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Griffon Corporation Announces Fourth Quarter and Annual Results



  Griffon Corporation Announces Fourth Quarter and Annual Results

                  2012 Revenue Increases 2% to $1.9 billion

   2012 EPS $0.30 vs. 2011 ($0.13); 2012 Adjusted EPS $0.27 vs. 2011 $0.34

          2012 Segment Adjusted EBITDA Increases 3% to $171 million

       Telephonics Generates Record Profit for the Year; Backlog Grows

Business Wire

NEW YORK -- November 13, 2012

Griffon Corporation (NYSE: GFF) today reported results for the fourth quarter
and fiscal year ended September 30, 2012.

Ron Kramer, Chief Executive Officer, commented “Fourth quarter results were
in-line with our expectations and underscore how well each of our businesses
are operating in this challenging global economic environment. Specifically,
Telephonics had another strong quarter benefiting in part from a more
favorable product mix, achieving record-level profitability for the year.
Clopay Plastics (“Plastics”) continued to show ongoing improvement from the
initiatives undertaken to address manufacturing inefficiencies arising from
our capacity expansions in Germany and Brazil. Home & Building Products
(“HBP”), benefited from our doors business, but customer build up of snow tool
inventory resulting from last year’s unusually warm winter contributed to
lower sales at Ames in the quarter.”

Fourth quarter revenue totaled $447 million, decreasing 8% compared to the
2011 quarter. HBP, Telephonics and Plastics revenue decreased 5%, 13% and 6%,
respectively, compared to the prior year quarter.

For the current quarter, Segment adjusted EBITDA totaled $37.2 million,
decreasing 10% compared to $41.5 million in the prior year quarter. Segment
adjusted EBITDA is defined as net income, excluding corporate overhead,
interest, taxes, depreciation and amortization, acquisition-related expenses
including the impact from the fair value of inventory acquired as part of a
business combination, restructuring charges and the gain (loss) from debt
extinguishment, as applicable.

Fourth quarter net income totaled $3.4 million, or $0.06 per share, compared
to $3.4 million, or $0.06 per share, in the prior year quarter. Fourth quarter
2012 results included restructuring and acquisition costs, net, of $2.1
million, or $0.04 per share, and net discrete tax benefits of $3.5 million, or
$0.06 per share. Fourth quarter 2011 results included restructuring and
acquisition costs, net, of $2.1 million, or $0.03 per share, and net discrete
tax benefits of $1.3 million, or $0.02 per share. Current quarter adjusted net
income was $2.0 million, or $0.04 per share, compared to $4.2 million, or
$0.07 per share, in the prior year quarter.

For the full year 2012, revenue totaled $1.9 billion, increasing 2% compared
to 2011, driven by HBP and Plastics, which increased 2% and 5%, respectively.
Telephonics revenue decreased 3% compared to 2011 because of a decline in the
Counter Remote Control Improvised Explosive Device Electronic Warfare 3.1
(“CREW 3.1”) program for which Telephonics serves as a contract manufacturer.

For the year ended September 30, 2012, Segment adjusted EBITDA totaled $171.0
million, increasing 3% compared to $165.6 million in the prior year.

For the year ended September 30, 2012, net income was $17.0 million, or $0.30
per share, compared to a net loss of $7.4 million, or $0.13 per share, in the
prior year. Adjusted income for 2012 was $15.3 million, or $0.27 per share,
compared to $19.9 million, or $0.34 per share, in the prior year. Results for
2012 included restructuring of $4.7 million ($3.0 million, net of tax, or
$0.05 per share) and acquisition costs of $0.5 million ($0.3 million, net of
tax, or $0.01 per share), as well as discrete tax benefits, net, of $5.1
million, or $0.09 per share. Full year 2011 results included a charge of $26.2
million ($16.8 million, net of tax, or $0.29 per share) resulting from the
refinancing of Ames True Temper (“ATT”) acquisition-related debt; $15.2
million ($9.8 million, net of tax, or $0.17 per share) of cost of goods
related to the sale of inventory recorded at fair value in connection with ATT
acquisition accounting; $7.5 million ($4.9 million, net of tax, or $0.08 per
share) of restructuring charges related to the consolidation of Clopay
Building Product (“CBP”) facilities, and headcount reductions at Telephonics
and ATT; $0.4 million ($0.3 million net of tax) of Southern Patio (“SP”)
acquisition costs; and $4.6 million, or $0.08 per share, of net discrete tax
benefits.

