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): November
20, 2008
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 Executive
Offices)
|
(Zip
Code)
|
(516)
938-5544
(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):
o
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
o
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
November 20, 2008, Griffon Corporation (the “Registrant”) issued a press release
announcing the Registrant’s financial results for the fourth fiscal quarter and
year ended September 30, 2008. 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 November 20, 2008
|
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
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/ Patrick L. Alesia | |
|
Patrick L. Alesia |
||
| Chief Financial Officer | ||
Date:
November 20, 2008
3
Exhibit
Index
|
99.1.
|
Press
release, dated November 20, 2008
|
4
Contact:
Patrick L. Alesia
Chief
Financial Officer
(516)
938-5544
Griffon
Corporation Announces Fourth Quarter Operating Results
and
2008 Fiscal Year Results
●
Non-GAAP diluted EPS from continuing operations in Q4 was $.19 before non-cash
goodwill write-off
●
Non-GAAP pro forma pre-tax income from continuing operations increased
to $10.9
million in Q4
●
Segment adjusted EBITDA of $29.5 million in fourth quarter of
2008
●
Segment adjusted EBITDA of $92.9 million in fiscal year
2008
JERICHO,
NEW YORK, November 20, 2008
-
Griffon Corporation (NYSE:GFF) today reported operating results for the fourth
quarter and fiscal year ended September 30, 2008.
Fourth
Quarter of Fiscal 2008
Net
sales
from continuing operations for the fourth quarter of fiscal 2008 were $353.7
million, compared to $333.4 million in the fourth quarter of fiscal 2007.
In the
fourth quarter of fiscal 2008, the Company took a $12.9 million non-cash
goodwill write-off of all the goodwill associated with the Garage Doors segment.
As a result, the loss from continuing operations for that quarter was $6.7
million, or $.20 per diluted share, compared to income from continuing
operations of $10.0 million, or $.31 per diluted share, last year. Loss from
discontinued operations for the fourth quarter was $1.3 million, or $.04
per
diluted share, compared to $1.1 million, or $.03 per diluted share, last
year.
Net loss for the quarter was $8.0 million, or $.24 per diluted share, compared
to net income of $9.0 million, or $.28 per diluted share, last year.
The
Company’s non-GAAP, pro forma pre-tax results from continuing operations before
the goodwill write-off improved to $10.9 million in the fourth quarter compared
to $10.7 million last year. Given the challenging environment in the residential
housing market, as well as managing increases in raw material costs, the
Company
was satisfied with its overall performance for the fourth quarter.
The
Company’s segment adjusted EBITDA for the fourth quarter of 2008 was $29.5
million compared to $30.9 million in 2007. Segment adjusted EBITDA is defined
as
operating income excluding allocations of corporate overhead, interest, taxes,
depreciation and amortization, restructuring charges and goodwill
charges.
The
fourth-quarter non-cash goodwill write-off is not tax deductible, resulting
in
an increase in the Company’s effective tax rate from continuing operations for
the period. The goodwill write-off does not affect the Company’s cash position,
cash flow from operating activities, credit availability or liquidity and
will
not have any affect on the Company’s future operations.
In
May 2008,
the
Company’s Board of Directors approved a plan to exit all operating activities of
the Installation Services segment in 2008.
Certain
operating units in the Installation Services segment were closed during the
second and third quarters, two units were transferred into the Garage Doors
segment, others were sold during the third quarter and the remaining operating
units in Las Vegas and Phoenix were sold in the fourth quarter of fiscal
2008.
Results of operations related to substantially all of the operating units
of the
Installation Services segment from the beginning of each fiscal period presented
through September 30, 2008 have been reflected as discontinued operations
in the
consolidated statements of operations. Net sales of discontinued operations
were
$10.0 million and $62.8 million for the three months ended September 30,
2008
and 2007, respectively. Disposal costs related to the Installation Services
segment included in its operating results were $7.1 million for the fourth
quarter of fiscal 2008, which was less than our previously-disclosed estimate
of
up to $17 million. The Company is winding down remaining disposal activities
in
the first half of fiscal 2009 and does not expect to incur significant expenses
in the future. Future net cash outflows to satisfy restructuring liabilities
that were accrued as of September 30, 2008 are estimated to range between
$7
million and $8 million, which is less than our previously-disclosed estimate
of
up to $10 million. Substantially all of such liabilities are expected to
be paid
within the next twelve months.
