UNITED STATES


SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 2017
2022

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) 
DELAWAREDelaware11-1893410
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
712 Fifth Ave, 18th18th Floor
New YorkNew York10019
(Address of principal executive offices)(Zip Code)
 
(212) 957-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.25 par valueGFFNew York Stock Exchange
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. ý☒ Yes o☐ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý☒ Yes o☐ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Act:
Large accelerated filerý

☒Accelerated filer
o
☐
Non-accelerated filero (Do not check if a smaller reporting company)
☐Smaller reporting companyo☐
Emerging growth companyo☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes ý☒ No


The number of shares of common stock outstanding atJanuary March 31, 20182022 was 47,467,259.

57,032,073.



Griffon Corporation and Subsidiaries
 
Contents
 
Page
Page
Item 1 – Financial Statements
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5056


Table of Contents
Part I – Financial Information
Item 1 – Financial Statements
 
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

(Unaudited)
 March 31,
2022		September 30,
2021
CURRENT ASSETS  
Cash and equivalents$122,293 $248,653 
Accounts receivable, net of allowances of $13,500 and $8,787512,449 294,804 
Inventories687,011 472,794 
Prepaid and other current assets62,975 76,009 
Assets of discontinued operations held for sale264,861 273,414 
Assets of discontinued operations497 605 
Total Current Assets1,650,086 1,366,279 
PROPERTY, PLANT AND EQUIPMENT, net304,169 292,622 
OPERATING LEASE RIGHT-OF-USE ASSETS149,587 144,598 
GOODWILL707,523 426,148 
INTANGIBLE ASSETS, net949,730 350,025 
OTHER ASSETS22,734 21,589 
ASSETS OF DISCONTINUED OPERATIONS3,194 3,424 
Total Assets$3,787,023 $2,604,685 
CURRENT LIABILITIES  
Notes payable and current portion of long-term debt$25,110 $12,486 
Accounts payable227,085 260,140 
Accrued liabilities222,334 145,101 
Current portion of operating lease liabilities32,210 29,881 
Liabilities of discontinued operations held for sale73,218 80,748 
Liabilities of discontinued operations3,312 3,280 
Total Current Liabilities583,269 531,636 
LONG-TERM DEBT, net1,941,725 1,033,197 
LONG-TERM OPERATING LEASE LIABILITIES122,488 119,315 
OTHER LIABILITIES251,921 109,585 
LIABILITIES OF DISCONTINUED OPERATIONS4,406 3,794 
Total Liabilities2,903,809 1,797,527 
COMMITMENTS AND CONTINGENCIES - See Note 2200
SHAREHOLDERS’ EQUITY  
Total Shareholders’ Equity883,214 807,158 
Total Liabilities and Shareholders’ Equity$3,787,023 $2,604,685 

(Unaudited)

 December 31,
2017
September 30,
2017
CURRENT ASSETS 
 
Cash and equivalents$84,420

$47,681
Accounts receivable, net of allowances of $6,291 and $5,966212,023

208,229
Contract costs and recognized income not yet billed, net of progress payments of $5,165 and $4,407120,200

131,662
Inventories, net359,844

299,437
Prepaid and other current assets64,837

40,067
Assets of discontinued operations held for sale377,275

370,724
Assets of discontinued operations not held for sale328

329
Total Current Assets1,218,927

1,098,129
PROPERTY, PLANT AND EQUIPMENT, net280,725

232,135
GOODWILL385,076

319,139
INTANGIBLE ASSETS, net277,160

205,127
OTHER ASSETS15,675

16,051
ASSETS OF DISCONTINUED OPERATIONS NOT HELD FOR SALE2,952

2,960
Total Assets$2,180,515

$1,873,541






CURRENT LIABILITIES 

 
Notes payable and current portion of long-term debt$12,593

$11,078
Accounts payable197,814

183,951
Accrued liabilities117,482

83,258
Liabilities of discontinued operations held for sale85,737

84,450
Liabilities of discontinued operations not held for sale3,924

8,342
Total Current Liabilities417,550

371,079
LONG-TERM DEBT, net1,238,393

968,080
OTHER LIABILITIES84,534

132,537
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE5,225

3,037
Total Liabilities1,745,702

1,474,733
COMMITMENTS AND CONTINGENCIES - See Note 18




SHAREHOLDERS’ EQUITY 

 
Total Shareholders’ Equity434,813

398,808
Total Liabilities and Shareholders’ Equity$2,180,515

$1,873,541


The accompanying notes to condensed consolidated financial statements are an integral part of these statements.



1
Table of Contents
GRIFFON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)For the Three and Six Months Ended March 31, 2022 and 2021
(Unaudited)

COMMON STOCKCAPITAL IN
EXCESS OF
PAR VALUE		RETAINED
EARNINGS		TREASURY SHARESACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)		DEFERRED
COMPENSATION
(in thousands)SHARESPAR VALUESHARESCOSTTOTAL
Balance at September 30, 202184,375 $21,094 $602,181 $669,998 27,762 $(416,850)$(45,977)$(23,288)$807,158 
Net income— — — 19,298 — — — — 19,298 
Dividend— — — (4,739)— — — — (4,739)
Shares withheld on employee taxes on vested equity awards— — — — 422 (10,886)— — (10,886)
Amortization of deferred compensation— — — — — — — 591 591 
Equity awards granted, net113 28 (28)— — — — — — 
ESOP allocation of common stock— — 848 — — — — — 848 
Stock-based compensation— — 2,866 — — — — — 2,866 
Other comprehensive income, net of tax— — — — — — (2,751)— (2,751)
Balance at December 31, 202184,488 $21,122 $605,867 $684,557 28,184 $(427,736)$(48,728)$(22,697)$812,385 
Net income— — — 65,689 — — — — 65,689 
Dividend— — — (5,352)— — — — (5,352)
Amortization of deferred compensation— — — — — — — 591 591 
Equity awards granted, net258 65 (7,195)— (470)7,130 — — — 
ESOP allocation of common stock— — 638 — — — — — 638 
Stock-based compensation— — 4,314 — — — — — 4,314 
Other comprehensive income, net of tax— — — — — — 4,949 — 4,949 
Balance at March 31, 202284,746 $21,187 $603,624 $744,894 27,714 $(420,606)$(43,779)$(22,106)$883,214 

2
Table of Contents
COMMON STOCKCAPITAL IN
EXCESS OF
PAR VALUE		RETAINED
EARNINGS		TREASURY SHARESACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)		DEFERRED
COMPENSATION		 
(in thousands)(in thousands)SHARESPAR VALUESHARESCOSTTOTAL
Balance at September 30, 2020Balance at September 30, 202083,739 $20,935 $583,008 $607,518 27,610 $(413,493)$(72,092)$(25,725)$700,151 
Net incomeNet income— — — 29,500 — — — — 29,500 
DividendDividend— — — (4,469)— — — — (4,469)
Shares withheld on employee taxes on vested equity awardsShares withheld on employee taxes on vested equity awards— — — — 133 (2,909)— — (2,909)
Amortization of deferred compensationAmortization of deferred compensation— — — — — — — 609 609 
Equity awards granted, netEquity awards granted, net494 123 (123)— — — — — — 
COMMON STOCK 
CAPITAL IN
EXCESS OF
PAR VALUE
 
RETAINED
EARNINGS
 TREASURY SHARES 
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)
 
DEFERRED
COMPENSATION
  
(in thousands)SHARES PAR VALUE SHARES COST TOTAL
Balance at September 30, 201780,663
 $20,166
 $487,077
 $480,347
 33,557
 $(489,225) $(60,481) $(39,076) $398,808
Net income—
 —
 —
 30,989
 —
 —
 —
 —
 30,989
Dividend—
 —
 —
 (2,990) —
 —
 —
 —
 (2,990)
Shares withheld on employee taxes on vested equity awards—
 —
 —
 —
 191
 (4,332) —
 —
 (4,332)
Amortization of deferred compensation—
 —
 —
 —
 —
 —
 —
 817
 817
Equity awards granted, net895
 223
 (223) —

—

—

—

—
 —
ESOP allocation of common stock—
 —
 608
 —
 —
 —
 —
 —
 608
ESOP allocation of common stock— — 596 — — — — — 596 
Stock-based compensation—
 —
 2,555
 —
 —
 —
 —
 —
 2,555
Stock-based compensation— — 3,428 — — — — — 3,428 
Other comprehensive income, net of tax—
 —
 —
 —
 —
 —
 8,358
 —
 8,358
Other comprehensive income, net of tax— — — — — — 13,141 — 13,141 
Balance at December 31, 201781,558
 $20,389
 $490,017
 $508,346
 33,748
 $(493,557) $(52,123) $(38,259) $434,813
Balance at December 31, 2020Balance at December 31, 202084,233 $21,058 $586,909 $632,549 27,743 $(416,402)$(58,951)$(25,116)740,047 
Net incomeNet income— — — 17,112 — — — — 17,112 
DividendDividend— — — (3,217)— — — — (3,217)
Amortization of deferred compensationAmortization of deferred compensation— — — — — — — 609 609 
Equity awards granted, netEquity awards granted, net194 48 (48)— — — — — — 
ESOP allocation of common stockESOP allocation of common stock— — 756 — — — — — 756 
Stock-based compensationStock-based compensation— — 4,349 — — — — — 4,349 
Other comprehensive income, net of taxOther comprehensive income, net of tax— — — — — — 4,775 — 4,775 
Balance at March 31, 2021Balance at March 31, 202184,427 $21,106 $591,966 $646,444 27,743 $(416,402)$(54,176)$(24,507)$764,431 



The accompanying notes to condensed consolidated financial statements are an integral part of these statements.



3
Table of Contents
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share data)
(Unaudited)

Three Months Ended December 31, Three Months Ended March 31,Six Months Ended March 31,

2017
2016 2022202120222021
Revenue
$437,303

$352,277
Revenue$779,617 $574,682 $1,371,366 $1,116,205 
Cost of goods and services
316,459

255,533
Cost of goods and services518,974 413,476 944,881 790,863 
Gross profit
120,844

96,744
Gross profit260,643 161,206 426,485 325,342 







Selling, general and administrative expenses
105,807

78,884
Selling, general and administrative expenses157,838 117,559 285,190 229,268 







Income from operations
15,037

17,860
Income from operations102,805 43,647 141,295 96,074 







Other income (expense)
 

 
Other income (expense)    
Interest expense
(16,839)
(13,295)Interest expense(21,408)(15,831)(37,089)(31,521)
Interest income
197

6
Interest income32 304 65 348 
Other, net
(468)
(140)Other, net1,675 1,081 3,056 1,438 
Total other expense, net
(17,110)
(13,429)Total other expense, net(19,701)(14,446)(33,968)(29,735)







Income (loss) before taxes from continuing operations
(2,073)
4,431
Benefit from income taxes
(24,904)
(2,613)
Income before taxes from continuing operationsIncome before taxes from continuing operations83,104 29,201 107,327 66,339 
Provision for income taxesProvision for income taxes24,533 11,082 31,851 22,790 
Income from continuing operations
$22,831

$7,044
Income from continuing operations$58,571 $18,119 $75,476 $43,549 







Discontinued operations:





Discontinued operations:
Income from operations of discontinued operations
11,466

8,545
Provision for income taxes
3,308

3,325
Income from discontinued operations
8,158

5,220







Income (loss) from operations of discontinued operationsIncome (loss) from operations of discontinued operations694 (1,341)3,708 690 
Provision (benefit) for income taxesProvision (benefit) for income taxes(6,424)(334)(5,803)(2,373)
Income (loss) from discontinued operationsIncome (loss) from discontinued operations7,118 (1,007)9,511 3,063 
Net income
$30,989

$12,264
Net income$65,689 $17,112 $84,987 $46,612 







Basic earnings per common share:Basic earnings per common share:
Income from continuing operations
$0.54

$0.18
Income from continuing operations$1.13 $0.36 $1.47 $0.86 
Income from discontinued operations
0.19

0.13
Income (loss) from discontinued operationsIncome (loss) from discontinued operations0.14 (0.02)0.18 0.06 
Basic earnings per common share
$0.74

$0.31
Basic earnings per common share$1.27 $0.34 $1.65 $0.92 







Weighted-average shares outstanding
41,923

39,336
Basic weighted-average shares outstandingBasic weighted-average shares outstanding51,668 50,838 51,423 50,717 







Diluted earnings per common share:Diluted earnings per common share:
Income from continuing operations
$0.53

$0.17
Income from continuing operations$1.10 $0.34 $1.41 $0.82 
Income from discontinued operations
0.19

0.12
Income (loss) from discontinued operationsIncome (loss) from discontinued operations0.13 (0.02)0.18 0.06 
Diluted earnings per common share
$0.72

$0.29
Diluted earnings per common share$1.23 $0.32 $1.59 $0.88 







Weighted-average shares outstanding
43,336

42,312
Diluted weighted-average shares outstandingDiluted weighted-average shares outstanding53,430 53,264 53,602 53,211 







Dividends paid per common share
$0.07

$0.06
Dividends paid per common share$0.09 $0.08 $0.18 $0.16 







Net income
$30,989

$12,264
Net income$65,689 $17,112 $84,987 $46,612 







Other comprehensive income (loss), net of taxes:
 

 
Other comprehensive income (loss), net of taxes:    
Foreign currency translation adjustments
(1,289)
(13,479)Foreign currency translation adjustments6,049 1,739 3,730 13,862 
Pension and other post retirement plans
9,559

544
Pension and other post retirement plans140 1,245 808 2,951 
Change in cash flow hedges
88

1,623
Change in cash flow hedges(1,240)1,791 (2,340)1,103 
Total other comprehensive income (loss), net of taxes
8,358

(11,312)
Comprehensive income (loss), net
$39,347

$952
Total other comprehensive income, net of taxesTotal other comprehensive income, net of taxes4,949 4,775 2,198 17,916 
Comprehensive income, netComprehensive income, net$70,638 $21,887 $87,185 $64,528 
 
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.

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Table of Contents
GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Six Months Ended March 31,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income$84,987 $46,612 
Net income from discontinued operations(9,511)(3,063)
Adjustments to reconcile net income to net cash used in operating activities of continuing operations:  
Depreciation and amortization29,333 25,739 
Stock-based compensation9,959 9,501 
Asset impairment charges - restructuring806 2,690 
Provision for losses on accounts receivable578 194 
Amortization of debt discounts and issuance costs1,566 1,349 
Fair value step-up of acquired inventory sold2,701 — 
Deferred income taxes2,883 2,215 
(Gain) loss on sale of assets and investments(118)151 
Change in assets and liabilities, net of assets and liabilities acquired:  
Increase in accounts receivable(177,347)(65,398)
Increase in inventories(106,534)(74,661)
(Increase) decrease in prepaid and other assets6,063 (842)
Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities(18,524)8,702 
Other changes, net525 2,400 
Net cash used in operating activities - continuing operations(172,633)(44,411)
CASH FLOWS FROM INVESTING ACTIVITIES:  
Acquisition of property, plant and equipment(22,030)(17,835)
Acquired businesses, net of cash acquired(851,464)(2,242)
Proceeds (payments) from investments14,923 (2,138)
Proceeds from the sale of property, plant and equipment32 82 
Other, net— 27 
Net cash used in investing activities - continuing operations(858,539)(22,106)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Dividends paid(10,091)(8,678)
Purchase of shares for treasury(10,886)(2,909)
Proceeds from long-term debt975,291 14,029 
Payments of long-term debt(37,906)(7,573)
Financing costs(16,457)(571)
Other, net(27)(214)
Net cash provided by ( used) in financing activities - continuing operations899,924 (5,916)
 Three Months Ended December 31,
 2017
2016
CASH FLOWS FROM OPERATING ACTIVITIES: 

 
Net income from continuing operations$30,989

$12,264
Net (income) from discontinued operations(8,158)
(5,220)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:		 

 
Depreciation and amortization12,958

11,988
Stock-based compensation2,555

2,452
Provision (recovery) for losses on accounts receivable(220)
112
Amortization of debt discounts and issuance costs1,243

1,892
Deferred income taxes(23,186)
(196)
Gain on sale of assets and investments209

—
Change in assets and liabilities, net of assets and liabilities acquired: 

 
Decrease in accounts receivable and contract costs and recognized income not yet billed38,909

18,667
Increase in inventories(28,073)
(13,663)
Increase in prepaid and other assets(8,459)
(2,127)
Decrease in accounts payable, accrued liabilities and income taxes payable(24,973)
(27,423)
Other changes, net552

1,536
Net cash provided by (used in) operating activities(5,654)
282
CASH FLOWS FROM INVESTING ACTIVITIES: 

 
Acquisition of property, plant and equipment(10,785)
(7,690)
Acquired businesses, net of cash acquired(198,683)
(6,051)
Proceeds from sale of assets439

86
Net cash used in investing activities(209,029)
(13,655)
CASH FLOWS FROM FINANCING ACTIVITIES: 

 
Dividends paid(2,990)
(2,499)
Purchase of shares for treasury(4,332)
(15,073)
Proceeds from long-term debt326,094

39,056
Payments of long-term debt(52,973)
(7,295)
Change in short-term borrowings35

—
Financing costs(7,392)
(172)
Purchase of ESOP shares—

(9,213)
Other, net84

(349)
Net cash provided by financing activities258,526

4,455
CASH FLOWS FROM DISCONTINUED OPERATIONS: 

 
Net cash provided by operating activities1,261

6,841
Net cash used in investing activities(8,076)
(14,756)
Net cash provided by (used in) financing activities396

(2,234)






Net cash used in discontinued operations(6,419)
(10,149)
Effect of exchange rate changes on cash and equivalents(685)
(1,217)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS36,739

(20,284)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD47,681

72,553
CASH AND EQUIVALENTS AT END OF PERIOD$84,420

$52,269
The accompanying notes to condensed consolidated financial statements are an integral part of these statements.







4
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Table of Contents



GRIFFON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 Six Months Ended March 31,
 20222021
CASH FLOWS FROM DISCONTINUED OPERATIONS:  
Net cash provided by operating activities9,846 17,058 
Net cash provided by (used in) investing activities(1,445)11,323 
Net cash provided by discontinued operations8,401 28,381 
Effect of exchange rate changes on cash and equivalents(3,513)1,527 
NET DECREASE IN CASH AND EQUIVALENTS(126,360)(42,525)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD248,653 218,089 
CASH AND EQUIVALENTS AT END OF PERIOD$122,293 $175,564 

The accompanying notes to condensed consolidated financial statements are an integral part of these statements.
6
Table of Contents
GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
(Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30)






NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
 
About Griffon Corporation
 
Griffon Corporation (the “Company”, “Griffon”, "we" or “Griffon”"us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.


Headquartered in New York, N.Y., theThe Company was founded in 1959, and is incorporateda Delaware corporation headquartered in Delaware. GriffonNew York, N.Y. and is listed on the New York Stock Exchange and trades under the symbol GFF.(NYSE:GFF).


On September 5, 2017,27, 2021, Griffon announced it would exploreis exploring strategic alternatives for Clopay Plastic Products Company, Inc.its Defense Electronics ("PPC"DE") segment, which consists of its Telephonics subsidiary, and on November 16, 2017, announced itApril 18, 2022, Griffon entered into a definitive agreement to sell PPCTelephonics to Berry Global Group,TTM Technologies, Inc. (NYSE:BERY) ("Berry"TTM") for $475 million$330,000 in cash. The transaction is subject to regulatory approval and customary closing conditions, and is expected to close inwithin the firstsecond calendar quarter of calendar 2018. 2022.As a result, Griffon classified the results of operations of the PPCTelephonics business as a discontinued operationsoperation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operationsoperation as held for sale in the consolidated balance sheets. AllAccordingly, all references made to results and information presented exclude PPC in this Quarterly Report on Form 10-Q are to Griffon's continuing operations,unless otherwise noted. PPC is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies. See Note 14, Discontinued Operations.

On October 2, 2017, Griffon acquired ClosetMaid LLC ("ClosetMaid"). ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America. ClosetMaid's accounts, affected for preliminary adjustments to reflect fair market values assigned to assets purchased and liabilities assumed, and results of operations are included in the Company’s consolidated financial statements from the date of acquisition of October 2, 2017. See Note 3, Acquisitions.

Griffon currently conducts its operations through two reportable segments:
Home & Building Products (“HBP”) consists of three companies, The AMES Companies, Inc. (“AMES”), Clopay Building Products Company, Inc. (“CBP”) and ClosetMaid LLC ("ClosetMaid"):

-AMES, founded in 1774, is the leading US manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals.

