SEC Filing - Griffon Corporation

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, 2000 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. 29,850,097 shares of Common Stock as of April 28, 2000.

FORM 10-Q --------- CONTENTS -------- PAGE ---- PART I - FINANCIAL INFORMATION (Unaudited) --------------------- Condensed Consolidated Balance Sheets at March 31, 2000 and September 30, 1999........................................ 1 Condensed Consolidated Statements of Income for the Three Months and Six Months Ended March 31, 2000 and 1999........... 3 Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2000 and 1999...................... 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..... 13 PART II - OTHER INFORMATION ----------------- Item 1: Legal Proceedings .................................... 14 Item 2: Changes in Securities ................................ 14 Item 3: Defaults upon Senior Securities ...................... 14 Item 4: Submission of Matters to a Vote of Security Holders... 14 Item 5: Other Information .................................... 14 Item 6: Exhibits and Reports on Form 8-K ..................... 14 Signature .................................................... 15

GRIFFON CORPORATION AND SUBSIDIARIES ------------------------------------ CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- March 31, September 30, 2000 1999 --------- ------------ (Unaudited) (Note 1) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 17,838,000 $ 21,242,000 Accounts receivable, less allowance for doubtful accounts 119,997,000 123,008,000 Contract costs and recognized income not yet billed 69,039,000 65,527,000 Inventories (Note 2) 109,871,000 94,419,000 Prepaid expenses and other current assets 28,625,000 22,832,000 ------------ ------------ Total current assets 345,370,000 327,028,000 PROPERTY, PLANT AND EQUIPMENT at cost, less accumulated depreciation and amortization of $80,761,000 at March 31, 2000 and $72,152,000 at September 30, 1999 142,531,000 134,882,000 OTHER ASSETS 72,217,000 71,530,000 ------------ ------------ $560,118,000 $533,440,000 ============ ============ See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES ------------------------------------ CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- March 31, September 30, 2000 1999 ------------ ------------ (Unaudited) (Note 1) LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Accounts and notes payable $ 58,850,000 $ 64,540,000 Other current liabilities 71,722,000 73,465,000 ------------ ------------ Total current liabilities 130,572,000 138,005,000 ------------ ------------ LONG-TERM DEBT 159,894,000 127,652,000 ------------ ------------ MINORITY INTEREST AND OTHER 17,359,000 17,562,000 ------------ ------------ 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 31,749,199 shares at March 31, 2000 and 31,735,349 shares at September 30, 1999; 1,899,102 and 1,387,402 shares in treasury at March 31, 2000 and September 30, 1999, respectively 7,937,000 7,934,000 Other shareholders' equity 244,356,000 242,287,000 ------------ ------------ Total shareholders' equity 252,293,000 250,221,000 ------------ ------------ $560,118,000 $533,440,000 ============ ============ See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES ------------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ----------------------------------------------- (Unaudited) THREE MONTHS ENDED MARCH 31, --------------------------- 2000 1999 ------------ ------------ Net Sales $258,889,000 $236,360,000 Cost of sales 195,440,000 186,035,000 ------------ ------------ 63,449,000 50,325,000 Selling, general and administrative expenses 57,345,000 49,104,000 Restructuring charge (Note 6) --- 3,500,000 ------------ ------------ 6,104,000 (2,279,000) ------------ ------------ Other income (expense): Interest expense (2,744,000) (2,053,000) Interest income 211,000 273,000 Other, net 3,000 153,000 ------------ ------------ (2,530,000) (1,627,000) ------------ ------------ Income (loss) before income taxes 3,574,000 (3,906,000) ------------ ------------ Provision (benefit) for income taxes: Federal (382,000) (1,155,000) State and foreign 1,852,000 (290,000) ------------ ------------ 1,470,000 (1,445,000) ------------ ------------ Income (loss) before minority interest 2,104,000 (2,461,000) Minority interest (801,000) --- ------------ ------------ Net income (loss) $ 1,303,000 $ (2,461,000) ============ ============ Earnings (loss) per share of common stock (Note 3): Basic $ .04 $ (.08) ============ ============ Diluted $ .04 $ (.08) ============ ============ See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES ------------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF INCOME ------------------------------------------- (Unaudited) SIX MONTHS ENDED MARCH 31, -------------------------- 2000 1999 ---- ---- Net sales $539,650,000 $494,917,000 Cost of sales 404,349,000 382,466,000 ------------ ------------ 135,301,000 112,451,000 Selling, general and administrative expenses 112,782,000 98,438,000 Restructuring charge (Note 6) --- 3,500,000 ------------ ------------ 22,519,000 10,513,000 ------------ ------------ Other income (expense): Interest expense (5,099,000) (3,551,000) Interest income 514,000 334,000 Other, net (10,000) 150,000 ------------ ------------ (4,595,000) (3,067,000) ------------ ------------ Income before income taxes 17,924,000 7,446,000 ------------ ------------ Provision for income taxes: Federal 2,527,000 2,219,000 State and foreign 4,643,000 536,000 ------------ ------------ 7,170,000 2,755,000 ------------ ------------ Income before minority interest and cumulative effect of a change in accounting principle 10,754,000 4,691,000 Minority interest (Note 5) 281,000 --- ------------ ------------ Income before cumulative effect of a change in accounting principle 11,035,000 4,691,000 Cumulative effect of a change in accounting principle, net of income taxes (Note 5) (5,290,000) --- ------------ ------------ Net income $ 5,745,000 $ 4,691,000 ============ ============ Basic earnings per share of common stock (Note 3): Income before cumulative effect of a change in accounting principle $ .36 $ .15 Cumulative effect of a change in accounting principle (.17) --- ------------ ------------ $ .19 $ .15 ============ ============ Diluted earnings per share of common stock (Note 3): Income before cumulative effect of a change in accounting principle $ .36 $ .15 Cumulative effect of a change in accounting principle (.17) --- ------------ ------------ $ .19 $ .15 ============ ============= See notes to condensed consolidated financial statements