Telephonics
Results
For
the
quarter ended September 30, 2008, Telephonics generated sales of $103.8 million,
a 5.9% increase from the fourth quarter of fiscal 2007.
Telephonics’
increased sales were primarily the result of increased activities and production
in its core business, particularly in certain Radar Systems Division programs.
Last year’s fourth quarter sales were favorably impacted by contracts with the
Syracuse Research Corporation (SRC) contracts that were winding down in the
latter part of fiscal 2007. Excluding the prior-period sales related to the
SRC
contracts, core business sales grew by approximately $24.5 million, or 31%.
Operating profit improved $.4 million, or 3.4%, as a result of increased
gross
margin performance attributable to program mix.
Clopay
Garage Doors Results
For
the
quarter ended September 30, 2008, the Company’s Garage Doors segment generated
sales of $124.4 million, a 3.6% decrease from the fourth quarter of fiscal
2007.
Garage Doors’ sales continued to be impacted by weakness in the residential
housing and credit markets.
The
Garage Doors sales decline was principally due to reduced unit volume, offset
partially by higher selling prices to pass through rising material and freight
costs, a favorable product mix, and a decrease in customer returns and
deductions.
Operating
profit of the Garage Doors segment decreased by approximately $12.5 million
compared to last year, primarily as a result of a goodwill write-off of $12.9
million in 2008. The 2007 period was affected by restructuring charges of
approximately $2.4 million.
Clopay
Specialty Plastic Films Results
For
the
quarter ended September 30, 2008, the Company’s Specialty Plastic Films segment
generated sales of $125.5 million, an 18.0% increase from the fourth quarter
of
fiscal 2007.
2
Specialty
Plastic Films achieved higher sales resulting primarily from a favorable
product
mix in North America, the partial pass-through of higher selling prices due
to
increased resin costs, and the impact of foreign exchange, partially offset
by
lower selling prices to a major customer and lower unit volumes. Operating
profit decreased by $.4 million as gross margin was unfavorably impacted
by
reduced unit volumes and increased resin costs, as well as costs associated
with
building our European management team.
Fiscal
Year 2008 Results
Net
sales
from continuing operations for the fiscal year ended September 30, 2008 were
$1.27 billion, compared to $1.37 billion in fiscal 2007. Income from continuing
operations, which was significantly impacted by a non-cash goodwill write-off
taken in the fourth quarter of fiscal 2008 of $12.9 million, was $.1 million,
or
nil per diluted share, for the year compared to $28.2 million, or $.84 per
diluted share, last year. Loss from discontinued operations for fiscal 2008
was
$40.6 million, or $1.24 per diluted share, compared to $6.1 million, or $.19
per
diluted share, last year. Net loss for fiscal 2008 was $40.5 million, or
$1.24
per diluted share, compared to net income of $22.1 million, or $.65 per diluted
share, last year.
The
fourth-quarter non-cash goodwill write-off is not tax deductible, resulting
in
an increase in the Company’s effective tax rate from continuing operations for
the fiscal year.
The
Company’s segment adjusted EBITDA for fiscal 2008 was $92.9 million compared to
$110.6 million in 2007.
With
respect to the discontinued operations of the Installation Services segment,
net
sales of these operating units were $109.4 million and $250.9 million for
the
years ended September 30, 2008 and 2007, respectively. Disposal costs related
to
the Installation Services segment included in its operating results were
$43.1
million for fiscal 2008, which was below previously-disclosed estimates.
Telephonics
Results
For
the
fiscal
year
ended
September 30, 2008, Telephonics generated sales of $366.3 million, a 22.5%
decrease from fiscal year 2007.
The
operating results declined, as anticipated, by $13.2 million as a result
of the
wind down in late fiscal 2007 of substantial contracts with SRC. Excluding
the impact of the SRC contracts in the respective fiscal year periods, core
business sales grew by approximately $66.4 million, or 24%.
Clopay
Garage Doors Results
For
the
fiscal year ended September 30, 2008, the Company’s Garage Doors segment
generated sales of $435.3 million, a 10.5% decrease from fiscal year 2007.
The
Company’s Garage Doors segment results were clearly impacted by the sustained
downturn in the residential housing and credit markets. The decline in units
sales of Garage Doors was partially offset by higher selling prices to pass
through rising material and freight costs, a favorable product mix, and a
decrease in customer returns and deductions.