Mr. Kramer continued, “While we are prepared for economic conditions to remain
challenging, our businesses are well-positioned for growth and improved
profitability. We remain committed to driving shareholder value through a
range of opportunities including organic improvement, a disciplined approach
to capital investment and, in the longer term, our ongoing evaluation of
additional strategic transactions.”

Segment Operating Results

Telephonics

Revenue in the current quarter decreased $18.1 million or 13% compared to the
2011 quarter. In the current and prior year quarters, revenue included $1.8
million and $11.3 million, respectively, related to the CREW 3.1 program.
Excluding CREW 3.1 from both quarters, revenue decreased 7% from the prior
year quarter primarily due to timing of Mobile Surveillance Capability and
Integrated Fix Tower awards for follow-on production, and timing of awards for
Ground Surveillance radars and Firescout, partially offset by LAMPS MMR.

Segment adjusted EBITDA in the 2012 quarter was $13.7 million, increasing 2%
from the prior year quarter, mainly driven by higher gross profit from a
combination of favorable program mix and manufacturing efficiencies, and lower
selling, general and administrative expenses related to the timing of proposal
and research and development activities. Operating results also benefited from
cost reductions resulting from the voluntary early retirement plan undertaken
in the prior year and other restructuring activities implemented earlier this
year.

Revenue in 2012 decreased $13.9 million or 3% compared to the prior year. In
the current and prior year, revenue included $24.1 million and $44.3 million,
respectively, related to the CREW 3.1 program. Excluding CREW 3.1 from both
years, revenue increased 2% over the prior year primarily attributable to
LAMPS MMR.

Segment adjusted EBITDA for the full year 2012 totaled $60.6 million,
increasing 19% over the prior year, mainly driven by higher gross profit from
a combination of favorable program mix and manufacturing efficiencies,
partially offset by higher selling, general and administrative expenses
primarily due to the timing of proposal and research and development
activities. Operating results also benefited from cost reductions resulting
from the voluntary early retirement plan undertaken in the prior year and
other restructuring activities implemented earlier this year.

Contract backlog totaled a record $451 million at September 30, 2012 compared
to $417 million at September 30, 2011, with approximately 70% expected to be
filled within the next twelve months.

Plastic Products

Revenue in the current quarter decreased $8.8 million, or 6%, compared to the
2011 quarter; a volume increase of 3% and a 1% benefit from favorable mix were
more than offset by the 9% unfavorable impact of translation of European and
Brazilian revenue into a stronger U.S. dollar. Selling price adjustments due
to resin fluctuations reduced revenue by 1% in the quarter; Plastics adjusts
customer selling prices, based on underlying resin costs, on a delayed basis.

Segment adjusted EBITDA in the 2012 quarter increased $2.0 million, or 19%,
compared to the prior year quarter, primarily driven by the improved volume,
favorable mix and continued efficiency improvements on past capital
initiatives, partially offset by a 3% unfavorable impact of foreign exchange
as well as the impact of somewhat higher selling, general and administrative
expenses. The impact of resin was not material in the quarter.

Revenue in 2012 increased $27.4 million, or 5%, compared to 2011, driven by a
10% increase in volume. The benefit of the volume growth was partially offset
by a 5% unfavorable impact of translation of European and Brazilian revenue
into a stronger U.S. dollar. Selling price adjustments due to resin
fluctuations did not have a significant impact on 2012 revenue.

Segment adjusted EBITDA in 2012 increased $2.4 million, or 6%, compared to the
prior year, primarily driven by the higher volume, a $3.7 million favorable
resin impact and efficiency improvement on past capital initiatives, partially
offset by a 2% unfavorable impact of foreign exchange, product mix and the
impact of somewhat higher selling, general and administrative expenses.

Home & Building Products

Fourth quarter revenue decreased $10.6 million, or 5%, compared to the prior
year quarter. ATT revenue decreased 12% primarily due to lower snow tool
sales. Typically, ATT has strong snow tool sales in the last fiscal quarter as
customers build inventory in anticipation of the coming snow season; however,
excess snow tool inventory remaining at customers following the record warm
weather of the 2011-2012 winter substantially reduced such sales. The snow
tool impact was partially offset by the inclusion of SP. CBP revenue decreased
1% mainly due to volume, partially offset by favorable mix.

