FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended December 31, 2007

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

x ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For the quarterly period ended March 31, 2007~~

o ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from ~~________~~ to ~~________~~

Commission File Number: 1-06620

GRIFFON CORPORATION

(Exact name of registrant as specified in its charter)

~~GRIFFON CORPORATION~~ DELAWARE				11-1893410
~~(Exact name of registrant as specified in its charter)~~

~~DELAWARE~~	~~11-1893410~~
(State or other jurisdiction of	~~(I.R.S. Employer~~
incorporation or organization)		(I.R.S. Employer Identification No.)

100 JERICHO QUADRANGLE, JERICHO, NEW YORK			~~11753~~
(Address of principal executive offices)			11753 (Zip Code)

(516) 938-5544

(~~Registrant's~~Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x ~~Yes~~

o No

xYes oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x

Accelerated filer o

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o ~~Yes~~

x No

o Yes x No

Indicate the number of shares outstanding of each of the ~~issuer's~~issuer’s classes of common stock, as of the latest practicable date. ~~29,824,276~~29,888,806 shares of Common Stock as of ~~April 30, 2007.~~January 31, 2008.

FORM 10-Q

CONTENTS

~~CONTENTS~~

				PAGE

PART I -			— FINANCIAL INFORMATION (Unaudited) ~~(Unaudited)~~

Item 1 -	—	Financial Statements

	Condensed Consolidated Balance Sheets at ~~March~~December 31, 2007 and September 30, ~~2006~~2007	1

		Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~March~~December 31, 2007 and 2006	3

		Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months ended ~~March~~December 31, 2007 and 2006	5 4

		Condensed Consolidated Statement of Shareholders’ Equity for the Three Months ended December 31, 2007	5

		Notes to Condensed Consolidated Financial Statements	6

Item 2 -	~~Management's~~ —	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9 12

Item 3 -	—	Quantitative and Qualitative Disclosures about Market Risk	13 16

Item 4 -	—	Controls & Procedures	13 16

PART II -			— OTHER INFORMATION

Item 1 -	—	Legal Proceedings	14 17

Item 1A -	—	Risk Factors	14 17

Item 2 -	—	Unregistered Sales of Equity Securities and Use of Proceeds	14 17

Item 3 -	—	Defaults ~~Upon~~upon Senior Securities	15 17

Item 4 -	—	Submission of Matters to a Vote of Security Holders	15 17

Item 5 -	—	Other Information	15 17

Item 6 -	~~Exhibits~~ —	15 Exhibits	18

Signature				16 19

Part I - Financial Information

Item 1 - Financial Statements

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, September 30,
2007 2006
(Note 1)
ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 34,374,000 $ 22,389,000

Accounts receivable, less allowance for doubtful accounts
212,484,000 247,172,000

Contract costs and recognized income not yet billed
74,312,000 68,279,000

Inventories (Note 2) 174,426,000 165,089,000

Prepaid expenses and other current assets 46,215,000 42,075,000

Total current assets 541,811,000 545,004,000

PROPERTY, PLANT AND EQUIPMENT

at cost, less accumulated depreciation and amortization of $231,971,000
at March 31, 2007 and $218,090,000 at September 30, 2006
235,663,000 231,975,000

OTHER ASSETS:

Goodwill 110,286,000 99,540,000

Intangible assets and other 67,894,000 51,695,000

178,180,000 151,235,000

$ 955,654,000 $ 928,214,000

	December 31,		September 30,
	2007		2007
			(Note 1)
ASSETS

CURRENT ASSETS:

Cash and cash equivalents	$	69,752,000	$	44,747,000

Accounts receivable, less allowance for doubtful accounts of $9,973,000 at December 31, 2007 and $9,284,000 at September 30, 2007	171,121,000		210,340,000

Contract costs and recognized income not yet billed	71,133,000		77,184,000

Inventories (Note 2)	165,569,000		161,775,000

Prepaid expenses and other current assets	51,151,000		50,889,000

Total current assets	528,726,000		544,935,000

PROPERTY, PLANT AND EQUIPMENT, at cost, net of depreciation and amortization of $269,206,000 at December 31, 2007 and $257,886,000 at September 30, 2007	230,173,000		233,449,000

OTHER ASSETS:
Costs in excess of fair value of net assets of businesses acquired, net	116,917,000		114,756,000
Intangible assets and other	75,028,00		66,718,000

	191,945,000		181,474,000

	$	950,844,000	$	959,858,000

See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, September 30,
2007 2006
(Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts and notes payable $ 109,081,000 $ 135,300,000

Other current liabilities 85,128,000 100,999,000

Total current liabilities 194,209,000 236,299,000

LONG-TERM DEBT (Note 2) 251,475,000 209,228,000

OTHER LIABILITIES AND DEFERRED CREDITS 77,365,000 70,242,000

Total liabilities and deferred credits 523,049,000 515,769,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:

Preferred stock, par value $.25 per share, authorized 3,000,000 shares, no shares issued --- ---

Common stock, par value $.25 per share, authorized 85,000,000 shares,
issued 41,701,238 shares at March 31, 2007 and 41,628,059 shares
at September 30, 2006; 11,876,962 and 11,779,462 shares in treasury
at March 31, 2007 and September 30, 2006, respectively 10,425,000 10,407,000

Other shareholders' equity 422,180,000 402,038,000

Total shareholders' equity 432,605,000 412,445,000

$ 955,654,000 $ 928,214,000

	December 31, 2007			September 30, 2007
				(Note 1)

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Notes payable and current portion of long-term debt (Note 3)	$	66,834,000		$	3,392,000
Accounts payable	100,388,000			105,324,000
Accrued liabilities	81,743,000			79,001,000
Income taxes	696,000			14,153,000

Total current liabilities	249,661,000			201,870,000

LONG-TERM DEBT (Note 3)	153,027,000			229,438,000

OTHER LIABILITIES AND DEFERRED CREDITS	80,836,000			61,611,000

Total liabilities and deferred credits	483,524,000			492,919,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY:
Preferred stock, par value $.25 per share, authorized 3,000,000 shares, no shares issued	—			—
Common stock, par value $.25 per share, authorized 85,000,000 shares, issued 42,328,821 shares at December 31, 2007 and September 30, 2007	10,582,000			10,582,000
Capital in excess of par	180,625,000			180,022,000
Retained earnings	455,141,000			461,163,000
Treasury shares, at cost, 12,440,015 common shares at December 31, 2007 and 12,399,115 common shares at September 30, 2007	(213,310,000		)	(212,731,000		)
Accumulated other comprehensive income	35,767,000			29,522,000
Deferred compensation	(1,485,000		)	(1,619,000		)

Total shareholders’ equity	467,320,000			466,939,000

	$	950,844,000		$	959,858,000

See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

THREE MONTHS ENDED MARCH 31,
2007 2006

Net sales $ 387,371,000 $ 366,151,000

Cost of sales 305,853,000 275,898,000

Gross profit 81,518,000 90,253,000

Selling, general and administrative expenses 79,103,000 78,710,000

Income from operations 2,415,000 11,543,000

Other income (expense):
Interest expense (3,052,000 ) (2,565,000 )
Interest income 752,000 418,000
Other, net (Note 6) 582,000 2,072,000
(1,718,000 ) (75,000 )
Income before income taxes 697,000 11,468,000

Provision for income taxes (Note 7) 442,000 4,260,000

Net income $ 255,000 $ 7,208,000

Basic earnings per share of common stock (Note 3) $ .01 $ .24

Diluted earnings per share of common stock (Note 3) $ .01 $ .23

	THREE MONTHS ENDED DECEMBER 31,
	2007			2006

Net sales	$	341,398,000		$	434,315,000

Cost of sales	264,205,000			341,111,000

Gross profit	77,193,000			93,204,000

Selling, general and administrative expenses	78,400,000			77,140,000

Income (loss) from operations	(1,207,000		)	16,064,000

Other income (expense):
Interest expense	(2,915,000		)	(2,944,000		)
Interest income	885,000			620,000
Other, net (Note 8)	844,000			618,000
	(1,186,000		)	(1,706,000		)