GRIFFON CORPORATION AND SUBSIDIARIES ------------------------------------ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (Unaudited) SIX MONTHS ENDED MARCH 31, -------------------------- 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 5,745,000 $ 4,691,000 ----------- ----------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 11,437,000 10,506,000 Minority interest (281,000) --- Cumulative effect of a change in accounting principle, net 5,290,000 --- Provision for losses on accounts receivable 1,235,000 1,223,000 Non-cash asset write-downs from restructuring --- 2,150,000 Change in assets and liabilities: Increase in accounts receivable and contract costs and recognized income not yet billed (2,762,000) (4,991,000) (Increase) decrease in inventories (12,371,000) 6,854,000 Increase in prepaid expenses and other assets (6,123,000) (4,381,000) Decrease in accounts payable, accrued liabilities and federal income taxes (1,874,000) (20,903,000) Other changes, net 1,707,000 165,000 ----------- ----------- Total adjustments (3,742,000) (9,377,000) ----------- ----------- Net cash provided by (used in) operating activities 2,003,000 (4,686,000) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (22,687,000) (14,614,000) Acquired businesses (12,112,000) (20,172,000) Proceeds from sale of product line --- 4,300,000 Other, net 4,578,000 420,000 ----------- ----------- Net cash used in investing activities (30,221,000) (30,066,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of treasury shares (3,620,000) (298,000) Proceeds from issuance of long-term debt 34,000,000 34,835,000 Payments of long-term debt (6,665,000) (5,053,000) Increase in short-term borrowings 2,500,000 4,314,000 Other, net (1,401,000) 130,000 ----------- ----------- Net cash provided by financing activities 24,814,000 33,928,000 ----------- ----------- NET DECREASE IN CASH AND CASH EQUIVALENTS (3,404,000) (824,000) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 21,242,000 19,326,000 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $17,838,000 $18,502,000 =========== =========== See notes to condensed 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. 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, 2000 are not necessarily indicative of the results that may be expected for the year ending September 30, 2000. The balance sheet at September 30, 1999 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, 1999. (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, 2000 1999 ------------ ------------ Finished goods......................... $ 60,129,000 $ 51,157,000 Work in process........................ 27,465,000 23,405,000 Raw materials and supplies............. 22,277,000 19,857,000 ------------ ------------ $109,871,000 $ 94,419,000 ============ ============ (3) Earnings per share - ------------------ 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 30,010,000 and 30,395,000 for the three months ended March 31, 2000 and 1999, respectively and 30,238,000 and 30,386,000 for the six months ended March 31, 2000 and 1999, 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. The weighted average number of shares of common stock used in determining diluted EPS was 30,190,000 and 30,395,000 for the three months ended March 31, 2000 and 1999, respectively and 30,409,000 and 30,631,000 for the six months ended March 31, 2000 and 1999, respectively, and reflects additional shares in connection with stock option and other stock-based compensation plans (180,000 shares for the three months ended March 31, 2000, 171,000 shares for the six months ended March 31, 2000 and 245,000 shares for the six months ended March 31, 1999).

