UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 6, 2013
GRIFFON CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 1-06620 | 11-1893410 |
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
| 712 Fifth
Avenue, 18th Floor New York, New York |
10019 |
| (Address of Principal Executive Offices) | (Zip Code) |
(212) 957-5000
(Registrant’s telephone number, including area code)
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 (17 CFR 240.14d-2(b)) |
| £ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On August 6, 2013 Griffon Corporation (the “Registrant”) issued a press release announcing the Registrant’s financial results for the third fiscal quarter ended June 30, 2013. A copy of the Registrant’s press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
| 99.1 | Press Release, dated August 6, 2013 |
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.
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SIGNATURES
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/ Douglas J. Wetmore | ||
| Douglas J. Wetmore | |||
| Executive Vice President and | |||
| Chief Financial Officer | |||
Date: August 6, 2013
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Exhibit Index
| 99.1 | Press release, dated August 6, 2013 |
Exhibit 99.1
Griffon Corporation Announces Third Quarter Results
NEW YORK, NEW YORK, August 6, 2013 – Griffon Corporation (“Griffon” or the “Company”) (NYSE: GFF) today reported results for the fiscal third quarter ended June 30, 2013.
Third quarter revenue totaled $510 million, increasing 6% compared to the prior year quarter. Telephonics and Home and Building Products (“HBP”) revenue increased 29% and 1%, respectively while Clopay Plastics (“Plastics”) revenue decreased 2%, all in comparison to the prior year quarter.
Segment adjusted EBITDA totaled $46.8 million compared to $51.8 million in the prior year quarter. Segment adjusted EBITDA is defined as net income, excluding interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, acquisition-related expenses, and gains (losses) from pension settlement and debt extinguishment, as applicable.
Net income totaled $3.6 million, or $0.06 per share, compared to $9.0 million, or $0.16 per share, in the prior year quarter. Current quarter results included restructuring costs of $1.6 million ($1.0 million, net of tax, or $0.02 per share) and a discrete tax benefit of $1.5 million, or $0.03 per share. The prior year quarter included a discrete tax benefit of $1.6 million or $0.03 per share. Excluding these items from both periods, current quarter adjusted net income was $3.1 million, or $0.06 per share, compared to $7.4 million, or $0.13 per share, in the prior year quarter.
Ronald J. Kramer, Chief Executive Officer, commented, “We are performing well in what continues to be a challenging environment. Our performance was in-line with our expectations for the quarter and consistent with the outlook for the year. We expect to deliver enhanced operating performance as the global economy continues to recover.”
Segment Operating Results
Telephonics
Third quarter revenue totaled $130 million, increasing 29% compared to the prior year quarter. The current and prior year quarters included $20.0 million and $2.7 million, respectively, of revenue related to electronic warfare programs where Telephonics serves as a contract manufacturer; excluding revenue from these programs, current quarter revenue increased 12% from the prior year quarter primarily due to work performed on Multi-mode Surveillance Radar contracts.
Third quarter segment adjusted EBITDA was $13.1 million, decreasing 17% from the prior year quarter, mainly driven by product mix, partially offset by lower expenditures associated with the timing of research and development (“R&D”) initiatives and proposal efforts. The prior year quarter benefitted from higher gross profit and favorable manufacturing efficiencies, both of which were primarily due to an increased level of Light Airborne Multi-purpose Systems Multi Mode Radar deliveries.
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Contract backlog totaled $440 million at June 30, 2013 compared to $451 million and $422 million at September 30, 2012 and June 30, 2012, respectively, with approximately 67% expected to be filled within the next twelve months.
Plastic Products
Third quarter revenue totaled $139 million, decreasing 2% compared to the prior year quarter. The decrease reflected lower volume (5%), a portion of which was attributable to Plastics exiting certain low margin products, partially offset by favorable mix (2%) and the pass through of higher resin costs in customer selling prices (1%). The impact of currency in the quarter was not significant.
Third quarter segment adjusted EBITDA was $12.2 million, increasing 20% from the prior year quarter, driven by product mix, continued efficiency improvements and a $0.5 million favorable resin benefit.
