GRIFFON CORPORATION ANNOUNCES OPERATING RESULTS
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FOR THE FIRST QUARTER OF FISCAL 2006 AND INITIAL SHIPMENTS
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FOR THE SYRACUSE RESEARCH CORPORATION SUBCONTRACT-RELEASES
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NOW EXCEED $90 MILLION AND THE PROGRAM COULD EXCEED $150 MILLION
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Jericho, New York, February 3, 2006 - Griffon Corporation (NYSE:GFF) today
reported operating results for the first quarter of fiscal 2006, ended December
31, 2005. Net sales for the quarter increased to $358,524,000 up from
$340,174,000 for the first quarter of fiscal 2005. Income before income taxes
was $10,793,000 compared to $17,555,000 last year. Net income was $6,776,000 in
the current quarter compared to $9,192,000 last year. Diluted earnings per share
for the quarter was $.22 compared to $.29 in last year's first quarter.
Operating results in the first quarter of fiscal 2006 reflected
unprecedented increases in resin costs and reduced sales volume from our primary
customer for the specialty plastic films segment. This segment experienced
reduced unit volume from its primary customer as a result of product design
changes and the softening of its North American market. In garage doors, selling
price increases to pass along increased raw material (steel) costs and favorable
product mix resulted in higher net sales. Garage door profitability was
positively impacted as raw material cost increases were not recovered in the
prior year, but were recovered in the current year. Higher sales and profits in
the installation services segment reflected continued strength in the Phoenix
and Las Vegas markets. The electronic information and communication systems
segment, Telephonics, reflected higher sales and profits principally due to
growth in radar programs.
The company also announced that Telephonics successfully delivered the
initial systems in support of the subcontract award from Syracuse Research
Corporation (SRC) for turnkey production of an SRC product. Telephonics has
received subcontracts in excess of $90 million to date. Under the structure of
the joint cooperation agreement with SRC, Telephonics' total share of all
production for the program could exceed $150 million. SRC is an independent,
not-for-profit research and development leader focused on technology programs of
national significance. "Meeting the initial delivery of this aggressive effort
is a tribute to the effective collaboration between Telephonics and SRC",
emphasized Mr. Donald C. Pastor, Executive Vice President of Operations for
Telephonics. "As a team we are driven by a sincere desire to support our
troops."
Cash flow from operations was $4.7 million for the quarter, which funded
capital expenditures of $4.7 million. Also, during the quarter $10.3 million was
used to acquire approximately 415,500 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, results of integrating acquired
businesses into existing operations, competitive factors and pricing pressures
for resin and steel, 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)
PRELIMINARY
For the Three Months Ended
December 31,
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2005 2004
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Net sales:
Garage Doors $ 142,827,000 $ 135,707,000
Installation Services 82,154,000 72,289,000
Specialty Plastic Films 86,173,000 91,332,000
Electronic Information and Communication Systems 52,681,000 46,402,000
Intersegment eliminations (5,311,000) (5,556,000)
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$ 358,524,000 $ 340,174,000
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Operating income:
Garage Doors $ 13,570,000 $ 10,649,000
Installation Services 2,810,000 1,289,000
Specialty Plastic Films (1,636,000) 8,598,000
Electronic Information and Communication Systems 2,967,000 2,524,000
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Segment operating income 17,711,000 23,060,000
Unallocated amounts (4,830,000) (3,980,000)
Interest expense, net (2,088,000) (1,525,000)
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Income before income taxes 10,793,000 17,555,000
Provision for income taxes (4,017,000) (6,495,000)
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Income before minority interest 6,776,000 11,060,000
Minority interest - (1,868,000)
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Net income $ 6,776,000 $ 9,192,000
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GRIFFON CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
PRELIMINARY
FOR THE THREE MONTHS ENDED
DECEMBER 31,
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2005 2004
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Net sales $ 358,524 $ 340,174
Cost of sales 269,355 251,882
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Gross profit 89,169 88,292
Selling, general and administrative expenses 75,224 70,458
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Income from operations 13,945 17,834
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Other income (expense):
Interest expense (2,578) (2,108)
Interest income 490 583
Other, net (1,064) 1,246
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(3,152) (279)
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Income before income taxes 10,793 17,555
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Provision for income taxes:
Federal 2,807 4,088
State and foreign 1,210 2,407
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4,017 6,495
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Income before minority interest 6,776 11,060
Minority interest - (1,868)
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Net income $ 6,776 $ 9,192
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Basic earnings per share of common stock $ 0.22 $ 0.31
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Diluted earnings per share of common stock $ 0.22 $ 0.29
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Weighted average number of shares outstanding:
Basic 30,205,000 29,249,000
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Diluted 31,502,000 31,165,000
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GRIFFON CORPORATION AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
PRELIMINARY
DECEMBER 31, SEPTEMBER 30,
2005 2005
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ASSETS
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Current Assets:
Cash and cash equivalents $ 45,960 $ 60,663
Accounts receivable, net 172,589 189,904
Contract costs and recognized income
not yet billed 47,111 43,065
Inventories 152,700 148,350
Prepaid expenses and other current assets 40,647 41,227
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Total current assets 459,007 483,209
Property, plant and equipment, at cost less
depreciation and amortization 211,245 216,900
Goodwill 96,350 96,098
Intangible and other assets 56,445 55,220
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$ 823,047 $ 851,427
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current Liabilities:
Notes payable and current portion of long-term debt $ 8,346 $ 16,625
Accounts payable 82,614 91,970
Accrued liabilities 70,676 78,849
Income taxes 23,021 22,599
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Total current liabilities 184,657 210,043
Long-term debt:
Convertible subordinated notes 130,000 130,000
Other 70,798 66,540
Other liabilities and deferred credits 81,834 82,890
Shareholders' equity 355,758 361,954
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$ 823,047 $ 851,427
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GRIFFON CORPORATION AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
PRELIMINARY
For the three Months Ended
December 31,
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2005 2004
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,776 $ 9,192
Adjustments to reconcile net income to net cash provided by ------- -------
operating activities:
Depreciation and amortization 8,006 7,499
Minority interest - 1,868
Provision for losses on accounts receivable 374 347
Change in assets and liabilities:
Decrease in accounts receivable and contract costs and recognized
income not yet billed 11,473 25,736
Increase in inventories (3,814) (1,905)
Increase in prepaid expenses and other assets (682) (2,063)
Decrease in accounts payable, accrued liabilities and income taxes (19,181) (31,930)
Other changes, net 1,776 351
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Total adjustments (2,048) (97)
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Net cash provided by operating activities 4,728 9,095
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (4,690) (16,926)
Acquisition of minority interest in subsidiary (1,304) (3,883)
(Increase) decrease in lease deposits (8) 3,924
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Net cash used in investing activities (6,002) (16,885)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury (10,262) (7,067)
Proceeds from borrowings under long-term debt arrangements 60,000 7,778
Payments of long-term debt (62,699) (3,187)
Payment of debt issuance costs (607) -
Decrease in short-term borrowings (1,181) (118)
Distributions to minority interest (354) (560)
Exercise of stock options 66 2,514
Tax benefit from exercise of stock options 1,679 -
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Net cash used in financing activities (13,358) (640)
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Effect of exchange rate changes on cash and cash equivalents (71) 781
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NET DECREASE IN CASH AND CASH EQUIVALENTS (14,703) (7,649)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 60,663 88,047
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $45,960 $80,398
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