GRIFFON CORPORATION ANNOUNCES OPERATING RESULTS
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FOR THE FIRST QUARTER OF FISCAL 2005 AND CONTRACT AWARDS TO
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SUPPLY RADAR SYSTEMS FOR THE U.S. COAST GUARD'S
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DEEPWATER PROGRAM
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Jericho, New York, February 8, 2005 - Griffon Corporation (NYSE:GFF) today
reported operating results for the first quarter of fiscal 2005, ended December
31, 2004. Net sales for the quarter increased to $340,174,000, up from
$338,502,000 for the first quarter of fiscal 2004. Income before income taxes
was $19,555,000 compared to $25,658,000 last year. Net income was $10,452,000 in
the current quarter compared to $13,115,000 last year. Diluted earnings per
share for the quarter was $.34 compared to $.41 in last year's first quarter.
Operating results in the first quarter of fiscal 2005 reflected continued
increases in raw material costs for both the specialty plastic films and garage
doors segments. Higher selling prices in both segments moderated the effect of
the raw material cost increases, but did not fully recover them. In garage
doors, selling price increases to pass along increased raw material (steel)
costs and favorable product mix resulted in higher net sales. Garage doors'
profitability was negatively impacted primarily by the net effect of the raw
material cost increases. Specialty plastic films experienced reduced unit volume
related to product design changes by its major customer that were partly offset
by higher selling prices due to raw material (resin) cost increases and the
effect of a weaker U.S. dollar on foreign operations. Specialty plastic films'
profitability in the quarter was unfavorably impacted by the unit volume
reduction and the effect of the raw material cost increases. Lower sales and
profits in installation services reflected the effects of
increased competition, a weaker construction environment in certain of its
markets and narrower margins due to higher costs of products with significant
steel content (garage doors and fireplaces). The electronic information and
communication systems segment, Telephonics, reflected higher sales and profits
principally due to growth in defense and international production programs.
The company also announced that Telephonics received two contract awards
valued in excess of $7.3 million from Lockheed Martin to develop radar systems
for the United States Coast Guard's CN-235 Maritime Patrol Aircraft and the
HV-911 Vertical Takeoff Unmanned Aerial Vehicle.
The first contract award is for development of an advanced version of
Telephonics' APS-143 radar, designated the APS-143C(V)3. When fielded, this high
performance radar will be a major element of the CN-235 Maritime Patrol
Aircraft. This flexible and versatile mission system can be adapted to any other
fixed wing aircraft utilized by the Coast Guard.
The second contract award is for a customized version of Telephonics'
RDR-1700B lightweight imaging radar, which will be integrated on the Coast
Guard's HV-911 Vertical Takeoff Unmanned Aerial Vehicle. Designated the
RDR-1700CG, this radar will provide the HV-911 with maritime surveillance,
weather avoidance and search and rescue capabilities.
The contract awards span an eighteen-month time period, covering system
development, non-recurring engineering, and the first engineering development
models for the CN-235 MPA and the HV-911. The contracts were awarded under
Deepwater, a critical multi-year, multi-billion dollar program to modernize and
replace the Coast Guard's aging ships and aircraft, and improve command and
control and logistics systems. It is the largest recapitalization effort in the
history of the Coast Guard.
Cash flow from operations was $9,000,000 for the quarter, which together
with existing cash balances, funded capital expenditures of $17,000,000,
principally for the specialty plastic
films segment capital expansion programs. Also, during the quarter $7,000,000
was used to acquire approximately 300,000 shares of the company's common stock
under its buyback program. Additional purchases will be made from time to time,
depending on market conditions, at prices deemed appropriate by management.
Griffon Corporation -
o is a leading manufacturer and marketer of residential, commercial and
industrial garage doors sold to professional installing dealers and major
home center retail chains;
o installs and services specialty building products and systems, primarily
garage doors, openers, fireplaces and cabinets, for new construction
markets through a substantial network of operations located throughout the
country;
o is an international leader in the development and production of embossed
and laminated specialty plastic films used in the baby diaper, feminine
napkin, adult incontinent, surgical and patient care markets; and
o develops and manufactures information and communication systems for
government and commercial markets worldwide.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: All statements other than statements of historical fact included in this
release, including without limitation statements regarding the company's
financial position, business strategy and the plans and objectives of the
company's management for future operations, are forward-looking statements. When
used in this release, words such as "anticipate", "believe", "estimate",
"expect", "intend", and similar expressions, as they relate to the company or
its management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of the company's management, as well as
assumptions made by and information currently available to the company's
management. Actual results could differ materially from those contemplated by
the forward-looking statements as a result of certain factors, including but not
limited to, business and economic conditions, 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 to release publicly any revisions to these forward-looking
statements to reflect future events or circumstances or to reflect the
occurrence of unanticipated events.
GRIFFON CORPORATION
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OPERATING HIGHLIGHTS
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(Unaudited)
For the Three Months Ended
December 31,
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2004 2003
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Net sales:
Garage Doors $ 135,707,000 $ 121,860,000
Installation Services 72,289,000 76,705,000
Specialty Plastic Films 91,332,000 104,001,000
Electronic Information and Communication Systems 46,402,000 41,640,000
Intersegment eliminations (5,556,000) (5,704,000)
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$ 340,174,000 $ 338,502,000
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Operating income:
Garage Doors $ 12,649,000 $13,260,000
Installation Services 1,289,000 3,006,000
Specialty Plastic Films 8,598,000 12,940,000
Electronic Information and Communication Systems 2,524,000 2,030,000
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Segment operating income 25,060,000 31,236,000
Unallocated amounts (3,980,000) (3,728,000)
Interest expense, net (1,525,000) (1,850,000)
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Income before income taxes 19,555,000 25,658,000
Provision for income taxes (7,235,000) (9,493,000)
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Income before minority interest 12,320,000 16,165,000
Minority interest (1,868,000) (3,050,000)
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Net income $ 10,452,000 $ 13,115,000
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Earnings per share of common stock:
Basic $ .36 $ .44
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Diluted $ .34 $ .41
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