Income (loss) before income taxes	(2,393,000		)	14,358,000

Provision (benefit) for income taxes (Note 9)	(1,038,000		)	5,893,000

Net income (loss)	$	(1,355,000	)	$	8,465,000


Basic earnings (loss) per share (Note 4)	$	(.05	)	$	.28

Diluted earnings (loss) per share (Note 4)	$	(.05	)	$	.27

Weighted-average shares outstanding — basic (Note 4)	30,051,000			29,952,000

Weighted-average shares outstanding — diluted (Note 4)	30,051,000			31,067,000

See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CASH FLOWS

(Unaudited)

SIX MONTHS ENDED MARCH 31,
2007 2006

Net sales $ 821,686,000 $ 724,675,000

Cost of sales 646,964,000 545,253,000

Gross profit 174,722,000 179,422,000

Selling, general and administrative expenses 156,243,000 153,934,000

Income from operations 18,479,000 25,488,000

Other income (expense):
Interest expense (5,996,000 ) (5,143,000 )
Interest income 1,372,000 908,000
Other, net (Note 6) 1,200,000 1,008,000
(3,424,000 ) (3,227,000 )

Income before income taxes 15,055,000 22,261,000

Provision for income taxes (Note 7) 6,335,000 8,277,000

Net income $ 8,720,000 $ 13,984,000

Basic earnings per share of common stock (Note 3) $ .29 $ .47

Diluted earnings per share of common stock (Note 3) $ .28 $ .45

	THREE MONTHS ENDED DECEMBER 31,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(1,355,000	)	$	8,465,000
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	11,046,000			9,301,000
Stock-based compensation	624,000			590,000
Provision for losses on accounts receivable	876,000			382,000
Deferred income taxes	412,000			441,000
Change in assets and liabilities:
Decrease in accounts receivable and contract costs and recognized income not yet billed	45,302,000			48,547,000
Increase in inventories	(3,183,000		)	(4,020,000		)
Increase in prepaid expenses and other assets	(5,448,000		)	(1,899,000		)
Decrease in accounts payable, accrued liabilities and income taxes payable	(5,540,000		)	(27,678,000		)
Other changes, net	(1,578,000		)	(90,000		)

	42,511,000			25,574,000

Net cash provided by operating activities	41,156,000			34,039,000

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(6,540,000		)	(10,092,000		)
Acquisition of business	(1,750,000		)	—
Decrease in equipment lease deposits	4,332,000			500,000
Funds restricted for capital projects	—			(4,347,000		)
Other, net	1,000,000			—

Net cash used in investing activities	(2,958,000		)	(13,939,000		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury	(579,000		)	(1,127,000		)
Proceeds from issuance of long-term debt	—			20,891,000
Payments of long-term debt	(13,818,000		)	(283,000		)
Increase (decrease) in short-term borrowings	787,000			(6,044,000		)
Exercise of stock options	—			387,000
Tax benefit from exercise of stock options	—			156,000
Other, net	177,000			(1,041,000		)

Net cash provided by (used in) financing activities	(13,433,000		)	12,939,000

Effect of exchange rate changes on cash and cash equivalents	240,000			198,000

NET INCREASE IN CASH AND CASH EQUIVALENTS	25,005,000			33,237,000

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	44,747,000			22,389,000

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	69,752,000		$	55,626,000

See notes to condensed consolidated financial statements.

GRIFFON CORPORATION ~~AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF ~~CASH FLOWS~~SHAREHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED DECEMBER 31,2007

(Unaudited)

SIX MONTHS ENDED MARCH 31,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 8,720,000 $ 13,984,000
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 19,765,000 16,951,000
Stock based compensation 1,303,000 870,000
Provision for losses on accounts receivable 734,000 816,000
Change in assets and liabilities, net of assets acquired and liabilities assumed:

Decrease in accounts receivable and contract costs and recognized income not yet billed
32,828,000 812,000
Increase in inventories (6,658,000 ) (8,003,000 )
(Increase) decrease in prepaid expenses and other assets
(1,217,000 ) 257,000
Decrease in accounts payable, accrued liabilities and income taxes payable
(36,989,000 ) (17,121,000 )
Other changes, net 861,000 (32,000 )
10,627,000 (5,450,000 )
Net cash provided by operating activities 19,347,000 8,534,000

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property, plant and equipment (19,477,000 ) (13,442,000 )
Acquisition of minority interest in subsidiary --- (1,304,000 )
Acquired businesses (17,167,000 ) ---
Increase in equipment lease deposits (1,473,000 ) (4,463,000 )
Funds restricted for capital projects (4,421,000 ) ---
Net cash used in investing activities (42,538,000 ) (19,209,000 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of shares for treasury (2,300,000 ) (15,573,000 )
Proceeds from issuance of long-term debt 42,891,000 60,000,000
Payments of long-term debt (482,000 ) (62,982,000 )
Decrease in short-term borrowings (5,625,000 ) (1,181,000 )
Exercise of stock options 1,111,000 649,000
Tax benefit from exercise of stock options 278,000 1,863,000
Distributions to minority interest --- (354,000 )
Other, net (1,238,000 ) (607,000 )

Net cash provided by (used in) financing activities 34,635,000 (18,185,000 )

Effect of exchange rate changes on cash and cash equivalents
541,000 68,000

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 11,985,000 (28,792,000 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 22,389,000 60,663,000

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 34,374,000 $ 31,871,000

	COMMON STOCK			CAPITAL IN EXCESS OF		RETAINED			TREASURY SHARES				ACCUMULATED OTHER COMPREHENSIVE		DEFERRED						COMPREHEN-SIVE
	SHARES	PAR VALUE		PAR VALUE		EARNINGS			SHARES	COST			INCOME		COMPENSATION			Total			INCOME
Balances, October 1, 2007	42,328,821	$	10,582,000	$	180,022,000	$	461,163,000		12,399,115	$	(212,731,000	)	$	29,522,000	$	(1,619,000	)	$	466,939,000
Foreign currency translation adjustment	—	—		—		—			—	—			6,245,000		—			6,245,000			$	6,245,000
Net income (loss)	—	—		—		(1,355,000		)	—	—			—		—			(1,355,000		)	(1,355,000		)
Comprehensive income (Note 6)	—	—		—		—			—	—			—		—			—			$	4,890,000
Amortization of deferred compensation	—	—		—		—			—	—			—		105,000			105,000
Purchase of treasury shares	—	—		—		—			40,900	(579,000		)	—		—			(579,000		)
Stock-based compensation	—	—		595,000		—			—	—			—		29,000			624,000
Impact of the adoption of FIN 48	—	—		—		(4,667,000		)	—	—			—		—			(4,667,000		)
Other	—	—		8,000		—			—	—			—		—			8,000
Balances, December 31, 2007	42,328,821	$	10,582,000	$	180,625,000	$	455,141,000		12,440,015	$	(213,310,000	)	$	35,767,000	$	(1,485,000	)	$	467,320,000

See notes to condensed consolidated financial statements.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of presentation -

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement have been included. Operating results for the three-month ~~and six-month periods~~period ended ~~March~~December 31, 2007 are not necessarily indicative of the results that may be expected for the year ending September 30, ~~2007.~~2008. The ~~balance sheet~~Condensed Consolidated Balance Sheet at September 30, ~~2006~~2007 has been derived from the audited financial statements at that date. For further information, refer to the consolidated financial statements and notes thereto included in the ~~company's~~company’s Annual Report on Form 10-K for the year ended September 30, ~~2006.~~

2007.