-CBP, since 1964, is a leading manufacturer and marketer of residential and commercial garage doors and sells to professional dealers and some of the largest home center retail chains in North America.

-ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers.

noted otherwise. Telephonics Corporation ("Telephonics"), founded in 1933, is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions forthat are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers.customers worldwide.



On January 24, 2022, Griffon acquired Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of approximately $845,000, subject to customary post-closing adjustments. Hunter, which is part of Griffon's Consumer and Professional Products segment, complements and diversifies our portfolio of leading consumer brands and products. The acquisition of Hunter was primarily financed with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and revolving credit facility borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures.



Griffon now conducts its operations through 2 reportable segments:


•Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a global provider of branded consumer and professional tools; residential, industrial and commercial fans; home storage and organization products; and products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

•Home and Building Products ("HBP") conducts its operations through Clopay Corporation ("Clopay"). Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America.  Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world. The impact from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which has impacted, and could continue to impact, our business and consolidated results of operations and financial condition. As of the date of this filing, all of Griffon's facilities are fully operational. We have implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize
7

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
the risk to our employees of contracting COVID-19. In the United States, we manufacture a substantial majority of the products that we sell. While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted and are unable to accurately predict the impact COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. As such, they should be read together with Griffon’s Annual Report on Form 10-K for the year ended September 30, 2017,2021, which provides a more complete explanation of Griffon’s accounting policies, financial position, operating results, business, properties and other matters. In the opinion of management, these financial statements reflect all adjustments considered necessary for a fair statement of interim results. Griffon’s HBPCPP operations are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year.
 
The condensed consolidated balance sheet information at September 30, 20172021 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2017.2021.
 
The condensed consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated onin consolidation.


The preparation of financial statements in conformity with US GAAPaccounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. These estimates may be adjusted due to changes in economic, industry or customer financial conditions, as well as changes in technology or demand. Significant estimates include expected loss allowances for doubtful accounts receivable and returns, net realizable value of inventories, restructuring reserves, valuation of goodwill and intangible assets, percentage of completion method of accounting,sales, assumptions associated with pension assumptions,benefit obligations and income or expenses, useful lives associated with depreciation and amortization of intangible and fixed assets, warranty reserves, sales incentive accruals, assumption associated with stock based compensation assumptions,valuation, income taxes and tax valuation reserves, environmental reserves, legal reserves, insurance reserves, and the valuation of assets and liabilities of discontinued operations, acquisition assumptions usedassociated with valuation of acquired assets and assumed liabilities of acquired companies and the accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions Griffon may undertake in the future. Actual results may ultimately differ from these estimates.

Certain amounts in the prior year have been reclassified to conform to current year presentation.


NOTE 2 – FAIR VALUE MEASUREMENTS
 
The carrying values of cash and equivalents, accounts receivable, accounts and notes payable, and revolving credit and variable interest rate debt approximate fair value due to either the short-term nature of such instruments or the fact that the interest rate of the revolving credit and variable rate debt is based upon current market rates.


Applicable accounting guidance establishes a fair value hierarchy requiring the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The accounting guidance establishes three levels of inputs that may be used to measure fair value, as follows:


8

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
•Level 1 inputs are measured and recorded at fair value based upon quoted prices in active markets for identical assets.


•Level 2 inputs include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.


•Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
 


TheOn March 31, 2022, the fair values of Griffon’s 20222028 senior notes and Term Loan B facility approximated $1,020,000 on December 31, 2017.$945,000 and $792,000, respectively. Fair values were based upon quoted market prices (level 1 inputs).

On January 17, 2017, Griffon's 4% convertible subordinated notes settled for a total of $173,855. The total settlement value for the convertible notes was based on the sum of the daily Volume Weighted Average Price multiplied by the conversion rate over a 40-day observation period (level 1 inputs).  The settlement value was split between $125,000 in cash and $48,858, or 1,954,993 shares, of common stock issued from treasury.
 
Insurance contracts with values of $3,000$4,053 at DecemberMarch 31, 20172022 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.
 
Items Measured at Fair Value on a Recurring Basis


At DecemberMarch 31, 2017, trading2022, marketable debt and equity securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $3,352$995 ($2,8241,000 cost basis), were included in Prepaid and other current assets on the Consolidated Balance Sheets. Realized and unrealized gains and losses on tradingmarketable debt and equity securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).


In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates. To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options. During the quarter ended DecemberAs of March 31, 2017,2022, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in USU.S. dollars.


At DecemberMarch 31, 2017,2022, Griffon had $15,000 and $1,422$46,500 of Australian dollar and British Pound Sterling contracts respectively, at a weighted average rate of $1.28 and $0.74, respectively,$1.35 which qualified for hedge accounting.accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred losses of $773 ($541, net of tax) at March 31, 2022. Upon settlement, gains of $730 and $2,263 were recorded in COGS during the three and six months ended March 31, 2022, respectively. All contracts expire in 29 to 180 days.

At March 31, 2022, Griffon had 48,600 of Chinese Yuan contracts at a weighted average rate of $6.52 which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred gains of $130$1,140 ($42,832, net of tax) at DecemberMarch 31, 2017 and a loss2022. Upon settlement, gains of $7 was$654 were recorded in COGS during the quartersix months ended DecemberMarch 31, 2017 for all settled contracts.2022. All contracts expire in 157 to 179308 days.


At DecemberMarch 31, 2017,2022, Griffon had $4,129$6,950 of Canadian dollar contracts at a weighted average rate of $1.25. The contracts, which protect Canadian operations from currency fluctuations for USU.S. dollar based purchases, do not qualify for hedge accounting. For the quarterthree and six months ended DecemberMarch 31, 2017, a2022, fair value gain(losses) gains of $237 was$(136) and $2, respectively, were recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized losses of $29$16 and $2 were recorded in Other income during the quarterthree and six months ended DecemberMarch 31, 20172022, respectively for all settled contracts. All contracts expire in 281 to 238380 days.


9

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
NOTE 3 – REVENUE

The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied.A performance obligation is a promise in a contract to transfer a distinct good or service, or a bundle of goods or services, to the customer, and is the unit of accounting. A contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and with respect to which payment terms are identified and collectability is probable.Once the Company has entered into a contract or purchase order, it is evaluated to identify performance obligations.For each performance obligation, revenue is recognized when control of the promised products is transferred to the customer, or services are satisfied under the contract or purchase order, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price).

The majority of the Company’s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components primarily within the CPP and HBP Segments, and revenue is recognized when title, and risk and rewards of ownership, have transferred to the customer, which is generally upon shipment.

Within our discontinued operation, Defense Electronics, performance obligations are recognized over time and relate to prime or subcontractors from contract awards with the U.S. Government, as well as foreign governments and other commercial customers. Revenue recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. We believe that cumulative costs incurred to date as a percentage of estimated total contract costs at completion (cost-to-cost method) is an appropriate measure of progress towards satisfaction of performance obligations recognized over time, as it most accurately depicts the progress of our work and transfer of control to our customers.

For a complete explanation of Griffon’s revenue accounting policies, this note should be read in conjunction with Griffon’s Annual Report on Form 10-K for the year ended September 30, 2021. See Note 13 - Business Segments for revenue from contracts with customers disaggregated by end markets, segments and geographic location.
NOTE 4 – ACQUISITIONS


Griffon accountscontinually evaluates potential acquisitions that strategically fit within its portfolio or expand its portfolio into new product lines or adjacent markets. Griffon has completed a number of acquisitions that have been accounted for acquisitions under the acquisition method,as business combinations, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition using a method substantially similar toand have resulted in the recognition of goodwill impairment test methodology (level 3 inputs). The operating results of the acquired companiesbusiness acquisitions are included in Griffon’s consolidated financial statements from the date of acquisition; in each instance, Griffon is in the process of finalizing the initial purchase price allocation.allocation unless otherwise noted.


On November 6, 2017, AMES acquired Harper Brush Works (“Harper”), a division of Horizon Global, for approximately $5,000. Harper is a leading U.S. manufacturer of cleaning products for professional, home, and industrial use. The acquisition will broaden AMES’ long-handled tool offering in North America to include brooms, brushes, and other cleaning tools and accessories.

On October 2, 2017,January 24, 2022, Griffon Corporation completed the acquisition of ClosetMaid,Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of home storage$845,000, subject to customary post-closing adjustments. The acquisition was primarily financed with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and organization products, for approximately $185,700, inclusive of post-closing adjustments, or $165,000 netrevolver borrowings was used to fund the balance of the estimated present value of tax benefits under the current tax law. There is no other contingent consideration arrangement relative to thepurchase price and related acquisition of ClosetMaid. ClosetMaid adds to Griffon's Home and Building Products segment, complementingdebt expenditures. Hunter complements and diversifyingdiversifies Griffon's portfolio of leading consumer brands and products. During the quarter ended December 31, 2017, SG&A and Cost of goods and services included acquisition costs of $1,612 and $1,500, respectively. ClosetMaid is part of the HBP segment.

ClosetMaid's accounts, affected for preliminary adjustments to reflect fair market valuesThe goodwill recognized was $279,658, which was assigned to assets purchasedthe CPP segment, and liabilities assumed, and results of operations are includedis not expected to be deductible for income tax purposes. The final purchase price allocation, which is expected to be completed in the Company’s consolidated financial statements from the datefirst quarter of acquisition

of October 2, 2017. The Company has recorded a preliminary allocation of the purchase price to the Company’s tangible and identifiable intangible assets acquired and liabilities assumedfiscal 2023, will be based on theirfinal appraisals and other analysis of fair market values (level 3 inputs) at the acquisition date. The excess of the purchase price over the fair value of the net tangibleacquired assets and intangible assets was recorded as goodwill and is deductible for tax purposes. Goodwill recognized at the acquisition date represents the other intangible benefits that the Company will derive from the ownership of ClosetMaid, however, such intangible benefits do not meet the criteria for recognition of separately identifiable intangible assets.

liabilities. The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired ClosetMaidHunter on October 1, 2016:2020:

Proforma For the Three Months Ended March 31, (unaudited)Proforma For the Six Months Ended March 31, (unaudited)
2022202120222021
Revenue$791,038 $673,597 $1,461,877 $1,277,382 
Income from continuing operations55,151 24,419 75,125 50,514 

10

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
 
Proforma
 For the three months ended December 31, 2016
(unaudited)
Revenue$429,178
Income from continuing operations7,980


Griffon did not include any material, nonrecurring proforma adjustments directly attributable to the business combination included in the proforma revenue and earnings.These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon, restated for classifying the results of operations of the PPCTelephonics Corporate business as a discontinued operation, to the historical results of ClosetMaidHunter after applying Griffon’s accounting policies and the following proforma adjustments:


•Additional depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2016.2021.
Elimination of intercompany interest income recorded on ClosetMaid’s financial statements earned on an intercompany receivable due from ClosetMaid’s former parent.
•Additional interest and related expenses from the add-on offering of $275,000 aggregate principal amount of 5.25% senior notes due 2022new $800,000 seven year Term Loan B facility that Griffon used to acquire ClosetMaid.Hunter Fan.
Removal of $600 of restructuring costs from ClosetMaid's historical results.
•The consequential tax effects of the above adjustments using a 59%21.9% tax rate.rate for the year ended September 30, 2021.


The calculation of the preliminary purchase price allocation which is pending finalization of tax-related items and completion of the related final valuation, is as follows:

Accounts receivable (1)
$64,602 
Inventories(2)
110,299 
Other current assets9,513 
Property, plant and equipment15,007 
Operating lease right-of-use assets12,447 
Goodwill279,658 
Intangible assets606,000 
Total assets acquired$1,097,526 
Accounts payable and accrued liabilities$70,768 
Current portion of operating lease liabilities3,323 
Deferred tax liability(3)
161,381 
Long-term operating lease liabilities9,123 
Other long-term liabilities1,467 
Total liabilities assumed$246,062 
Total net assets acquired$851,464 
(1)Includes $67,201 of gross accounts receivable of which $2,599 was not expected to be collected. The fair value of accounts receivable approximated book value acquired.
Cash and cash equivalents$5,999
Accounts receivable32,234
Inventories28,772
Property, plant and equipment48,260
Goodwill66,147
Intangible assets72,465
Other current and non-current assets3,852
Total assets acquired257,729
  
Accounts payable and accrued liabilities63,281
Long-term liabilities8,719
Total liabilities assumed72,000
Total$185,729
(2) Includes $113,287 of gross inventory of which $2,988 was reserved for obsolete items.

(3) Deferred tax liability recorded on intangibles assets.


The amounts assigned to goodwill and major intangible asset classifications all of which are tax deductible, for the ClosetMaidHunter acquisition are as follows:
Average Life (Years)
Goodwill$279,658 N/A
Indefinite-lived intangibles356,000 N/A
Definite-lived intangibles250,000 20
Total goodwill and intangible assets$885,658 

11
    Average
Life
(Years)
Goodwill $66,147
 N/A
Indefinite-lived intangibles 48,920
 N/A
Definite-lived intangibles 23,545
 18
Total goodwill and intangible assets $138,612
  


GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
On September 29, 2017,December 22, 2020, AMES Australia completed the acquisition of Tuscan Landscape Groupacquired Quatro Design Pty Ltd. ("Tuscan Path"Ltd (“Quatro”) for approximately $18,000 (AUD 22,250). Tuscan Path is, a leading Australian providermanufacturer and supplier of pots, planters, pavers, decorative stone,glass fiber reinforced concrete landscaping products for residential, commercial, and garden decor products. The acquisition of Tuscan Path broadens AMES' outdoor living and lawn and garden business, and will strengthen AMES' industry leading position in Australia. Thepublic sector projects for a net purchase price was primarilyof AUD $3,500 (approximately $2,700) in cash. The final purchase price allocated to intangible assets ofgoodwill and acquired intangibles was AUD 3,900$1,038 (approximately $784) and inventory and accounts receivable of AUD 7,900.

On July 31, 2017, The AMES Companies, Inc. acquired La Hacienda Limited, a leading United Kingdom outdoor living brand of unique heating and garden decor products, for approximately $11,400 (GBP 9,175)$2,755 (approximately $2,082), including an approximate contingent earn out payment of $790 (GBP 600). The acquisition of La Hacienda broadens AMES' global outdoor living and lawn and garden business and supports AMES' UK expansion strategy. The purchase price allocationrespectively, which was primarily allocatedassigned to intangible assets of approximately GBP 3,100.
On December 30, 2016, AMES Australia acquired Hills Home Living ("Hills") for approximately $6,051 (AUD 8,400). The purchase price has been allocated to acquired assets and assumed liabilities and primarily consists of inventory, tooling and identifiable intangible assets, including trademarks, intellectual property and customer relationships. Hills, founded in 1946, is a market leader in the supply of clothesline, laundry and garden products. The Hills acquisition adds to AMES' existing broad category of products and enhances our lawn and garden product offerings in Australia. The purchase price was primarily allocated to intangible assets of approximately AUD 6,400.

On February 14, 2016, AMES Australia acquired substantially all of the Intellectual Property (IP) assets of Australia-based Nylex Plastics Pty Ltd. for approximately $1,744 (AUD 2,452). Through this acquisition, AMES and Griffon secured the ownership of the trademark “Nylex” for certain categories of AMES products, principally in the country of Australia.  Previously, the Nylex name was licensed.  The acquisition of the Nylex IP was contemplated as a post-closing activity following the Cyclone acquisition and supports AMES' Australian watering products strategy.  The purchase price was allocated to indefinite lived trademarksCPP segment, and is not deductible for income taxes.tax purposes.


During the three and six months ended March 31, 2022, the Company incurred acquisition costs of $6,708 and $9,303, respectively. During the three and six months ended March 31, 2021, acquisition costs were de minimis.

NOTE 45 – INVENTORIES
 
Inventories are stated at the lower of cost (first-in, first-out or average)average cost) or market.
 
The following table details the components of inventory:
At December 31, 2017 At September 30, 2017At March 31, 2022At September 30, 2021
Raw materials and supplies$87,588
 $67,990
Raw materials and supplies$164,912 $133,684 
Work in process82,988
 78,846
Work in process48,267 48,531 
Finished goods189,268
 152,601
Finished goods473,832 290,579 
Total$359,844
 $299,437
Total$687,011 $472,794 
 


NOTE 56 – PROPERTY, PLANT AND EQUIPMENT


The following table details the components of property, plant and equipment, net:
At March 31, 2022At September 30, 2021
Land, building and building improvements$163,567 $164,486 
Machinery and equipment546,663 520,110 
Leasehold improvements42,045 39,913 
752,275 724,509 
Accumulated depreciation and amortization(448,106)(431,887)
Total$304,169 $292,622 
 At December 31, 2017 At September 30, 2017
Land, building and building improvements$89,770
 $71,764
Machinery and equipment497,743
 462,173
Leasehold improvements48,046
 43,040

635,559
 576,977
Accumulated depreciation and amortization(354,834) (344,842)
Total$280,725
 $232,135

Depreciation and amortization expense for property, plant and equipment was $10,702$11,782 and $10,349$10,742 for the quarters ended DecemberMarch 31, 20172022 and 2016,2021, respectively, and $22,476 and $20,980 for the six months ended March 31, 2022 and 2021, respectively. Depreciation included in Selling, general and administrative ("SG&A&A") expenses was $3,742$4,256 and $3,060$3,613 for the quarters ended DecemberMarch 31, 20172022 and 2016,2021, respectively, and $7,656 and $6,875 for the six months ended March 31, 2022 and 2021, respectively. Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services.

No event or indicator
12

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
NOTE 7 – CREDIT LOSSES

The Company is exposed to credit losses primarily through sales of impairment occurred duringproducts and services. Trade receivables are recorded at their stated amount, less allowances for discounts, doubtful accounts and returns. The Company’s expected loss allowance methodology for trade receivables is primarily based on the three months ended December 31, 2017aging method of the accounts receivables balances and the financial condition of its customers. The allowances represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations (usually due to customers’ potential insolvency), discounts related to early payment of accounts receivables by customers and estimates for returns. The allowance for doubtful accounts includes amounts for certain customers in which would require additional impairment testinga risk of property, plantdefault has been specifically identified, as well as an amount for customer defaults, based on a formula, when it is determined the risk of some default is probable and equipment.estimable, but cannot yet be associated with specific customers. Allowance for discounts and returns are recorded as a reduction of revenue and the provision related to the allowance for doubtful accounts is recorded in SG&A expenses.

The Company also considers current and expected future economic and market conditions, such as the COVID-19 pandemic, when determining any estimate of credit losses. Generally, estimates used to determine the allowance are based on assessment of anticipated payment and all other historical, current and future information that is reasonably available. All accounts receivable amounts are expected to be collected in less than one year.

Based on a review of the Company's policies and procedures across all segments, including the aging of its trade receivables, recent write-off history and other factors related to future macroeconomic conditions, Griffon determined that its method to determine credit losses and the amount of its allowances for bad debts is in accordance with the accounting guidance for credit losses on financial instruments, including trade receivables, in all material respects.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected:

Six months ended March 31,
20222021
Beginning Balance, October 1$8,787 $8,178 
Accounts receivable, net acquired2,599 — 
Provision for expected credit losses1,889 1,234 
Amounts written off charged against the allowance(10)(161)
Other, primarily foreign currency translation235 23 
Ending Balance, March 31$13,500 $9,274 

13

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
NOTE 68 – GOODWILL AND OTHER INTANGIBLES

The following table provides changes in the carrying value of goodwill by segment during the threesix months ended DecemberMarch 31, 2017:2022:

 At September 30, 2021Hunter AcquisitionForeign
 currency
translations adjustments		At March 31, 2022
Consumer and Professional Products$234,895 $279,658 $1,717 $516,270 
Home and Building Products191,253 — — 191,253 
Total$426,148 $279,658 $1,717 $707,523 
 At September 30, 2017
Goodwill from
ClosetMaid acquisition
Other
adjustments
including currency
translations
At December 31, 2017
Home & Building Products$300,594
 $66,147
 $(210) $366,531
Telephonics18,545
 —
 —
 18,545
Total$319,139
 $66,147
 $(210) $385,076



The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:
At March 31, 2022 At September 30, 2021
At December 31, 2017   At September 30, 2017 Gross Carrying AmountAccumulated
Amortization		Average
Life
(Years)		Gross Carrying AmountAccumulated
Amortization
Gross Carrying Amount 
Accumulated
Amortization
 
Average
Life
(Years)
 Gross Carrying Amount 
Accumulated
Amortization
Customer relationships$162,464
 $44,956
 25 $152,025
 $43,421
Customer relationships & otherCustomer relationships & other$438,693 $82,866 23$187,732 $75,794 
Technology and patents18,877
 5,303
 12.5 6,193
 4,719
Technology and patents13,613 2,702 1313,429 2,439 
Total amortizable intangible assets181,341
 50,259
   158,218
 48,140
Total amortizable intangible assets452,306 85,568  201,161 78,233 
Trademarks146,078
 —
   95,049
 —
Trademarks582,992 —  227,097 — 
Total intangible assets$327,419
 $50,259
   $253,267
 $48,140
Total intangible assets$1,035,298 $85,568  $428,258 $78,233 
 
The gross carrying amount of intangible assets was impacted by $563 related to foreign currency translation.