Options to purchase approximately 4,195,000 and 5,297,000 shares of common stock were not included in the computation of diluted earnings per share for the three months ended March 31, 2000 and 1999, respectively, and options to purchase approximately 4,195,000 and 3,018,000 shares of common stock were not included in the computation of diluted earnings per share for the six months ended March 31, 2000 and 1999, respectively, because the effects would have been antidilutive. (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, 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).

Information on the company's business segments is as follows: Electronic Information and Specialty Garage Installation Communication Plastic Doors Services Systems Films Totals ------ ------------ ------------- --------- ------ Revenues from external customers - Three months ended March 31, 2000 $ 84,941,000 $ 65,099,000 $ 43,479,000 $ 65,370,000 $258,889,000 March 31, 1999 86,142,000 55,115,000 50,088,000 45,015,000 236,360,000 Six months ended March 31, 2000 196,031,000 133,783,000 83,625,000 126,211,000 539,650,000 March 31, 1999 201,844,000 105,596,000 92,124,000 95,353,000 494,917,000 Intersegment revenues - Three months ended March 31, 2000 $ 6,879,000 $ 85,000 $ --- $ --- $ 6,964,000 March 31, 1999 7,005,000 157,000 --- --- 7,162,000 Six months ended March 31, 2000 15,644,000 254,000 --- --- 15,898,000 March 31, 1999 15,262,000 496,000 --- --- 15,758,000 Segment profit - Three months ended March 31, 2000 $ (78,000) $ 936,000 $ 3,939,000 $ 3,617,000 $ 8,414,000 March 31, 1999 23,000 707,000 3,372,000 (900,000) 3,202,000 Six months ended March 31, 2000 7,902,000 3,318,000 7,690,000 8,275,000 27,185,000 March 31, 1999 8,585,000 2,521,000 6,321,000 769,000 18,196,000 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, 2000 1999 2000 1999 ---- ---- ---- ---- Profit for all segments $ 8,414,000 $ 3,202,000 $27,185,000 $ 18,196,000 Unallocated amounts (2,307,000) (1,828,000) (4,676,000) (4,033,000) Restructuring charge --- (3,500,000) --- (3,500,000) Interest expense, net (2,533,000) (1,780,000) (4,585,000) (3,217,000) ----------- ------------ ----------- ------------ Income (loss) before income taxes $ 3,574,000 $ (3,906,000) $17,924,000 $ 7,446,000 =========== ============ =========== ============

