50725--12/14/2006--GRIFFON

related topics

{debt, indebtedness, cash}

{cost, regulation, environmental}

{stock, price, share}

{condition, economic, financial}

{system, service, information}

{competitive, industry, competition}

{capital, credit, financial}

{product, market, service}

{property, intellectual, protect}

{operation, international, foreign}

{investment, property, distribution}

{personnel, key, retain}

{product, liability, claim}

{customer, product, revenue}

{regulation, change, law}

We operate in highly competitive industries and may be unable to compete effectively with other companies. If we were to lose any of our largest customers, our results of operations could be significantly harmed. Increases in raw material costs could adversely impact our financial condition and operating results. Trends in the housing sector and in general economic conditions will directly impact our business. Trends in the baby diaper market will directly impact our business. Our electronic information and communication systems business depends heavily upon government contracts. There can be no assurance that the capital expansion program that we have implemented in the specialty plastic films segment will generate the revenue and profits anticipated. We must continually improve existing products, design and sell new products and manage the costs of research and development in order to compete effectively. The loss of certain key officers or employees could adversely affect us. Our businesses are subject to seasonal variations. We are exposed to a variety of risks relating to our international sales and operations, including foreign economic and political conditions and fluctuations in exchange rates. We may not be able to protect our proprietary rights. We are exposed to product liability claims. We have been, and may in the future be, subject to claims and liabilities under environmental laws and regulations. Changes in income tax laws and regulations or exposure to additional income tax liabilities could adversely affect profitability. Our compliance with restrictions and covenants in our debt agreements may limit our ability to take corporate actions and harm our business. Our inability to repurchase outstanding convertible notes as required under the indenture may cause an event of default under other agreements. Our reported earnings per share may be more volatile because of the conversion contingency provision of our notes. We may be unable to raise additional financing necessary to conduct our business, make payments when due or refinance our debt. Our indebtedness and interest expense will limit our cash flow and could adversely affect our operations and our ability to make full payment on our outstanding notes. We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding common stock.

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50725--12/14/2006--GRIFFON_CORP