Amortization expense for intangible assets was $2,256$4,470 and $1,639$2,407 for the quarters ended DecemberMarch 31, 20172022 and 2016,2021, respectively, and $6,857 and $4,759 for the six months ended March 31, 2022 and 2021, respectively. The increase in intangible assets and amortization is related to the Hunter acquisition.

Amortization expense for the remainder of 2022 and the next five fiscal years and thereafter, based on current intangible balances and classifications, is estimated as follows: 2022 - $13,600; 2023 - $22,100; 2024 - $22,100; 2025 - $22,100; 2026 - $22,100; 2027 - $22,100; thereafter $242,638.
 
No event or indicator of impairment occurred duringDuring the threesix months ended DecemberMarch 31, 2017 which would require2022, the Company determined that there were no triggering events and, as a result, there was no impairment testing of long-livedto either its goodwill or indefinite-lived intangible assets including goodwill.at March 31, 2022.
 



14


GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
NOTE 79 – INCOME TAXES


On December 22, 2017, the "Tax Cuts and Jobs Act" ("TCJA") was signed into law, significantly impacting several sections of the Internal Revenue Code. ASC 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions, January 1, 2018. Though certain key aspects of the TCJA are effective January 1, 2018 and have an immediate accounting effect, other significant provisions are not effective or may not result in accounting effects for September 30 fiscal year companies until October 1, 2018.
Given the significance of the TCJA, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period”. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.
Among the significant changes to the U.S. Internal Revenue Code, the TCJA lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the September 30, 2018 fiscal year using a blended Federal Tax Rate of 24.5%. The 21% Federal Tax Rate will apply to fiscal years ending September 30, 2019 and each year thereafter.

The Company has recorded provisional amounts for the effects of the TCJA where accounting is not complete but a reasonable estimate has been determined. The company recorded a $23,941 benefit on the revaluation of deferred tax liabilities as a provisional amount for the re-measurement of deferred tax assets and liabilities, as well as an amount for deductible executive compensation expense, both of which have been reflected in the tax benefit for the quarter ended DecemberMarch 31, 2017.

A reasonable estimate cannot yet be made and therefore taxes are reflected based on the law in effect prior to the enactment of the Tax Cuts and Jobs Act for the impact of the one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer’s foreign subsidiaries, bonus depreciation expensing for qualified property placed in service after September 27, 2017 and the impact on state income taxes.

The provisional amounts incorporate assumptions made based upon the Company’s current interpretation of the TCJA and may change as the Company receives additional clarification and implementation guidance.

In accordance with SAB 118 adjustments recorded to the provisional amounts will be reflected within the measurement period through the quarter ended December 31, 2018 and will be included in income from continuing operations and net income as an adjustment to tax expense.

In the quarter ended December 31, 2017,2022, the Company recognized a tax benefitprovision of $24,904$24,533 on a Lossincome before taxes from continuing operations of $2,073,$83,104, compared to a tax benefitprovision of $2,613$11,082 on Incomeincome before taxes from continuing operations of $4,431$29,201 in the comparable prior year quarter.

The quarters ended December 31, 2017current year quarter results included restructuring charges of $4,766 ($3,496, net of tax), acquisition costs of $6,708 ($6,146, net of tax), proxy expenses of $4,661 ($3,591, net of tax), fair value step-up of acquired inventory sold of $2,701 ($2,007, net of tax), and 2016 tax rates included netdiscrete and certain other tax benefits, net, that affect comparability of $23,018 and $4,421, respectively. The current year quarter ended December 31, 2017 included net tax benefits from the December 22, 2017 tax reform bill primarily from approximately $23,941 related to revaluation of deferred tax liabilities. $693.The prior year quarter ended December 31, 2016results included restructuring charges of $7,502 ($5,605, net of tax), and discrete benefits from the adoptiontax and certain other tax provisions, net, that affect comparability of Financial Accounting Standards Board guidance which requires the Company to recognize excess tax benefits from the vesting of equity awards within income tax expense.$1,417. Excluding these tax items, the effective tax rates for the quarters ended DecemberMarch 31, 20172022 and 20162021 were 35.4%28.3% and 40.8%31.5%, respectively.



During the six months ended March 31, 2022, the Company recognized a tax provision of $31,851 on income before taxes of $107,327, compared to a tax provision of $22,790 on income before taxes of $66,339 in the comparable prior year period. The six month period ended March 31, 2022 included restructuring charges of $6,482 ($4,826, net of tax), acquisition costs of $9,303 ($8,149, net of tax), proxy expenses of $6,952 ($5,359, net of tax), fair value step-up of acquired inventory sold of $2,701 ($2,007, net of tax), and discrete and certain other tax benefits, net, that affect comparability of $1,574. The six month period ended March 31, 2021 included restructuring charges of $10,581 ($7,906, net of tax), and discrete tax and certain other tax provisions, net, that affect comparability of $369. Excluding these items, the effective tax rates for the six months ended March 31, 2022 and 2021 were 29.0% and 32.6%, respectively.




15

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
NOTE 810 – LONG-TERM DEBT
 
  At March 31, 2022At September 30, 2021
   Outstanding BalanceOriginal Issuer Premium/(Discount)Capitalized Fees & ExpensesBalance SheetCoupon Interest RateOutstanding BalanceOriginal Issuer Premium/(Discount)Capitalized Fees & ExpensesBalance SheetCoupon Interest Rate
Senior notes due 2028(a)$1,000,000 $290 (12,257)$988,033 5.75 %$1,000,000 $315 $(13,293)$987,022 5.75 %
Term Loan B 2029(b)800,000 (1,970)(15,235)782,795 Variable— — — — — n/a
Revolver due 2025(b)153,146 — (1,473)151,673 Variable13,483 — (1,718)11,765 Variable
Finance lease - real estate(c)13,757 — — 13,757 Variable14,594 — (4)14,590 Variable
Non US lines of credit(d)11,713 — (9)11,704 Variable3,012 — (17)2,995 Variable
Non US term loans(d)15,948 — (52)15,896 Variable25,684 — (91)25,593 Variable
Other long term debt(e)2,991 — (14)2,977 Variable3,733 — (15)3,718 Variable
Totals 1,997,555 (1,680)(29,040)1,966,835  1,060,506 315 (15,138)1,045,683  
less: Current portion (25,110)— — (25,110) (12,486)— — (12,486) 
Long-term debt $1,972,445 $(1,680)$(29,040)$1,941,725  $1,048,020 $315 $(15,138)$1,033,197  



16

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
  At December 31, 2017 At September 30, 2017
   Outstanding Balance
Original Issuer Premium
Capitalized Fees & Expenses Balance Sheet
Coupon Interest Rate (1)
Outstanding Balance
Original Issuer Discount Capitalized Fees & Expenses Balance Sheet
Coupon Interest Rate (1)
Senior notes due 2022(a)$1,000,000
 $1,484
 $(15,619) $985,865
 5.25% 725,000
 $(1,177) $(9,220) $714,603
 5.25%
Revolver due 2021(b)147,743
 —
 (1,830) 145,913
 Variable
 144,216
 —
 (1,951) 142,265
 Variable
Real estate mortgages(d)23,047
 —
 (304) 22,743
 Variable
 23,642
 —
 (320) 23,322
 Variable
ESOP Loans(e)42,106
 —
 (279) 41,827
 Variable
 42,675
 —
 (310) 42,365
 Variable
Capital lease - real estate(f)9,705
 —
 (99) 9,606
 5.00% 5,312
 —
 (105) 5,207
 5.00%
Non US lines of credit(g)4,675
 —
 (27) 4,648
 Variable
 9,402
 —
 (31) 9,371
 Variable
Non US term loans(g)34,765
 —
 (108) 34,657
 Variable
 35,943
 —
 (108) 35,835
 Variable
Other long term debt(h)5,748
 —
 (21) 5,727
 Variable
 6,211
 —
 (21) 6,190
 Variable
Totals 1,267,789
 1,484
 (18,287) 1,250,986
  
 992,401
 (1,177) (12,066) 979,158
  
less: Current portion (12,593) —
 —
 (12,593)  
 (11,078) —
 —
 (11,078)  
Long-term debt $1,255,196
 $1,484
 $(18,287) $1,238,393
  
 $981,323
 $(1,177) $(12,066) $968,080
  
  Three Months Ended March 31, 2022Three Months Ended March 31, 2021
  Effective Interest RateCash InterestAmort. Debt (Premium)/DiscountAmort. Debt Issuance Costs & Other FeesTotal Interest ExpenseEffective Interest RateCash InterestAmort. Debt
Premium		Amort.
Debt Issuance Costs
& Other Fees		Total Interest Expense
Senior notes due 2028(a)6.0 %$14,375 $(12)$518 $14,881 6.0 %$14,375 $(12)$529 $14,892 
Term Loan B due 2029(b)3.4 %4,767 30 232 5,029 n/a— — — — 
Revolver due 2025(b)Variable990 — 123 1,113 Variable287 — 122 409 
Finance lease - real estate(c)5.6 %192 — — 192 5.9 %224 — 7 231 
Non US lines of credit(d)Variable7 — 3 10 Variable4 — 4 8 
Non US term loans(d)Variable185 — 18 203 Variable163 — 18 181 
Other long term debt(e)Variable61 — — 61 Variable115 — 1 116 
Capitalized interest  (81)— — (81) (6)— — (6)
Totals  $20,496 $18 $894 $21,408  $15,162 $(12)$681 $15,831 
(1) n/a = not applicable


  Six Months Ended March 31, 2022Six Months Ended March 31, 2021
  Effective Interest RateCash InterestAmort. Debt (Premium)/DiscountAmort. Debt Issuance Costs & Other FeesTotal Interest ExpenseEffective Interest RateCash InterestAmort. Debt
Premium		Amort.
Debt Issuance Costs
& Other Fees		Total Interest Expense
Senior notes due 2028(a)6.0 %$28,750 $(24)$1,036 $29,762 6.0 %$28,750 $(24)$1,071 $29,797 
Term Loan B due 2029(b)3.4 %4,767 30 232 5,029 n/a— — — — 
Revolver due 2025(b)Variable1,251 — 245 1,496 Variable416 — 245 661 
Finance lease - real estate(c)5.5 %390 — 4 394 5.6 %456 — 13 469 
Non US lines of credit(d)Variable10 — 7 17 Variable7 — 8 15 
Non US term loans(d)Variable351 — 35 386 Variable334 — 35 369 
Other long term debt(e)Variable158 — 1 159 Variable222 — 1 223 
Capitalized interest(154)— — (154)(13)— — (13)
Totals$35,523 $6 $1,560 $37,089 $30,172 $(24)$1,373 $31,521 
17
  Three Months Ended December 31, 2017 Three Months Ended December 31, 2016
  Effective Interest Rate (1)
Cash Interest
Amort. Debt
Discount
Amort. Debt Issuance Costs
& Other Fees
Total Interest Expense
Effective Interest Rate (1)
Cash Interest
Amort. Debt
Discount
Amort.
Debt Issuance Costs
& Other Fees
Total Interest Expense
Senior notes due 2022(a)5.6% 13,125
 67
 939
 14,131
 5.5% 9,516
 67
 473
 10,056
Revolver due 2021(b)Variable
 1,356
 —
 141
 1,497
 Variable
 325
 —
 132
 457
Convert. debt due 2017(c)n/a
 —
 —
 —
 —
 9.1% 1,000
 1,058
 111
 2,169
Real estate mortgages(d)3.5% 185
 —
 17
 202
 2.4% 120
 —
 2
 122
ESOP Loans(e)4.1% 413
 —
 31
 444
 3.3% 364
 —
 27
 391
Capital lease - real estate(f)5.5% 164
 —
 6
 170
 5.4% 80
 —
 6
 86
Non US lines of credit(g)Variable
 7
 —
 8
 15
 Variable
 4
 —
 3
 7
Non US term loans(g)Variable
 334
 —
 33
 367
 Variable
 222
 —
 11
 233
Other long term debt(h)Variable
 115
 —
 1
 116
 Variable
 74
 —
 2
 76
Capitalized interest  
 (103) —
 —
 (103)  
 (302) —
 —
 (302)
Totals  
 $15,596
 $67
 $1,176
 $16,839
  
 $11,403
 $1,125
 $767
 $13,295

(1) n/a = not applicableGRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in thousands, except per share data)

(Unaudited)
(a)On October 2, 2017, in an unregistered offering through a private placement under Rule 144A, Griffon completed the add-on offering of $275,000 principal amount of its 5.25% senior notes due 2022, at 101.00% of par, to Griffon's previously issued $125,000 principal amount of its 5.25% senior notes due 2022, at 98.76% of par, completed on May 18, 2016 and $600,000 5.25% senior notes due 2022, at par, completed on February 27, 2014 (collectively the “Senior Notes”). As of December 31, 2017, outstanding Senior Notes due totaled $1,000,000; interest is payable semi-annually on March 1 and September 1. The net proceeds of the $275,000 add-on offering were used to acquire ClosetMaid with the remaining proceeds used to pay down outstanding loan borrowings under Griffon's revolving credit facility (the "Credit Agreement"). The net proceeds of the previously issued $125,000 add-on offering were used to pay down outstanding revolving loan borrowings under the Credit Agreement.


(a)    During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem $1,000,000 of 5.25% Senior Notes due 2022. As of March 31, 2022, outstanding 2028 Senior Notes due totaled $1,000,000; interest is payable semi-annually on March 1 and September 1.

The 2028 Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On December 18, 2017, Griffon commenced an offer to exchange all of the $275,000The 2028 Senior Notes issued on October 2, 2017 for substantially identical Senior Noteswere registered under the Securities Act of 1933. On July 20, 2016 and June 18, 2014, Griffon exchanged all of the $125,000 and $600,000 Senior Notes, respectively, for substantially identical Senior Notes registered under the Securities Act of 1933, as amended (the "Securities Act") via an exchange offer. The fair value of the 2028 Senior Notes approximated $1,020,000$945,000 on DecemberMarch 31, 20172022 based upon quoted market prices (level 1 inputs). In connection with these transactions, Griffon capitalized $16,448 of underwriting fees and other expenses incurred related to the issuance and exchange of the $275,000 senior2028 Senior Notes, which is being amortized over the term of such notes, and at March 31, 2022, $12,257 remained to be amortized.

(b) On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to its current $400,000 revolving credit facility ("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate). The fair value of the Term Loan B facility approximated $792,000 on March 31, 2022 based upon quoted market prices (level 1 inputs). The Term Loan B contains a SOFR floor of 0.50% and a current spread of 2.75%, for a total current interest rate of 3.25%. The Original Issue Discount for the Term Loan B was 99.75%. Additionally, there are 2 interest rate step-downs tied to achieving decreased secured leverage ratio thresholds. The Term Loan B facility requires nominal quarterly principal payments equal to 0.25% of the original outstanding principal amount, beginning with the quarter ended June 30, 2022; potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023; and a final balloon payment due at maturity. Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed. The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the same collateral as the Revolver. In connection with this amendment, Griffon capitalized $8,434 of underwriting fees and other expenses; Griffon capitalized $3,016$15,466 of underwriting fees and other expenses in connection with the $125,000 senior notes; and Griffon capitalized $10,313 in connection with the previously issued $600,000 senior notes. All capitalized fees will amortizeincurred, which are being amortized over the term of the notes.loan. At March 31, 2022, $15,235 remained to be amortized.


(b)On March 22, 2016, Griffon amended the Credit Agreement to increase the credit facility from $250,000 to $350,000, extend its maturity date from March 13, 2020 to March 22, 2021 and modify certain other provisions of the facility. On October 2, 2017, Griffon further amended
The Revolver's maximum borrowing availability is $400,000 and it matures on March 22, 2025. The Revolver includes a letter of credit sub-facility with a limit of $100,000; a multi-currency sub-facility of $200,000; and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000.

    In addition, on December 9, 2021, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA"). Borrowings under the Revolver may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a SOFR, SONIA or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance. Current margins are 1.00% for base rate loans, 2.00% for SOFR loans and 2.00% for SONIA loans. The Revolver has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants, and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Both the Revolver and Term Loan B borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At March 31, 2022, there were $153,146 of outstanding borrowings under the Revolver; outstanding standby letters of credit were $13,815; and $233,039 was available, subject to certain loan covenants, for borrowing at that date.

(c)    Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in association with the ClosetMaid acquisition to modify the net leverage covenant through the quarter ended March 31, 2019. The facility includes a letter of credit sub-facility with a limit of $50,000 and a multi-currency sub-facility of $50,000. The Credit Agreement provides for same day borrowings of base rate loans. Borrowings under the Credit Agreement may be repaid and re-borrowed at any time, subject to final maturity of the facility or the occurrence of an event of default under the Credit Agreement. Interest is payable on borrowings at either a LIBOR or base rate benchmark rate, in each case without a floor, plus an applicable margin, which adjusts based on financial performance. Current margins are 1.25% for base rate loans and 2.25% for LIBOR loans. The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries (except that a lien on the assets of Griffon's material domestic subsidiaries securing a limited amount of the debt under the Credit Agreement relating to Griffon's Employee Stock Ownership Plan ("ESOP") ranks pari passu with the lien granted on such assets under the Credit Agreement; see footnote (e) below). At December 31, 2017, under the Credit Agreement, there were $147,743 in outstanding borrowings; standby letters of credit were $14,938; and $187,319 was available, subject to certain loan covenants, for borrowing at that date.

(c)On December 21, 2009, Griffon issued $100,000 principal amount of 4% convertible subordinated notes due 2017 (the “2017 Notes”). On July 14, 2016, Griffon announced that it would settle, upon conversion, up to $125,000 of the conversion value of the 2017 Notes in cash, with amounts in excess of $125,000, if any, to be settled in shares of Griffon common stock. On January 17, 2017, Griffon settled the convertible debt for $173,855 with $125,000 in cash, utilizing borrowings under the Credit Agreement, and $48,858, or 1,954,993 shares, of common stock issued from treasury.

(d)In September 2015 and March 2016, Griffon entered into mortgage loans in the amounts of $32,280 and $8,000, respectively. The mortgage loans are secured by four properties occupied by Griffon's subsidiaries. The loans mature in September 2025 and April 2018, respectively, are collateralized by the specific properties financed and are guaranteed by Griffon. The loans bear interest at a rate of LIBOR plus 1.50%. At December 31, 2017, mortgage loans outstanding relating to continuing operations was $22,743, net of issuance costs.

(e)In August 2016, Griffon’s ESOP entered into an agreement that refinanced the existing ESOP loan into a new Term Loan in the amount of $35,092 (the "Agreement"). The Agreement also provided for a Line Note with $10,908 available to purchase shares of Griffon common stock in the open market. During 2017, Griffon's ESOP purchased 621,875 shares of common stock for a total of $10,908 or $17.54 per share, under a borrowing line that has now been fully utilized. On June 30, 2017,

the Term Loan and Line Note were combined into a single Term Loan. The Term Loan bears interest at LIBOR plus 2.50%a fixed rate of approximately 5.6%. The Term Loan requires a quarterly principal payment of $569 with a balloon payment due at maturity onOcala, Florida lease contains 2 five-year renewal options. At March 22, 2020. As of December 31, 2017, $41,827,2022, $13,757 was outstanding, net of issuance costs,costs. During the year-to-date period ended March 31, 2022, the financing lease on the Troy, Ohio location expired. The lease bore interest at a rate of approximately 5.0%, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a 1 dollar buyout at the end of the lease. Griffon exercised the 1 dollar buyout option in November 2021. Refer to Note 21- Leases for further details.
18

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
(d)     In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($12,018 as of March 31, 2022) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.75% LIBOR USD and 2.38% Bankers Acceptance Rate CDN as of March 31, 2022). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity.  At March 31, 2022, there were no outstanding borrowings under the Term Loan. The Term Loan is secured by shares purchasedrevolving credit facility with CAD 15,000 ($12,018 as of March 31, 2022) available.