As a result of an acquisition during the six months ended March 31, 2000, the electronic information and communication systems segment's assets increased by approximately $16,000,000, and the garage doors segment's assets increased by approximately $4.5 million in connection with the purchase of a previously leased facility. (5) Start-up costs - -------------- Effective October 1, 1999 the company adopted the provisions of the American Institute of Certified Public Accountants' Statement of Position No. 98-5 (SOP 98-5), "Reporting on the Costs of Start-Up Activities". SOP 98-5 requires that, at the date of adoption, costs of start-up activities previously capitalized be written-off as a cumulative effect of a change in accounting principle, and that after adoption, such costs are to be expensed as incurred. Consequently, in the first quarter of fiscal 2000, the company's 60%-owned joint venture wrote off costs that were previously capitalized in connection with the start-up of the venture and the implementation of additional production capacity. The cumulative effect of this change in accounting principle is $5,290,000 (net of $3,784,000 income tax effect). The minority interest's share of the net charge is $2,116,000 and is included as an offsetting credit in "Minority interest" in the accompanying Condensed Consolidated Statements of Income. (6) Restructuring charge - -------------------- In March 1999 the company recorded a restructuring charge in connection with the closing of a garage door manufacturing facility in order to streamline operations and improve efficiency. Approximately $1,350,000 of restructuring costs were accrued; through March 31, 2000 approximately $777,000 has been paid for employee severance and related benefits and $328,000 has been paid for lease and related costs. The remaining accrual will be paid by September 30, 2000.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ----------------------------------------------------------- AND RESULTS OF OPERATIONS ------------------------- GENERAL The following information is presented in accordance with related segment results presented in Note 4 of "Notes to Condensed Consolidated Financial Statements." RESULTS OF OPERATIONS Three months ended March 31, 2000 - --------------------------------- Net sales were $258.9 million for the three-month period ended March 31, 2000, an increase of $22.5 million or 9.5%. Net sales for the garage doors segment were $91.8 million, a decrease of $1.3 million or 1.4% compared to last year. Unit volume of residential garage doors increased compared to last year's quarter, offset by the effect of price competition, lower unit sales of commercial doors and by the sale in fiscal 1999 of a commercial product line that had net sales of approximately $3 million in the second quarter of fiscal 1999. Net sales for the specialty plastic films segment were $65.4 million, an increase of $20.4 million or 45.2% compared to last year. Substantially higher unit sales volume at Finotech, the segment's European joint venture was the principal reason for the increase. Net sales for the electronic information and communication systems segment were $43.5 million, a decrease of $6.6 million or 13.2% compared to last year. The decrease in sales was principally due to delays in anticipated orders on international radar programs and lower revenues in the second quarter of fiscal 2000 on programs that were in development in 1999 but have not yet fully transitioned to production, partly offset by sales of an acquired search and weather radar business. Net sales for the installation services segment were $65.2 million, an increase of $9.9 million or 17.9% compared to last year. The increase was primarily due to the inclusion for the entire second quarter of fiscal 2000 of a company which was acquired during the second quarter of fiscal 1999. Operating income for all business segments for the three months ended March 31, 2000 was $8.4 million, an increase of $5.2 million or 162.8% compared to last year. The increase was principally due to substantial volume-driven improvement in specialty plastic films' European joint venture and related manufacturing efficiencies.

Operating results for the garage doors segment was approximately the same as last year. Increased profitability due to favorable product mix in residential doors, lower raw material costs and manufacturing efficiencies was offset by higher operating costs to support the segment's standing as the exclusive supplier of residential garage doors to The Home Depot in the United States and Canada. The segment also experienced unprofitable operations in a commercial door product line and competitive pricing. Operating income for specialty plastic films was $3.6 million compared to a loss of $.9 million last year. The substantial increase in net sales of the segment's European joint venture and resultant manufacturing efficiencies due to higher unit volume was the principal reason for the improvement in operating income. Operating income for the electronic information and communication systems segment was $3.9 million, an increase of $.6 million or 16.8% compared to last year. Profitability improved due primarily from higher aggregate margins on certain programs which have transitioned from development to production and from earnings of the acquired search and weather radar business, partly offset by increased bid and proposal expenditures. Operating income of the installation services segment was $.9 million, an increase of $.2 million compared to last year. The increase was principally due to the inclusion of earnings of an acquired company for the entire second quarter of fiscal 2000, partly offset by higher distribution and labor costs from expanded product offerings. Net interest expense increased by $.8 million principally due to higher levels of outstanding debt from acquisitions in 1999 and 2000. Six months ended March 31, 2000 - ------------------------------- Net sales were $539.7 million for the six-month period ended March 31, 2000, an increase of $44.7 million or 9.0%. Net sales for the garage doors segment were $211.7 million, a decrease of $5.4 million or 2.5% compared to last year. Unit volume of residential garage doors increased compared to last year's first half, offset by the effect of price competition, lower unit sales of commercial doors and by the sale last year of a commercial product line that had net sales of approximately $7 million in the first half of fiscal 1999. Net sales for the specialty plastic films segment were $126.2 million, an increase of $30.9 million or 32.4% compared to last year. Substantially higher unit sales volume at Finotech, the segment's European joint venture was the principal reason for the increase.