Home & Building Products
Third quarter revenue totaled $241 million, increasing 1% compared to the prior year quarter. Ames True Temper’s (“ATT”) revenue decreased 2% in comparison to the prior year quarter due to lower demand for lawn and garden tools, driven by cold and wet weather conditions in North America. Clopay Building Products (“CBP”) revenue increased 5%, mainly due to improved volume and favorable mix.
Third quarter segment adjusted EBITDA was $21.5 million, decreasing 17% compared to the prior year quarter. The decline resulted primarily from lower ATT revenue, which also affected absorption of manufacturing expenses, partially offset by higher volume and favorable mix at CBP. ATT also had manufacturing inefficiencies in connection with its plant consolidation initiative. These inefficiencies are expected to continue until the initiative is complete in 2014.
Taxes
The effective tax rates for the quarters ended June 30, 2013 and 2012 were 54.0% and 39.7%, respectively. The rates include discrete benefits in the current and prior year quarter of $1.5 million and $1.6 million respectively, primarily resulting from release of previously established reserves for uncertain tax positions on conclusion of tax audits, and benefits arising on the filing of tax returns in various jurisdictions.
Excluding discrete items, the effective tax rates for the quarters ended June 30, 2013 and 2012 were 73.1% and 50.5%, respectively. Rates in both periods reflect the impact of permanent differences not deductible in determining taxable income, mainly limited deductibility of restricted stock, tax reserves and changes in earnings mix between domestic and non-domestic operations, all of which are material relative to the level of pretax result.
Restructuring
In January 2013, ATT announced its intention to close certain manufacturing facilities, and consolidate operations primarily into its Camp Hill and Carlisle, PA locations. The actions, to be completed by the end of fiscal 2014, will improve manufacturing and distribution efficiencies, allow for in-sourcing of certain production currently performed by third party suppliers, and improve material flow and absorption of fixed costs. Management estimates that, upon completion, these actions will result in annual cash savings exceeding $10 million, based on current operating levels.
ATT anticipates incurring pre-tax restructuring and related exit costs approximating $8.0 million, comprised of cash charges of $4.0 million and non-cash,
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asset-related charges of $4.0 million. The cash charges will include $3.0 million for personnel-related costs and $1.0 million for facility exit costs. ATT expects $20 million in capital expenditures in connection with this initiative and, to date, has incurred $5.4 million and $8.4 million in restructuring costs and capital expenditures, respectively.
During the current quarter, HBP recognized $0.9 million in restructuring costs primarily related to one-time termination benefits and other personnel costs, and facility costs related to the ATT plant consolidation initiative.
In February 2013, Plastics announced a restructuring project, primarily in Europe, to exit low margin business and eliminate approximately 80 positions, resulting in restructuring charges of $4.8 million in the second quarter of this year, primarily for one-time termination benefits and other personnel costs. The project is substantially complete.
During the current quarter, Telephonics recognized $0.8 million in restructuring costs in connection with the termination of a facility lease. The facility was vacated as a result of the headcount reductions and changes in organizational structure Telephonics undertook in the past two years.
Balance Sheet
At June 30, 2013, the Company had cash and equivalents of $126 million, total debt outstanding of $692 million, net of discounts, and $199 million available for borrowing, subject to certain loan covenants, under its revolving credit facility.
Stock Repurchases
During the third quarter, the Company purchased 0.3 million shares of its common stock under an authorized stock repurchase plan, for $3.0 million. At June 30, 2013, the Company had a remaining authorization of $17.7 million.
Conference Call Information
The Company will hold a conference call today, August 6, 2013, at 4:30 PM ET.
The call can be accessed by dialing 1-800-500-0177 (U.S. participants) or 1-719-325-2250 (International participants). Callers should ask to be connected to the Griffon Corporation teleconference.
A replay of the call will be available starting on August 6, 2013 at 7:30 PM ET by dialing 1-877-870-5176 (U.S.) or 1-858-384-5517 (International), and entering the conference ID number: 9362205. The replay will be available through August 20, 2013.