During the proceeds of the loan and with a lien on a specific amount of Griffon assets (which lien ranks pari passu with the lien granted on such assets under the Credit Agreement) and is guaranteed by Griffon.

(f)Two Griffon subsidiaries have capital leases outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases mature in 2021 and 2022, respectively, and bear interest at fixed rates of approximately 5.0% and 8.0%, respectively. The Troy Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon. The Ocala, Florida lease contains two five-year renewal options. At December 31, 2017, $9,606 was outstanding, net of issuance costs.
(g)In November 2012, Garant G.P. (“Garant”) entered into a CAD $15,000 ($11,901 as of December 31, 2017) revolving credit facility.  The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.98% LIBOR USD and 2.78% Bankers Acceptance Rate CDN as of December 31, 2017). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity.  At December 31, 2017, there were no borrowings under the revolving credit facility with CAD 15,000 ($11,901 as of December 31, 2017) available for borrowing.

In July 2016,period ended March 31,2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries ("Griffon(collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into an AUD 30,000 term loanin July 2016 and an AUD 10,000 revolver. The term loan refinanced two existing term loans and the revolver replaced two existing lines. In December 2016, the amount available under the revolver was increased from AUD 10,000 to AUD 20,000 and,further amended in March 2017,fiscal 2020. Griffon Australia paid off the term loan commitment was increased byin the amount of AUD 5,000 to9,625 and canceled the AUD 33,500. In September 2017,20,000 revolver. The amendment refinanced the term commitment was increased byexisting AUD 15,000 to AUD 46,750.receivable purchase facility. The term loan requires quarterly principal payments of AUD 1,250 plus interest, with a balloon payment of AUD 37,125 due upon maturity in June 2019, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 2.00% per annum (3.84% at December 31, 2017). As of December 31, 2017, the term loan had an outstanding balance of AUD 44,625 ($34,765 as of December 31, 2017). The revolvingreceivable purchase facility matures in November 2018,March 2023, but is renewable upon mutual agreement with the bank, andlender. The receivable purchase facility accrues interest at BBSY (Bank Bill Sap Rate) plus 2.0%1.25%, respectively, per annum (3.70%(1.31% at DecemberMarch 31, 2017)2022). At DecemberMarch 31, 2017,2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($11,273 as of March 31, 2022) available. The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries. Griffon Australia is required to maintain a certain minimum equity level.

In July 2018, The AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA. The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus 1.92% (2.61% at March 31, 2022). The revolving facility accrues interest at the Bank of England Base Rate plus 3.25% (4.00% as of March 31, 2022). The revolving credit facility matures in July 2022, but it is renewable upon mutual agreement with the lender. As of March 31, 2022, the revolver had an outstanding balance of AUD 6,000GBP 2,827 ($4,675 at December3,713 as of March 31, 2017)2022) while the term and mortgage loan balances amounted to GBP 12,145 ($15,948 as of March 31, 2022). The revolver and the term loan are both secured by substantially all of the assets of Griffon AustraliaAMES UK and its subsidiaries. Griffon guarantees the term loan. Griffon Australia is required to maintain a certain minimum equity level andAMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. During the period ended March 31, 2022, AMES UK entered into a $8,500 trade loan facility agreement. The trade loan facility has a maximum loan period of 135 days and is due on June 29, 2022. The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50% (2.88% as of March 31, 2022). The trade facility had an outstanding balance of $8,000 as of March 31, 2022.


(h)Other long-term debt consists primarily of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.
(e)     Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of finance leases.

At DecemberMarch 31, 2017,2022, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.


NOTE 911 — SHAREHOLDERS’ EQUITY
 
During the first quartersix months ended March 31, 2022, the Company paid two quarterly cash dividends of 2018,$0.09 per share each. During 2021, the Company paid a quarterly cash dividend of $0.07 per share. During 2017, the Company paid quarterly cash dividends of $0.06$0.08 per share, totaling $0.24$0.32 per share for the year. Dividends paid on shares in the ESOP were used to offset ESOP loan payments and recorded as a reduction of debt service payments and compensation expense. A dividend payable was established for the holders of restricted shares; such dividends will be released upon vesting of the underlying restricted shares.


On January 30, 2018,April 27, 2022, the Board of Directors declared a quarterly cash dividend of $0.07$0.09 per share, payable on March 22, 2018June 16, 2022 to shareholders of record as of the close of business on February 22, 2018.

Compensation expense for restricted stock is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on the date of grant and, for performance shares, the likelihood of achieving the performance criteria. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the straight-line attribution method and recorded within SG&A expenses.May 19, 2022.
 
On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan ("(the "Original Incentive Plan") pursuant to which, among other things, under which awards of performance shares, performance units, stock options,
19

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted. On January 31, 2018, shareholders approved Amendment No. 1 to the Original Incentive Plan pursuant to which, among other things, 1,000,000 shares were added to the Original Incentive Plan; and on January 30, 2020, shareholders approved Amendment No. 2 to the Original Incentive Plan, pursuant to which 1,700,000 shares were added to the Original Incentive Plan. On February 17, 2022, shareholders approved the Amended and Restated 2016 Equity Incentive Plan (the “Amended Incentive Plan”), which amended and restated the Original Incentive Plan and pursuant to which, among other things, 1,200,000 shares were added to the Original Incentive Plan. Options granted under the Amended Incentive Plan may be either “incentive stock options” or nonqualified stock options, generally expire ten years after the date of grant and are granted at an exercise price of not less than 100% of the fair market value at the date of grant. The maximum number of shares of common stock available for award under the Amended Incentive Plan is 3,350,0006,250,000 (600,000 of which may

be issued as incentive stock options), plus (i) any shares that were reserved for issuance under the 2011 EquityOriginal Incentive Plan as of the effective date of the Original Incentive Plan, and (ii) any shares underlying awards outstanding on such effective date under the 2011 Incentive Plan that arewere subsequently canceled or forfeited. As of DecemberMarch 31, 2017,2022, there were 305,512867,180 shares available for grant; after giving effectgrant.

Compensation expense for restricted stock and restricted stock units is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on the date of grant and, for performance shares, the likelihood of achieving the performance criteria. Compensation expense for restricted stock granted to Amendment No. 1two senior executives is calculated as the maximum number of shares granted, upon achieving certain performance criteria, multiplied by the stock price as valued by a Monte Carlo Simulation Model. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the Incentive Plan, there would have been 1,260,622 shares available for grant as of such date, contemplating 44,890 of restricted share awards granted on January 31, 2018.straight-line attribution method and recorded within SG&A expenses.

All grants outstanding under former equity plans will continue under their terms; no additional awards will be granted under such plans.

During the first quarter of 2018,2022, Griffon granted 1,008,756236,973 shares of restricted stock and restricted stock units. This included 480,756218,162 shares of restricted stock and restricted stock units, subject to certain performance conditions, with vesting periods of thirty-four months, with a total fair value of $6,285, or a weighted average fair value of $28.81 per share. Furthermore, this included an 18,811 shares of restricted stock award granted to 1 executive, with a vesting period of three years and a total fair value of $507 or a weighted average fair value of $26.97 per share.

During the second quarter of 2022, Griffon granted 711,725 shares of restricted stock. This included 199,195 shares of restricted stock to 9 executives with a vesting period of three years, with a total fair value of $9,980,$1,494, or a weighted average fair value of $20.76$22.50 per share. This also included 528,000454,146 shares of restricted stock granted to two2 senior executives with a vesting period of four yearsthirty-four months and a two year-year post-vesting holding period, subject to the achievement of certain absolute and relative performance conditions relating to required levels of return on invested capital and the pricerelative total shareholder return of Griffon's common stock.stock as compared to a market index. So long as the minimum performance condition is attained, the amount of shares that can vest will range from 384,000113,538 to 528,000.454,146. The total fair value of these restricted shares, assuming achievement of the performance conditions at target, is approximately $7,008,$5,456, or a weighted average fair value of $13.27.$24.03 per share. Additionally, Griffon granted 58,384 restricted shares to the non-employee directors of Griffon with a vesting period of one year and a fair value of $1,375, or a weighted average fair value of $23.55 per share. During the six months ended March 31, 2022, 469,855 shares granted were issued out of treasury stock.


ForThe following table summarizes the quarters ended December 31, 2017 and 2016, stock basedCompany’s compensation expense totaled $2,555 and $2,452, respectively.relating to all stock-based incentive plans:

For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
Restricted stock$4,314 $4,286 $8,204 $7,714 
ESOP778 1,007 1,755 1,787 
Total stock based compensation$5,092 $5,293 $9,959 $9,501 
During the quarter ended December 31, 2017, 191,332 shares, with a market value of $4,332 or $22.64 per shares were withheld to settle employee taxes due to the vesting of restricted stock, and were added to treasury.


On December 21, 2009, Griffon issued $100,000 principal amounteach of 4% convertible subordinated notes due 2017 (the “2017 Notes”). On July 14, 2016, Griffon announced that it would settle, upon conversion, up to $125,000 of the conversion value of the 2017 Notes in cash, with amounts in excess of $125,000, if any, to be settled in shares of Griffon common stock. On January 17, 2017, Griffon settled the convertible debt for $173,855 with $125,000 in cash, utilizing borrowing under the Credit Agreement, and $48,858, or 1,954,993 shares of common stock issued from treasury.

On August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under this share repurchase program, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. There were no repurchases under this program duringDuring the quartersix months ended DecemberMarch 31, 2017. As of December 31, 2017, $49,437 remains under the August 3, 2016 Board authorization.

From August 2011 to December 31, 2017,2022, Griffon repurchased 15,984,854did not purchase any shares of common stock for a totalunder these repurchase programs. As of $211,621 or $13.24 per share,March 31, 2022, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs.

20

In additionGRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)

During the six months ended March 31, 2022, 421,860 shares, with a market value of $10,742, or $25.46 per share were withheld to repurchases under Board authorized programs, on December 10, 2013, Griffon repurchased 4,444,444settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during the six months ended March 31, 2022, an additional 5,480 shares, with a market value of its$144, or $26.31 per share, were withheld from common stock for $50,000 from GS Direct, L.L.C. (“GS Direct”), an affiliateissued upon the vesting of The Goldman Sachs Group, Inc. Subjectrestricted stock units to certain exceptions, if GS Direct intends to sell its remaining 5,555,556 shares of Griffon common stock at any time prior to December 31, 2017, it will first negotiate in good faith to sell such shares to the Company.settle employee taxes due upon vesting.





NOTE 1012 – EARNINGS PER SHARE (EPS)
 
Basic EPS (and diluted EPS in periods when a loss exists) was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding plus additional common shares that werecould be issued in connection with stock based compensation and upon the settlement of the 2017 convertible notes.compensation.
 
The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:
Three Months Ended March 31,Six Months Ended March 31,
 Three Months Ended December 31, 2022202120222021
 2017 2016
Common shares outstandingCommon shares outstanding57,032 56,684 57,032 56,684 
Unallocated ESOP sharesUnallocated ESOP shares(1,769)(1,961)(1,769)(1,961)
Non-vested restricted stockNon-vested restricted stock(3,533)(3,822)(3,533)(3,822)
Impact of weighted average sharesImpact of weighted average shares(62)(63)(307)(184)
Weighted average shares outstanding - basic 41,923
 39,336
Weighted average shares outstanding - basic51,668 50,838 51,423 50,717 
Incremental shares from stock based compensation 1,413
 1,922
Incremental shares from stock based compensation1,762 2,426 2,179 2,494 
Convertible debt matured 2017 —
 1,054
    
Weighted average shares outstanding - diluted 43,336
 42,312
Weighted average shares outstanding - diluted53,430 53,264 53,602 53,211 
    
 
On July 14, 2016, Griffon announced that it would settle, upon conversion, up to $125,000 of the conversion value of the 2017 Notes
21

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in cash, with amounts in excess of $125,000, if any, to be settled in shares of Griffon common stock. During the quarter ended March 31, 2017, Griffon settled the 2017 Notes for $173,855 with $125,000 in cash and 1,954,993 shares of common stock issued from treasury. Prior to settlement, Griffon had the intent and ability to settle the principal amount of the 2017 Notes in cash, and as such, the issuance of shares related to the principal amount of the 2017 Notes did not affect diluted shares.thousands, except per share data)

(Unaudited)
NOTE 1113 – BUSINESS SEGMENTS


Griffon’sGriffon reports its operations through 2 reportable segments, from continuing operations are as follows:


HBP is a leading manufacturer•Consumer and marketer of residential and commercial garage doors to professional dealers and to some of the largest home center retail chains in North America; a global provider of long-handled tools and landscaping products for homeowners and professionals; and a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products to home center retail chains, mass merchandisers, and direct-to builder professional installers.

Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

On September 5, 2017, Griffon announced it would explore strategic alternatives for PPC and on November 15, 2017, announced it entered into a definitive agreement to sell PPC to Berry for $475 million in cash. The transaction is subject to regulatory approval and customary closing conditions, and is expected to close in the first quarter of calendar 2018. As a result, Griffon classified the results of operations of the PPC business as discontinued operations in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operations as held for sale in the consolidated balance sheets; all results and information presented exclude PPC unless otherwise noted. PPC is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies. See Note 14, Discontinued Operations to the Notes of the Financial Statements.

On October 2, 2017, Griffon acquired ClosetMaid. ClosetMaid, founded in 1965,Professional Products (“CPP”) is a leading North American manufacturer and marketera global provider of closet organization,branded consumer and professional tools; residential, industrial and commercial fans; home storage and garage storageorganization products; and products that enhance indoor and outdoor lifestyles. CPP sells to someproducts globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

•Home and Building Products ("HBP") conducts its operations through Clopay. Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America.  Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains mass merchandisers,throughout North America under the brands Clopay, Ideal, and direct-to-builder professional installers in North America. The accounts of ClosetMaid, affectedHolmes. Rolling steel door and grille products designed for preliminary adjustments to reflect fair market values assigned to assets purchasedcommercial, industrial, institutional, and liabilities assumed,retail use are included insold under the Company’s consolidated financial statements from the date of acquisition of October 2, 2017. ClosetMaid is part of the HBP segment. For the quarter ended December 31, 2017, ClosetMaid's income from operations before taxes was $677,575.CornellCookson brand.


Information on Griffon’s reportable segments from continuing operations is as follows:
 For the Three Months Ended March 31,For the Six Months Ended March 31,
REVENUE2022202120222021
Consumer and Professional Products$411,012 $331,871 $694,185 $622,913 
Home and Building Products368,605 242,811 677,181 493,292 
Total revenue$779,617 $574,682 $1,371,366 $1,116,205 

Disaggregation of Revenue
Revenue from contracts with customers is disaggregated by end markets, segments and geographic location, as it more accurately depicts the nature and amount of the Company’s revenue. The following table presents revenue disaggregated by end market and segment:
For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
Residential repair and remodel$50,478 $50,560 $89,237 $96,160 
Retail216,836 153,746 347,071 292,994 
Residential new construction12,019 14,540 22,346 28,055 
Industrial21,068 9,958 32,374 19,489 
International excluding North America110,611 103,067 203,157 186,215 
Total Consumer and Professional Products411,012 331,871 694,185 622,913 
Residential repair and remodel172,377 120,827 317,462 246,942 
Commercial construction157,376 94,751 288,165 190,690 
Residential new construction38,852 27,233 71,554 55,660 
Total Home and Building Products368,605 242,811 677,181 493,292 
Total Consolidated Revenue$779,617 $574,682 $1,371,366 $1,116,205 

22
 For the Three Months Ended December 31,
REVENUE2017 2016
Home & Building Products: 
  
AMES$139,982
 $120,724
CBP154,236
 143,460
ClosetMaid76,760
 —
Home & Building Products370,978
 264,184
Telephonics66,325
 88,093
Total consolidated net sales$437,303
 $352,277


GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
The following table reconciles segment operating profit to income before taxes from continuing operations:presents revenue disaggregated by geography based on the location of the Company's customer:
For the Three Months Ended March 31,
20222021
CPPHBPTotalCPPHBPTotal
United States$264,747 $352,809 $617,556 $205,368 $230,955 $436,323 
Europe46,783 7 46,790 38,965 41 39,006 
Canada31,029 13,877 44,906 21,778 9,797 31,575 
Australia62,189 — 62,189 63,691 — 63,691 
All other countries6,264 1,912 8,176 2,069 2,018 4,087 
Consolidated revenue$411,012 $368,605 $779,617 $331,871 $242,811 $574,682 
 For the Three Months Ended December 31,
INCOME BEFORE TAXES FROM CONTINUING OPERATIONS2017 2016
Segment operating profit: 
  
Home & Building Products$27,751
 $22,640
Telephonics1,480
 5,391
Segment operating profit from continuing operations29,231
 28,031
Net interest expense(16,642) (13,289)
Unallocated amounts(10,436) (10,311)
Acquisition costs(1,612) —
Cost of life insurance benefit(2,614) —
Income (loss) before taxes from continuing operations$(2,073) $4,431
For the Six Months Ended March 31, 2022
20222021
CPPHBPTotalCPPHBPTotal
United States$429,646 $647,385 $1,077,031 $388,810 $467,486 $856,296 
Europe65,113 44 65,157 52,121 41 52,162 
Canada53,657 25,891 79,548 43,893 21,285 65,178 
Australia136,537 — 136,537 133,231 — 133,231 
All other countries9,232 3,861 13,093 4,858 4,480 9,338 
Consolidated revenue$694,185 $677,181 $1,371,366 $622,913 $493,292 $1,116,205 

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, loss onfrom debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason.

The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes from continuing operations:
 For the Three Months Ended March 31,For the Six Months Ended March 31,
 2022202120222021
Segment adjusted EBITDA:    
Consumer and Professional Products$47,844 $37,423 $64,058 $70,136 
Home and Building Products104,474 40,060 160,771 88,429 
Segment adjusted EBITDA152,318 77,483 224,829 158,565 
Unallocated amounts, excluding depreciation *(12,750)(12,104)(25,707)(24,733)
Adjusted EBITDA139,568 65,379 199,122 133,832 
Net interest expense(21,376)(15,527)(37,024)(31,173)
Depreciation and amortization(16,252)(13,149)(29,333)(25,739)
Restructuring charges(4,766)(7,502)(6,482)(10,581)
Acquisition costs(6,708)— (9,303)— 
Proxy expenses(4,661)— (6,952)— 
Fair value step-up of acquired inventory sold(2,701)— (2,701)— 
Income before taxes from continuing operations$83,104 $29,201 $107,327 $66,339 
 For the Three Months Ended December 31,
 2017 2016
Segment adjusted EBITDA: 
  
Home & Building Products$39,457
 $31,807
Telephonics4,199
 8,108
Total Segment adjusted EBITDA43,656
 39,915
Net interest expense(16,642) (13,289)
Segment depreciation and amortization(12,852) (11,884)
Unallocated amounts(10,436) (10,311)
Acquisition costs(3,185) —
Cost of life insurance benefit(2,614) —
Income (loss) before taxes from continuing operations$(2,073) $4,431

* Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.
23

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)

For the Three Months Ended December 31,For the Three Months Ended March 31,For the Six Months Ended March 31,
DEPRECIATION and AMORTIZATION2017
2016DEPRECIATION and AMORTIZATION2022202120222021
Segment: 
 Segment:    
Home & Building Products$10,133
 $9,167
Telephonics2,719
 2,717
Consumer and Professional ProductsConsumer and Professional Products$11,791 $8,620 $20,397 $16,819 
Home and Building ProductsHome and Building Products4,324 4,379 8,662 8,720 
Total segment depreciation and amortization12,852
 11,884
Total segment depreciation and amortization16,115 12,999 29,059 25,539 
Corporate106
 104
Corporate137 150 274 200 
Total consolidated depreciation and amortization$12,958
 $11,988
Total consolidated depreciation and amortization$16,252 $13,149 $29,333 $25,739 






CAPITAL EXPENDITURES 

 
CAPITAL EXPENDITURES    
Segment: 

 
Segment:    
Home & Building Products$6,658
 $6,391
Telephonics1,943
 1,296
Consumer and Professional ProductsConsumer and Professional Products$9,054 $6,813 $16,184 $13,720 
Home and Building ProductsHome and Building Products2,403 1,998 5,752 4,113 
Total segment8,601
 7,687
Total segment11,457 8,811 21,936 17,833 
Corporate2,184
 3
Corporate— 2 94 2 
Total consolidated capital expenditures$10,785
 $7,690
Total consolidated capital expenditures$11,457 $8,813 $22,030 $17,835 
ASSETSAt March 31, 2022At September 30, 2021
Segment assets:  
Consumer and Professional Products$2,665,362 $1,377,618 
Home and Building Products714,647 666,422 
Total segment assets3,380,009 2,044,040 
Corporate138,462 283,202 
Total continuing assets3,518,471 2,327,242 
Discontinued operations - held for sale264,861 273,414 
Other discontinued operations3,691 4,029 
Consolidated total$3,787,023 $2,604,685 

ASSETSAt December 31, 2017
At September 30, 2017
Segment assets: 
 
Home & Building Products$1,345,467
 $1,084,103
Telephonics325,766
 343,445
Total segment assets1,671,233
 1,427,548
Corporate128,727
 71,980
Total continuing assets1,799,960
 1,499,528
Assets of discontinued operations380,555
 374,013
Consolidated total$2,180,515
 $1,873,541

NOTE 1214 – EMPLOYEE BENEFIT PLANS


Defined benefit pension expense (income) included in Other Income (Expense), net was as follows:


 Three Months Ended March 31,Six Months Ended March 31,
 2022202120222021
Interest cost$911 $745 $1,707 $1,489 
Expected return on plan assets(2,835)(2,545)(5,424)(5,089)
Amortization:    
Recognized actuarial loss845 1,573 1,690 3,146 
Net periodic expense (income)$(1,079)$(227)$(2,027)$(454)

24
  Three Months Ended December 31,
  2017 2016
Interest cost $1,407
 $1,402
Expected return on plan assets (2,684) (2,736)
Amortization:  
  
Prior service cost 4
 4
Recognized actuarial loss 525
 832
Pension settlement 13,715
 —
Net periodic expense (income) $12,967
 $(498)


19
Table of Contents
GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
(Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30)



As a result of the recent passing of our Chairman of the Board, who participated in a Supplemental Executive Retirement Plan relating to his tenure as Chief Executive Officer (a position from which he retired in 2008), the pension benefit liability was reduced by $13,715 at December 31, 2017, with the offset, net of tax, recorded in Other Comprehensive Income.

