784)
--------- --------- ---------- ----------
$ 388,442 $ 369,723 $1,401,993 $1,393,809
========= ========= ========== ==========
Operating income:
Garage Doors $ 15,585 $ 15,738 $ 37,669 $ 42,600
Installation Services 3,976 2,716 9,135 10,909
Specialty Plastic Films 10,724 13,793 31,582 52,655
Electronic Information and Communication Systems 9,366 8,288 18,117 20,224
--------- --------- ---------- ----------
Segment operating income 39,651 40,535 96,503 126,388
Unallocated amounts (2,353) (3,950) (15,121) (14,643)
Interest and other, net (1) (1,940) (1,602) (2,437) (6,996)
--------- --------- ---------- ----------
Income before income taxes and minority interest $ 35,358 $ 34,983 $ 78,945 $ 104,749
========= ========= ========== ==========
(1) Includes pre-tax gain in 2005 of $3.7 million on sale of land and building.
GRIFFON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
PRELIMINARY FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2005 2004
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Net sales $ 388,442 $ 369,723
Cost of sales 276,018 257,990
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Gross profit 112,424 111,733
Selling, general and administrative expenses 75,766 75,350
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Income from operations 36,658 36,383
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Other income (expense):
Interest expense (2,498) (1,941)
Interest income 558 339
Other, net 640 202
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(1,300) (1,400)
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Income before income taxes 35,358 34,983
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Provision for income taxes:
Federal 9,410 9,501
State and foreign 3,325 3,442
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12,735 12,943
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Income before minority interest 22,623 22,040
Minority interest - (3,115)
--------- ---------
Net income $ 22,623 $ 18,925
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Basic earnings per share of common stock: $ .74 $ .64
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Diluted earnings per share of common stock: $ .71 $ .61
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Weighted average number of shares outstanding:
Basic 30,529,000 29,540,000
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Diluted 31,910,000 31,225,000
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GRIFFON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
PRELIMINARY FOR THE YEARS ENDED
SEPTEMBER 30,
----------------------------------
2005 2004
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Net sales $ 1,401,993 $1,393,809
Cost of sales 1,032,365 992,648
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Gross profit 369,628 401,161
Selling, general and administrative expenses 289,527 289,979
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Income from operations 80,101 111,182
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Other income (expense):
Interest expense (8,266) (8,066)
Interest income 2,085 1,070
Other, net 5,025(1) 563
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(1,156) (6,433)
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Income before income taxes 78,945 104,749
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Provision for income taxes:
Federal 14,794 18,407
State and foreign 10,923 20,350
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25,717(2) 38,757
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Income before minority interest 53,228 65,992
Minority interest (4,415) (12,133)
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Net income $ 48,813 $ 53,859
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Basic earnings per share of common stock: $ 1.64 $ 1.81
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Diluted earnings per share of common stock: $ 1.55 $ 1.71
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Weighted average number of shares outstanding:
Basic 29,851,000 29,762,000
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Diluted 31,416,000 31,586,000
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(1) Includes gain of $3.7 million on sale of land and building.
(2) Includes a reduced provision as a result of the resolution of certain
income tax matters.
GRIFFON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
PRELIMINARY
SEPTEMBER 30, SEPTEMBER 30,
2005 2004
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ASSETS
Current Assets:
Cash and cash equivalents $ 60,663 $ 88,047
Accounts receivable, net 189,904 174,938
Contract costs and recognized income
not yet billed 43,065 32,700
Inventories 148,350 141,567
Prepaid expenses and other current assets 41,227 43,381
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Total current assets 483,209 480,633
Property, plant and equipment, at cost less
depreciation and amortization 216,900 203,539
Goodwill 96,098 50,554
Intangible and other assets 55,220 14,790
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$ 851,427 $ 749,516
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion of long-term debt $ 16,625 $ 14,490
Accounts payable 91,970 85,589
Accrued liabilities 78,849 96,288
Income taxes 22,599 14,264
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Total current liabilities 210,043 210,631
Long-term debt:
Convertible subordinated notes 130,000 130,000
Other 66,540 24,445
Other liabilities and deferred credits 82,890 40,293
Minority interest - 25,175
Shareholders' equity 361,954 318,972
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$ 851,427 $ 749,516
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GRIFFON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
PRELIMINARY For the Years Ended
September 30,
-------------------------
2005 2004
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 48,813 $ 53,859
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Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,613 28,331
Gain on sale of land and building (3,744) -
Minority interest 4,415 12,133
Provision for losses on accounts receivable 988 2,785
Deferred income taxes (1,740) 8,336
Change in assets and liabilities:
(Increase) decrease in accounts receivable and contract
costs and recognized income not yet billed (24,595) 11,545
Increase in inventories (5,718) (27,313)
Increase in prepaid expenses and other assets (880) (4,655)
Increase in accounts payable, accrued liabilities and
income taxes payable, net 5,644 14,632
Other changes, net 2,526 6,128
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Total adjustments 9,509 51,922
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Net cash provided by operating activities 58,322 105,781
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (40,000) (56,124)
Proceeds from sale of land and building 6,931 -
Acquisition of minority interest in subsidiaries (85,928) -
Acquired businesses (9,577) -
(Increase) decrease in equipment lease deposits 6,856 (3,787)
Other, net - 708
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Net cash used in investing activities (121,718) (59,203)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury shares (25,909) (28,400)
Proceeds from issuance of long-term debt 67,778 12,393
Payments of long-term debt (25,038) (12,631)
Increase in short-term borrowings 1,045 103
Exercise of stock options 20,261 5,473
Distributions to minority interests (1,362) (5,974)
Other, net - (269)
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Net cash provided by (used in) financing activities 36,775 (29,305)
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Effect of exchange rate changes on cash and cash equivalents (763) 958
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (27,384) 18,231
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 88,047 69,816
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CASH AND CASH EQUIVALENTS AT END OF YEAR $ 60,663 $ 88,047
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