(2) Inventories ~~and long-term debt~~ -

Inventories, stated at the lower of cost (first-in, first-out or average) or market, are comprised of the following:

March 31, September 30,
2007 2006

Finished goods $ 70,578,000 $ 67,230,000

Work in process 67,169,000 54,590,000

Raw materials and supplies 36,679,000 43,269,000

$ 174,426,000 $ 165,089,000

	December 31,		September 30,
	2007		2007
Finished goods	$	65,545,000	$	66,165,000
Work in process	62,114,000		52,404,000
Raw materials and supplies	37,910,000		43,206,000
	$	165,569,000	$	161,775,000

(3) Long-term debt

In December ~~2006~~2007, the company and a subsidiary modified their existing senior secured multicurrency revolving credit facility, executed in December 2005 ~~increasing~~ (as further amended in December 2006)(the ~~facility~~“Credit Agreement”), to ~~provide up~~revise certain financial covenants, namely the Consolidated Leverage Ratio and the Consolidated Fixed Charges Coverage Ratio, in effect for the first quarter of fiscal 2008 ended December 31, 2007. The financial covenants reset to ~~$175,000,000~~previously existing levels commencing with the quarter ended March 31, 2008. The company anticipates that it may not be in compliance with one or both of these quarterly covenants in the future. As a result of such possible non-compliance and ~~extending its remaining term to five years. Commitments under~~in accordance with the ~~credit agreement may be increased by $50,000,000 under certain circumstances upon request~~Emerging Issues Task Force Issue No. 86-30 “Classification of Obligations When a Violation is Waived by the ~~company. Borrowings under~~Creditor”, the ~~credit agreement bear interest~~company has reclassified $62.5 million of long-term debt as current debt in the Condensed Consolidated Balance Sheet at ~~rates based upon LIBOR~~ December 31, 2007. The company has commenced discussions with its lenders to further amend and/or ~~the prime rate and are collateralized~~refinance its Credit Agreement by ~~stock of a subsidiary of the company.~~March 31, 2008.

~~(3)~~ (4) Earnings (loss) per share (EPS) -

Basic EPS is calculated by dividing income (loss) by the ~~weighted average~~weighted-average number of shares of common stock outstanding during the period. Diluted EPS is calculated by dividing income (loss) by the ~~weighted average~~weighted-average number of shares of common stock outstanding plus additional common shares that could be issued in connection with potentially dilutive securities. Holders of the company’s 4% convertible subordinated notes are entitled to convert their notes into the company’s common stock upon the occurrence of certain events described in Note 2 of Notes to Consolidated Financial Statements in the company’s Annual Report on Form 10-K for the year ended September 30, ~~2006.~~2007. Basic and diluted EPS for the three-month ~~and six-month~~ periods ended ~~March~~December 31, 2007 and 2006 were determined using the following information:

Three Months Ended March 31, Six Months Ended March 31,
2007 2006 2007 2006

Income available to common stockholders
$ 255,000 $ 7,208,000 $ 8,720,000 $ 13,984,000

Weighted-average shares outstanding - basic EPS
29,948,000 29,874,000 29,950,000 30,039,000
Incremental shares from stock-based compensation
1,136,000 1,229,000 1,123,000 1,263,000
Incremental shares from 4% convertible notes
82,000 --- 44,000 ---
Weighted average shares outstanding - diluted EPS
31,166,000 31,103,000 31,117,000 31,302,000

	Three Months Ended December 31,
	2007			2006
Income (loss) available to common stockholders	$	(1,355,000	)	$	8,465,000
Weighted-average shares outstanding — basic	30,051,000			29,952,000
Incremental shares from stock-based compensation	—			1,110,000
Incremental shares from 4% convertible notes	—			5,000
Weighted-average shares outstanding — diluted	30,051,000			31,067,000

At December 31, 2007 and 2006 and during the three-month periods ended December 31, 2007 and 2006, there were outstanding stock options whose exercise prices were higher than the average market values of the underlying common stock for the period. At December 31, 2007 and during the three-month period ended December 31, 2007, there were outstanding stock options whose exercise prices were lower than the average market values of the underlying common stock for the period but are considered antidilutive because of the net loss in the period. These options are antidilutive and are excluded from the computation of income (loss) per share. The antidilutive stock options outstanding were as follows:

	Three Months Ended December 31,
	2007	2006

Antidilutive stock options	2,482,000	148,000

~~(4)~~ (5) Business segments ~~and acquisition~~ -

The ~~company's~~company’s reportable business segments are as ~~follows -~~follows: Garage Doors (manufacture and sale of residential and commercial/industrial garage doors, and related products); Installation Services (sale and installation of building products primarily for new construction, such as garage doors, garage door openers, manufactured fireplaces and surrounds, flooring and cabinets); Specialty Plastic Films (manufacture and sale of plastic films and film laminates for baby diapers, adult incontinence care products, disposable surgical and patient care products and plastic packaging); and Electronic Information and Communication Systems (communication and information systems for government and commercial markets).

Information on the ~~company's~~company’s business segments is as follows:

Electronic
Information
Specialty and
Garage Installation Plastic Communication
Doors Services Films Systems Totals
Revenues from external customers -

Three months ended
March 31, 2007 $ 101,216,000 $ 62,261,000 $ 99,730,000 $ 124,164,000 $ 387,371,000
March 31, 2006 117,062,000 81,603,000 95,869,000 71,617,000 366,151,000

Six months ended
March 31, 2007 $ 225,105,000 $ 139,182,000 $ 203,385,000 $ 254,014,000 $ 821,686,000
March 31, 2006 254,621,000 163,714,000 182,042,000 124,298,000 724,675,000

Intersegment revenues -

Three months ended
March 31, 2007 $ 4,039,000 $ 15,000 $ --- $ --- $ 4,054,000
March 31, 2006 4,525,000 18,000 --- --- 4,543,000

Six months ended
March 31, 2007 $ 8,790,000 $ 29,000 $ --- $ --- $ 8,819,000
March 31, 2006 9,793,000 61,000 --- --- $ 9,854,000

Segment profit (loss) -

Three months ended
March 31, 2007 $ (4,556,000 ) $ (4,848,000 ) $ 4,939,000 $ 12,430,000 $ 7,965,000
March 31, 2006 3,637,000 1,204,000 8,910,000 4,751,000 18,502,000

Six months ended
March 31, 2007 $ (543,000 ) $ (5,741,000 ) $ 9,277,000 $ 25,351,000 $ 28,344,000
March 31, 2006 17,207,000 4,014,000 7,274,000 7,718,000 36,213,000

											Electronic
											Information
									Specialty		and
			Garage			Installation			Plastic		Communication
	Totals		Doors			Services			Films		Systems
Revenues from external customers —

Three months ended
December 31, 2007	$	341,398,000	$	106,936,000		$	52,204,000		$	106,398,000	$	75,860,000
December 31, 2006	434,315,000		123,889,000			76,921,000			103,655,000		129,850,000

Intersegment revenues —

Three months ended
December 31, 2007	$	4,127,000	$	4,110,000		$	17,000		$	—	$	—
December 31, 2006	4,765,000		4,751,000			14,000			—		—

Segment profit (loss) —

Three months ended
December 31, 2007	$	4,462,000	$	(1,291,000	)	$	(5,727,000	)	$	5,997,000	$	5,483,000
December 31, 2006	20,379,000		4,013,000			(893,000		)	4,338,000		12,921,000

Following is a reconciliation of segment profit to amounts reported in the consolidated financial statements:

Three Months Ended March 31, Six Months Ended March 31,
2007 2006 2007 2006
Profit for all segments $ 7,965,000 $ 18,502,000 $ 28,344,000 $ 36,213,000
Unallocated amounts (4,968,000 ) (4,887,000 ) (8,665,000 ) (9,717,000 )
Interest and other, net (2,300,000 ) (2,147,000 ) (4,624,000 ) (4,235,000 )

Income before income taxes $ 697,000 $ 11,468,000 $ 15,055,000 $ 22,261,000

	Three Months Ended December 31,
	2007			2006
Profit for all segments	$	4,462,000		$	20,379,000
Unallocated amounts	(4,825,000		)	(3,697,000		)
Interest and other, net	(2,030,000		)	(2,324,000		)
Income (loss) before income taxes	$	(2,393,000	)	$	14,358,000

Unallocated amounts include general corporate expenses not attributable to any reportable segment. Goodwill at ~~March~~December 31, 2007 includes $12.9 million attributable to the ~~garage doors~~Garage Doors segment, ~~$19.5~~$18.6 million attributable to the ~~electronic information~~Electronic Information and ~~communication systems~~Communication Systems segment, $6.3 million attributable to the ~~installation services~~Installation Services segment and ~~$71.6~~$79.1 million attributable to the ~~specialty plastic films~~Specialty Plastic Films segment. The change in goodwill from September 30, ~~2006~~2007 was primarily due to ~~specialty plastic films~~Specialty Plastic Films’ foreign currency translation ~~adjustments~~adjustments. In December 2007, the Electronic Information and ~~the goodwill recorded from the January 2007 installation services~~Communication Systems segment ~~acquisition~~acquired certain assets and assumed certain liabilities of a ~~kitchen cabinet installation~~video surveillance systems integration business. The ~~acquisition~~purchase price was aapproximately $1.75 million in cash ~~transaction~~ plus ~~performance based~~performance-based cash payments ~~determined~~ over a ~~three year period. Annual revenues for the acquired company are approximately $30,000,000.~~

three-year period of up to $1.75 million. The purchase price has been allocated to intangible assets.