NOTE 1315 – RECENT ACCOUNTING PRONOUNCEMENTS
Issued but not yet effective accounting pronouncements


In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU No. 2021-08, Business Combinations (Topic 805); Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This new guidance affects all entities that enter into a business combination within the scope of ASC 805-10. Under this new guidance, the acquirer should determine what contract assets and/or liabilities it would have recorded under ASC 606 (Revenue Guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquirer. Under current U.S. GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value. This update is effective for the Company beginning in fiscal 2023. Early adoption is permitted. The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and related disclosures.
New Accounting Standards Implemented

In May 2017,December 2019, the FASB issued guidance on simplifying the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. This guidance became effective for the Company beginning in fiscal 2022. We adopted the recognition of non-income taxes on the modified retrospective basis. Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

In August 2018, the FASB issued guidance to address the situation when a company modifies the terms of a stock compensation award previously grantedclarify disclosure requirements related to an employee. Thisdefined benefit pension and other post-retirement plans. The guidance is effective and should be applied prospectively, for fiscal years beginning after December 15, 2017. Early2020, with early adoption is permitted, as of the beginning of an annual period. The new guidance isand was effective for the Company in our fiscal year beginning in 2019. We are currently evaluatingOctober 1, 2021. Adoption of this standard did not have a material impact on our consolidated financial statements and the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

In March 2017, the FASB issued amendments to the Compensation - Retirement Benefits guidance which requires companies to retrospectively present the service cost component of net periodic benefit cost for pension and retiree medical plans along with other compensation costs in operating income and present the other components of net periodic benefit cost below operating income in the income statement. The guidance also allows only the service cost component of net periodic benefit cost to be eligible for capitalization within inventory or fixed assets on a prospective basis. This guidance is effective, and should be applied retroactively, for fiscal years beginning after December 15, 2017. Early adoption is permitted as of the beginning of an annual period. The new guidance is effective for the Company beginning in 2019. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

In January 2017, the FASB issued guidance that simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. This guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those periods and will be effective for the Company beginning in 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

In January 2017, the FASB issued guidance that clarifies the definition of a business, which will impact many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The new standard is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods and will be effective for the Company beginning in 2019. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

In August 2016, the FASB issued guidance on the Statement of Cash Flows Classification of certain cash receipts and cash payments (a consensus of the FASB Emerging Issues Task Force). This guidance addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company beginning in 2019. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

In February 2016, the FASB issued guidance on lease accounting requiring lessees to recognize a right-of-use asset and a lease liability for long-term leases. The liability will be equal to the present value of lease payments. This guidance must be applied using a modified retrospective transition approach to all annual and interim periods presented and is effective for the Company

beginning in 2020. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

In May 2014, the FASB issued guidance on revenue from contracts with customers. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved, in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. This guidance permits the use of either the retrospective or cumulative effect transition method and is effective for the Company beginning in 2019; early adoption is permitted beginning in 2018. The Company has commenced its initial assessment to assess the impact, if any, the new revenue standard will have on the Company’s consolidated financial statements. During this initial assessment, the Company has identified certain differences that will likely have the most impact; however, how significant of an impact cannot be determined during this phase of the Company’s implementation process. These differences relate to the new concepts of variable consideration, consideration payable and the focus on control to determine when and how revenue should be recognized (i.e. point in time versus over time). The FASB has also issued the following additional guidance clarifying certain issues on revenue from contracts with customers; Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients and Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. The Company expects to complete its initial assessments by the end of the third quarter of 2018 and expects to finalize its implementation process prior to the adoption of the new revenue standard on October 1, 2018.


The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements, and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


NOTE 1416 – DISCONTINUED OPERATIONS
PPC


On September 5, 2017,27, 2021, Griffon announced it would exploreis exploring strategic alternatives for PPCits DE segment, which consists of its Telephonics subsidiary, and on November 16, 2017, announced itApril 18, 2022, Griffon entered into a definitive agreement to sell PPCTelephonics to BerryTTM for $475 million$330,000 in cash. The transaction is subject to regulatory approval and customary closing conditions, and is expected to close inwithin the firstsecond calendar quarter of calendar 2018. As2022.

In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a result, Griffon classifieddisposal of a component of an entity or a group of components of an entity is required to be reported as discontinuedoperations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component of an entity meets the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinuedoperations criteria, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinuedoperations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the PPC business as discontinued operationsnet income (loss) of continuing operations.








25

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operations as held for sale in the consolidated balance sheets. All results and information presented exclude PPC unless otherwise noted. PPC is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies.thousands, except per share data)

(Unaudited)
Defense Electronics (DE or Telephonics)

The following amounts related to the PPC segmentTelephonics have been segregated from Griffon's continuing operations and are reported as a discontinued operations:operation:


For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
Revenue$56,273 $60,150 $110,266 $127,918 
Cost of goods and services45,188 51,411 86,149 113,512 
Gross profit11,085 8,739 24,117 14,406 
Selling, general and administrative expenses10,289 9,359 20,309 19,301 
Income (loss) from discontinued operations796 (620)3,808 (4,895)
Other income (expense)
Interest income, net2 1 2 1 
Gain on sale of business— (949)— 5,291 
Other, net(104)227 (102)293 
Total other income (expense)(102)(721)(100)5,585 
Income from discontinued operations before taxes$694 $(1,341)$3,708 $690 
Provision (benefit) for income taxes(6,424)(334)(5,803)(2,373)
Income from discontinued operations$7,118 $(1,007)$9,511 $3,063 
  For the Three Months Ended December 31,
  2017 2016 
Revenue $120,430
 $114,823
 
Cost of goods and services 95,944
 95,438
 
Gross profit 24,486
 19,385
 
Selling, general and administrative expenses 12,108
 10,861
 
Income from discontinued operations 12,378
 8,524
 
Other income (expense)  
  
 
Interest expense, net 60
 78
 
Other, net 852
 (99) 
Total other income (expense) 912
 (21) 
Income from operations of discontinued operations $11,466
 $8,545
 


The above table excludes depreciationDuring the three and six months ended March 31, 2022, Income from discontinued operations includes $2,422 and $4,214, respectively, of costs associated with consulting and stay bonuses. Depreciation and amortization was excluded from the current year results since PPCDE is classified as a discontinued operationsoperation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines. Depreciation and amortization would have been approximately $7,400$2,400 and $5,100 in the three and six months ended March 31, 2022, respectively. Provision (benefit) for income taxes includes $4,954 of estimated deferred tax benefits related to the anticipated disposition of the Telephonics subsidiary.

The gain on sale of business relates to the divestiture of the SEG business on December 18, 2020; SEG had sales of $6,713 in the quarter ended December 31, 2017.2020.


In September 2020, a Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities.The reduction in force initiative resulted in severance charges of approximately $2,200, recorded in the first quarter ended December 31, 2020. These actions reduced headcount by approximately 90 people.

Income from discontinued operations includes charges of $5,601 recorded in fiscal 2021 primarily related to exiting older weather radar product lines.

26

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
The following amounts related to the PPC segmentTelephonics have been segregated from Griffon's continuing operations and are reported as assets and liabilities of discontinued operations held for sale in the consolidated balance sheets:


At March 31,At September 30,
20222021
CURRENT ASSETS
Accounts receivable, net$48,652 $42,020 
Contract assets, net of progress payments52,497 72,983 
Inventories87,265 83,970 
Prepaid and other current assets4,993 4,409 
PROPERTY, PLANT AND EQUIPMENT, net47,313 45,371 
OPERATING LEASE RIGHT-OF-USE ASSETS1,167 1,167 
GOODWILL17,734 17,734 
INTANGIBLE ASSETS, net131 131 
OTHER ASSETS5,109 5,629 
Total Assets Held for Sale$264,861 $273,414 
CURRENT LIABILITIES
Accounts payable58,681 60,486 
Accrued liabilities10,510 15,153 
Current portion of operating lease liabilities223 287 
LONG-TERM OPERATING LEASE LIABILITIES766 867 
OTHER LIABILITIES3,038 3,955 
Total Liabilities Held for Sale$73,218 $80,748 
 At December 31, 2017 At September 30, 2017 
ASSETS 
  
 
Accounts receivable, net$52,004
 $51,768
 
Inventories, net46,552
 45,742
 
Prepaid and other current assets10,904
 11,000
 
PROPERTY, PLANT AND EQUIPMENT, net191,793
 185,940
 
GOODWILL56,865
 57,087
 
INTANGIBLE ASSETS, net12,228
 12,298
 
OTHER ASSETS6,929
 6,889
 
Total Assets Held for Sale$377,275
 370,724
 
LIABILITIES 
  
 
Notes payable and current portion of long-term debt$11,929
 $11,163
 
Accounts payable29,705
 36,619
 
Accrued liabilities14,407
 14,553
 
LONG-TERM DEBT, net10,348
 10,549
 
OTHER LIABILITIES19,348
 11,566
 
Total Liabilities Held for Sale$85,737
 $84,450
 


Installation Services and Other Discontinued Activities

In 2008, as a result of the downturn in the residential housing market, Griffon exited substantially all operating activities of its Installation Services segment which sold, installed and serviced garage doors and openers, fireplaces, floor coverings, cabinetry
and a range of related building products, primarily for the new residential housing market. In 2008, Griffon sold eleven units, closed one unit and merged two units into CBP. Griffon substantially concluded its remaining disposal activities in 2009.

Installation Services operating results have been reported as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented; Installation Services is excluded from segment reporting. There was no reported revenue in the quarters ended December 31, 2017 and 2016.
During the year ended September 30, 2017, Griffon recorded $5,700 of reserves in discontinued operations related to historical environmental remediation efforts and to increase the reserve for homeowner association claims (HOA) related to the Clopay Services Corporation discontinued operations in 2008.

The following amounts summarize the total assets and liabilities related to the Installation Services segment, discontinued in 2008, and other businesses discontinued several years ago,activities which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations not held for sale in the Condensed Consolidated Balance Sheets:
At March 31, 2022At September 30, 2021
Assets of discontinued operations:
Prepaid and other current assets$497 $605 
Other long-term assets3,194 3,424 
Total assets of discontinued operations$3,691 $4,029 
Liabilities of discontinued operations:  
Accrued liabilities, current$3,312 $3,280 
Other long-term liabilities4,406 3,794 
Total liabilities of discontinued operations$7,718 $7,074 
 At December 31, 2017
At September 30, 2017
Assets of discontinued operations not held for sale: 

 
Prepaid and other current assets$328
 $329
Other long-term assets2,952
 2,960
Total assets of discontinued operations not held for sale$3,280
 $3,289
    
Liabilities of discontinued operations not held for sale: 
  
Accrued liabilities, current$3,924
 $8,342
Other long-term liabilities5,225
 3,037
Total liabilities of discontinued operations not held for sale$9,149
 $11,379


At March 31, 2022 and September 30, 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance claims, warranty and environmental reserves totaling liabilities of approximately $7,718 and $7,074, respectively.

There was no Installation Servicesreported revenue or incomein the quarter and six month period ended March 31 2022 and 2021.

27

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
NOTE 17 – RESTRUCTURING CHARGES

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced an accelerated timeline and reduced scope for the initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative includes three key development areas. First, certain AMES U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

When fully implemented and the efficiencies are fully realized, we expect annual cash savings of $25,000 (previously $30,000 to $35,000). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately $50,000 (previously $65,000) and capital investments of approximately $15,000 (previously $65,000), net of future proceeds from the sale of exited facilities.

In the quarter and six months ended DecemberMarch 31, 2017 or 2016.2022, CPP incurred pre-tax restructuring and related exit costs approximating $4,766 and $6,482, respectively. During the six months ended March 31, 2022, cash charges totaled $4,427 and non-cash, asset-related charges totaled $2,055; the cash charges included $2,138 for one-time termination benefits and other personnel-related costs and $2,289 for facility exit costs. Non-cash charges included a $1,766 impairment charge related to certain fixed assets at several manufacturing locations and $289 of inventory that have no recoverable value. During the six months ended March 31, 2022, headcount was reduced by 20.


In the quarter and six months ended March 31, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $7,502 and $10,581, respectively. During the six months ended March 31, 2021, cash charges totaled $7,891 and non-cash, asset-related charges totaled $2,690; the cash charges included $1,084 for one-time termination benefits and other personnel related costs and $6,807 for facility and lease exit costs primarily driven by the consolidation of distribution facilities. Non-cash charges of $2,690 predominantly related to inventory that have no recoverable value.

A summary of the restructuring and other related charges included in Cost of goods and services and SG&A expenses in the Company's Condensed Consolidated Statements of Operations were as follows:

For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
Cost of goods and services$2,455 $3,337 $2,777 $3,878 
Selling, general and administrative expenses2,311 4,165 3,705 6,703 
Total restructuring charges$4,766 $7,502 $6,482 $10,581 
28

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
Personnel related costs$1,878 $722 $2,138 $1,084 
Facilities, exit costs and other1,122 4,283 2,289 6,807 
Non-cash facility and other1,766 2,497 2,055 2,690 
Total$4,766 $7,502 $6,482 $10,581 

The following table summarizes the accrued liabilities of the Company's restructuring actions:
Cash ChargesNon-Cash
Personnel related costsFacilities &
Exit Costs		Facility and Other CostsTotal
Accrued liability at September 30, 2021$418 $264 $— $682 
Q1 Restructuring charges260 1,167 289 1,716 
Q1 Cash payments(275)(1,167)— (1,442)
Q1 Non-cash charges— — (289)(289)
Accrued liability at December 31, 2021$403 $264 $— $667 
Q2 Restructuring charges1,878 1,122 1,766 4,766 
Q2 Cash payments(1,883)(1,122)— (3,005)
Q2 Non-cash charges— — (1,766)(1,766)
Accrued liability at March 31, 2022$398 $264 $— $662 

NOTE 1518 – OTHER INCOME (EXPENSE)
 
For the quarters ended DecemberMarch 31, 20172022 and 2016,2021, Other income (expense) included $(437)of $1,675 and ($132),$1,081, respectively, includes $168 and $320, respectively, of net currency exchange gains (losses)losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $1,079 and $227, respectively, as well as $(5)$(331) and $87,$55, respectively, of net investment income (loss). Other income (expense) also includes rental income of $462 in each of the three months ended March 31, 2022 and 2021. Additionally, it includes royalty income of $616 for the three months ended March 31, 2022.


For the six months ended March 31, 2022 and 2021, Other income (expense) of $3,056 and $1,438, respectively, includes $562 and $379, respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $2,027 and $454, respectively, as well as $(238) and $386, respectively, of net investment income (loss). Other income (expense) also includes rental income of $924 in each of the six months ended March 31, 2022 and 2021. Additionally, it includes royalty income of $616 for the six months ended March 31, 2022.


NOTE 1619 – WARRANTY LIABILITY
 
Telephonics offersCPP and HBP offer warranties against product defects for periods generally ranging from one to two years, depending on the specific product and terms of the customer purchase agreement. CBP also offers warranties against product defects for periods generally ranging from one to ten years, with limited lifetime warranties on certain door and fan models. Typical warranties require CBP, ClosetMaidCPP and TelephonicsHBP to repair or replace the defective products during the warranty period at no cost to the customer. At the time revenue is recognized, Griffon records a liability for warranty costs, estimated based on historical experience, and periodically assesses its warranty obligations and adjusts the liability as necessary. AMESCPP offers an express limited warranty for a period of ninety days on all products from the date of original purchase unless otherwise stated on the product or packaging.packaging from the date of original purchase.


29
GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
(Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30)
Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:
 Three Months Ended March 31,Six Months Ended March 31,
 2022202120222021
Balance, beginning of period$9,572 $6,232 $7,818 $6,268 
Warranties issued and changes in estimated pre-existing warranties5,788 4,933 9,249 8,509 
Actual warranty costs incurred(3,755)(3,245)(5,462)(6,857)
Other warranty liabilities assumed from acquisitions6,353 — 6,353 — 
Balance, end of period$17,958 $7,920 $17,958 $7,920 
 Three Months Ended December 31,
 2017 2016
Balance, beginning of period$6,236
 $6,322
Warranties issued and changes in estimated pre-existing warranties1,475
 1,294
Actual warranty costs incurred(2,492) (1,601)
Other warranty liabilities assumed from acquisitions$836
 $—
Balance, end of period$6,055
 $6,015



NOTE 1720 – OTHER COMPREHENSIVE INCOME (LOSS)
 
The amounts recognized in other comprehensive income (loss) were as follows:
For the Three Months Ended March 31,
 20222021
 Pre-taxTaxNet of taxPre-taxTaxNet of tax
Foreign currency translation adjustments$6,049 $— $6,049 $1,739 $— $1,739 
Pension and other defined benefit plans177 (37)140 1,585 (340)1,245 
Cash flow hedges(1,771)531 (1,240)2,559 (768)1,791 
Total other comprehensive income (loss)$4,455 $494 $4,949 $5,883 $(1,108)$4,775 

For the Six Months Ended March 31,
Three Months Ended December 31, 2017 Three Months Ended December 31, 201620222021
Pre-tax Tax Net of tax Pre-tax Tax Net of taxPre-taxTaxNet of taxPre-taxTaxNet of tax
Foreign currency translation adjustments$(1,289) $—
 $(1,289) $(13,479) $—
 $(13,479)Foreign currency translation adjustments$3,730 $— $3,730 $13,862 $— $13,862 
Pension and other defined benefit plans14,244
 (4,685) 9,559
 836
 (292) 544
Pension and other defined benefit plans1,023 (215)808 3,735 (784)2,951 
Cash flow hedges130
 (42) 88
 2,272
 (649) 1,623
Cash flow hedges(3,342)1,002 (2,340)1,576 (473)1,103 
Total other comprehensive income (loss)$13,085
 $(4,727) $8,358
 $(10,371) $(941) $(11,312)Total other comprehensive income (loss)$1,411 $787 $2,198 $19,173 $(1,257)$17,916 


The components of Accumulated other comprehensive income (loss) are as follows:
At March 31, 2022At September 30, 2021
Foreign currency translation adjustments$(15,520)$(19,250)
Pension and other defined benefit plans(27,994)(28,802)
Change in Cash flow hedges(265)2,075 
$(43,779)$(45,977)
30
 December 31, 2017 September 30, 2017
Foreign currency translation adjustments$(33,517) $(32,227)
Pension and other defined benefit plans(18,580) (28,140)
Change in Cash flow hedges(26) (114)
 $(52,123) $(60,481)


GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:
 For the Three Months Ended March 31,For the Six Months Ended March 31,
Gain (Loss)2022202120222021
Pension amortization$(845)$(1,573)$(1,690)$(3,146)
Cash flow hedges1,384 (1,741)2,917 (2,399)
Total gain (loss)$539 $(3,314)$1,227 $(5,545)
Tax benefit (expense)(113)696 (257)1,165 
Total$426 $(2,618)$970 $(4,380)
 For the Three Months Ended December 31, 
Gain (Loss)2017 2016 
Pension amortization$(529) $(836) 
Cash flow hedges(7) (649) 
Total gain (loss)(536) (1,485) 
Tax benefit (expense)161
 97
 
Total$(375) $(1,388) 

NOTE 1821 — LEASES

The Company recognizes right-of-use ("ROU") assets and lease liabilities on the balance sheet, with the exception of leases with a term of twelve months or less. The Company determines if an arrangement is a lease at inception. The ROU assets and short and long-term liabilities associated with our Operating leases are shown as separate line items on our Condensed Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, net, other accrued liabilities, and other non-current liabilities. The Company's finance leases are immaterial. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments primarily include rent and insurance costs (lease components). The Company's leases also include non-lease components such as real estate taxes and common-area maintenance costs. The Company elected the practical expedient to account for lease and non-lease components as a single component. In certain of the Company's leases, the non-lease components are variable and in accordance with the standard are therefore excluded from lease payments to determine the ROU asset. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. Our determination of the lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less (a "Short-term" lease), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets.Variable lease cost for both operating and finance leases, if any, is recognized as incurred. Components of operating lease costs are as follows:
For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
Fixed$9,906 $9,686 $19,653 $19,177 
Variable (a), (b)
1,684 1,919 3,536 3,813 
Short-term (b)
1,486 985 2,835 2,055 
Total$13,076 $12,590 $26,024 $25,045 
(a) Primarily relates to common-area maintenance and property taxes.
(b) Not recorded on the balance sheet.

