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

                                   FORM 10-Q

( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 1995

                                      OR

(   ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from _________ to ________

Commission File Number:  1-6620


                              GRIFFON CORPORATION
            (Exact name of registrant as specified in its charter)


           DELAWARE                                        11-1893410
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                         Identification No.)


100 JERICHO QUADRANGLE, JERICHO, NEW YORK                    11753
(Address of principal executive offices)                   (Zip Code)


                                  (516) 938-5544
             (Registrant's telephone number, including area code)


      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                                                   X   Yes                 No
                                                 -----               -----
      Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.  30,778,647 shares of Common
Stock as of January 31, 1996.



                                   FORM 10-Q

                                   CONTENTS




PART I -  FINANCIAL INFORMATION (Unaudited)

          Condensed Consolidated Balance Sheets at December 31, 1995
          and September 30, 1995

          Condensed Consolidated Statements of Income for the Three
          Months Ended December 31, 1995 and 1994

          Condensed Consolidated Statements of Cash Flows for the Three
          Months Ended December 31, 1995 and 1994

          Notes to Condensed Consolidated Financial Statements

          Management's Discussion and Analysis of Financial Condition and
          Results of Operations


PART II - OTHER INFORMATION

          Item 1:  Legal Proceedings

          Item 2:  Changes in Securities

          Item 3:  Defaults upon Senior Securities

          Item 4:  Submission of Matters to a Vote of Security Holders

          Item 5:  Other Information

          Item 6:  Exhibits and Reports on Form 8-K

          Signature


                     GRIFFON CORPORATION AND SUBSIDIARIES

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

5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS. 3-MOS SEP-30-1996 DEC-31-1995 26,163,000 5,294,000 111,215,000 5,790,000 88,994,000 234,778,000 108,462,000 50,485,000 318,725,000 108,591,000 33,225,000 0 417,000 7,774,000 168,718,000 318,725,000 163,477,000 163,477,000 123,627,000 123,627,000 0 272,000 772,000 9,611,000 3,748,000 5,863,000 0 0 0 5,863,000 .18 0