Segment adjusted EBITDA in the 2012 quarter decreased $6.4 million, or 37%,
compared to the prior year quarter. The decrease was driven by the lower snow
volume that also affected ATT plant absorption of manufacturing expenses in
the quarter. The ATT decline was partially offset by CBP favorable product mix
as well as CBP manufacturing efficiencies, and lower warehouse and
distribution costs.

Revenue in 2012 increased $16.8 million, or 2%, compared to the prior year.
ATT revenue was flat with the prior year, mainly because of weak snow tool
sales, driven by the absence of snow throughout much of the country during the
2011-2012 winter, substantially offset by the inclusion of SP, acquired in
October 2011. CBP revenue increased 4% due to a combination of favorable mix
and higher volume.

Segment adjusted EBITDA in 2012 decreased $6.7 million, or 9%, compared to the
prior year, driven mainly by the decline in snow volume at ATT; the ATT volume
decline was partially offset by the inclusion of SP as well as improved CBP
profitability driven by increased volume, favorable mix, and lower warehouse
and distribution costs.

Taxes

Griffon’s effective tax rate for 2012 was 22.5% compared to a benefit of 48.2%
in 2011. The 2012 rate reflected net discrete benefits of $5.1 million
primarily from the release of previously established reserves for uncertain
tax positions on conclusion of various tax audits, and benefits related to
various tax planning initiatives. The 2011 rate reflected net discrete
benefits of $4.6 million primarily from tax planning related to unremitted
foreign earnings. Excluding discrete tax items, the 2012 rate would have been
45.8%, and the 2011 benefit would have been 16.4%. In both years, the
effective rates reflect the impact of permanent differences not deductible in
determining taxable income, mainly limited deductibility of restricted stock,
as well as the impact of tax reserves and changes in earnings mix between
domestic and non-domestic operations.

Restructuring

In 2012 and 2011, respectively, Telephonics recognized $3.8 and $3.0 million
of restructuring charges in connection with two discrete voluntary early
retirement plans and other restructuring costs related to changes in its
organizational structure; such charges were personnel-related, reducing
headcount by 185 employees.

In both 2012 and 2011, ATT recognized $0.9 million in restructuring costs
primarily related to termination benefits, reducing headcount by 38 employees.

The consolidation of the CBP manufacturing facilities plan, announced in June
2009, was completed in 2011. In completing the consolidation plan, CBP
incurred total pre-tax exit and restructuring costs of $9.0 million,
substantially all of which were cash charges, and had $10.4 million of related
capital expenditures. The restructuring costs were $3.6 million in 2011, $4.2
million in 2010 and $1.2 million in 2009.

Balance Sheet and Capital Expenditures

At September 30, 2012, the Company had cash and equivalents of $210 million,
total debt outstanding of $700 million, net of discounts, and $178 million
available for borrowing under its revolving credit facility. Capital
expenditures were $68.9 million in 2012. The Company expects capital spending
of $60 to $65 million for 2013.

Stock Repurchases

During 2012, the Company purchased 1.2 million shares of its common stock
under an authorized stock repurchase plan, for $10.4 million, of which 486,000
shares were purchased in the fourth quarter, for $4.7 million. At September
30, 2012, the Company had a remaining authorization of $38.3 million. During
2011, the Company’s Employee Stock Ownership Plan purchased 1.9 million shares
for a total of $20.0 million and the Company purchased 1.5 million shares for
a total of $12.4 million under authorized repurchase plans.

Conference Call Information

The Company will hold a conference call today, November 13, 2012, at 4:30 PM
ET.

The call can be accessed by dialing 1-800-231-9012 (U.S. participants) or
1-719-457-2619 (International participants). Callers should ask to be
connected to the Griffon Corporation teleconference.

A replay of the call will be available starting on November 13, 2012 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: 4942707. The replay will be available
through November 27, 2012.

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 supplied products; 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, including as a result of sequestration which is
currently scheduled to take effect in January 2013; 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 (the “Company” or “Griffon”), 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.
  * 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.