~~(5)~~ (6) Comprehensive income and defined benefit pension expense -

Comprehensive income, which consists of net income (loss) and foreign currency translation adjustments, was ~~$4.1~~$4.9 million and ~~$11.6~~$15.4 million for the three-month periods ~~and $19.4 million and $15.3 million for the six-month periods~~ ended ~~March~~December 31, 2007 and 2006, respectively.

Defined benefit pension expense was recognized as follows:

	Three Months Ended December 31,
	2007			2006
Service cost	$	244,000		$	312,000
Interest cost	1,001,000			932,000
Expected return on plan assets	(520,000		)	(449,000		)
Amortization of net actuarial loss	239,000			628,000
Amortization of prior service cost	84,000			80,000
	$	1,048,000		$	1,503,000

(7) Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides a new single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 is effective for the company as of October 1, 2008. The Company is currently evaluating the impact that the adoption of SFAS 157 will have on its results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities, Including an amendment of FASB Statement No. 115”, (“SFAS 159”). This Statement permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. SFAS 159 is effective for the company as of October 1, 2008. The Company is currently evaluating the impact that the adoption of SFAS 159 will have on its results of operations and financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). The purpose of issuing the statement is to replace current guidance in SFAS 141 to better represent the economic value of a business combination transaction. The changes to be effected with SFAS 141R from the current guidance include, but are not limited to: (1) acquisition costs will be recognized separately from the acquisition; (2) known contractual contingencies at the time of the acquisition will be considered part of the liabilities acquired measured at their fair value; all other contingencies will be part of the liabilities acquired measured at their fair value only if it is more likely than not that they meet the definition of a liability; (3) contingent consideration based on the outcome of future events will be recognized and measured at the time of the acquisition; (4) business combinations achieved in stages (step acquisitions) will need to recognize the identifiable assets and liabilities, as well as noncontrolling interests, in the acquiree, at the full amounts of their fair values; and (5) a bargain purchase (defined as a business combination in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree) will require that excess to be recognized as a gain attributable to the acquirer. The company does anticipate that the adoption of SFAS 141R will have an impact on the way in which business combinations will be accounted for compared to current practice. SFAS 141R will be effective for any business combinations that occur after October 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”). SFAS 160

Three Months Ended March 31, Six Months Ended March 31,
2007 2006 2007 2006
Service cost $ 312,000 $ 339,000 $ 624,000 $ 678,000
Interest cost 932,000 864,000 1,864,000 1,728,000
Expected return on plan assets
(449,000 ) (374,000 ) (898,000 ) (748,000 )
Amortization of net actuarial loss
628,000 750,000 1,256,000 1,500,000
Amortization of prior service cost
80,000 80,000 160,000 160,000

$ 1,503,000 $ 1,659,000 $ 3,006,000 $ 3,318,000

was issued to improve the relevance, comparability, and transparency of financial information provided to investors by requiring all entities to report noncontrolling (minority) interests in subsidiaries in the same way, that is, as equity in the consolidated financial statements. Moreover, SFAS 160 eliminates the diversity that currently exists in accounting for transactions between an entity and noncontrolling interests by requiring they be treated as equity transactions. SFAS 160 will be effective for the company as of October 1, 2009. The company is currently evaluating the impact that SFAS 160 will have on its financial statements and disclosures.

~~(6)~~ (8) Other income-

Other income included approximately ~~$180,000~~$179,000 and ~~$1,740,000 for the three-month periods and $569,000 and $499,000 for the six-month periods ended March 31, 2007 and 2006, respectively,~~$389,000 of foreign exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of the company and its ~~subsidiaries.~~

~~(7)~~ ~~Provision~~subsidiaries for ~~income~~the quarters ended December 31, 2007 and 2006, respectively.

(9) Income taxes -

The company’s effective tax rate ~~increased in~~for the ~~first and second quarters of fiscal~~three months ended December 31, 2007 ~~to 42% principally~~was approximately 43%. This rate was greater than the 35% U.S. income tax rate primarily due to ~~differences in the mix of foreign earnings and related taxes included in the calculation of the estimated annual effective tax rate for fiscal~~state taxes.

On October 1, 2007, ~~compared to the prior year. Additionally,~~ the company ~~is currently assessing what the effects will be upon adoption of Financial Accounting Standards Board~~adopted FASB Interpretation (“FIN”) No. 48, ~~which clarifies the accounting~~“Accounting for ~~uncertainty~~Uncertainty in ~~income taxes~~Income Taxes — an interpretation of FASB Statement No. 109”(“FIN 48”). FIN 48 prescribes a recognition criteria and a related measurement model for tax positions taken by companies. FIN 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial ~~statements.~~

statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition rules. The total amount of unrecognized tax benefits as of the date of adoption was $24.6 million. The adoption of FIN 48 resulted in an adjustment to beginning retained earnings of $4.7 million and did not have any impact on the company’s results of operations. Included in the balance of unrecognized tax benefits at October 1, 2007 are $20.8 million of tax benefits that, if recognized, would impact the effective tax rate. With regard to the unrecognized tax benefits as of December 31, 2007, the company believes it is reasonably possible that approximately $1.4 million of such unrecognized tax benefits could be recognized in the next twelve months, which would impact the effective tax rate if recognized.

The company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. At October 1, 2007, the combined amount of accrued interest and penalties related to tax positions taken or to be taken on our tax returns and recorded as part of the reserves for uncertain tax positions was $3.0 million. There was no significant change to this amount during the first quarter of fiscal 2008.

As a result of the company’s global operations, Griffon or its subsidiaries file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. The company is routinely subject to examination by taxing authorities throughout the world, including such jurisdictions as Germany, Canada, Brazil, Sweden and the U.S. The company’s U.S. federal income tax returns are no longer subject to income tax examination for years before 2004 and the company’s major U.S. state and foreign jurisdictions are no longer subject to income tax examinations for years before 2000. Various U.S. state and foreign tax audits are currently underway.

(10) — Warranty Liability

The company offers to its customers warranties against product defects for periods primarily ranging from six months to three years, with certain products having a limited lifetime warranty, depending on the specific product and terms of the customer purchase agreement. The company’s typical warranties require it to repair or replace the defective products during the warranty period at no cost to the customer. At the time the product revenue is recognized, the company records a liability for estimated costs under its warranties, which costs are estimated based on historical experience. The company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary. While the company believes that its estimated liability for product warranties is adequate, the estimated liability for the product warranties could differ materially from future actual warranty costs.

Changes in the company’s warranty liability, included in accrued liabilities, were as follows:

	Three Months Ended December 31,
	2007			2006
Balance, beginning of period	$	7,868,000		$	5,908,000
Warranties issued and changes in estimated pre-existing warranties	(79,000		)	3,045,000
Actual warranty costs incurred	(1,028,000		)	(752,000		)
Balance, end of period	$	6,761,000		$	8,201,000

ITEM 2 ~~- MANAGEMENT'S~~— MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Net sales for the quarter ended ~~March~~December 31, 2007 were ~~$387,371,000, up~~$341,398,000, down from ~~$366,151,000~~$434,315,000 for the first quarter of fiscal 2007. Income (loss) before income taxes was $(2,393,000) compared to $14,358,000 last year. Net income (loss) was $(1,355,000) compared to $8,465,000 last year.