Operating
profit of the Garage Doors segment decreased by approximately $24.6 million
compared to last year, which ended the current fiscal year with a $17.4 million
operating loss, primarily as a result of the goodwill write-off of $12.9
million, as well as certain non-recurring SG&A expenses and the impact of
the overall sales decline.
3
The
segment’s management has focused on cost reduction programs including, but not
limited to, reductions in force, reducing or eliminating certain sales and
marketing programs and consolidating facilities where possible.
Clopay
Specialty Plastic Films Results
For
the
fiscal year ended September 30, 2008, the Company’s Specialty Plastic Films
segment generated sales of $467.7 million, a 15.0% increase from fiscal year
2007.
Specialty
Plastic Films achieved higher sales resulting primarily from a favorable
product
mix in North America, the partial pass-through of higher selling prices from
rising resin costs, and the impact of foreign exchange, partially offset
by
lower selling prices to a major customer and lower unit volumes. Operating
profit increased by $3.4 million, or 19.6%, as a result of a favorable product
mix, particularly in North America, and improved manufacturing efficiencies
in
Europe and Brazil, partially offset by increased resin costs and competitive
price pressures.
Balance
Sheet and Capital Expenditures
In
September 2008, the Company received $241.3 million of gross proceeds from
the
first closing of its rights offering and the closing of the related investments
by GS Direct, L.L.C. (an affiliate of Goldman Sachs), and by Ronald Kramer,
Griffon’s Chief Executive Officer. An additional $5.3 million of rights offering
proceeds were received in October 2008 in connection with the second and
final
closing of the rights offering, after which the rights offering was terminated.
The Company intends to use the proceeds for general corporate purposes and
to
fund future growth.
The
Company’s total cash and cash equivalents balance at September 30, 2008 was
$311.9 million. Total debt outstanding at the end of fiscal 2008 was $233.2
million, including $130 million of convertible notes. Capital expenditures
were
$4.0 million during the fourth quarter of fiscal 2008 and were $53.1 million
for
fiscal year 2008.
In
October 2008, the Company purchased $35.5 million face value of its outstanding
4% convertible notes from certain note holders for $28.4 million. This will
result in a pre-tax gain from the early extinguishment of debt of $7.1 million
in the first quarter of fiscal 2009.
Conference
Call Information
The
Company will hold a conference call to discuss its results today, November
20,
2008, at 4:30 PM EST. The conference call can be accessed by dialing
1-800-322-9079 (U.S. participants) or 1-973-582-2717 (International
participants). Callers should ask to be connected to Griffon Corporation’s
fourth quarter and fiscal year 2008 teleconference and provide the conference
ID
number 71563444. A replay of the call will be available from November 20,
2008
at 7:30 PM EST by dialing 1-800-642-1687 (U.S.) or 1-706-645-9291
(International). The replay access code is 71563444. The replay will be
available through December 4, 2008.
4
Forward-looking
Statements
“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, financial market and economic conditions, including,
but
not limited to, the credit market, the housing market, results of integrating
acquired businesses into existing operations, the results of the Company’s
restructuring and disposal efforts, competitive factors and pricing pressures
for resin and steel, and 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
as previously disclosed in the Company’s SEC filings. 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.
About
Griffon Corporation
Griffon
Corporation, headquartered in Jericho, New York, is a diversified holding
Company consisting of three distinct business segments: Electronic Information
and Communication Systems, through Telephonics Corporation; Garage Doors,
through Clopay Building Products Company; and Specialty Plastic Films, through
Clopay Plastic Products Company. Telephonics Corporation’s high-technology
engineering and manufacturing capabilities provide integrated information,
communication and sensor system solutions to military and commercial markets
worldwide. Clopay
Building Products Company is a leading manufacturer and marketer of residential
garage doors to
professional installing dealers and major home center retail chains.
Clopay Plastic Products 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 markets. For more information
on
the Company and its operating subsidiaries, please see the Company's website
at
www.griffoncorp.com.