Griffon evaluates performance and allocates resources based on each segments’
operating results before interest income or expense, income taxes,
depreciation and amortization, gain (loss) from debt extinguishment,
unallocated amounts, restructuring charges and acquisition-related expenses
including the impact from the fair value of inventory acquired as part of a
business combination (“Segment Adjusted EBITDA”). Griffon believes this
information is useful to investors.

The following table provides a reconciliation of Segment Adjusted EBITDA to
Income (loss) before taxes:

                                                                     
GRIFFON CORPORATION AND SUBSIDIARIES
OPERATING HIGHLIGHTS
(in thousands)
                                                                       
                    (Unaudited)
                    For the Three Months Ended      For the Years Ended
                    September 30,                   September 30,
                    2012            2011              2012              2011       
REVENUE
Home & Building
Products:
ATT                 $ 71,492        $ 80,804        $ 433,866         $ 434,789
CBP                   112,849         114,107         422,674           404,947    
Home & Building       184,341         194,911         856,540           839,736
Products
Telephonics           121,882         140,019         441,503           455,353
Plastics              141,213         150,059         563,102           535,713    
Total
consolidated        $ 447,436       $ 484,989       $ 1,861,145       $ 1,830,802  
net sales
                                                                       
Segment profit:
Segment profit
before
depreciation,
amortization,
restructuring,
fair value
write-up of
acquired
inventory sold
and acquisition
costs:
Home & Building     $ 11,033        $ 17,479        $ 70,467          $ 77,119
Products
Telephonics           13,653          13,418          60,565            50,875
Plastics              12,538          10,574          40,000            37,639     
Total Segment
profit before
depreciation,
amortization,
restructuring,
fair value            37,224          41,471          171,032           165,633
write-up of
acquired
inventory sold
and acquisition
costs
Unallocated           (6,305  )       (3,400  )       (26,346   )       (22,868   )
amounts
Loss from debt
extinguishment,       -               -               -                 (26,164   )
net
Net interest          (12,940 )       (12,609 )       (51,715   )       (47,448   )
expense
Segment
depreciation          (17,491 )       (15,544 )       (65,864   )       (60,361   )
and
amortization
Restructuring         (2,894  )       (2,820  )       (4,689    )       (7,543    )
charges
Fair value
write-up of           -               -               -                 (15,152   )
acquired
inventory sold
Acquisition           (299    )       (446    )       (477      )       (446      )
costs
Income (loss)       $ (2,705  )     $ 6,652         $ 21,941          $ (14,349   )
before taxes
                                                                       
Unallocated amounts typically include general corporate expenses not attributable
to a reportable segment.
 

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
Unaudited
                                                                      
                           Three Months Ended
                           September 30,             Years Ended September 30,
                           2012         2011         2012            2011
                                                                      
Home & Building
Products
Segment operating          $ 1,670      $ 9,408      $  37,082       $ 28,228
profit
Depreciation and             8,463        7,248         32,034         28,796
amortization
Fair value write-up of
acquired inventory           -            -             -              15,152
sold
Restructuring charges        601          377           874            4,497
Acquisition costs            299          446           477            446
Segment adjusted             11,033       17,479        70,467         77,119
EBITDA
                                                                      
Telephonics
Segment operating            9,061        8,952         49,232         40,595
profit
Depreciation and             2,299        2,023         7,518          7,234
amortization
Restructuring charges        2,293        2,443         3,815          3,046
Segment adjusted             13,653       13,418        60,565         50,875
EBITDA
                                                                      
Clopay Plastic
Products
Segment operating            5,809        4,301         13,688         13,308
profit
Depreciation and             6,729        6,273         26,312         24,331
amortization
Segment adjusted             12,538       10,574        40,000         37,639
EBITDA
                                                                      
All segments:
Income from operations       9,722        18,955        72,420         55,549
- as reported
Unallocated amounts          6,305        3,400         26,346         22,868
Other, net                   513          306           1,236          3,714
Segment operating            16,540       22,661        100,002        82,131
profit
Depreciation and             17,491       15,544        65,864         60,361
amortization
Fair value write-up of
acquired inventory           -            -             -              15,152
sold
Restructuring charges        2,894        2,820         4,689          7,543
Acquisition costs            299          446           477            446
Segment adjusted           $ 37,224     $ 41,471     $  171,032      $ 165,633
EBITDA
                                                                        