Net sales for the electronic information and communication systems segment were $83.6 million, a decrease of $8.5 million or 9.2% compared to last year. The decrease in sales was principally due to delays in anticipated orders on international radar programs and lower revenues in the first half of fiscal 2000 on programs that were in development in 1999 but have not yet fully transitioned to production, partly offset by sales of an acquired search and weather radar business. Net sales for the installation services segment were $134.0 million, an increase of $27.9 million or 26.3% compared to last year. The increase was due to the inclusion in the first six months of fiscal 2000 of a company which was acquired during the second quarter of fiscal 1999, and internal growth from expanded product offerings. Operating income for all business segments for the six months ended March 31, 2000 was $27.2 million, an increase of $9.0 million or 49.4% compared to last year. The increase was principally due to increased unit volume in specialty plastic films' European joint venture and related manufacturing efficiencies and increased margins in electronic information and communication systems. Operating income for the garage doors segment was $7.9 million, a decrease of $.7 million or 8.0% compared to last year. Increased profitability due to favorable product mix in residential doors, lower raw material costs and manufacturing efficiencies was offset by higher operating costs to support the segment's expansion of sales to retail channels. Unprofitable operations in a commercial door product line and competitive pricing also contributed to the segment's reduced operating results for the first half of fiscal 2000. Operating income for specialty plastic films was $8.3 million, an increase of $7.5 million compared to last year. The increase in net sales of the segment's European joint venture and resultant manufacturing efficiencies due to higher unit volume was the principal reason for the improvement in operating income. Operating income for the electronic information and communication systems segment was $7.7 million, an increase of $1.4 million or 21.7% compared to last year. The increase in operating income reflects improved profitability on certain programs that have transitioned from development to production and earnings of the acquired search and weather radar business, partly offset by increased bid and proposal expenditures. Operating income of the installation services segment was $3.3 million, an increase of $.8 million compared to last year. The increase was principally due to the inclusion of earnings of an acquired company, partly offset by higher distribution and labor costs from expanded product offerings. Net interest expense increased by $1.4 million principally due to higher levels of outstanding debt from acquisitions in 1999 and 2000.

LIQUIDITY AND CAPITAL RESOURCES Cash flow provided by operations for the six months ended March 31, 2000 improved to $2.0 million compared to cash used by operations of $4.7 million last year, principally due to increased earnings. Working capital increased to $214.8 million at March 31, 2000. The increase was principally due to higher inventory requirements in connection with expansion of the garage door segment's retail business and with expanded product offerings in the installation services segment. During the six months ended March 31, 2000 net cash used in investing activities was approximately $30.2 million. The company had capital expenditures of approximately $22.7 million, principally made in connection with increasing production capacity and with the purchase of a previously leased garage door manufacturing facility for approximately $4.5 million. Also, the electronic information and communication systems segment acquired a search and weather radar business for approximately $16 million, of which $12 million was financed under bank credit lines with the balance expected to be paid during the third quarter of fiscal 2000. Net cash provided by financing activities during the six months ended March 31, 2000 was approximately $24.8 million. Borrowings under bank credit lines were used to finance an acquisition, capital expenditures and working capital requirements. Also, since September 30, 1999 the company has purchased approximately 512,000 shares of its Common Stock for approximately $3.6 million, and increased its stock buyback program from 1,500,000 shares to 3,000,000 shares. Additional purchases will be made from time-to-time, depending upon market conditions, at prices deemed appropriate by management. 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. FORWARD-LOOKING STATEMENTS All statements other than statements of historical fact included in this report, 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 are any material market risk exposures with respect to derivative or other financial instruments that are required to be disclosed.

PART II - OTHER INFORMATION Item 1 Legal Proceedings ----------------- None 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 -------------------------------- (a) Exhibits -------- 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/s/ Robert Balemian --------------------------- Robert Balemian President (Principal Financial Officer) Date: May 11, 2000

5 6-MOS SEP-30-2000 MAR-31-2000 17,838,000 0 198,791,000 9,755,000 109,871,000 345,370,000 223,292,000 80,761,000 560,118,000 130,572,000 159,894,000 0 0 7,937,000 244,356,000 560,118,000 539,650,000 539,650,000 404,349,000 404,349,000 0 1,235,000 5,099,000 17,924,000 7,170,000 11,035,000 0 0 (5,290,000) 5,745,000 0.19 0.19