5
|
GRIFFON
CORPORATION AND SUBSIDIARIES
|
||||||||
|
OPERATING
HIGHLIGHTS
|
||||||||
|
(Unaudited)
|
|
For
the Three Months Ended
|
For
the Year Ended
|
||||||||||||
|
September
30,
|
September
30,
|
||||||||||||
|
PRELIMINARY
(in thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||
|
Net
Sales:
|
|||||||||||||
|
Electronic
Information and Communication Systems
|
$
|
103,780
|
$
|
97,982
|
$
|
366,288
|
$
|
472,549
|
|||||
|
Garage
Doors
|
124,409
|
129,087
|
435,321
|
486,606
|
|||||||||
|
Specialty
Plastic Films
|
125,476
|
106,341
|
467,696
|
406,574
|
|||||||||
|
$
|
353,665
|
$
|
333,410
|
$
|
1,269,305
|
$
|
1,365,729
|
||||||
|
Operating
Income (Loss):
|
|||||||||||||
|
Electronic
Information and Communication Systems
|
$
|
10,942
|
$
|
10,586
|
$
|
32,737
|
$
|
45,888
|
|||||
|
Garage
Doors
|
(9,376
|
)
|
3,090
|
(17,444
|
)
|
7,117
|
|||||||
|
Specialty
Plastic Films
|
4,765
|
5,127
|
20,620
|
17,263
|
|||||||||
|
Segment
operating income
|
6,331
|
18,803
|
35,913
|
70,268
|
|||||||||
|
Unallocated
amounts
|
(5,655
|
)
|
(5,316
|
)
|
(21,969
|
)
|
(18,721
|
)
|
|||||
|
Interest,
net
|
(2,718
|
)
|
(2,798
|
)
|
(9,562
|
)
|
(10,111
|
)
|
|||||
|
Income
from continuing operations before
income
taxes
|
$
|
(2,042
|
)
|
$
|
10,689
|
$
|
4,382
|
$
|
41,436
|
||||
6
|
GRIFFON
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||
|
(Unaudited)
|
|
THREE
MONTHS ENDED SEPTEMBER
30,
|
|||||||
|
PRELIMINARY
(in thousands, except per share data)
|
2008
|
2007
|
|||||
|
Net
sales
|
$
|
353,665
|
$
|
333,410
|
|||
|
Cost
of sales
|
276,256
|
254,599
|
|||||
|
Gross
profit
|
77,409
|
78,811
|
|||||
|
Selling,
general and administrative expenses
|
63,970
|
63,500
|
|||||
|
Impairment
of goodwill
|
12,913
|
-
|
|||||
|
Restructuring
and other related charges
|
38
|
2,422
|
|||||
|
Total
operating expenses
|
76,921
|
65,922
|
|||||
|
Income
from operations
|
488
|
12,889
|
|||||
|
Other
income (expense):
|
|||||||
|
Interest
expense
|
(2,932
|
)
|
(3,288
|
)
|
|||
|
Interest
income
|
214
|
491
|
|||||
|
Other,
net
|
188
|
597
|
|||||
|
(2,530
|
)
|
(2,200
|
)
|
||||
|
Income
(loss) from continuing operations
before
income taxes
|
(2,042
|
)
|
10,689
|
||||
|
Provision
for income taxes
|
4,619
|
646
|
|||||
|
Income
(loss) from continuing operations before
discontinued
operations
|
(6,661
|
)
|
10,043
|
||||
|
Discontinued
operations:
|
|||||||
|
Loss
from operations of the discontinued Installation
Services
business (including a loss on disposal of
$7,077
for the three-month period ended September 30,
2008)
|
(10,111
|
)
|
(1,512
|
)
|
|||
|
Income
tax benefit
|
(8,793
|
)
|
(431
|
)
|
|||
|
Loss
from discontinued operations
|
(1,318
|
)
|
(1,081
|
)
|
|||
|
Net
income
|
$
|
(7,979
|
)
|
$
|
8,962
|
||
|
Basic
earnings (loss) per share:
|
|||||||
|
Continuing
operations
|
$
|
(.20
|
)
|
$
|
.31
|
||
|
Discontinued
operations
|
(.04
|
)
|
(.03
|
)
|
|||
|
$
|
(.24
|
)
|
$
|
.28
|
|||
|
Diluted
earnings (loss) per share:
|
|||||||
|
Continuing
operations
|
$
|
(.20
|
)
|
$
|
.31
|
||
|
Discontinued
operations
|
(.04
|
)
|
(.03
|
)
|
|||
|
$
|
(.24
|
)
|
$
|
.28
|
|||
|
Weighted-average
shares outstanding - basic
|
33,215
|
32,483
|
|||||
|
Weighted-average
shares outstanding - diluted
|
33,373
|
32,902
|
|||||
7
|
GRIFFON
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|||||||
|
(Unaudited)
|