31

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
Supplemental cash flow information were as follows:
For the Six Months Ended March 31,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$22,510 $21,223 
Financing cash flows from finance leases1,401 1,865 
Total$23,911 $23,088 

Supplemental Condensed Consolidated Balance Sheet information related to leases were as follows:
March 31, 2022September 30, 2021
Operating Leases:
Right of use assets:
Operating right-of-use assets$149,587 $144,598 
Lease Liabilities:
Current portion of operating lease liabilities$32,210 $29,881 
Long-term operating lease liabilities122,488 119,315 
Total operating lease liabilities$154,698 $149,196 
Finance Leases:
Property, plant and equipment, net(1)
$15,113 $16,466 
Lease Liabilities:
Notes payable and current portion of long-term debt$2,329 $2,347 
Long-term debt, net13,019 14,120 
Total financing lease liabilities$15,348 $16,467 
(1) Finance lease assets are recorded net of accumulated depreciation of $4,488 and $6,136 as of March 31, 2022 and September 30, 2021, respectively.

32

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)


Griffon has one finance lease outstanding for real estate located in Ocala, Florida. The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6%. The Ocala, Florida lease contains 2 five-year renewal options. At March 31, 2022, $13,757 was outstanding, net of issuance costs. During the six months ended March 31, 2022, the financing lease on the Troy, Ohio location expired. The lease bore interest at a rate of approximately 5.0%, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a 1 dollar buyout at the end of the lease. Griffon exercised the 1 dollar buyout option in November 2021.

The aggregate future maturities of lease payments for operating leases and finance leases as of March 31, 2022 are as follows (in thousands):
Operating LeasesFinance Leases
2022(a)
$20,230 $1,541 
202334,959 2,893 
202426,530 2,322 
202523,775 2,128 
202615,566 2,106 
202711,677 2,074 
Thereafter54,552 5,703 
Total lease payments$187,289 $18,767 
Less: Imputed Interest(32,591)(3,419)
Present value of lease liabilities$154,698 $15,348 
(a) Excluding the six months ended March 31, 2022.

Average lease terms and discount rates at March 31, 2022 were as follows:
Weighted-average remaining lease term (years)
Operating leases7.6
Finance Leases7.8
Weighted-average discount rate
Operating Leases4.36 %
Finance Leases5.49 %


NOTE 22 — COMMITMENTS AND CONTINGENCIES
 
Legal and environmental


Department of Environmental Conservation of New York State (“DEC”), with ISC Properties, Inc.Peekskill Site. Lightron Corporation (“Lightron”), a wholly-owned subsidiary of Griffon, once conducted operations at a location in Peekskill in the Town of Cortlandt, New York, just outside the city of Peekskill, New York (the “Peekskill Site”) which was owned by ISC Properties, Inc. (“ISC”ISCP”), a wholly-owned subsidiary of Griffon. ISCGriffon, for approximately three years. ISCP sold the Peekskill Site in November 1982.


Subsequently, ISC was advised byOn May 15, 2019 the DECUnited States Environmental Protection Agency ("EPA") added the Peekskill Site to the National Priorities List under CERCLA and has since announced that random samplingit is performing a Remedial Investigation/Feasibility Study ("RI/FS"). On August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions regarding implementation of the RI/FS. The EPA also sent a request for information under Section 104(e) of CERCLA to each party. Lightron and ISCP have informed the
33

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
EPA that they are willing to participate in discussions regarding implementation of the RI/FS. Lightron and ISCP have also submitted responses to certain items contained in the Section 104(e) information request, with additional responses to follow. The current owner of the property, which acquired the Peekskill Site from ISCP in 1982 and has no relationship with Lightron or ISCP, has also informed the EPA that it is willing to discuss implementation of the RI/FS, and has also received, and submitted certain information in response to, a Section 104(e) information request. The EPA may decide to implement the RI/FS, on its own or through the use of consultants, may reach agreement with one or more parties to perform the RI/FS, or may offer to negotiate with one or more parties to accept a settlement addressing the potential liability of such parties for investigation and/or remediation at the Peekskill Site and in a creek nearSite. Should the Peekskill Site indicated concentrations of solvents and other chemicals common to Lightron’s prior plating operations. ISC then entered into a consent orderEPA implement the RI/FS, or perform further studies and/or subsequently remediate the site, without first reaching agreement with one or more relevant parties, the DEC in 1996 (the “Consent Order”) to perform a remedial investigation and prepare a feasibility study. After completing the initial remedial investigation pursuant to the Consent Order, ISC was required by the DEC, and did accordingly conduct over the next several years, supplemental remedial investigations, including soil vapor investigations, under the Consent Order.

In April 2009, the DEC advised ISC’s representatives that both the DEC and the New York State Department of Health had reviewed and accepted an August 2007 Remedial Investigation Report and an Additional Data Collection Summary Report dated January 30, 2009. With the acceptance of these reports, ISC completed the remedial investigation required under the Consent Order and was authorized, accordingly, by the DEC to conduct the Feasibility Study required by the Consent Order. Pursuant to the requirements of the Consent Order and its obligations thereunder, ISC, without acknowledging any responsibility to perform any

remediation at the Site, submitted to the DEC in August 2009, a draft feasibility study which recommendedEPA would likely seek reimbursement for the soil, groundwater and sediment media, remediation alternatives having a current net capital cost value, in the aggregate, of approximately $5,000.  In February 2011, DEC advised ISC it has accepted and approved the feasibility study. Accordingly, ISC has no further obligations under the consent order.
Upon acceptance of the feasibility study, DEC issued a Proposed Remedial Action Plan (“PRAP”) that sets forth the proposed remedy for the site. The PRAP accepted the recommendation contained in the feasibility study for remediation of the soil and groundwater media, but selected a different remediation alternative for the sediment medium. The approximate cost and the current net capital cost value of the remedy proposed by DEC in the PRAP is $10,000. After receiving public comments on the PRAP, the DEC issued a Record of Decision (“ROD”) that set forth the specific remedies selected and responded to public comments. The remedies selected by the DEC in the ROD are the same remedies as those set forth in the PRAP.
It is now expected that DEC will enter into negotiations with potentially responsible parties to request they undertake performance of the remedies selected in the ROD, and if such parties do not agree to implement such remedies, then the State of New York may use State Superfund money to remediate the Peekskill site and seek recovery of costs incurred from such parties.

Lightron has not engaged in any operations in over three decades. ISCP functioned solely as a real estate holding company, and has not held any real property in over three decades. Griffon does not acknowledge any responsibility to perform any investigation or remediation at the Peekskill Site. One of Griffon’s insurers is defending Lightron, ISCP and Griffon subject to a reservation of rights.


Improper Advertisement Claim involving Union Tools® Products. Beginning in December 2004, a customer of AMES had been named in various litigation matters relating to certain Union Tools products. The plaintiffs in those litigation matters asserted causes of action against the customer of AMES for improper advertisement to end consumers. The allegations suggested that advertisements led the consumers to believe that Union Tools’ hand tools were wholly manufactured within boundaries of the United States. The complaints asserted various causes of action against the customer of AMES under federal and state law, including common law fraud. At some point, the customer may seek indemnity (including recovery of its legal fees and costs) against AMES for an unspecified amount. Presently, AMES cannot estimate the amount of loss, if any, if the customer were to seek legal recourse against AMES.

Union Fork and Hoe, Frankfort, NY site.The former Union Fork and Hoe property in Frankfort, NYNew York was acquired by AmesAMES in 2006 as part of a larger acquisition, and has historic site contamination involving chlorinated solvents, petroleum hydrocarbons and metals. AMES has entered into an Order on Consent with the New York State Department of Environmental Conservation.Conservation (“DEC”). While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, the Order required AMES is required to perform a remedial investigation of certain portions of the property and to recommend a remediation option. AtIn 2011, remediation of chlorinated solvents in the conclusion of the remediation phasegroundwater was completed to the satisfaction of DEC. In June 2020, AMES completed the remediation required by the Record of Decision issued by DEC in 2019 ("ROD") and filed a Construction Completion Report, a Site Management Plan and an environmental easement with DEC. While AMES was implementing the remediation required by the ROD, DEC will issuerequested additional investigation of a Certificatesmall area on the site and of Completion.an area adjacent to the site perimeter. AMES investigated the on-site area and has performed significant investigative and remedial activities in the last few yearscompleted remediation of that small area under work plansa workplan approved by DEC. AMES also completed a workplan approved by DEC to investigate the DEC, and the DEC has approved the final remedial investigation report. AMES submitted a Feasibility Study, evaluating a number of remedial options, and recommending excavation and offsite disposal of lead contaminated soils, capping of other areas ofadjacent to the site impacted by other metalsperimeter, and performing limited groundwater monitoring. The Company is now awaitingperforming a DEC decision onstatistical analysis to determine the Feasibility Study and the issuance of a Record of Decision. Implementation of the selected remedial alternative is expectedarea, if any, required to occur following regulatory approval.be remediated. AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between the DEC and a predecessor of AMES relating to the site.

US Government investigations and claims

In general, departments and agenciesAMES’ insurer has accepted AMES’ claim for a substantial portion of the US Government havecosts incurred and to be incurred for both the authorityon-site and off-site activities.

Memphis, TN site.Hunter Fan Company (“Hunter”) operated its headquarters and a production plant in Memphis, Tennessee for over 50 years (the “Memphis Site”).While Hunter completed certain on-site remediation of PCB-contaminated soils, Hunter did not investigate the extent to investigate various transactions and operations of Griffon,which PCBs existed beneath the building itself nor determine whether off-site areas had been impacted.Hunter vacated the Memphis Site approximately twenty years ago, and the resultson-site buildings have now been demolished.

The State of Tennessee Department of Environment and Conservation (“TDEC”) identified the Memphis Site as being potentially contaminated, raising the possibility that site operations could have resulted in soil and groundwater contamination involving volatile organic compounds and metals.The TDEC performed a preliminary assessment of the site and recommended to the United States Environmental Protection Agency (“EPA”) that the site be listed on the National Priorities List established under CERCLA.The TDEC further recommended that the EPA fund an investigation of potential soil gas contamination in receptors near the site.The TDEC has also indicated that it will proceed with this investigation if the EPA does not act.

It is unknown whether the EPA will add the Memphis Site to the National Priorities List, whether a site investigation will reveal contamination and, if there is contamination, the extent of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. US Government regulations providecontamination. However, given that certain findings againstPCB work was not completed in the past and the TDEC’s stated intent for the EPA to perform an investigation (and the statement by the TDEC that it will perform the investigation if the EPA will not), liability is probable in this matter.There are other potentially responsible parties for this site, including a contractorformer owner of Hunter; Hunter has notified such former owner of this matter, which may leadhave liability for any required remediation.

34

GRIFFON CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(US dollars and non US currencies in thousands, except per share data)
(Unaudited)
If the EPA decides to suspensionadd this site to the National Priorities List, a Remedial Investigation/Feasibility Study (“RI/FS”) will be required.Hunter expects that EPA will ask it to perform this work.If Hunter does not reach an agreement with the EPA to perform this work, the EPA will implement the RI/FS on its own.Should the EPA implement the RI/FS or debarmentperform further studies and/or subsequently remediate the site without first reaching an agreement with one or more relevant parties, the EPA would likely seek from future US Government contracts orsuch parties, including Hunter, reimbursement for the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on Telephonics because of its reliance on government contracts.costs incurred.


General legal


Griffon is subject to various laws and regulations relating to the protection of the environment and is a party to legal proceedings arising in the ordinary course of business. Management believes, based on facts presently known to it, that the resolution of the matters above and such other matters will not have a material adverse effect on Griffon’s consolidated financial position, results of operations or cash flows.


35

NOTE 19 — CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by the domestic assets of Clopay Building Products Company, Inc., Clopay Plastic Products Company, Inc. ("PPC"), Telephonics Corporation, The AMES Companies, Inc., ATT Southern, Inc., Clopay Ames True Temper Holding Corp., and ClosetMaid, LLC, all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, presented below are condensed consolidating financial information as of December 31, 2017 and September 30, 2017 and for the three months ended December 31, 2017 and 2016. The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities. The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly-owned subsidiaries accounted for under the equity method.

The indenture relating to the Senior Notes (the “Indenture”) contains terms providing that, under certain limited circumstances, a guarantor will be released from its obligations to guarantee the Senior Notes.  These circumstances include (i) a sale of at least a majority of the stock, or all or substantially all the assets, of the subsidiary guarantor as permitted by the Indenture; (ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the Indenture (generally, a business the EBITDA of which constitutes less than 50% of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters), and that meets certain other specified conditions as set forth in the Indenture; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indenture, in compliance with the terms of the Indenture; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indenture, in each case in accordance with the terms of the Indenture; and (v) upon obtaining the requisite consent of the holders of the Senior Notes. Accordingly, at the time of closing of the sale of PPC, the guarantee given by PPC relating to the Senior Notes will be released.


CONDENSED CONSOLIDATING BALANCE SHEETS
At December 31, 2017
 Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CURRENT ASSETS 
  
  
  
  
Cash and equivalents$5,931
 $31,437
 $47,052
 $—
 $84,420
Accounts receivable, net of allowances—
 174,330
 60,864
 (23,171) 212,023
Contract costs and recognized income not yet billed, net of progress payments—
 119,529
 671
 —
 120,200
Inventories, net—
 307,201
 52,573
 70
 359,844
Prepaid and other current assets34,622
 20,748
 3,499
 5,968
 64,837
Assets of discontinued operations held for sale—
 176,788
 200,487
 —
 377,275
Assets of discontinued operations not held for sale—
 —
 328
 —
 328
Total Current Assets40,553
 830,033
 365,474
 (17,133) 1,218,927
PROPERTY, PLANT AND EQUIPMENT, net715
 248,481
 31,529
 —
 280,725
GOODWILL—
 346,898
 38,178
 —
 385,076
INTANGIBLE ASSETS, net93
 216,478
 60,589
 —
 277,160
INTERCOMPANY RECEIVABLE587,623
 772,461
 391,237
 (1,751,321) —
EQUITY INVESTMENTS IN SUBSIDIARIES1,066,860
 883,171
 1,817,051
 (3,767,082) —
OTHER ASSETS6,070
 12,402
 (1,323) (1,474) 15,675
ASSETS OF DISCONTINUED OPERATIONS NOT HELD FOR SALE—
 —
 2,952
 —
 2,952
Total Assets$1,701,914
 $3,309,924
 $2,705,687
 $(5,537,010) $2,180,515
CURRENT LIABILITIES 
  
  
  
  
Notes payable and current portion of long-term debt$2,854
 $3,249
 $6,490
 $—
 $12,593
Accounts payable and accrued liabilities37,122
 229,702
 56,099
 (7,627) 315,296
Liabilities of discontinued operations held for sale—
 42,635
 43,102
 —
 85,737
Liabilities of discontinued operations not held for sale—
 —
 3,924
 —
 3,924
Total Current Liabilities39,976
 275,586
 109,615
 (7,627) 417,550
          
LONG-TERM DEBT, net1,177,811
 8,610
 51,972
 —
 1,238,393
INTERCOMPANY PAYABLES63,607
 1,324,279
 334,212
 (1,722,098) —
OTHER LIABILITIES(14,293) 76,997
 4,919
 16,911
 84,534
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE—
 —
 5,225
 —
 5,225
Total Liabilities1,267,101
 1,685,472
 505,943
 (1,712,814) 1,745,702
SHAREHOLDERS’ EQUITY434,813
 1,624,452
 2,199,744
 (3,824,196) 434,813
Total Liabilities and Shareholders’ Equity$1,701,914
 $3,309,924
 $2,705,687
 $(5,537,010) $2,180,515


CONDENSED CONSOLIDATING BALANCE SHEETS
At September 30, 2017

Table of Contents
 Parent
Company		 Guarantor
Companies		 Non-Guarantor
Companies		 Elimination Consolidation
CURRENT ASSETS 
  
  
  
  
Cash and equivalents$3,240
 $8,066
 $36,375
 $—
 $47,681
Accounts receivable, net of allowances—
 168,731
 59,929
 (20,431) 208,229
Contract costs and recognized income not yet billed, net of progress payments—
 131,383
 279
 —
 131,662
Inventories, net��
 246,605
 52,759
 73
 299,437
Prepaid and other current assets21,131
 15,854
 3,002
 80
 40,067
Assets of discontinued operations held for sale—
 168,306
 202,418
 —
 370,724
Assets of discontinued operations not held for sale—
 —
 329
 —
 329
Total Current Assets24,371
 738,945
 355,091
 (20,278) 1,098,129
          
PROPERTY, PLANT AND EQUIPMENT, net645
 200,362
 31,128
 —
 232,135
GOODWILL—
 280,797
 38,342
 —
 319,139
INTANGIBLE ASSETS, net93
 143,415
 61,619
 —
 205,127
INTERCOMPANY RECEIVABLE552,017
 757,608
 915,551
 (2,225,176) —
EQUITY INVESTMENTS IN SUBSIDIARIES863,149
 877,641
 1,613,891
 (3,354,681) —
OTHER ASSETS12,171
 12,054
 (1,002) (7,172) 16,051
ASSETS OF DISCONTINUED OPERATIONS NOT HELD FOR SALE—
 —
 2,960
 —
 2,960
Total Assets$1,452,446
 $3,010,822
 $3,017,580
 $(5,607,307) $1,873,541
CURRENT LIABILITIES 
  
  
  
  
Notes payable and current portion of long-term debt$2,854
 $1,471
 $6,753
 $—
 $11,078
Accounts payable and accrued liabilities14,683
 199,784
 46,111
 6,631
 267,209
Liabilities of discontinued operations held for sale—
 47,426
 37,024
 —
 84,450
Liabilities of discontinued operations not held for sale—
 —
 8,342
 —
 8,342
Total Current Liabilities17,537
 248,681
 98,230
 6,631
 371,079
LONG-TERM DEBT, net903,609
 6,044
 58,427
 —
 968,080
INTERCOMPANY PAYABLES84,068
 1,259,413
 854,518
 (2,197,999) —
OTHER LIABILITIES48,424
 76,036
 14,135
 (6,058) 132,537
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE—
 —
 3,037
 —
 3,037
Total Liabilities1,053,638
 1,590,174
 1,028,347
 (2,197,426) 1,474,733
SHAREHOLDERS’ EQUITY398,808
 1,420,648
 1,989,233
 (3,409,881) 398,808
Total Liabilities and Shareholders’ Equity$1,452,446
 $3,010,822
 $3,017,580
 $(5,607,307) $1,873,541