Operating results for the first quarter of fiscal 2008 decreased compared to the first quarter of 2007. The decreases in sales and operating income were attributable to the Installation Services, Garage Doors and the Electronic Information and Communication Systems segments.

The company’s Garage Doors segment finished the quarter with disappointing results that were consistent with the sustained downturn in the housing market. Although we anticipated that weaker residential construction markets would have a continuing effect on Garage Doors’ operating results, we did not anticipate the duration and severity of the impact that weaker housing markets, particularly with respect to resale of existing houses, would have on this segment’s repair and renovate business. We continue to see mixed signals with respect to predicting the bottom of the housing market decline. The segment has been and will continue to focus on significant cost reduction programs including, but not limited to, reductions in force, reducing or eliminating certain sales and marketing programs and consolidating facilities where possible.

A decline in Installation Services’ operating results was anticipated, although not to the extent actually experienced, due to the continuing effect of the weakness in new home construction in the segment’s Las Vegas, Phoenix and Atlanta markets, as well as the loss of a major customer in Las Vegas. During the second quarter of fiscal ~~2006. Income before income taxes was $697,000 compared~~2008, the segment’s management has initiated a restructuring program in its efforts to ~~$11,468,000 last year. Net income was $255,000 compared~~reduce future operating losses by, among other things, undertaking a reduction in force, consolidating facilities and optimizing its exit from certain markets. The company expects the restructuring program to ~~$7,208,000 last year.~~

result in charges that range between $12 million and $15 million in fiscal 2008.

The ~~increase~~decline in sales ~~for~~and operating income in the ~~second quarter of fiscal 2007 was primarily~~Electronic Information and Communication Systems segment is attributable to the ~~electronic information and communication systems segment offset by a decline~~wind down in ~~sales in the garage doors and installation services segments. Operating results declined for the second quarter~~late fiscal 2007 of 2007. Higher operating profit in the electronic information and communication systems segment was offset by losses in the garage doors and installation services segments and lower operating results in the plastic films segment.

~~The~~ substantial ~~growth in the electronic information and communication systems segment is primarily attributable to the~~ contracts with Syracuse Research Corporation ~~(SRC)~~(“SRC”). Excluding the impact of the SRC contracts in the respective first quarter periods, the Electronic Information and Communication Systems segment’s core business sales grew by approximately $9.2 million, or 15%. The segment ~~has~~had received approximately ~~$309~~$340 million of funding from SRC for turnkey production of a Counter Improvised Explosive Device ~~and when all awards are definitized they are expected~~over the prior two fiscal years.

Specialty Plastic Films achieved improved results compared to reach over $345 million. The segment anticipates that shipments for these awards will be completed through the remainder of this fiscal year. Unless there are significant new orders with SRC or in respect of other projects, we anticipate that sales in the segment will be lower in fiscal 2008 than in fiscal 2007.

last year’s first quarter. Higher sales in the specialty plastic films segment primarily reflects higher unit volume in Europe and the impact of foreign exchange partially offset by lower selling prices to a major customer and an unfavorable product mix. The decrease in operating income for specialty plastic films is primarily attributable to the selling price concessions made to a major customer.

~~The decline in~~ sales and operating income were favorably affected by improved operational efficiencies and product mix. To a lesser degree, results were favorably impacted by the translation of foreign exchange rates. On average, resin costs in ~~our garage door~~the first quarter increased approximately 30% and ~~installation services segments was principally due~~6% in North America and Brazil, respectively, but remained fairly constant in Europe. It is estimated that the effect of resin cost volatility had a negative impact on the segment’s operating results, when compared to ~~declines~~the prior-year quarter, of approximately $3-4 million. The segment’s operating results were also unfavorably impacted by lower unit volumes primarily in Europe, resulting from a decline in sales ~~volume. The company believes~~to a certain customer.

Specialty Plastic Films’ elastic laminates for the sales volume decline is principally a result of the slowdown in the new home construction and home resale markets. We did not anticipate the severity of the decline in new home construction in certain markets and we did not foresee the slowdown in our repair and renovate business. As these conditions have had a significant impact on operating results, we have taken steps subsequent to March 31, 2007 to resize operations for lower volumes, including a substantial work force reduction. A decline in installation services’ operating results was anticipated, but it has been greater than expected. Weakness in the new home constructionhygiene products market has been greater than anticipated and we have not been successful in replacing lost business in our Las Vegas market. In January 2007, the segment acquired an installer of kitchen cabinets in the Las Vegas market, expanding the segment’s offering in this market and creating opportunities for synergyare qualified with the segment’s ~~existing cabinet installation business.~~major customer and business development with other key target customers is in process. We anticipate that volume will ramp up for this product

as the year progresses.

RESULTS OF OPERATIONS

~~See Note 4 of Notes to Condensed Consolidated Financial Statements.~~

THREE MONTHS ENDED ~~MARCH~~DECEMBER 31, 2007

Operating results (in thousands) by business segment were as follows for the three-month periods ended ~~March~~December 31:

   Segment
   Operating
Net Sales Profit (loss)
2007 2006 2007   2006
Garage Doors $ 105,255 $ 121,587 $ (4,556 ) $ 3,637
Installation services 62,276 81,621 (4,848 ) 1,204
Specialty plastic films 99,730 95,869 4,939 8,910
Electronic information and communication systems
124,164 71,617 12,430 4,751
Intersegment revenues (4,054 ) (4,543 ) --- ---
$ 387,371 $ 366,151 $ 7,965 $ 18,502

							Segment
							Operating
	Net Sales						Profit (loss)
	2007			2006			2007			2006

Garage Doors	$	111,046		$	128,640		$	(1,291	)	$	4,013
Installation Services	52,221			76,935			(5,727		)	(893		)
Specialty Plastic Films	106,398			103,655			5,997			4,338
Electronic Information and Communication Systems	75,860			129,850			5,483			12,921
Intersegment revenues	(4,127		)	(4,765		)	—			—
	$	341,398		$	434,315		$	4,462		$	20,379

Garage Doors

Net sales of the ~~garage doors~~Garage Doors segment decreased by ~~$16.3~~$17.6 million, or 13.7%, compared to last ~~year.~~year primarily due to the effects of the weak housing market. The sales decline was principally due to reduced unit volume ~~(approximately $22 million) partially offset by the effect of higher selling prices associated with the recovery of increased costs (approximately $4~~($17.2 million) and ~~favorable product mix~~an increase in customer returns and ~~decreased customer~~ deductions ~~(approximately $2~~($.4 million). The ~~decline~~segment reported declines in ~~unit volume is primarily due to the effects~~both its retail channel and dealer channel of ~~the weak housing market.~~

approximately 10% and 15%, respectively.

Operating profit of the ~~garage doors~~Garage Doors segment decreased by ~~$8.2~~$5.3 million compared to last year, resulting in an operating loss for the ~~second~~first quarter of ~~2007.~~2008. Gross margin percentage decreased to ~~24.2%~~27.3% for the quarter compared to ~~28.5%~~27.7% last year primarily due to the reduced unit sales and resultant underabsorbed overhead. Selling, general and administrative (“SG&A”) expenses ~~decreased~~were approximately $1$.3 million ~~from~~higher than last year and, as a percentage of sales, ~~was 28.4% compared~~increased to ~~25.5%~~28.7% from 24.5% last year due to the sales decrease.

Installation Services

Net sales of the ~~installation services~~Installation Services segment decreased by ~~$19.3~~$24.7 million, or 32.1%, compared to last year. The sales decrease was primarily due to ~~the severe slowdown~~lower housing starts in the new home construction market, particularly in this segment’s major markets in the South and West for which housing starts have reportedly declined approximately 26% and 33%, respectively. Sales in the South decreased approximately 35%, primarily in the Atlanta market. These sales were further affected by the loss of market share due to competitive pressures. Sales decreased approximately 40% in the West, primarily in Las Vegas and Phoenix markets. These sales were further affected by the loss of a major customer inand increased competitive pressures.