|
YEARS
ENDED SEPTEMBER 30,
|
|||||||
|
PRELIMINARY
(in thousands, except per share data)
|
2008
|
2007
|
|||||
|
|
|||||||
|
Net
sales
|
$
|
1,269,305
|
$
|
1,365,729
|
|||
|
Cost
of sales
|
996,308
|
1,071,173
|
|||||
|
Gross
profit
|
272,997
|
294,556
|
|||||
|
Selling,
general and administrative expenses
|
246,243
|
243,400
|
|||||
|
Impairment
of goodwill
|
12,913
|
-
|
|||||
|
Restructuring
and other related charges
|
2,610
|
2,501
|
|||||
|
Total
operating expenses
|
261,766
|
245,901
|
|||||
|
Income
from operations
|
11,231
|
48,655
|
|||||
|
Other
income (expense):
|
|||||||
|
Interest
expense
|
(11,532
|
)
|
(12,508
|
)
|
|||
|
Interest
income
|
1,970
|
2,397
|
|||||
|
Other,
net
|
2,713
|
2,892
|
|||||
|
(6,849
|
)
|
(7,219
|
)
|
||||
|
Income
from continuing operations
before
income taxes
|
4,382
|
41,436
|
|||||
|
Provision
for income taxes
|
4,294
|
13,271
|
|||||
|
Income
from continuing operations before
discontinued
operations
|
88
|
28,165
|
|||||
|
Discontinued
operations:
|
|||||||
|
Loss
from operations of the discontinued Installation
Services
business (including a loss on disposal of
$43,093
for the year ended September 30, 2008)
|
(62,447
|
)
|
(9,804
|
)
|
|||
|
Income
tax benefit
|
(21,856
|
)
|
(3,718
|
)
|
|||
|
Loss
from discontinued operations
|
(40,591
|
)
|
(6,086
|
)
|
|||
|
Net
income (loss)
|
$
|
(40,503
|
)
|
$
|
22,079
|
||
|
Basic
earnings (loss) per share:
|
|||||||
|
Continuing
operations
|
$
|
.00
|
$
|
.87
|
|||
|
Discontinued
operations
|
(1.24
|
)
|
(.19
|
)
|
|||
|
$
|
(1.24
|
)
|
$
|
.68
|
|||
|
Diluted
earnings (loss) per share:
|
|||||||
|
Continuing
operations
|
$
|
.00
|
$
|
.84
|
|||
|
Discontinued
operations
|
(1.24
|
)
|
(.19
|
)
|
|||
|
$
|
(1.24
|
)
|
$
|
.65
|
|||
|
Weighted-average
shares outstanding - basic
|
32,667
|
32,405
|
|||||
|
Weighted-average
shares outstanding - diluted
|
32,836
|
33,357
|
|||||
8
|
CONSOLIDATED
BALANCE SHEETS
|
|||
|
(Unaudited)
|
|
PRELIMINARY
(in thousands)
|
SEPTEMBER
30,
|
||||||
|
2008
|
2007
|
||||||
|
ASSETS
|
|||||||
|
Current
Assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
311,921
|
$
|
44,747
|
|||
|
Accounts
receivable, net
|
163,586
|
172,333
|
|||||
|
Contract
costs and recognized income not yet billed
|
69,001
|
77,184
|
|||||
|
Inventories
|
167,158
|
143,962
|
|||||
|
Prepaid
expenses and other current assets
|
52,430
|
44,525
|
|||||
|
Assets
of discontinued operations
|
9,495
|
66,042
|
|||||
|
Total
current assets
|
773,591
|
548,793
|
|||||
|
Property,
plant and equipment, at cost net of
|
|||||||
|
depreciation
and amortization
|
239,003
|
230,232
|
|||||
|
Costs
in excess of fair value of net assets of
|
|||||||
|
businesses
acquired, net
|
93,782
|
108,417
|
|||||
|
Intangible
and other assets
|
56,844
|
55,838
|
|||||
|
Assets
of discontinued operations
|
8,436
|
16,578
|
|||||
|
$
|
1,171,566
|
$
|
959,858
|
||||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
Current
Liabilities:
|
|||||||
|
Notes
payable and current portion of long-term debt
|
$
|
2,258
|
$
|
3,392
|
|||
|
Accounts
payable
|
129,823
|
99,007
|
|||||
|
Accrued
liabilities
|
62,643
|
60,764
|
|||||
|
Income
taxes
|
1,807
|
14,153
|
|||||
|
Liabilities
of discontinued operations
|
14,917
|
17,287
|
|||||
|
Total
current liabilities
|
211,448
|
194,603
|
|||||
|
Long-term
debt
|
230,930
|
229,438
|
|||||
|