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Forward-looking Statements
“Safe Harbor” Statements under the Private Securities Litigation Reform Act of 1995: All statements related to, among other things, income, earnings, cash flows, revenue, changes in operations, operating improvements, industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, among others: current economic conditions and uncertainties in the housing, credit and capital markets; the Company’s ability to achieve expected savings from cost control, integration and disposal initiatives; the ability to identify and successfully consummate and integrate value-adding acquisition opportunities; increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets and to anticipate and meet customer demands for new products and product enhancements and innovations; reduced military spending by the government on projects for which Telephonics Corporation supplies products, including as a result of sequestration which is currently scheduled to take effect in March 2013; increases in the cost of raw materials such as resin and steel; changes in customer demand; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events that could impact the worldwide economy; a downgrade in the Company’s credit ratings; changes in international economic conditions including interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which could impact margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation; unfavorable results of government agency contract audits of Telephonics Corporation; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain Griffon’s operating companies; and possible terrorist threats and actions and their impact on the global economy. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company’s Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
About Griffon Corporation
Griffon Corporation is a diversified management and holding company that conducts business through wholly owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.
Griffon currently conducts its operations through three segments:
| · | Home & Building Products consists of two companies, Ames True Temper, Inc. (“ATT”) and Clopay Building Products Company, Inc. (“CBP”): |
| - | ATT is a global provider of non-powered landscaping products that make work easier for homeowners and professionals. |
| - | CBP is a leading manufacturer and marketer of residential, commercial and industrial garage doors to professional installing dealers and major home center retail chains. |
| · | Telephonics Corporation designs, develops and manufactures high-technology, integrated information, communication and sensor system solutions for use in military and commercial markets worldwide. |
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| · | Clopay Plastic Products Company, Inc. is an international leader in the development and production of embossed, laminated and printed specialty plastic films used in a variety of hygienic, health-care and industrial applications. |
For more information on Griffon and its operating subsidiaries, please see the Company’s website at www.griffoncorp.com.
| Company Contact: | Investor Relations Contact: | ||
| Douglas J. Wetmore | Anthony Gerstein | ||
| Chief Financial Officer | Senior Vice President | ||
| Griffon Corporation | ICR Inc. | ||
| (212) 957-5000 | (646) 277-1242 | ||
| 712 Fifth Avenue, 18th Floor | |||
| New York, NY 10019 |
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Griffon evaluates performance and allocates resources based on each segment’s operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, acquisition-related expenses, and gains (losses) from pension settlement and debt extinguishment, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors.
The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes:
GRIFFON CORPORATION AND SUBSIDIARIES
OPERATING HIGHLIGHTS
(in thousands)
(Unaudited)
| For the Three Months Ended June 30, | For the Nine Months Ended June 30, | |||||||||||||||