Operating loss for the Las Vegas market. Approximately 60% of the sales decline is in the flooring installation business, with approximately 15% each, attributable to fireplace and garage door sales. Cabinet sales declined approximately 25% which was primarily offsetInstallation Services segment increased by ~~sales of the recently acquired cabinet installation company.~~

~~Operating profit of the installation services segment decreased by $6.1~~$4.8 million compared to last ~~year, resulting in an operating loss for the second quarter of 2007.~~year. Gross margin percentage increased to ~~26.4%~~27.0% from ~~25.8%~~25.1% last year principally due to ~~the kitchen~~a favorable product mix of higher-margin flooring and cabinet ~~installation business acquired in January 2007 offset by~~sales, as well as certain operational ~~inefficiencies and competitive pressures in certain of the segment’s markets. Selling, general and administrative~~improvements. SG&A expenses ~~were~~decreased approximately ~~the same as~~$.3 million from last year, ~~but~~and as a percentage of sales, increased to ~~34.3% from 24.4%~~38.1% compared to 26.3% last year. Such decreases were due primarily to decreases in distribution and selling expenses related to sales decreases and reductions in personnel and related costs, partially offset by the inclusion of SG&A expenses of Cabinet West, acquired in the second fiscal quarter of last year, ~~due to the sales decrease.~~and increases in receivable reserves.

Specialty Plastic Films

Net sales of the ~~specialty plastic films~~Specialty Plastic Films segment increased ~~$3.9~~$2.7 million, or 2.6%, compared to last year. The increase was principally due to the ~~effect of unit volume increases ($9 million), the positive effect on selling prices of resin volatility compared to last year ($2-3 million) and the~~ impact of exchange rates on translated foreign sales ($57.0 million)~~. These increases were~~, a favorable product mix ($1.7 million) and the impact of increased selling prices ($1.1 million), largely offset by ~~the effect~~lower volumes in Europe ($127.1 million) ~~of lower selling prices to the segment’s major customer and less favorable product mix.~~

Operating profit of the ~~specialty plastic films~~Specialty Plastic Films segment ~~decreased $4~~increased $1.7 million, or 38.2%, compared to last year. Gross margin percentage ~~decreased~~was 15.5% compared to ~~16.4% from 21.1%~~15.7% last year. The effect of ~~lower~~higher resin costs ~~positively~~not fully recovered in increased selling prices negatively affected margins by ~~$3 million. This gain was~~3.9%. Unit volume decreases also reduced gross margin by 1.1%. These gross margin percentage decreases were partially offset by ~~the effect of lower margins with the segment’s major customer~~improved operational efficiencies and ~~less~~a favorable product mix. ~~Selling, general and administrative~~SG&A expenses ~~were~~decreased approximately ~~the same as~~$1.6 million from last year ~~but~~and, as a percentage of sales, decreased to ~~11.8%~~10.4% from ~~13.9%~~12.2% last year due to the sales increase.

Such decreases were primarily due to reductions in personnel and related costs.

Electronic Information and Communication Systems

Net sales of the ~~electronic information~~Electronic Information and ~~communication systems~~Communication Systems segment ~~increased $52.5~~decreased $54.0 million, or 41.6%, compared to last year. The sales ~~increase~~decrease was ~~primarily~~ attributable to the conclusion of the primary SRC contracts ~~($36 million)~~in fiscal 2007. Partially offsetting this decrease was revenue growth related to new and ~~the MH-60 helicopter program ($11 million).~~

expanded programs.

Operating profit of the ~~electronic information~~Electronic Information and ~~communication systems~~Communication Systems segment ~~increased $7.7~~decreased $7.4 million, or 57.6%, principally due to the substantial revenue ~~growth~~decline attributable to the SRC ~~contracts.~~contracts noted above. Gross margin percentage ~~decreased~~increased to ~~18.5%~~21.2% from ~~19.5%~~16.7% last year, principally due to ~~lower margins on the SRC contracts. The effect of the lower gross margin percentage was offset by the sales increase. Selling, general and administrative~~a favorable program mix. SG&A expenses ~~were approximately the same as~~increased $1.8 million compared to last year ~~but~~and increased, as a percentage of sales, ~~decreased~~ to ~~8.7% from 13.3%~~14.2% compared to 6.9% last ~~year~~year. The increase in SG&A is primarily due to ~~the~~expenditures associated with product engineering and enhancement, as well as increases in expenses related to certain sales ~~increase.~~

and marketing related efforts.

Provision for income taxes

The company’s effective tax rate increased in the ~~second~~first quarter of fiscal ~~2007 principally due~~2008 to ~~differences in the mix of foreign earnings and related taxes included in the calculation of the estimated annual effective tax rate for fiscal 2007 compared to the prior year.~~

~~SIX MONTHS ENDED MARCH 31, 2007~~

~~Operating results (in thousands) by business segment were as follows for the six-month periods ended March 31:~~

   Segment
   Operating
Net Sales   Profit (loss)
2007 2006 2007   2006
Garage Doors $ 233,895 $ 264,414 $ (543 ) $ 17,207
Installation services 139,211 163,775 (5,741 ) 4,014
Specialty plastic films 203,385 182,042 9,277 7,274
Electronic information and communication systems
254,014 124,298 25,351 7,718
Intersegment revenues (8,819 ) (9,854 ) --- ---
$ 821,686 $ 724,675 $ 28,344 $ 36,213

~~Garage Doors~~

Net sales of the garage doors segment decreased by $30.5 million compared to last year. The sales decline was principally due to reduced sales volume (approximately $45 million) partially offset by selling price increases associated with the recovery of increased costs (approximately $10 million) and favorable product mix and decreased customer deductions (approximately $5 million).

Operating profit of the garage doors segment decreased $17.8 million compared to last year, resulting in an operating loss for the first half of 2007. Gross margin percentage in the first six months of fiscal 2007 decreased to 26.1% compared to 30.1% for last year’s first half principally due to the effect of reduced sales volume and associated plant efficiency losses. Selling, general and administrative expenses decreased by approximately ~~$1 million compared to last year and, as a percentage of sales, was 26.2% compared to 23.6% last year.~~

~~Installation Services~~

~~Net sales of the installation services segment decreased by $24.6 million compared to last year. The sales decrease was~~43% primarily due to the severe slowdown in the new home construction market and the loss of a major customer in the Las Vegas market. Approximately 65% of the sales decline is in the flooring installation business, with approximately 20% each, attributable to fireplace and garage door sales. Cabinet sales increased approximately 11% which was primarily due to the sales of the recently acquired cabinet installation company.

Operating profit of the installation services segment decreased $9.8 million compared to last year, resulting in an operating loss for the first half of 2007. Gross margin was 25.7% in the first six months of 2007 and 26.3% in the first half of 2006. Selling, general and administrative expenses increased $2.4 million compared to last year and, as a percentage of sales was 29.8% compared to 23.9% last year.

~~Specialty Plastic Films~~

Net sales of the specialty plastic films segment increased $21.3 million compared to last year. The increase was due to higher unit volumes (approximately $22 million), the partial pass-through of resin costs (approximately $9 million) and the impact of foreign exchange rates (approximately $10 million), partially offset by lower selling prices to a major customer and unfavorable product mix (approximately $20 million).

Operating profit of the specialty plastic films segment increased $2 million compared to last year. Gross margin percentage decreased to 16% from 17.4% last year. The lower gross margin primarily reflected the effect of lower selling prices to a major customer. Selling, general and administrative expenses decreased as a percentage of sales to 12% from 14% last year.

~~Electronic Information and Communication Systems~~

Net sales of the electronic information and communication systems segment increased $129.7 million compared to last year. The sales increase was principally attributable to the SRC subcontract ($102 million) and growth in the MH-60 helicopter program ($20 million).

Operating profit of the electronic information and communication systems segment increased $17.6 million compared to last year. Gross margin percentage decreased to 17.6% from 19.6% last year, principally due to lower margins on the SRC contracts. The effect of the lower gross margin percentage was offset by the sales increase. Selling, general and administrative expenses increased $2.9 million compared to last year and, as a percentage of sales, was 7.8% compared to 13.7% last year due to the sales increase.