Other
liabilities and deferred credits
|
59,460
|
62,429
|
|||||
|
Liabilities
of discontinued operations
|
10,048
|
6,449
|
|||||
|
Shareholders'
equity
|
659,680
|
466,939
|
|||||
|
$
|
1,171,566
|
$
|
959,858
|
||||
9
|
GRIFFON
CORPORATION AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||
|
(Unaudited)
|
|
YEARS
ENDED SEPTEMBER 30
|
|||||||
|
PRELIMINARY
(in thousands)
|
2008
|
2007
|
|||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES - CONTINUING OPERATIONS:
|
|
||||||
|
Net
income (loss)
|
$
|
(40,503
|
)
|
$
|
22,079
|
||
|
Loss
from discontinued operations - net of taxes
|
40,591
|
6,086
|
|||||
|
Adjustments
to reconcile net income (loss) to net cash provided by
operating
activities of continuing operations:
|
|||||||
|
Depreciation
and amortization
|
43,735
|
40,356
|
|||||
|
Impairment
of goodwill
|
12,913
|
-
|
|||||
|
Stock-based
compensation
|
3,327
|
2,412
|
|||||
|
Provision
for losses on accounts receivable
|
1,089
|
649
|
|||||
|
Write-off
of unamortized deferred financing costs
|
495
|
-
|
|||||
|
Deferred
income taxes
|
3,446
|
(10,004
|
)
|
||||
|
Change
in assets and liabilities:
|
|||||||
|
Decrease
in accounts receivable and contract costs and
recognized
income not yet billed
|
13,585
|
20,174
|
|||||
|
(Increase)
decrease in inventories
|
(23,500
|
)
|
3,651
|
||||
|
Increase
in prepaid expenses and other assets
|
(9,065
|
)
|
(141
|
)
|
|||
|
Increase
(decrease) in accounts payable, accrued liabilities and
income
taxes payable
|
46,185
|
(29,563
|
)
|
||||
|
Other
changes, net
|
(6,344
|
)
|
3,999
|
||||
|
126,457
|
37,619
|
||||||
|
Net
cash provided by operating activities - continuing
operations
|
85,954
|
59,698
|
|||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES - CONTINUING OPERATIONS:
|
|||||||
|
Acquisition
of property, plant and equipment
|
(53,116
|
)
|
(29,737
|
)
|
|||
|
Acquisition
of business
|
(1,829
|
)
|
(818
|
)
|
|||
|
Proceeds
from sale of investment
|
1,000
|
-
|
|||||
|
Decrease
(increase) in equipment lease deposits
|
4,593
|
(6,092
|
)
|
||||
|
Funds
restricted for capital projects
|
-
|
(4,521
|
)
|
||||
|
Net
cash used in investing activities - continuing operations
|
(49,352
|
)
|
(41,168
|
)
|
|||
|
CASH
FLOWS FROM FINANCING ACTIVITIES - CONTINUING OPERATIONS:
|
|||||||
|
Proceeds
from the issuance of common stock from Rights Offering
|
241,344
|
-
|
|||||
|
Purchase
of shares for treasury
|
(579
|
)
|
(4,355
|
)
|
|||
|
Proceeds
from issuance of long-term debt
|
89,235
|
47,891
|
|||||
|
Payments
of long-term debt
|
(87,785
|
)
|
(27,650
|
)
|
|||
|
Decrease
in short-term borrowings
|
(924
|
)
|
(5,834
|
)
|
|||
|
Financing
costs
|
(9,932
|
)
|
-
|
||||
|
Exercise
of stock options
|
-
|
2,588
|
|||||
|
Tax
benefit from exercise of stock options
|
3
|
1,346
|
|||||
|
Other,
net
|
139
|
271
|
|||||
|
Net
cash provided by financing activities - continuing
operations
|
231,501
|
14,257
|
|||||
|
CASH
FLOWS FROM DISCONTINUED OPERATIONS:
|
|||||||
|
Net
cash provided by (used in) operating activities
|
(5,410
|
)
|
5,963
|
||||
|
Net
cash provided by (used in) investing activities
|
5,496
|
(17,184
|
)
|
||||
|
Net
cash provided by discontinued operations
|
86
|
(11,221
|
)
|
||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
(1,015
|
)
|
792
|
||||
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
267,174
|
22,358
|