 
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                      
                     (Unaudited)
                     Three Months Ended              Years Ended September 30,
                     September 30,
                       2012            2011            2012              2011       
Revenue              $ 447,436       $ 484,989       $ 1,861,145       $ 1,830,802
Cost of goods          349,785         379,699         1,442,340         1,437,341  
and services
Gross profit           97,651          105,290         418,805           393,461
                                                                        
Selling, general
and                    85,035          83,515          341,696           330,369
administrative
expenses
Restructuring
and other              2,894           2,820           4,689             7,543      
related charges
Total operating        87,929          86,335          346,385           337,912    
expenses
                                                                        
Income from            9,722           18,955          72,420            55,549
operations
                                                                        
Other income
(expense)
Interest expense       (13,007 )       (12,735 )       (52,007   )       (47,846   )
Interest income        67              126             292               398
Loss from debt
extinguishment,        -               -               -                 (26,164   )
net
Other, net             513             306             1,236             3,714      
Total other            (12,427 )       (12,303 )       (50,479   )       (69,898   )
income (expense)
                                                                        
Income (loss)          (2,705  )       6,652           21,941            (14,349   )
before taxes
Provision
(benefit) for          (6,153  )       3,274           4,930             (6,918    )
income taxes
Net Income           $ 3,448         $ 3,378         $ 17,011          $ (7,431    )
(loss)
                                                                        
                                                                        
Basic earnings
(loss) per           $ 0.06          $ 0.06          $ 0.30            $ (0.13     )
common share
                                                                        
Weighted-average
shares                 55,560          57,516          55,914            58,919     
outstanding
                                                                        
                                                                        
Diluted earnings
(loss) per           $ 0.06          $ 0.06          $ 0.30            $ (0.13     )
common share
                                                                        
Weighted-average
shares                 57,374          58,284          57,329            58,919     
outstanding
                                                                                    

 
GRIFFON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                             
                                                               
                                         At September 30,     At September 30,
                                         2012                 2011
                                                               
CURRENT ASSETS
Cash and equivalents                     $    209,654         $    243,029
Accounts receivable, net of                   239,857              267,471
allowances of $5,433 and $6,072
Contract costs and recognized income
not yet billed,
net of progress payments of $3,748            70,777               74,737
and $9,697
Inventories, net                              257,868              263,809
Prepaid and other current assets              47,472               48,828
Assets of discontinued operations             587                  1,381
Total Current Assets                          826,215              899,255
PROPERTY, PLANT AND EQUIPMENT, net            356,879              350,050
GOODWILL                                      358,372              357,888
INTANGIBLE ASSETS, net                        230,473              223,189
OTHER ASSETS                                  31,317               31,197
ASSETS OF DISCONTINUED OPERATIONS             2,936                3,675
Total Assets                             $    1,806,192       $    1,865,254
                                                               
CURRENT LIABILITIES
                                                               
Notes payable and current portion of     $    17,703          $    25,164
long-term debt
Accounts payable                              141,704              186,290
Accrued liabilities                           110,337              99,631
Liabilities of discontinued                   3,639                3,794
operations
Total Current Liabilities                     273,383              314,879
LONG-TERM DEBT, net of debt discount          681,907              688,247
of $16,607 and $19,693
OTHER LIABILITIES                             193,107              204,434
LIABILITIES OF DISCONTINUED                   3,643                5,786
OPERATIONS
Total Liabilities                             1,152,040            1,213,346
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Total Shareholders' Equity                    654,152              651,908
Total Liabilities and Shareholders'      $    1,806,192       $    1,865,254
Equity
                                                                    

                                                 
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                 
                                                  Years Ended September 30,
                                                    2012            2011      
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                 $ 17,011        $ (7,431   )
                                                                   