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended December 31, 2017
($ in thousands)Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue$—
 $351,312
 $92,519
 $(6,528) $437,303
Cost of goods and services—
 262,575
 60,779
 (6,895) 316,459
Gross profit—
 88,737
 31,740
 367
 120,844
Selling, general and administrative expenses11,337
 74,513
 20,049
 (92) 105,807
Income (loss) from operations(11,337) 14,224
 11,691
 459
 15,037
Other income (expense) 
  
  
  
  
Interest income (expense), net(6,774) (6,202) (3,666) —
 (16,642)
Other, net(5) 323
 (324) (462) (468)
Total other income (expense)(6,779) (5,879) (3,990) (462) (17,110)
Income (loss) before taxes(18,116) 8,345
 7,701
 (3) (2,073)
Provision (benefit) for income taxes(29,692) 2,734
 2,057
 (3) (24,904)
Income (loss) before equity in net income of subsidiaries11,576
 5,611
 5,644
 —
 22,831
Equity in net income (loss) of subsidiaries19,413
 (652) 5,611
 (24,372) —
Income from continuing operations$30,989
 $4,959
 $11,255
 $(24,372) $22,831
Income from operations of discontinued businesses—
 6,420
 5,046
 —
 11,466
Provision from income taxes—
 2,060
 1,248
 —
 3,308
Income from discontinued operations—
 4,360
 3,798
 —
 8,158
          
Net Income (loss)$30,989
 $9,319
 $15,053
 $(24,372) $30,989
Comprehensive income (loss)$39,347
 $22,769
 $47,447
 $(70,216) $39,347


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Three Months Ended December 31, 2016

($ in thousands)Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue$—
 $291,336
 $68,551
 $(7,610) $352,277
Cost of goods and services—
 218,839
 44,554
 (7,860) 255,533
Gross profit—
 72,497
 23,997
 250
 96,744
Selling, general and administrative expenses6,644
 54,991
 17,341
 (92) 78,884
Income (loss) from operations(6,644) 17,506
 6,656
 342
 17,860
Other income (expense) 
  
  
  
  
Interest income (expense), net(4,027) (5,954) (3,308) —
 (13,289)
Other, net(28) 402
 (172) (342) (140)
Total other income (expense)(4,055) (5,552) (3,480) (342) (13,429)
Income (loss) before taxes(10,699) 11,954
 3,176
 —
 4,431
Provision (benefit) for income taxes(9,029) 5,864
 552
 —
 (2,613)
Income (loss) before equity in net income of subsidiaries(1,670) 6,090
 2,624
 —
 7,044
Equity in net income (loss) of subsidiaries13,934
 (3,983) 6,090
 (16,041) —
Income (loss) from continuing operations12,264
 2,107
 8,714
 (16,041) 7,044
Income from operation of discontinued businesses—
 3,491
 5,054
 —
 8,545
Provision (benefit) from income taxes—
 1,804
 1,521
 —
 3,325
Income (loss) from discontinued operations—
 1,687
 3,533
 —
 5,220
Net Income (loss)$12,264
 $3,794
 $12,247
 $(16,041) $12,264
          
Comprehensive income (loss)$952
 $(2,849) $18,890
 $(16,041) $952


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 2017

 Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES: 
  
  
  
  
Net income (loss)$30,989
 $9,319
 $15,053
 $(24,372) $30,989
Net (income) loss from discontinued operations—
 (4,360) (3,798) —
 (8,158)
Net cash provided by (used in) operating activities:(68,932) 48,147
 15,131
 —
 (5,654)
CASH FLOWS FROM INVESTING ACTIVITIES: 
  
  
  
  
Acquisition of property, plant and equipment(121) (7,984) (2,680) —
 (10,785)
Acquired businesses, net of cash acquired(194,001) (4,682) —
 —
 (198,683)
Proceeds from sale of assets—
 7
 432
 —
 439
Net cash provided by investing activities(194,122) (12,659) (2,248) —
 (209,029)
CASH FLOWS FROM FINANCING ACTIVITIES: 
  
  
  
  
Purchase of shares for treasury(4,332) —
 —
 —
 (4,332)
Proceeds from long-term debt326,094
 976
 (976) —
 326,094
Payments of long-term debt(45,719) (1,776) (5,478) —
 (52,973)
Change in short-term borrowings—
 35
 —
 —
 35
Share premium payment on settled debt—
 —
 —
 —
 —
Financing costs(7,392) —
 —
 —
 (7,392)
Purchase of ESOP shares—
 —
 —
 —
 —
Dividends paid(2,990) —
 —
 —
 (2,990)
Other, net84
 (10,524) 10,524
 —
 84
Net cash provided by (used in) financing activities265,745
 (11,289) 4,070
 —
 258,526
CASH FLOWS FROM DISCONTINUED OPERATIONS: 
  
  
  
  
Net cash used in discontinued operations—
 (827) (5,592) —
 (6,419)
Effect of exchange rate changes on cash and equivalents—
 (1) (684) —
 (685)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS2,691
 23,371
 10,677
 —
 36,739
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD3,240
 8,066
 36,375
 —
 47,681
CASH AND EQUIVALENTS AT END OF PERIOD$5,931
 $31,437
 $47,052
 $—
 $84,420


CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 2016
 Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES: 
  
  
  
  
Net income (loss)$12,264
 $3,794
 $12,247
 $(16,041) $12,264
Net (income) loss from discontinued operations—
 (1,687) (3,533) —
 (5,220)
Net cash provided by (used in) operating activities:(8,907) (334) 9,523
 —
 282
CASH FLOWS FROM INVESTING ACTIVITIES: 
  
  
  
  
Acquisition of property, plant and equipment(3) (6,919) (768) —
 (7,690)
Acquired businesses, net of cash acquired—
 —
 (6,051) —
 (6,051)
Proceeds from sale of assets—
 86
 —
 —
 86
Net cash provided by (used in) investing activities(3) (6,833) (6,819) —
 (13,655)
CASH FLOWS FROM FINANCING ACTIVITIES: 
  
  
  
  
Purchase of shares for treasury(15,073) —
 —
 —
 (15,073)
Proceeds from long-term debt32,213
 —
 6,843
 —
 39,056
Payments of long-term debt(788) (329) (6,178) —
 (7,295)
Financing costs(172) —
 —
 —
 (172)
Purchase of ESOP shares(9,213) —
 —
 —
 (9,213)
Dividends paid(2,499) —
 —
 —
 (2,499)
Other, net(349) (243) 243
 —
 (349)
Net cash provided by (used in) financing activities4,119
 (572) 908
 —
 4,455
CASH FLOWS FROM DISCONTINUED OPERATIONS: 
  
  
  
  
Net cash used in discontinued operations—
 (6,204) (3,945) —
 (10,149)
Effect of exchange rate changes on cash and equivalents—
 —
 (1,217) —
 (1,217)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS(4,791) (13,943) (1,550) —
 (20,284)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD6,517
 27,692
 38,344
 —
 72,553
CASH AND EQUIVALENTS AT END OF PERIOD$1,726
 $13,749
 $36,794
 $—
 $52,269


(Unless otherwise indicated, US dollars and non US currencies are in thousands, except per share data)


Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
BUSINESS OVERVIEW
Overview

Griffon Corporation (the “Company”, “Griffon”, "we" or “Griffon”"us") is a diversified management and holding company that conducts business through wholly-owned subsidiaries. The Company was founded in 1959, is a Delaware corporation headquartered in New York, N.Y. and is listed on the New York Stock Exchange (NYSE:GFF).

Business Strategy

We own and operate, and seek to acquire, businesses in multiple industries and geographic markets. Our objective is to maintain leading positions in the markets we serve by providing innovative, branded products with superior quality and industry-leading service. We place emphasis on our iconic and well-respected brands, which helps to differentiate us and our offerings from our competitors and strengthens our relationship with our customers and those who ultimately use our products.

Through operating a diverse portfolio of businesses, we expect to reduce variability caused by external factors such as market cyclicality, seasonality, and weather. We achieve diversity by providing various product offerings and brands through multiple sales and distribution channels and conducting business across multiple countries which we consider our home markets.

Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. As long-term investors, having substantial experience in a variety of industries, our intent is to continue the growth and strengthening of our existing businesses, and to diversify further through investments in our businesses and through acquisitions.

Over the past four years, we have undertaken a series of transformative transactions. We divested our specialty plastics business in 2018 to focus on our core markets and improve our free cash flow conversion. In orderour Consumer and Professional Products ("CPP") segment, we expanded the scope of our brands through the acquisition of Hunter Fan Company ("Hunter") on January 24, 2022 and ClosetMaid, LLC ("ClosetMaid") in 2018. In our Home and Building Products ("HBP") segment, we acquired CornellCookson, Inc. ("CornellCookson"), which has been integrated into Clopay Corporation ("Clopay") in our Home and Building Products ("HBP") segment, creating a leading North American manufacturer and marketer of residential garage doors and sectional commercial doors, and rolling steel doors and grille products under brands that include Clopay, Ideal and CornellCookson. We established an integrated headquarters for CPP in Orlando, Florida, for our portfolio of leading brands that includes AMES, Hunter, True Temper and ClosetMaid. CPP is now positioned to further diversify, Griffon also seeks out, evaluatesfulfill its mission of Bringing Brands Together™ with the leading brands in consumer and when appropriate, will acquire additional businessesprofessional tools; residential, industrial and commercial fans; home storage and organization products; and products that offer potentially attractive returns on capital.enhance indoor and outdoor lifestyles.


Headquartered in New York, N.Y., the Company was founded in 1959 and is incorporated in Delaware. Griffon is listed on the New York Stock Exchange and trades under the symbol GFF.

On September 5, 2017, Griffon27, 2021, we announced it would explorewe are exploring strategic alternatives for Clopay Plastic Products Company, Inc.our Defense Electronics ("PPC"DE") segment, which consists of our Telephonics Corporation ("Telephonics") subsidiary; and on November 16, 2017, announced itApril 18, 2022, Griffon entered into a definitive agreement to sell PPCTelephonics to Berry Global Group,TTM Technologies, Inc. (NYSE:BERY)(NASDAQ:TTMI) ("Berry"TTM") for $475 million$330,000 in cash. The transaction is expected to close within the second calendar quarter of 2022, subject to regulatory approval and customarycertain closing conditions and is expected to close in the first quarter of calendar 2018. As a result,regulatory approvals. Since September 2021, Griffon has classified the results of operations of the PPCTelephonics business as a discontinued operationsoperation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operationsoperation as held for sale in the consolidated balance sheets. AllAccordingly, all references made to results and information presented exclude PPCin this Quarterly Report on Form 10-Q are to Griffon's continuing operations, unless otherwise noted. PPCnoted otherwise.

On January 24, 2022, Griffon acquired Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of $845,000, subject to customary post-closing adjustments. Hunter, part of Griffon's CPP segment, complements and diversifies our portfolio of leading consumer brands and products. The acquisition of Hunter was financed with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures.



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Table of Contents
Update of COVID-19 on Our Business

The health and safety of our employees, our customers and their families is a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. We have implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19.In the United States, we manufacture a substantial majority of the products that we sell.While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted by these disruptions.Our supply chain has experienced certain disruptions which, together with other factors such asa shortage of labor, has resulted in longer delivery lead times and restricted manufacturing capacity for certain of our products.Commodity prices have increased during COVID-19 and may continue to increase, and we may not be able to pass off all or any of such price increases to our customers on a timely basis, or at all.It is difficult to predict whether the supply chain disruptions that impact us will improve, worsen or remain the same in the near term.Our suppliers could be required by government authorities to temporarily cease operations in accordance with the various restrictions discussed above; might be limited in their production capacity due to complying with restrictions relating to the operation of businesses during the COVID-19 pandemic; or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us.

We believe that, based on the various standards published to date, the work our employees are performing are either critical, essential and/or life-sustaining for the following reasons:1) HBP residential and commercial garage doors, rolling steel doors and related products (a) provide protection and support for the efficient and safe movement of people, goods, and equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes, and their contents, from damage caused by strong weather events such as hurricanes and tornadoes; and 2) CPP tools and storage products provide critical support for the national infrastructure including construction, maintenance, manufacturing and natural disaster recovery, and is part of the essential supply base to many of its largest customers including Home Depot, Lowe's and Menards. Our AMES international facilities are currently fully operational, as they meet the applicable standards in their respective countries.

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. At March 31, 2022, $233,039 of revolver capacity was available under Griffon's Credit Agreement and Griffon had cash and equivalents of $122,293.

We will continue to actively monitor the situation and may take further actions that impact our operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.

Business Highlights

On September 27, 2021, we announced we are exploring strategic alternatives for our DE segment, which consists of our Telephonics subsidiary, and on April 18, 2022, Griffon entered into a definitive agreement to sell Telephonics to TTM for $330,000 in cash. The transaction is expected to close within the second calendar quarter of 2022. Griffon believes this will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics. Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.

On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, for a contractual purchase price of $845,000, subject to customary post-closing adjustments. The acquisition of Hunter was financed primarily with a new $800,000 seven year Term Loan B facility; a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter is expected to contribute approximately $385,000 in revenue in the first twelve months of operation after the acquisition.

In August 2020 Griffon completed the public offering of 8,700,000 shares of our common stock for total net proceeds of $178,165. The Company used a portion of the net proceeds to repay outstanding borrowings under its Credit Agreement. The Company intends to use the remainder of the proceeds for general corporate purposes, including to expand its current business through acquisitions of, or investments in, other businesses or products.

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Table of Contents
During 2020, Griffon issued, at par, $1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem the $1,000,000 of 5.25% Senior Notes due 2022.

In January 2020, Griffon amended its Credit Agreement to increase the total amount available for borrowing from $350,000 to $400,000, extend its maturity date from March 22, 2021 to March 22, 2025 and modify certain other provisions of the facility.

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and productioncompetitiveness of embossed, laminatedits U.S. operations, and printed specialty plastic filmson November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced an accelerated timeline and reduced scope for hygienic, health-carethe initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and industrial productsreduced investment in facilities expansion and sellsequipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to somethe deployment of AMES' global information systems, will be included in the continuing operations of the world's largest consumerbusiness. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative includes three key development areas. First, certain AMES U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

When fully implemented and the efficiencies are fully realized, we expect annual cash savings of $25,000 (previously $30,000 to $35,000). The cost to implement this new business platform, over the duration of the project, will now include one-time charges of approximately $50,000 (previously $65,000) and capital investments of approximately $15,000 (previously $65,000).

In June 2018, Clopay acquired CornellCookson, a leading provider of rolling steel service doors, fire doors, and grilles, for an effective purchase price of approximately $170,000. This transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products companies. See Note 14, Discontinued Operations.to complement Clopay's sectional door offerings in the commercial sector, and expands the Clopay network of professional dealers focused on the commercial market.


OnIn February 2018, we closed on the sale of our Clopay Plastics Products ("Plastics") business to Berry Global, Inc. ("Berry") for approximately $465,000, net of certain post-closing adjustments, thus exiting the specialty plastics industry that the Company had entered when it acquired Clopay Corporation in 1986. This transaction provided immediate liquidity and improved Griffon's cash flow given the historically higher capital needs of the Plastics operations as compared to Griffon’s remaining businesses.

In October 2, 2017, Griffonwe acquired ClosetMaid LLC ("ClosetMaid"). from Emerson Electric Co. (NYSE:EMR) for an effective purchase price of approximately $165,000.ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of wood and wire closet organization, homegeneral living storage and wire garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America. The accounts, affectedWe believe that ClosetMaid is the leading brand in its category, with excellent consumer recognition.

We believe these actions have established a solid foundation for preliminary adjustments to reflect fair market values assigned to assets purchasedgrowth in sales, profit, and liabilities assumed,cash generation and resultsbolster Griffon’s platforms for opportunistic strategic acquisitions.

Other Acquisitions and Dispositions

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of operationsglass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a purchase price of ClosetMaid are includedAUD $3,500 (approximately $2,700). Quatro contributed approximately $5,000 in revenue in the Company’s consolidated financial statementsfirst twelve months after the acquisition.

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading U.K. supplier of innovative garden pottery and associated products sold to leading U.K. and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired.This acquisition broadens AMES' product offerings in the U.K. market and increases its in-country operational footprint.

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Table of Contents
On February 13, 2018, AMES acquired Kelkay, a leading U.K. manufacturer and distributor of decorative outdoor landscaping products sold to garden centers, retailers and grocers in the U.K. and Ireland. This acquisition broadened AMES' product offerings in the market and increased its in-country operational footprint.

In November 2017, Griffon acquired Harper Brush Works, a leading U.S. manufacturer of cleaning products for professional, home, and industrial use, from Horizon Global (NYSE:HZN). This acquisition expanded the dateAMES line of long-handle tools in North America to include brooms, brushes, and other cleaning products.

During fiscal 2017, Griffon also completed a number of other acquisitions to expand and enhance AMES' global footprint. In the United Kingdom, Griffon acquired La Hacienda, an outdoor living brand of unique heating and garden décor products, in July 2017. The acquisition of October 2, 2017. See Note 3, Acquisitions.La Hacienda, together with the February 2018 acquisition of Kelkay and November 2020 acquisition of Apta, provides AMES with additional brands and a platform for growth in the U.K. market and access to leading garden centers, retailers, and grocers in the UK and Ireland.In Australia, Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) in December 2016, and in September 2017 Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products.The Hills, Tuscan Path and December, 2020 Quatro acquisitions broadened AMES' outdoor living and lawn and garden business, strengthening AMES’ portfolio of brands and its market position in Australia and New Zealand.


Further Information

Griffon posts and makes available, free of charge through its website at www.griffon.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, as well as press releases, as soon as reasonably practicable after such materials are published or filed with or furnished to the Securities and Exchange Commission (the “SEC”). The information found on Griffon's website is not part of this or any other report it files with or furnishes to the SEC.

For information regarding revenue, profit and total assets of each segment, see the Reportable Segments footnote in the Notes to Consolidated Financial Statements.

Reportable Segments:

Griffon currently conducts its operations through two reportable segments:

•Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a global provider of branded consumer and professional tools; residential, industrial and commercial fans; home storage and organization products; and products that enhance indoor and outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

•Home &and Building Products (“HBP”("HBP") consistsconducts its operations through Clopay.Founded in 1964, Clopay is the largest manufacturer and marketer of three companies, The AMES Companies, Inc. (“AMES”),garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Building Products Company, Inc. (“CBP”)Ideal, and ClosetMaid:Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

-AMES, founded in 1774, is the leading US manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals.

-CBP, since 1964, is a leading manufacturer and marketer of residential and commercial garage doors and sells to professional dealers and some of the largest home center retail chains in North America.

-ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of closet organization, home storage, and garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers.


Defense Electronics, classified as a discontinued operation, conducts its operations through Telephonics Corporation ("Telephonics"), founded in 1933, isa globally recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

39
We are focused on acquiring, owning and operating businesses in a variety
Table of industries. We are long-term investors that have substantial experience in a variety of industries. Our intent is to continue the growth of our existing segments and diversify further through investments and acquisitions.Contents


As a result of the decline in the U.S. housing market, in May 2008, we announced the divestiture of our Installation Services business, which was consummated by September 2008. In September 2008, Griffon strengthened its balance sheet by raising $248,600 in equity through a common stock rights offering and a related investment by GS Direct L.L.C., an affiliate of The Goldman Sachs Group, Inc. Since that time, Griffon has continued to refine and enhance the strategic direction and operating

performance of its companies, while strengthening its balance sheet. During this period, Griffon has grown revenue and earnings through organic growth, cost containment and acquisitions, while returning capital to its shareholders through dividends and stock buybacks.

From October 2008 through May 10, 2017, Griffon's Employee Stock Ownership Plan ("ESOP") purchased 4,562,371 shares of Griffon's common stock, for a total of $54,186 or $11.88 per share. During the year ended September 30, 2017, Griffon's ESOP purchased 621,875 shares of common stock for a total of $10,908 or $17.54 per share. As of December 31, 2017, the ESOP holds 5,784,229 allocated and unallocated shares, or 12% of Griffon's outstanding shares, with a related loan balance of $41,827, net of issuance costs.

On September 30, 2010, Griffon purchased AMES for $542,000. Subsequently, Griffon acquired seven businesses complementary to AMES: the pots and planters business of Southern Sales & Marketing ("Southern Patio"), Northcote Pottery ("Northcote"), the Australian Garden and Tools division of Illinois Tool Works, Inc. ("Cyclone"), Hills Home Living ("Hills"), La Hacienda Limited ("La Hacienda"), Tuscan Landscape Group Ltd ("Tuscan Path") and Harper Brush Works (“Harper”).