~~Provision for income taxes~~

The company’s effective tax rate increased to 42% in the six-month period ended March 31, 2007 principally due to differences in the mix of foreign earnings and related taxes included in the calculation of the estimated annual effective tax rate for fiscal 2007 compared to the prior year.

state taxes.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow generated by operations for the ~~six-months~~three-months ended ~~March~~December 31, 2007 was ~~$19.3~~$41.2 million compared to ~~$8.5~~$34.0 million last year and working capital was ~~$347.6~~$279.1 million at ~~March~~December 31, 2007. Operating cash flows ~~increased compared to last year due primarily to lower trade receivables partly offset by decreases in current liabilities.~~

were principally the result of decreased accounts receivable and income taxes payable.

During the ~~six-months~~three-months ended ~~March~~December 31, 2007, the company had capital expenditures of approximately ~~$19.5~~$6.5 million, principally in connection with the ~~garage doors~~Garage Doors, Specialty Plastic Films and ~~specialty plastic films~~the Electronic Information and Communication Systems segments.

During the three-months ended December 31, 2007, the company used cash from financing activities of $13.4 million, primarily from payments made on long-term debt of $13.8 million, partially offset by a net increase in short-term borrowings of $787,000. Financing cash flows also included treasury stock purchases of ~~$2.3 million~~$579,000 to acquire approximately ~~97,500~~41,000 shares of the company’s common stock. ~~During the six months ended March 31, 2007 the company borrowed approximately $43~~Approximately 1.4 million ~~to finance its manufacturing facility in Troy, Ohio and the acquisition of a kitchen cabinet installation business as well as for other working capital purposes.~~

~~Approximately 1,500,000~~ shares of common stock are available for purchase pursuant to the company’s stock buyback program, and additional purchases under the plan or a 10b5-1 plan ~~will~~may be made, depending upon market conditions and other factors, at prices deemed appropriate by management.

In December 2007, the company and a subsidiary modified their existing senior secured multicurrency revolving credit facility, executed in December 2005 (as further amended in December 2006)(the “Credit Agreement”), to revise certain financial covenants, namely the Consolidated Leverage Ratio and the Consolidated Fixed Charges Coverage Ratio, in effect for the first quarter of fiscal 2008 ended December 31, 2007. The financial covenants reset to previously existing levels commencing with the quarter ended March 31, 2008. The company anticipates that it may not be in compliance with one or both of these quarterly covenants in the future. As a result of such possible non-compliance and in accordance with the Emerging Issues Task Force Issue No. 86-30 “Classification of Obligations When a Violation is Waived by the Creditor”, the company has reclassified $62.5 million of long-term debt as current debt in the Condensed Consolidated Balance Sheet at December 31, 2007. The company has commenced discussions with its lenders to further amend and/or refinance its Credit Agreement by March 31, 2008.

The company has outstanding $130 million of 4% convertible subordinated notes due 2023 (the “Notes”). Holders of the Notes may require the company to repurchase all or a portion of their Notes on July 18, 2010, 2013 and 2018, and upon a change in control.

Anticipated cash flows from operations, together with existing cash, bank lines of credit and lease line availability, should be adequate to finance presently anticipated working capital and capital expenditure requirements and to repay long-term debt as it matures.

CRITICAL ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

The ~~company's~~company’s significant accounting policies are set forth in Note 1 of Notes to Consolidated Financial Statements in the ~~company's annual report to shareholders~~company’s Annual Report on Form 10-K for the year ended September 30, ~~2006.~~2007. A discussion of those policies that require management judgment and estimates and are most important in determining the ~~company's~~company’s operating results and financial condition are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the ~~2006~~2007 Annual Report. The ~~company is currently assessing what the effects will be upon adoption of~~ Financial Accounting Standards Board ~~Interpretation No. 48, which clarifies the~~issues, from time to time, new financial accounting standards, staff positions and emerging issues task force consensus. See Note 7 of Notes to Condensed Consolidated Financial Statements for ~~uncertainty in income taxes recognized in the financial statements.~~

a discussion of these matters.

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this report, including without limitation statements regarding the ~~company's~~company’s financial position, business strategy, and the plans and objectives of the ~~company's~~company’s management for future operations, are forward-looking statements. When used in this report, words such as ~~“anticipate,” “believe,” “estimate,” “expect,”~~“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~~company’s management, as well as assumptions made by and information currently available to the ~~company's~~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, including, but not limited to, the housing market, results of integrating acquired businesses into existing operations, 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.~~company as previously disclosed in the company’s Annual Report on Form 10-K for the year ended September 30, 2007 in response to Item 1A to Part I of Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements. The company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

ITEM 3 -— QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Management does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that is required to be disclosed.

ITEM 4 -— CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the company’s disclosure controls and procedures were evaluated as of the end of the period covered by this report. Based on that evaluation, the company’s CEO and CFO concluded that the company’s disclosure controls and procedures were effective.

During the period covered by this report, there were no changes in the company’s internal control over financial reporting which materially affected, or are reasonably likely to materially affect, the ~~company's~~company’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

The company believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, within a company have been detected. The company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the company’s ~~chief executive officer~~CEO and ~~chief financial officer~~CFO have concluded that such controls and procedures are effective at the “reasonable assurance” level.

PART II - OTHER INFORMATION

Item 1	Legal Proceedings
	None

Item 1A	Risk Factors
	~~The~~ There have been no material changes from the risk ~~factor~~factors disclosed in Item 1A to Part I in the company’s ~~report~~Annual Report on Form 10-K for the year ended September 30, ~~2006 titled~~ ~~Trends in the housing sector and in general economic conditions will directly impact our business~~ ~~has been deleted and amended as follows:~~ 2007.

	Our businesses in the garage door and the installation industries are influenced by market conditions for new home construction and renovation of existing homes. For the year ended September 30, 2006, approximately 53% of our total net sales were related to new home construction and renovation of existing homes. Trends in the housing sector directly affect our financial performance. Accordingly, the strength of the U.S. economy, the age of existing home stock, job growth, interest rates, consumer confidence and the availability of consumer credit, as well as demographic factors such as the migration into the United States and migration of the population within the United States have an effect on our business. In that respect, the recent downturn in the housing market has had an adverse effect on the operating results of our garage door and installation services segments. For the three months ended March 31, 2007, we incurred operating losses of $4,556,000 in garage doors and $4,848,000 in installation services.

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds
(c)	Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs at Month End
October 1 – 31	20,900	$	14.28	20,900	1,386,295
November 1 – 30	20,000	14.01		20,000	1,366,295
December 1 – 31	—	—		—	1,366,295
Total	40,900			40,900

    Period

Total Number of
Shares Purchased(1)
Average Price Paid per Share
Total Number of Shares
Purchased as part of
Publicly Announced Plans
or Programs

Maximum Number of Shares
that May Yet Be Purchased
Under the Plans or Programs
at Month End
January 1 - 31 --- ---    ---    1,567,995
February 1 - 28 50,000 23.45    50,000    1,517,995
March 1 - 31    --- ---       ---    1,517,995
Total 50,000 50,000

(1) The company’s stock buyback program has been in effect since 1993, under which ~~a total of~~ approximately 1717.2 million shares have been purchased for ~~$231~~$234 million. The unused authorization is ~~1.5~~1.4 million shares. There is no time limit on the repurchases to be made under the plan.

