FISCAL 2005 SECOND QUARTER ENDED MARCH 31, 2005

The information contained herein has been modified since May 3, 2005 and reference should be made to the Company’s press release dated May 11, 2005 in which the Company announced a restatement of fiscal 2005 first and second quarter financial statements. The restatements did not change net income or earnings per share for the six months ended March 31, 2005.

Good afternoon and welcome to a financial overview of our second quarter of fiscal 2005 which ended on March 31, 2005.

I am Harvey Blau, Chairman of Griffon Corporation. With me is Griffon’s Executive Vice President and Chief Financial Officer, Eric Edelstein.

I will discuss the overall results of the quarter and then Eric will provide some further detail.

First, I should point out that, to the extent that matters to be discussed in this call include forward looking statements, they involve certain risks and uncertainties that could cause the Company’s actual results to differ materially from those in the forward looking statements.

I will start by noting that we are disappointed that in the second quarter, we experienced a reduction in quarterly earnings compared to the prior year.

Our second quarter results reflect a difficult economic environment for our businesses. It’s clearly a disappointing period compared to the record operating performance achieved last year.

Consolidated net sales for the quarter were $322 million, compared to $318 million in last year’s second quarter. Pretax income was $4.1 million, compared to $19.3 million last year. Net income of $2.9 million for the quarter resulted in diluted earnings per share of 9 cents, compared to 27 cents last year.

Profitability in the second quarter was negatively impacted by continued higher raw material costs in both the garage doors and specialty plastic films segments. Higher selling prices in both segments partially offset the effect of the raw material cost increases.

In films, resin prices increased over first quarter levels in North America and advanced more sharply in Europe. Resin prices increased by close to 5% during the quarter, and by approximately 40% compared to last year. We estimate that resin cost movement produced a negative impact on operating results of approximately $2 to $3 million.

In the garage doors segment, coil and hardware steel prices have risen dramatically, with coil steel costs increasing 27% in the second quarter and hardware steel rising over 60% over the last 12 months. Higher steel costs negatively impacted operating results by approximately $6-7 million.

Specialty plastic films sales for the quarter were $95 million compared to $107 million last year. Operating income was $ 6.2 million compared to $15.1 million last year. Reduction in sales volume from our major customer also significantly impacted sales and operating income.

Sales in garage doors for the quarter were $110 million compared to $96 million last year. This segment had an operating loss of $1.3 million for the quarter, compared to operating income of $4 million in the prior year.

Our service and installation operation had sales in the quarter of $67 million, compared to $72 million in the prior year. Operating income was $1.3 million, compared to $1.7 million last year.

Telephonics, our electronics information and communications systems segment, had sales in the quarter of $56 million, compared to $47 million last year. Telephonics’ operating income was $3.4 million compared to $3.7 million last year. This decrease was primarily attributable to operating costs associated with companies acquired during the period.

Consolidated operating cash flow in the quarter was $25 million and we continue to support the growth of our businesses with capital expenditures in the quarter of $6 million and funds used for acquisitions of $9 million and debt repayments of $6 million.

Our balance sheet at March 31 remains strong, with cash in excess of $80 million, working capital of $267 million and total indebtedness representing 34% percent of capital.

Eric will now provide some details on operations and on the outlook.

EPE

I will start by addressing specialty plastic films.

Sales in our films business were lower by $12 million in the quarter and operating income was down by $9 million. Consistent with our first quarter, the lower sales are directly related to product design changes made by our major customer. The overall volume impact resulted in a sales reduction of approximately $18 million for the quarter, offset by approximately $6 million of price increases and change in our product mix. The reduction in sales volume, and the impact of resin cost increases are also the primary reasons for the reduction in operating profit.

The reduction in sales and earnings in the films business primarily occurred in our joint venture operation in Europe.

We are continuing to execute our capital expansion program in the film’s business. Additional expenditures in connection with capacity additions in Europe and Brazil are being made as well as expenditures in North America.

We are still considering the addition of a new plant in Europe to address a specific new product program for a major customer. A decision on this project should be made in a few months, and we anticipate sharing further details with you in the near term.

As we have consistently noted, resin costs have clearly had an effect on the business. Not only have they had a negative effect on our earnings, but as we increase prices, they have an impact on our customers.

Currently resin prices have stabilized, and we are optimistic they will remain so in the coming months. Overall, for our films business, we are continuing our focus on global expansion, operational excellence and product innovation.

Sales of the garage doors segment increased by $14 million compared to last year. This included higher selling prices of $10 million with the balance primarily from the sale of higher priced product.

Operating profit of the garage doors segment decreased $5.3 million compared to last year, principally due to the effect of higher steel costs, offset by price increases and product mix changes.

We believe we have taken the necessary steps to minimize the effect that these cost increases will have on operating income for the remainder of the year.

In addition, other than raw material costs, the general business environment for garage doors remains positive and we believe we are well positioned both in our retail and dealer distribution channels. Our expectation is that operating results in garage doors for the balance of the year will reflect a substantially improved trend compared to the first half of the year.

In our service and installation segment, the sales decrease of $5 million was primarily attributable to a slowdown in business in the Phoenix and Las Vegas markets, and increased competition in Atlanta. In addition, service has received substantial cost increases, primarily for garage doors and fireplaces, which, due to the economic climate, are difficult to pass on. This has had a negative impact on operating margins.

Considering market conditions, overall our results in this segment compared favorable to the prior year. And we do see some additional improvement in the second half of the year.

Telephonics once again had a good solid quarter with both ongoing programs (such as the MH60-R platform) and newer programs (such as the CP-140 Radar program in Canada) contributing to sales and profitability.

We have a high level of business development activities around new and existing programs, especially for radar equipment, and our backlog at March 31, 2005 remains high at $176 million.

Finally, on a consolidated basis, the second quarter includes a reduced provision for income taxes as a result of a lower projected annual effective tax rate, and the resolution of other income tax matters.

Harvey has some concluding remarks.

HRB

Once again, we are very disappointed with the Company’s performance, especially in comparison to the record year of 2004. We are working extremely closely with management of our various businesses and feel that steps are being taken that should result in improved profitability.

At this time, we will take questions.