| REVENUE | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Home & Building Products: | ||||||||||||||||
| ATT | $ | 128,332 | $ | 130,311 | $ | 341,878 | $ | 362,374 | ||||||||
| CBP | 112,285 | 106,910 | 314,651 | 309,825 | ||||||||||||
| Home & Building Products | 240,617 | 237,221 | 656,529 | 672,199 | ||||||||||||
| Telephonics | 129,997 | 101,116 | 347,678 | 319,621 | ||||||||||||
| Plastics | 139,212 | 141,909 | 418,111 | 421,889 | ||||||||||||
| Total consolidated net sales | $ | 509,826 | $ | 480,246 | $ | 1,422,318 | $ | 1,413,709 | ||||||||
| Segment adjusted EBITDA: | ||||||||||||||||
| Home & Building Products | $ | 21,478 | $ | 25,831 | $ | 56,272 | $ | 59,434 | ||||||||
| Telephonics | 13,146 | 15,886 | 45,015 | 46,912 | ||||||||||||
| Plastics | 12,161 | 10,117 | 33,832 | 27,462 | ||||||||||||
| Total Segment adjusted EBITDA | 46,785 | 51,834 | 135,119 | 133,808 | ||||||||||||
| Net interest expense | (13,137 | ) | (12,855 | ) | (39,125 | ) | (38,775 | ) | ||||||||
| Segment depreciation and amortization | (17,639 | ) | (16,733 | ) | (52,467 | ) | (48,373 | ) | ||||||||
| Unallocated amounts | (6,573 | ) | (7,253 | ) | (22,140 | ) | (20,041 | ) | ||||||||
| Restructuring charges | (1,604 | ) | — | (12,048 | ) | (1,795 | ) | |||||||||
| Acquisition costs | — | — | — | (178 | ) | |||||||||||
| Loss on pension settlement | — | — | (2,142 | ) | — | |||||||||||
| Income before taxes | $ | 7,832 | $ | 14,993 | $ | 7,197 | $ | 24,646 | ||||||||
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The following is a reconciliation of each segment’s operating results to Segment adjusted EBITDA:
GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
BY REPORTABLE SEGMENT
(in thousands)
(Unaudited)
| Three months ended June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Home & Building Products | ||||||||||||||||
| Segment operating profit | $ | 11,549 | $ | 17,482 | $ | 22,655 | $ | 35,412 | ||||||||
| Depreciation and amortization | 9,075 | 8,349 | 27,092 | 23,571 | ||||||||||||
| Restructuring charges | 854 | — | 6,525 | 273 | ||||||||||||
| Acquisition costs | — | — | — | 178 | ||||||||||||
| Segment adjusted EBITDA | 21,478 | 25,831 | 56,272 | 59,434 | ||||||||||||
| Telephonics | ||||||||||||||||
| Segment operating profit | 10,592 | 14,113 | 38,990 | 40,171 | ||||||||||||
| Depreciation and amortization | 1,804 | 1,773 | 5,275 | 5,219 | ||||||||||||
| Restructuring charges | 750 | — | 750 | 1,522 | ||||||||||||
| Segment adjusted EBITDA | 13,146 | 15,886 | 45,015 | 46,912 | ||||||||||||
| Clopay Plastic Products | ||||||||||||||||
| Segment operating profit | 5,401 | 3,506 | 8,959 | 7,879 | ||||||||||||
| Depreciation and amortization | 6,760 | 6,611 | 20,100 | 19,583 | ||||||||||||
| Restructuring charges | — | — | 4,773 | — | ||||||||||||
| Segment adjusted EBITDA | 12,161 | 10,117 | 33,832 | 27,462 | ||||||||||||
| All segments: | ||||||||||||||||
| Income from operations - as reported | 20,362 | 28,202 | 44,807 | 62,698 | ||||||||||||
| Unallocated amounts | 6,573 | 7,253 | 22,140 | 20,041 | ||||||||||||
| Other, net | 607 | (354 | ) | 1,515 | 723 | |||||||||||
| Loss on pension settlement | — | — | 2,142 | — | ||||||||||||
| Segment operating profit | 27,542 | 35,101 | 70,604 | 83,462 | ||||||||||||
| Depreciation and amortization | 17,639 | 16,733 | 52,467 | 48,373 | ||||||||||||
| Restructuring charges | 1,604 | — | 12,048 | 1,795 | ||||||||||||
| Acquisition costs | — | — | — | 178 | ||||||||||||
| Segment adjusted EBITDA | $ | 46,785 | $ | 51,834 | $ | 135,119 | $ | 133,808 | ||||||||
Unallocated amounts typically include general corporate expenses not attributable to any reportable segment.
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GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS)
(in thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenue | $ | 509,826 | $ | 480,246 | $ | 1,422,318 | $ | 1,413,709 | ||||||||
| Cost of goods and services | 401,515 | 364,601 | 1,110,840 | 1,092,555 | ||||||||||||
| Gross profit | 108,311 | 115,645 | 311,478 | 321,154 | ||||||||||||
