Griffon Corporation achieved new records in sales, earnings and earnings per share in fiscal 2004, eclipsing past performance through customer responsiveness and superior technology. Consolidated net sales reached a new high of $1.4 billion, net income rose to $54 million and fully diluted earnings per share climbed to $1.71 from $1.28 last year. Strong operating performance resulted in all-time highs in sales and earnings for each of the company’s business units, contributing to the robust upsurge in Griffon’s financial results.

Clopay Building Products, the company’s garage door operation, continued its strong momentum, finishing the year with healthy sales and earnings growth. This unit’s focus on industry-leading customer service and productivity combined with its keen market instinct for product innovations were the major factors that contributed to its performance in 2004. Sales grew more than eleven percent, and the unit’s earnings substantially exceeded last year due to the revenue growth and operational efficiencies achieved despite substantial increases in steel prices.

Clopay Building Products’ core strategy of facilitating the success of our dealer and retail customers is driving favorable performance throughout the unit. Operational improvements reduced the time required to process customer orders and increased productivity, resulting in nearly one hundred percent on-time and complete delivery of orders.

Clopay secured its position as the industry innovator again in 2004 by introducing several exciting new products targeting design-conscious consumers. Two key trends in home construction and remodeling are driving architects, builders and homeowners to put more thought into the look of the garage door. First and foremost is size. Today’s larger automobiles and the increasing number of automobiles owned by families require garages that take more space on the home facade than ever before. Next is the growing desire for the “new old house.” Homeowners want the best of both worlds: a new home with all the modern amenities built to replicate the look and feel of a classic American housing style. To achieve that authentic look, they are specifying affordable products that deliver high style and low maintenance, and Clopay doors answer the call.

This past year saw the introduction of the Coachman™ Collection, a steel Carriage House style garage door that gives homeowners and builders a new, virtually maintenance-free alternative to the increasingly popular look of wood garage doors. Also, in 2004 the unit added the Full View Architectural Collection to its product offering. This new residential door series combines contemporary aluminum and glass in a sleek modern design.

Clopay’s relentless quest to provide consumers with greater value and convenience also resulted in a supplier partnership with 3M to help launch a new window category to the industry, and the introduction of a line of garage door operators at retail provides consumers with easy one-stop shopping.

We have also deployed an advanced interactive website and a national advertising and public relations campaign to further influence and assist the consumer in purchase decisions. Over the past year, Clopay doors have been spotlighted in the pages of top trade magazines as well as on several popular home improvement television shows on major networks. These programs are powerful marketing tools and have enabled Clopay Building Products to win in the marketplace on a daily basis.

The appreciation of our customers is evident in their expanding purchases and recognition. The Home Depot honored Clopay as a 2004 Partner of the Year and our Coachman Collection made us one of the finalists for Home Depot’s Innovator of the Year Award.

Our other building products operation, Clopay Service Company, the company’s installation services segment, had a very strong year in 2004, achieving growth in sales, earnings and margins. Already a significant supplier to the largest U.S. homebuilders, the unit’s operating performance reaped the rewards of efforts to identify and emphasize those product offerings and markets with the greatest potential.

Clopay Service Company’s design centers offer a wide variety of products and professional designers to assist consumers in the selection process. This is especially important for items such as flooring, cabinetry, garage doors, fireplaces, appliances and other specialty elements of a home in which homeowners are increasingly adding their “personal touch.” We provide new homebuyers with products they want and provide homebuilders with the superior installation services they need. Our commitment to service was enhanced with the implementation of new information systems that streamline processes and increase accuracy and response time—ultimately increasing customer satisfaction.

Clopay Plastic Products, the company’s specialty plastic films business, is a market leader in the development and production of high-performance films and laminates used in a variety of hygienic, health-care and industrial markets worldwide. Our mission is to provide innovative product solutions to the world’s leading manufacturers of personal care, surgical and industrial products. For our plastics business, 2004 was a year of excellent progress and great change. The business had outstanding operating performance with record sales and income while managing through volatile and upward trending raw material prices, multiple capital expansion projects and major new product initiatives.

In plastics, our major product line is technical films and laminates for use in disposable personal care products. In this market, the consumer is always looking for new products that perform better and cost less. To meet this need, we must provide our customers (the consumer product manufacturer) with fresh innovative solutions to tough performance problems and cost targets. This market dynamic, while challenging, is beneficial to Clopay as our culture and reputation are built on finding unique technical responses to our customers’ most demanding requirements. To rapidly develop and commercialize new products, Clopay Plastics has invested heavily in our technology development capability and capacity. Our newly built Product Development Center in Mason, Ohio is equipped with world-class developmental and pilot-scale film extrusion, lamination and converting equipment and associated material development, analysis and product-testing laboratories. These investments give our team of scientists and engineers the world-class tools needed to generate new products. In our Product Development Center, we collaborate with our customers to take new product projects from concept through to precommercialization. We believe passionately in product innovation, new product development and technical problem solving for our customers. This focus will keep Clopay Plastics in the lead in our markets and drive our future growth opportunities.

In 2004, our major new product initiative was the commercialization of multicolor, high-quality printed graphics for our hygienic films and laminates. This added feature provides our customers with significantly improved aesthetics for their end products. When fully executed, this product enhancement may well redefine the consumer’s expectations across a broad range of disposable personal care products. To execute this initiative, our plastics business launched a major capital expansion program in North America and Europe that will be completed in 2005. The ability to execute large, complex, international projects clearly identifies Clopay Plastics as a leading supply partner capable of supporting our customers globally, meeting their objectives and paving the way for our mutual success.