|||||
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
44,747
|
22,389
|
|||||
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
311,921
|
$
|
44,747
|
|||
10
|
GRIFFON
CORPORATION AND SUBSIDIARIES
RECONCILIATION
OF NON-GAAP MEASURES
NET
INCOME (LOSS) TO PRO FORMA NET INCOME (LOSS)
|
||
|
(Unaudited)
|
||
|
PRELIMINARY
(in thousands, except per share data)
|
Three
Months Ended September
30, 2008
|
Year
Ended
September
30, 2008
|
|||||
|
Income
(loss) from continuing operations
before
income taxes - as reported
|
$
|
(2,042
|
)
|
$
|
4,382
|
||
|
Goodwill
impairment
|
12,913
|
12,913
|
|||||
|
Income
from continuing operations before
taxes
- pro forma
|
10,871
|
17,295
|
|||||
|
Provision
for income taxes
|
4,619
|
4,294
|
|||||
|
Income
(loss) from continuing operations before
discontinued
operations - pro forma
|
6,252
|
13,001
|
|||||
|
Discontinued
operations:
|
|||||||
|
Loss
from operations of the discontinued Installation
Services
business
|
(10,111
|
)
|
(62,447
|
)
|
|||
|
Income
tax benefit
|
(8,793
|
)
|
(21,856
|
)
|
|||
|
Loss
from discontinued operations
|
(1,318
|
)
|
(40,591
|
)
|
|||
|
Net
income - pro forma
|
$
|
4,934
|
$
|
(27,590
|
)
|
||
|
Basic
earnings (loss) per share - as reported:
|
|||||||
|
Continuing
operations
|
$
|
(.20
|
)
|
$
|
.00
|
||
|
Discontinued
operations
|
(.04
|
)
|
(1.24
|
)
|
|||
|
$
|
(.24
|
)
|
$
|
(1.24
|
)
|
||
|
Basic
earnings (loss) per share - pro forma:
|
|||||||
|
Continuing
operations
|
$
|
.19
|
$
|
.40
|
|||
|
Discontinued
operations
|
(.04
|
)
|
(1.24
|
)
|
|||
|
$
|
.15
|
$
|
(.84
|
)
|
|||
|
Diluted
earnings (loss) per share - as reported:
|
|||||||
|
Continuing
operations
|
$
|
(.20
|
)
|
$
|
.00
|
||
|
Discontinued
operations
|
(.04
|
)
|
(1.24
|
)
|
|||
|
$
|
(.24
|
)
|
$
|
(1.24
|
)
|
||
|
Diluted
earnings (loss) per share - pro forma:
|
|||||||
|
Continuing
operations
|
$
|
.19
|
$
|
.40
|
|||
|
Discontinued
operations
|
(.04
|
)
|
(1.24
|
)
|
|||
|
$
|
.15
|
$
|
(.84
|
)
|
|||
|
Weighted-average
shares outstanding - basic
|
33,215
|
32,667
|
|||||
|
Weighted-average
shares outstanding - diluted
|
33,373
|
32,836
|
|||||
11
|
GRIFFON
CORPORATION AND SUBSIDIARIES
|
||||||||
|
RECONCILIATION
OF NON-GAAP MEASURES
SEGMENT
OPERATING INCOME AND SEGMENT ADJUSTED EBITDA
|
||||||||
|
(Unaudited)
|
||||||||
|
The
following is a reconciliation of operating income, which is a GAAP
measure
of our operating results, to segment operating income and segment
adjusted
EBITDA. Management believes that the presentation of segment operating
income and segment adjusted EBITDA is appropriate to provide additional
information about the Company’s reportable segments. Segment operating
income and segment adjusted EBITDA are not presentations made in
accordance with GAAP, are not measures of financial performance or
condition, liquidity or profitability of the Company, and should
not be
considered as an alternative to (1) net income, operating income
or any
other performance measures determined in accordance with GAAP or
(2)
operating cash flows determined in accordance with GAAP. Additionally,
segment operating income and segment adjusted EBITDA are not intended
to
be measures of free cash flow for management’s discretionary use, as they
do not consider certain cash requirements such as interest payments,
tax
payments and debt service
requirements.