| Selling, general and administrative expenses | 86,345 | 87,443 | 254,623 | 256,661 | ||||||||||||
| Restructuring and other related charges | 1,604 | — | 12,048 | 1,795 | ||||||||||||
| Total operating expenses | 87,949 | 87,443 | 266,671 | 258,456 | ||||||||||||
| Income from operations | 20,362 | 28,202 | 44,807 | 62,698 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (13,279 | ) | (12,932 | ) | (39,446 | ) | (39,000 | ) | ||||||||
| Interest income | 142 | 77 | 321 | 225 | ||||||||||||
| Other, net | 607 | (354 | ) | 1,515 | 723 | |||||||||||
| Total other income (expense) | (12,530 | ) | (13,209 | ) | (37,610 | ) | (38,052 | ) | ||||||||
| Income before taxes | 7,832 | 14,993 | 7,197 | 24,646 | ||||||||||||
| Provision for income taxes | 4,229 | 5,945 | 3,855 | 11,083 | ||||||||||||
| Net income | $ | 3,603 | $ | 9,048 | $ | 3,342 | $ | 13,563 | ||||||||
| Basic earnings per common share | $ | 0.07 | $ | 0.16 | $ | 0.06 | $ | 0.24 | ||||||||
| Weighted-average shares outstanding | 54,265 | 56,034 | 54,588 | 56,032 | ||||||||||||
| Diluted earnings per common share | $ | 0.06 | $ | 0.16 | $ | 0.06 | $ | 0.24 | ||||||||
| Weighted-average shares outstanding | 56,204 | 57,495 | 56,735 | 57,311 | ||||||||||||
| Net income | $ | 3,603 | $ | 9,048 | $ | 3,342 | $ | 13,563 | ||||||||
| Other comprehensive income (loss), net of taxes: | ||||||||||||||||
| Foreign currency translation adjustments | (7,884 | ) | (18,527 | ) | (10,805 | ) | (13,479 | ) | ||||||||
| Pension amortization | 490 | 523 | 4,839 | 1,562 | ||||||||||||
| Gain on cash flow hedge | (158 | ) | — | 13 | — | |||||||||||
| Total other comprehensive income (loss), net of taxes | (7,552 | ) | (18,004 | ) | (5,953 | ) | (11,917 | ) | ||||||||
| Comprehensive income (loss) | $ | (3,949 | ) | $ | (8,956 | ) | $ | (2,611 | ) | $ | 1,646 | |||||
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GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| (Unaudited) | ||||||||
| At June 30, 2013 | At September 30, 2012 | |||||||
| CURRENT ASSETS | ||||||||
| Cash and equivalents | $ | 126,104 | $ | 209,654 | ||||
| Accounts receivable, net of allowances of $5,525 and $5,433 | 271,743 | 239,857 | ||||||
| Contract costs and recognized income not yet billed, net of progress payments of $4,062 and $3,748 | 117,273 | 70,777 | ||||||
| Inventories, net | 219,329 | 257,868 | ||||||
| Prepaid and other current assets | 58,711 | 47,472 | ||||||
| Assets of discontinued operations | 554 | 587 | ||||||
| Total Current Assets | 793,714 | 826,215 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, net | 348,440 | 356,879 | ||||||
| GOODWILL | 356,375 | 358,372 | ||||||
| INTANGIBLE ASSETS, net | 221,783 | 230,473 | ||||||
| OTHER ASSETS | 25,668 | 31,317 | ||||||
| ASSETS OF DISCONTINUED OPERATIONS | 2,646 | 2,936 | ||||||
| Total Assets | $ | 1,748,626 | $ | 1,806,192 | ||||
| CURRENT LIABILITIES | ||||||||
| Notes payable and current portion of long-term debt | $ | 13,384 | $ | 17,703 | ||||
| Accounts payable | 144,438 | 141,704 | ||||||
| Accrued liabilities | 94,213 | 110,337 | ||||||
| Liabilities of discontinued operations | 1,690 | 3,639 | ||||||
| Total Current Liabilities | 253,725 | 273,383 | ||||||
| LONG-TERM DEBT, net of debt discount of $14,116 and $16,607 | 678,307 | 681,907 | ||||||
| OTHER LIABILITIES | 181,589 | 193,107 | ||||||
| LIABILITIES OF DISCONTINUED OPERATIONS | 2,631 | 3,643 | ||||||
| Total Liabilities | 1,116,252 | 1,152,040 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Total Shareholders’ Equity | 632,374 | 654,152 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,748,626 | $ | 1,806,192 | ||||
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GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Nine Months Ended June 30, | ||||||||
| 2013 | 2012 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 3,342 | $ | 13,563 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 52,787 | 48,668 | ||||||
| Stock-based compensation | 9,327 | 7,599 | ||||||
| Fixed asset impairment charges - restructuring | 3,122 | — | ||||||