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Income from discontinued operations                 -               -
Depreciation and amortization                       66,264          60,712
Fair value write-up of acquired inventory           -               15,152
sold
Stock-based compensation                            10,439          8,956
Provision for losses on accounts receivable         1,212           1,225
Amortization/write-off of deferred financing        6,023           6,733
costs and debt discounts
Loss from debt extinguishment, net                  -               26,164
Deferred income taxes                               (2,627  )       (2,749   )
(Gain) loss on sale/disposal of assets              56              (251     )
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                27,269          (30,593  )
(Increase) decrease in inventories                  9,011           (12,803  )
Increase in prepaid and other assets                (3,281  )       9,065
Decrease in accounts payable, accrued
liabilities
and income taxes payable                            (46,368 )       (42,604  )
Other changes, net                                  5,121           3,809     
Net cash provided by operating activities           90,130          35,385
                                                                   
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment        (68,851 )       (87,617  )
Acquired business, net of cash acquired             (22,432 )       (855     )
Change in funds restricted for capital              -               4,629
projects
Proceeds from sale of assets                        309             1,510     
Net cash used in investing activities               (90,974 )       (82,333  )
                                                                   
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock              -               -
Dividends paid                                      (4,743  )       -
Purchase of shares for treasury                     (10,382 )       (18,139  )
Proceeds from issuance of long-term debt            4,000           674,251
Payments of long-term debt                          (18,546 )       (498,572 )
Change in short-term borrowings                     (1,859  )       3,538
Financing costs                                     (97     )       (21,653  )
Purchase of ESOP shares                             -               (19,973  )
Exercise of stock options                           -               2,306
Tax effect from exercise/vesting of equity          834             7
awards, net
Other, net                                          100             345       
Net cash provided by (used in) financing            (30,693 )       122,110
activities
                                                                   
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash used in operating activities               (2,801  )       (962     )
Net cash used in discontinued operations            (2,801  )       (962     )
                                                                   
Effect of exchange rate changes on cash and         963             (973     )
equivalents
                                                                   
NET INCREASE (DECREASE) IN CASH AND                 (33,375 )       73,227
EQUIVALENTS
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD         243,029         169,802   
CASH AND EQUIVALENTS AT END OF PERIOD             $ 209,654       $ 243,029   
                                                                   

Griffon evaluates performance based on Earnings per share and Net income
(loss) excluding restructuring charges, gain (loss) from debt extinguishment,
discrete tax items and acquisition-related expenses including the impact from
the fair value of inventory acquired as part of a business combination.
Griffon believes this information is useful to investors. The following table
provides a reconciliation of Earnings (loss) per share and Net income (loss)
to Adjusted earnings per share and Adjusted net income:

                                                    
GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF INCOME (LOSS) TO ADJUSTED INCOME (LOSS)
(Unaudited)
                                                                   
                       For the Three Months          For the Years Ended
                       Ended September 30,           September 30,
                         2012           2011           2012           2011    
                                                                     
Net income (loss)      $ 3,448        $ 3,378        $ 17,011       $ (7,431 )
                                                                     
Adjusting items,
net of tax:
Loss from debt
extinguishment,          -              -              -              16,813
net
Fair value
write-up of              -              -              -              9,849
acquired inventory
sold
Restructuring and        1,881          1,833          3,048          4,903
related
Acquisition costs        194            290            310            290
Discrete tax             (3,484 )       (1,252 )       (5,110 )       (4,570 )
benefits
                                                                     
Adjusted net           $ 2,039        $ 4,249        $ 15,259       $ 19,854  
income
                                                                     
Earnings (loss)        $ 0.06         $ 0.06         $ 0.30         $ (0.13  )
per common share
                                                                     
Adjusting items,
net of tax:
Loss from debt
extinguishment,          -              -              -              0.29
net
Fair value
write-up of              -              -              -              0.17
acquired inventory
sold
Restructuring            0.03           0.03           0.05           0.08
Acquisition costs        0.00           0.00           0.01           0.00
Discrete tax             (0.06  )       (0.02  )       (0.09  )       (0.08  )
benefits
                                                                     
Adjusted earnings      $ 0.04         $ 0.07         $ 0.27         $ 0.34    
per share
                                                                     
Weighted-average
shares outstanding       57,374         58,284         57,329         58,919  
(in thousands)

Contact:

Griffon Corporation
Douglas J. Wetmore, 212-957-5000
Chief Financial Officer
or
Investor Relations:
ICR Inc.
Anthony Gerstein, 646-277-1242
Senior Vice President
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