|
|
For
the Three Months Ended
|
For
the Year Ended
|
||||||||||||
|
September
30,
|
September
30,
|
||||||||||||
|
PRELIMINARY
(in thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||
|
Operating
income - as reported
|
$
|
488
|
$
|
12,889
|
$
|
11,231
|
$
|
48,655
|
|||||
|
Corporate
and related charges
|
5,655
|
5,317
|
21,969
|
18,721
|
|||||||||
|
Other
income
|
188
|
597
|
2,713
|
2,892
|
|||||||||
|
Segment
operating income
|
6,331
|
18,803
|
35,913
|
70,268
|
|||||||||
|
Depreciation
and amortization
|
10,179
|
9,666
|
41,460
|
37,827
|
|||||||||
|
Goodwill
write-off
|
12,913
|
-
|
12,913
|
-
|
|||||||||
|
Restructuring
charges
|
38
|
2,422
|
2,610
|
2,501
|
|||||||||
|
Segment
adjusted EBITDA
|
$
|
29,461
|
$
|
30,891
|
$
|
92,896
|
$
|
110,596
|
|||||
12
|
GRIFFON
CORPORATION AND SUBSIDIARIES
|
||||||||
|
SEGMENT
ADJUSTED EBITDA - BY REPORTABLE SEGMENT
|
||||||||
|
(Unaudited)
|
|
For
the Three Months Ended
|
For
the Year Ended
|
||||||||||||
|
September
30,
|
September
30,
|
||||||||||||
|
PRELIMINARY
(in thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||
|
Electronic
Information and Communication Systems:
|
|||||||||||||
|
Segment
operating income
|
$
|
10,942
|
$
|
10,586
|
$
|
32,737
|
$
|
45,888
|
|||||
|
Depreciation
and amortization
|
1,904
|
1,598
|
6,752
|
5,800
|
|||||||||
|
Segment
adjusted EBITDA
|
$
|
12,846
|
$
|
12,184
|
$
|
39,489
|
$
|
51,688
|
|||||
|
Garage
Doors:
|
|||||||||||||
|
Segment
operating income
|
$
|
(9,376
|
)
|
$
|
3,090
|
$
|
(17,444
|
)
|
$
|
7,117
|
|||
|
Depreciation
and amortization
|
2,765
|
2,760
|
12,070
|
11,041
|
|||||||||
|
Goodwill
write-off
|
12,913
|
-
|
12,913
|
-
|
|||||||||
|
Restructuring
charges
|
38
|
2,422
|
2,610
|
2,501
|
|||||||||
|
Segment
adjusted EBITDA
|
$
|
6,340
|
$
|
8,272
|
$
|
10,149
|
$
|
20,659
|
|||||
|
Specialty
Plastic Films:
|
|||||||||||||
|
Segment
operating income
|
$
|
4,765
|
$
|
5,127
|
$
|
20,620
|
$
|
17,263
|
|||||
|
Depreciation
and amortization
|
5,510
|
5,308
|
22,638
|
20,986
|
|||||||||
|
Segment
adjusted EBITDA
|
$
|
10,275
|
$
|
10,435
|
$
|
43,258
|
$
|
38,249
|
|||||
|
All
segments:
|
|||||||||||||
|
Segment
operating income
|
$
|
6,331
|
$
|
18,803
|
$
|
35,913
|
$
|
70,268
|
|||||
|
Depreciation
and amortization
|
10,179
|
9,666
|
41,460
|
37,827
|
|||||||||
|
Goodwill
write-off
|
12,913
|
-
|
12,913
|
-
|
|||||||||
|
Restructuring
charges
|
38
|
2,422
|
2,610
|
2,501
|
|||||||||
|
Segment
adjusted EBITDA
|
$
|
29,461
|
$
|
30,891
|
$
|
92,896
|
$
|
110,596
|
|||||
###
13