| Provision for losses on accounts receivable | 824 | 532 | ||||||
| Amortization/write-off of deferred financing costs and debt discounts | 4,651 | 4,497 | ||||||
| Deferred income taxes | (897 | ) | (1,185 | ) | ||||
| (Gain) loss on sale/disposal of assets | (788 | ) | 59 | |||||
| Change in assets and liabilities, net of assets and liabilities acquired: | ||||||||
| (Increase) decrease in accounts receivable and contract costs and recognized income not yet billed | (81,381 | ) | 10,601 | |||||
| (Increase) decrease in inventories | 36,588 | (4,171 | ) | |||||
| (Increase) decrease in prepaid and other assets | 2,890 | (3,970 | ) | |||||
| Decrease in accounts payable, accrued liabilities and income taxes payable | (28,767 | ) | (49,574 | ) | ||||
| Other changes, net | 856 | 3,728 | ||||||
| Net cash provided by operating activities | 2,554 | 30,347 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Acquisition of property, plant and equipment | (45,886 | ) | (57,695 | ) | ||||
| Acquired business, net of cash acquired | — | (22,432 | ) | |||||
| Proceeds from sale of assets | 1,326 | 281 | ||||||
| Net cash used in investing activities | (44,560 | ) | (79,846 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Dividends paid | (4,384 | ) | (3,564 | ) | ||||
| Purchase of shares for treasury | (25,689 | ) | (5,670 | ) | ||||
| Proceeds from issuance of long-term debt | 303 | 4,000 | ||||||
| Payments of long-term debt | (12,842 | ) | (14,563 | ) | ||||
| Change in short-term borrowings | 2,408 | (1,262 | ) | |||||
| Financing costs | (759 | ) | (97 | ) | ||||
| Tax effect from exercise/vesting of equity awards, net | 150 | 834 | ||||||
| Other, net | 261 | 67 | ||||||
| Net cash used in financing activities | (40,552 | ) | (20,255 | ) | ||||
| CASH FLOWS FROM DISCONTINUED OPERATIONS: | ||||||||
| Net cash used in operating activities | (486 | ) | (1,690 | ) | ||||
| Net cash used in discontinued operations | (486 | ) | (1,690 | ) | ||||
| Effect of exchange rate changes on cash and equivalents | (506 | ) | 327 | |||||
| NET DECREASE IN CASH AND EQUIVALENTS | (83,550 | ) | (71,117 | ) | ||||
| CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 209,654 | 243,029 | ||||||
| CASH AND EQUIVALENTS AT END OF PERIOD | $ | 126,104 | $ | 171,912 | ||||
| 10 |
Griffon evaluates performance based on Earnings per share and Net income excluding restructuring charges, acquisition-related expenses, gains (losses) from pension settlement and debt extinguishment, and discrete tax items, as applicable. Griffon believes this information is useful to investors. The following table provides a reconciliation of Earnings per share and Net income to Adjusted earnings per share and Adjusted net income:
GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF INCOME TO ADJUSTED INCOME
(in thousands, except per share data)
(Unaudited)
| For
the Three Months Ended June 30, | For
the Nine Months Ended June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net income | $ | 3,603 | $ | 9,048 | $ | 3,342 | $ | 13,563 | ||||||||
| Adjusting items, net of tax: | ||||||||||||||||
| Restructuring and related | 994 | — | 7,502 | 1,167 | ||||||||||||
| Acquisition costs | — | — | — | 116 | ||||||||||||
| Loss on pension settlement | — | — | 1,392 | — | ||||||||||||
| Discrete tax benefits | (1,495 | ) | (1,626 | ) | (1,859 | ) | (1,626 | ) | ||||||||
| Adjusted net income | $ | 3,102 | $ | 7,422 | $ | 10,377 | $ | 13,220 | ||||||||
| Earnings per common share | $ | 0.06 | $ | 0.16 | $ | 0.06 | $ | 0.24 | ||||||||
| Adjusting items, net of tax: | ||||||||||||||||
| Restructuring | 0.02 | — | 0.13 | 0.02 | ||||||||||||
| Acquisition costs | — | — | — | 0.00 | ||||||||||||
| Loss on pension settlement | — | — | 0.02 | — | ||||||||||||
| Discrete tax benefits | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.03 | ) | ||||||||
| Adjusted earnings per share | $ | 0.06 | $ | 0.13 | $ | 0.18 | $ | 0.23 | ||||||||
| Weighted-average shares outstanding | 56,204 | 57,495 | 56,735 | 57,311 | ||||||||||||
| 11 |