Item 3

Defaults upon Senior Securities

None

Item 4	Submission of Matters to a Vote of Security Holders None

~~(a)~~ Item 5	Other Information
	The ~~Registrant held its~~Board of Directors of the company previously approved, subject to stockholder approval, an amendment to the company’s 2006 Equity Incentive Plan (the “Incentive Plan”) to increase the shares available for issuance under the Incentive Plan by 300,000 shares (150,000 shares if issued solely as restricted stock or awards other than stock options). The amendment was approved by the stockholders at the company’s 2008 Annual Meeting of Stockholders held on February ~~2, 2007.~~6, 2008. The foregoing description of the amendment is qualified in its entirety by reference to the 2006 Equity Incentive Plan, as amended, attached hereto as Exhibit 10.1 and incorporated herein by reference.
	~~(b)~~ Four directors were elected at the Annual Meeting to serve until the Annual Meeting of Stockholders in 2010. The names of these directors and votes cast in favor of their election and shares withheld are as follows:

Name Votes For Votes Withheld

Henry A. Alpert 26,164,124 2,067,457
Blaine V. Fogg 26,910,843 1,320,738
Rear Admiral Clarence A. Hill, Jr. 25,770,323 2,461,258
William H. Waldorf 24,469,201 2,761,880

~~The nine other directors whose term of office continued after the Annual Meeting are as follows:~~

~~Bertrand M. Bell~~ Item 6	~~Harvey R. Blau~~ Exhibits
~~Rear Admiral Robert G. Harrison~~	~~Ronald J. Kramer~~ Exhibit 10.1 — 2006 Equity Incentive Plan, as amended (attached hereto).
~~Martin S. Sussman~~	~~General Donald J. Kutyna~~
~~Joseph J. Whalen~~	~~Lieutenant General James W. Stansberry~~ Exhibit 10.2 — Severance Agreement, dated November 2, 2007, between the Registrant and Franklin H. Smith, Jr. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 2, 2007).
~~Lester L. Wolff~~

	~~(c) No other matters were voted upon at the Annual Meeting.~~
	Exhibit 10.3 — Amendment No. 1, dated December 31, 2007, to the Amended and Restated Credit Agreement, dated December 20, 2006, among Griffon Corporation, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated December 31, 2007).
	~~(d)Not applicable.~~

~~Item 5~~	~~Other Information~~
	~~None~~

~~Item 6~~	~~Exhibits~~

	Exhibit 31.1 -— Certification pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002 (attached hereto).

	Exhibit 31.2 -— Certification pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act ~~2002.~~2002 (attached hereto).

	Exhibit 32 -— Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~
	2002 (attached hereto).

SIGNATURE

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 thereunto duly authorized.

			GRIFFON CORPORATION

	By: /s/ Patrick L. Alesia	~~By /s/ Eric Edelstein~~
	~~Eric Edelstein~~ Patrick L. Alesia
	~~Executive~~ Vice President, ~~and~~ Chief Financial Officer, Treasurer and Secretary
	(Principal Financial Officer)

Date: ~~May 10, 2007~~February 11, 2008

EXHIBIT INDEX

Exhibit 10.1	—	2006 Equity Incentive Plan, as amended.

Exhibit 10.2	—	Severance Agreement, dated November 2, 2007, between the Registrant and Franklin H. Smith, Jr. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated November 2, 2007).

Exhibit 10.3	—	Amendment No. 1, dated December 31, 2007, to the Amended and Restated Credit Agreement, dated December 20, 2006, among Griffon Corporation, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated December 31, 2007).

Exhibit 31.1 -	—	Certification pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 -

—

Certification pursuant to Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act 2002.

Exhibit 32 -

—

Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	March 31,		September 30,
	2007		2006
			(Note 1)
ASSETS

CURRENT ASSETS:

Cash and cash equivalents	$	34,374,000	$	22,389,000

Accounts receivable, less allowance for doubtful accounts		212,484,000		247,172,000

Contract costs and recognized income not yet billed		74,312,000		68,279,000

Inventories (Note 2)		174,426,000		165,089,000

Prepaid expenses and other current assets		46,215,000		42,075,000

Total current assets		541,811,000		545,004,000

PROPERTY, PLANT AND EQUIPMENT

at cost, less accumulated depreciation and amortization of $231,971,000 at March 31, 2007 and $218,090,000 at September 30, 2006		235,663,000		231,975,000

OTHER ASSETS:

Goodwill		110,286,000		99,540,000

Intangible assets and other		67,894,000		51,695,000

		178,180,000		151,235,000

	$	955,654,000	$	928,214,000

	THREE MONTHS ENDED MARCH 31,
	2007			2006

Net sales	$	387,371,000		$	366,151,000

Cost of sales		305,853,000			275,898,000

Gross profit		81,518,000			90,253,000

Selling, general and administrative expenses		79,103,000			78,710,000

Income from operations		2,415,000			11,543,000

Other income (expense):
Interest expense		(3,052,000	)		(2,565,000	)
Interest income		752,000			418,000
Other, net (Note 6)		582,000			2,072,000
		(1,718,000	)		(75,000	)
Income before income taxes		697,000			11,468,000

Provision for income taxes (Note 7)		442,000			4,260,000

Net income	$	255,000		$	7,208,000

Basic earnings per share of common stock (Note 3)	$	.01		$	.24

Diluted earnings per share of common stock (Note 3)	$	.01		$	.23

	SIX MONTHS ENDED MARCH 31,
	2007			2006

Net sales	$	821,686,000		$	724,675,000

Cost of sales		646,964,000			545,253,000

Gross profit		174,722,000			179,422,000

Selling, general and administrative expenses		156,243,000			153,934,000

Income from operations		18,479,000			25,488,000

Other income (expense):
Interest expense		(5,996,000	)		(5,143,000	)
Interest income		1,372,000			908,000
Other, net (Note 6)		1,200,000			1,008,000
		(3,424,000	)		(3,227,000	)

Income before income taxes		15,055,000			22,261,000

Provision for income taxes (Note 7)		6,335,000			8,277,000

Net income	$	8,720,000		$	13,984,000

Basic earnings per share of common stock (Note 3)	$	.29		$	.47

Diluted earnings per share of common stock (Note 3)	$	.28		$	.45

									Electronic
									Information
							Specialty		and
	Garage			Installation			Plastic		Communication
	Doors			Services			Films		Systems		Totals
Revenues from external customers -

Three months ended
March 31, 2007	$	101,216,000		$	62,261,000		$	99,730,000	$	124,164,000	$	387,371,000
March 31, 2006		117,062,000			81,603,000			95,869,000		71,617,000		366,151,000

Six months ended
March 31, 2007	$	225,105,000		$	139,182,000		$	203,385,000	$	254,014,000	$	821,686,000
March 31, 2006		254,621,000			163,714,000			182,042,000		124,298,000		724,675,000

Intersegment revenues -

Three months ended
March 31, 2007	$	4,039,000		$	15,000		$	---	$	---	$	4,054,000
March 31, 2006		4,525,000			18,000			---		---		4,543,000

Six months ended
March 31, 2007	$	8,790,000		$	29,000		$	---	$	---	$	8,819,000
March 31, 2006		9,793,000			61,000			---		---	$	9,854,000

Segment profit (loss) -

Three months ended
March 31, 2007	$	(4,556,000	)	$	(4,848,000	)	$	4,939,000	$	12,430,000	$	7,965,000
March 31, 2006		3,637,000			1,204,000			8,910,000		4,751,000		18,502,000

Six months ended
March 31, 2007	$	(543,000	)	$	(5,741,000	)	$	9,277,000	$	25,351,000	$	28,344,000
March 31, 2006		17,207,000			4,014,000			7,274,000		7,718,000		36,213,000

							Segment
							Operating
	Net Sales						Profit (loss)
	2007			2006			2007			2006
Garage Doors	$	105,255		$	121,587		$	(4,556	)	$	3,637
Installation services		62,276			81,621			(4,848	)		1,204
Specialty plastic films		99,730			95,869			4,939			8,910
Electronic information and communication systems		124,164			71,617			12,430			4,751
Intersegment revenues		(4,054	)		(4,543	)		---			---
	$	387,371		$	366,151		$	7,965		$	18,502

Period	Total Number of Shares Purchased(1)	Average Price Paid per Share	Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs at Month End
January 1 - 31	---	---	---	1,567,995
February 1 - 28	50,000	23.45	50,000	1,517,995
March 1 - 31	---	---	---	1,517,995
Total	50,000		50,000

Name	Votes For	Votes Withheld

Henry A. Alpert	26,164,124	2,067,457
Blaine V. Fogg	26,910,843	1,320,738
Rear Admiral Clarence A. Hill, Jr.	25,770,323	2,461,258
William H. Waldorf	24,469,201	2,761,880