On October 17, 2011, AMES acquired Southern Patio for approximately $23,000. Southern Patio, is a leading designer, manufacturer and marketer of landscape accessories.

In January 2013, AMES announced its intention to close certain U.S. manufacturing facilities and consolidate affected operations primarily into its Camp Hill and Carlisle, PA locations. These actions, which were completed at the end of the first quarter of 2015, improved manufacturing and distribution efficiencies, allowed for in-sourcing of certain production previously performed by third party suppliers, and improved material flow and absorption of fixed costs. Savings began in the second quarter of 2015 and have exceeded $10,000 on an annual basis.

On December 31, 2013, AMES acquired Northcote, founded in 1897 and a leading brand in the Australian outdoor planter and decor market, for approximately $22,000.
On May 21, 2014, AMES acquired Cyclone for approximately $40,000. Cyclone offers a full range of quality garden and hand tool products sold under various leading brand names including Cyclone®, Nylex® and Trojan®, designed to meet the requirements of both the Do-it-Yourself and professional trade segments. The Northcote and Cyclone acquisitions complement Southern Patio and add to AMES' existing lawn and garden operations in Australia.

On December 30, 2016, AMES Australia acquired Hills for approximately $6,051 (AUD 8,400). Hills, founded in 1946, is a market leader in the supply of clothesline, laundry and garden products. The Hills acquisition adds to AMES' existing broad category of products and enhances its lawn and garden product offerings in Australia.

On July 31, 2017 AMES acquired La Hacienda, a leading United Kingdom outdoor living brand of unique heating and garden decor products, for approximately $11,400 (GBP 9,175). The acquisition of La Hacienda broadens AMES' global outdoor living and lawn and garden business and supports AMES' UK expansion strategy. La Hacienda is expected to generate approximately GBP 14,000 of revenue in the first twelve months after the acquisition.
On September 29, 2017, AMES Australia acquired Tuscan Path for approximately $18,000 (AUD 22,250). Tuscan Path is a leading Australian provider of pots, planters, pavers, decorative stone, and garden decor products. The acquisition of Tuscan Path broadens AMES' outdoor living and lawn and garden business, and will strengthen AMES' industry leading position in Australia. Tuscan Path is expected to generate approximately AUD 25,000 in revenue in the first twelve months after the acquisition.

On November 6, 2017, AMES acquired Harper, a division of Horizon Global, for approximately $5,000. Harper is a leading U.S. manufacturer of cleaning products for professional, home, and industrial use. The acquisition will broaden AMES’ long-handled tool offering in North America to include brooms, brushes, and other cleaning tools and accessories. The acquisition is expected to contribute approximately $10,000 in revenue in the first twelve months after the acquisition.

From August 2011 through December 31, 2017, Griffon repurchased 20,429,298 shares of its common stock, for a total of $261,621 or $12.81 per share. This included the repurchase of 15,984,854 shares on the open market, as well as the December 10, 2013 repurchase of 4,444,444 shares from GS Direct for $50,000, or $11.25 per share. In each of August 2011, May 2014, March 2015, July 2015 and August 2016, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under these programs, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. At December 31, 2017, $49,437 remains under the August 3, 2016 Board authorization.



On November 17, 2011, the Company began declaring quarterly dividends. For the three months ended December 31, 2017, and during 2017, 2016 and 2015, the Company declared and paid dividends per share of $0.07, $0.24, $0.20 and $0.16, respectively, for total dividends of $29,767 paid during this period.

On January 30, 2018, the Board of Directors declared a quarterly cash dividend of $0.07 per share, payable on March 22, 2018 to shareholders of record as of the close of business on February 22, 2018 .

As of December 31, 2017, Griffon had outstanding $1,000,000 of 5.25% Senior Notes due 2022 ("Senior Notes"), which were issued in three tranches and under the same indenture.  During 2014, Griffon issued $600,000 of Senior Notes, the proceeds of which were primarily used to redeem $550,000 of 7.125% senior notes due 2018.  In May 2016, the Company completed an add-on offering of $125,000 principal amount of Senior Notes, the proceeds of which were used to pay down outstanding revolving loan borrowings under the Credit Agreement.  On October 2, 2017, Griffon completed an add-on offering of $275,000 aggregate principal amount of Senior Notes, the proceeds of which were used to purchase ClosetMaid and to pay down outstanding revolving loan borrowings under the Credit Agreement).

On October 15, 2015, CBP announced plans to expand its manufacturing facility in Troy, Ohio. The expansion reflects increased customer demand for its core products, and its success in bringing new technologies to market. The project included improvements to its existing one million square foot building, as well as adding 250,000 square feet and new manufacturing equipment. The project is complete.

In January 2016, Griffon launched its new website, www.griffon.com.

On March 22, 2016, Griffon amended its Credit Agreement to increase the credit facility from $250,000 to $350,000, extend its maturity date from March 13, 2020 to March 22, 2021 and modify certain other provisions of the facility.

On January 17, 2017, Griffon settled its $100,000 principal amount of 4% convertible subordinated notes due 2017 for $173,855, with $125,000 in cash and $48,858, or 1,954,993 shares of common stock issued from treasury.

On September 5, 2017, Griffon announced that after having received from qualified parties unsolicited inquiries to acquire PPC, Griffon would explore strategic alternatives for PPC, and on November 16, 2017, announced it entered into a definitive agreement to sell PPC to Berry for $475 million in cash. Griffon expects to close on the transaction in the first calendar quarter of 2018.

On October 2, 2017, Griffon completed the acquisition of ClosetMaid, a market leader of home storage and organization products, for approximately $185,700, inclusive of post-closing adjustments, or $165,000 net of the estimated present value of tax benefits under the current tax law. ClosetMaid adds to Griffon's Home and Building Products segment, complementing and diversifying Griffon's portfolio of leading consumer brands and products. ClosetMaid is expected to generate approximately $300,000 in revenue in the first twelve months after the acquisition.



OVERVIEW
 
Revenue for the quarter ended DecemberMarch 31, 20172022 was $437,303$779,617 compared to $352,277$574,682 in the prior year comparable quarter, an increase of 36%. Revenue increased at HBP and CPP by 52% and 24%, primarily driven byrespectively. Excluding the Hunter acquisition on January 24, 2022, revenue increased revenue at Home & Building Products from both recent acquisitions and organic growth, partially offset by decreased revenue at Telephonics.23% to $708,768. Hunter contributed $70,849. Income from continuing operations was $22,831$58,571 or $0.53$1.10 per share, compared to $7,044$18,119, or $0.17$0.34 per share, in the prior year quarter.

The current year quarter results from continuing operations included the following:


–Acquisition costs of $3,185 ($2,348, net of tax, or $0.05 per share);
–Cost of life insurance benefit of $2,614 ($248, net tax, or $0.01); and
–Discrete and certain other tax benefits, net, of $(23,018) or $(0.53) per share.

–    Restructuring charges of $4,766 ($3,496, net of tax, or $0.07 per share);
– Acquisition costs of $6,708 ($6,146, net of tax, or $0.12 per share); and
–    Proxy expenses of $4,661 ($3,591, net of tax, or $0.07 per share);
–    Fair value step-up of acquired inventory sold of $2,701 ($2,007, net of tax, or $0.04 per share);
– Discrete and certain other tax benefits, net, of $693 or $0.01 per share.

The prior year quarter results from operations included the following:

– Restructuring charges of $7,502 ($5,605, net of tax, benefitsor $0.11 per share);
–Discrete and certain other tax provisions, net, of $4,421$1,417 or $0.10$0.03 per share, primarily related to discrete benefits for the adoption of recent Financial Accounting Standards Board guidance, which requires the Company to recognize excess tax benefits from the vesting of equity awards within income tax expense.share.


Excluding these items from the respective quarterly results, Income from continuing operations would have been $2,409$73,118, or $0.06$1.37 per share, in the current year quarter compared to $2,623$25,141, or $0.06$0.47 per share in the prior year quarter.


Revenue for the six months ended March 31, 2022 was $1,371,366 compared to $1,116,205 in the prior year period, an increase of 23%. Revenue increased at HBP and CPP by 37% and 11%, respectively. Revenue, excluding the Hunter acquisition, increased 17% to $1,300,517. Income from continuing operations was $75,476 or $1.41 per share, compared to $43,549, or $0.82 per share, in the prior year period.

The current year-to-date results from operations included the following:

–    Restructuring charges of $6,482 ($4,826, net of tax, or $0.09 per share);
– Acquisition costs of $9,303 ($8,149, net of tax, or $0.15 per share); and
–    Proxy expenses of $6,952 ($5,359, net of tax, or $0.10 per share);
–    Fair value step-up of acquired inventory sold of $2,701 ($2,007, net of tax, or $0.04 per share);
– Discrete and certain other tax benefits, net, of $1,574 or $0.03 per share.

The prior year-to-date results from operations included the following:

–Restructuring charges of $10,581 ($7,906, net of tax, or $0.15 per share);
–Discrete and certain other tax provisions, net, of $369 or $0.01 per share.

Excluding these items from the respective periods, Income from continuing operations would have been $94,243, or $1.76 per share in the current year period ended March 31, 2022 compared to $51,824, or $0.97 per share, in the comparable prior year period.

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Griffon evaluates performance based on Income from Continuing operationsNet income and the related Earnings per share excluding restructuring charges, loss onfrom debt extinguishment, acquisition related expenses and discrete and certain other tax items, as well as other items that may affect comparability, as applicable. Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Income from continuing operations to Adjusted income from continuing operations and Earnings per share from continuing operations to Adjusted earnings per share from continuing operations:


GRIFFON CORPORATION AND SUBSIDIARIES
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS
TO ADJUSTED INCOME FROM CONTINUING OPERATIONS
(Unaudited)
For the Three Months Ended March 31,For the Six Months Ended March 31,
2022202120222021
For the Three Months Ended December 31,(Unaudited)
2017
2016
Income from continuing operations$22,831

$7,044
Income from continuing operations$58,571 $18,119 $75,476 $43,549 






Adjusting items, net of tax: 

 
Adjusting items:Adjusting items:    
Restructuring chargesRestructuring charges4,766 7,502 6,482 10,581 
Acquisition costs2,348

—
Acquisition costs6,708 — 9,303 — 
Cost of life insurance benefit248

—
Discrete and certain other tax benefits(23,018)
(4,421)
Proxy expensesProxy expenses4,661 — 6,952 — 
Fair value step-up of acquired inventory soldFair value step-up of acquired inventory sold2,701 — 2,701 — 
Tax impact of above itemsTax impact of above items(3,596)(1,897)(5,097)(2,675)
Discrete and certain other tax provisions (benefits), netDiscrete and certain other tax provisions (benefits), net(693)1,417 (1,574)369 






Adjusted income from continuing operations$2,409

$2,623
Adjusted income from continuing operations$73,118 $25,141 $94,243 $51,824 






Diluted earnings per common share from continuing operations$0.53

$0.17
Earnings per common share from continuing operationsEarnings per common share from continuing operations$1.10 $0.34 $1.41 $0.82 






Adjusting items, net of tax: 

 
Adjusting items, net of tax:    
Restructuring chargesRestructuring charges0.07 0.11 0.09 0.15 
Acquisition costs0.05

—
Acquisition costs0.12 — 0.15 — 
Cost of life insurance benefit0.01

—
Discrete and certain other tax benefits(0.53)
(0.10)
Proxy expensesProxy expenses0.07 — 0.10 — 
Fair value step-up of acquired inventory soldFair value step-up of acquired inventory sold0.04 — 0.04 — 
Discrete and certain other tax provisions (benefits), netDiscrete and certain other tax provisions (benefits), net(0.01)0.03 (0.03)0.01 






Adjusted earnings per common share from continuing operations$0.06

$0.06
Adjusted earnings per common share from continuing operations$1.37 $0.47 $1.76 $0.97 






Weighted-average shares outstanding (in thousands)43,336

42,312
Weighted-average shares outstanding (in thousands)53,430 53,264 53,602 53,211 
 
Note: Due to rounding, the sum of earnings per common share from continuing operations and adjusting items, net of tax, may not equal adjusted earnings per common share.share from continuing operations.


The tax impact for the above reconciling adjustments from GAAP to non-GAAP Net income and EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments.
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RESULTS OF CONTINUING OPERATIONS
 
Three and six months ended DecemberMarch 31, 20172022 and 20162021

Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, and unallocated amounts (mainly(primarily corporate overhead), restructuring charges, loss on debt extinguishment and acquisition related expenses, and as well as other items that may affect comparability, as applicable (“Segment adjustedAdjusted EBITDA”), a non-GAAP measure). Griffon believes this information is useful to investors for the same reason. The following

See table providesprovided in Note 13 - Business Segments for a reconciliation of Segment operating profit from continuing operationsAdjusted EBITDA to Income before taxes from continuing operations:operations.


  For the Three Months Ended December 31,
  2017 2016
Segment operating profit:
 
 
Home & Building Products $27,751
 $22,640
Telephonics 1,480
 5,391
Segment operating profit from continuing operations 29,231
 28,031
Net interest expense (16,642) (13,289)
Unallocated amounts (10,436) (10,311)
Acquisition costs (1,612) —
Cost of life insurance benefit (2,614) —
Income before taxes from continuing operations $(2,073) $4,431
The following table provides a reconciliation of Segment adjusted EBITDA from continuing operations to Income (loss) before taxes from continuing operations:
  For the Three Months Ended December 31,
  2017 2016
Segment adjusted EBITDA:  
  
Home & Building Products $39,457
 $31,807
Telephonics 4,199
 8,108
Total Segment adjusted EBITDA 43,656
 39,915
Net interest expense (16,642) (13,289)
Segment depreciation and amortization (12,852) (11,884)
Unallocated amounts (10,436) (10,311)
Acquisition costs (3,185) —
Cost of life insurance benefit (2,614) —
Income (loss) before taxes from continuing operations $(2,073) $4,431



Home & BuildingConsumer and Professional Products
 For the Three Months Ended March 31,For the Six Months Ended March 31,
 2022202120222021
United States$264,747 $205,368 $429,646 $388,810 
Europe46,783 38,965 65,113 52,121 
Canada31,029 21,778 53,657 43,893 
Australia62,189 63,691 136,537 133,231 
All other countries6,264 2,069 9,232 4,858 
Total Revenue$411,012  $331,871  $694,185  $622,913  
Adjusted EBITDA47,844 11.6 %37,423 11.3 %$64,058 9.2 %$70,136 11.3 %
Depreciation and amortization11,791  8,620  $20,397  $16,819  
  For the Three Months Ended December 31,
  2017 2016
Revenue:  
  
  
  
AMES $139,982
  
 $120,724
  
CBP 154,236
  
 143,460
  
ClosetMaid 76,760
   —
  
Home & Building Products $370,978
  
 $264,184
  
Segment operating profit $27,751
 7.5% $22,640
 8.6%
Depreciation and amortization 10,133
  
 9,167
  
Acquisition costs 1,573
  
 —
  
Segment adjusted EBITDA $39,457
 10.6% $31,807
 12.0%


For the quarter ended DecemberMarch 31, 2017,2022, revenue increased $106,794$79,141, or 40%24%, compared to the prior year quarterperiod primarily resulting from a 21% or $70,849 contribution from the January 24, 2022 Hunter acquisition, and price and mix of 15%, partially offset by an 11% reduction in volume, primarily in the U.S. due to the acquisitionreduced consumer demand and customer supplier diversification, and an unfavorable impact of ClosetMaid and AMES' acquisitionsforeign exchange of Tuscan Path, La Hacienda, Hills and Harper, as well as, favorable mix and price increases at CBP, and increased shipments of Canadian snow tools and certain pots and planters sales.1%.

For the quarter ended DecemberMarch 31, 2017, Segment operating profit of $27,7512022, Adjusted EBITDA increased 23% from $22,64028% to $47,844 compared to $37,423 in the prior year quarter.quarter, due to EBITDA of $14,339 from the Hunter acquisition. Excluding the Hunter contribution, EBITDA of $33,505 decreased 10% primarily due to the unfavorable impact of acquisition relatedreduced U.S. volume and increased material, labor and transportation costs, Segment operating profit would have been $29,324, increasing 30% frompartially offset by the benefits of price and mix.

For the six months ended March 31, 2022, revenue increased $71,272, or 11%, compared to the prior year quarter,period primarily drivenresulting from a 12% or $70,849 contribution from the Hunter acquisition and price and mix of 13%, partially offset by a 13% reduction in volume, primarily in the U.S. due to reduced consumer demand and customer supplier diversification and an unfavorable impact of foreign exchange of 1%.

For the six months ended March 31, 2022, Adjusted EBITDA decreased 9% to $64,058 compared to $70,136 in the prior year period. Excluding the Hunter contribution of EBITDA of $14,339, EBITDA of $49,719 decreased 29% primarily due to the unfavorable impact of reduced US volume coupled with the lag in realization of price increases (Q1) and increased material, labor and transportation costs, partially offset by the increased revenue as noted above. Segmentbenefits of price and mix.

For the quarter and six months ended March 31, 2022, segment depreciation and amortization increased $966 from$3,171 and $3,578, respectively, compared to the prior year quarter primarily from acquisitions.comparable periods, due to new assets placed in service.


On October 2, 2017,January 24, 2021, Griffon completed the acquisition of ClosetMaid,Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans for a contractual purchase price of home storage and organization products, for $185,700, inclusive of$845,000, subject to customary post-closing adjustments, or $165,000 net of the estimated present value of tax benefits under the current tax law. ClosetMaidadjustments. Hunter adds to Griffon's Home and Building ProductsCPP segment, complementing and diversifying Griffon'sour portfolio of leading consumer brands and products. ClosetMaid is expected to generate approximately $300,000 in revenue in the first twelve months after the acquisition.


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On November 6, 2017,December 22, 2020, AMES acquired Harper Brush WorksQuatro Design Pty Ltd (“Harper”Quatro”), a division of Horizon Global, for approximately $5,000. Harper is a leading U.S. manufacturer of cleaning products for professional, home, and industrial use. The acquisition will broaden AMES’ long-handled tool offering in North America to include brooms, brushes, and other cleaning tools and accessories. The acquisition is expected to contribute approximately $10,000 in revenue in the first twelve months after the acquisition.

Prior year acquisitions

On September 29, 2017, AMES Australia acquired Tuscan Path for approximately $18,000 (AUD 22,250). Tuscan Path is a leading Australian providermanufacturer and supplier of pots, planters, pavers, decorative stone,glass fiber reinforced concrete landscaping products for residential, commercial, and garden decor products. The acquisitionpublic sector projects.

Strategic Initiative and Restructuring Charges
In November 2019, Griffon announced the development of Tuscan Path broadensa next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China. On April 28, 2022, Griffon announced an accelerated timeline and reduced scope for the initiative, which will now be completed by the end of fiscal 2022. These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs. Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' outdoor living and lawn and garden business, andglobal information systems, will strengthen AMES' industry leading position in Australia. Tuscan Path is expected to generate approximately AUD 25,000 in revenuebe included in the first twelve months aftercontinuing operations of the acquisition.business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.


On July 31, 2017This initiative includes three key development areas. First, certain AMES acquired La Hacienda,U.S. and global operations will be consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion will be made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth. Third, multiple independent information systems will be unified into a leading United Kingdom outdoor living brandsingle data and analytics platform, which will serve the whole AMES global enterprise.

When fully implemented and the efficiencies are fully realized, we expect annual cash savings of unique heating and garden decor products, for approximately $11,400 (GBP 9,175)$25,000 (previously $30,000 to $35,000). The acquisitioncost to implement this new business platform, over the duration of La Hacienda broadens AMES' global outdoor livingthe project, will now include one-time charges of approximately $50,000 (previously $65,000) and lawncapital investments of approximately $15,000 (previously $65,000), net of future proceeds from the sale of exited facilities.

In connection with this initiative, during the three and gardensix months ended March 31, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $4,766 and $6,482, respectively. Since inception of this initiative in fiscal 2020, total cumulative charges totaled $41,569, comprised of cash charges of $28,167 and non-cash, asset-related charges of $13,402; the cash charges included $10,948 for one-time termination benefits and other personnel-related costs and $17,219 for facility exit costs. Since inception of this initiative in fiscal 2020 and during the six months ended March 31, 2022, capital expenditures of $18,058 and $2,551, respectively, were driven by investment in CPP business intelligence systems and supports AMES' UK expansion strategy. La Hacienda is expected to generate approximately GBP 14,000an e-commerce facility.
Cash ChargesNon-Cash Charges
Personnel related costsFacilities, exit costs and otherFacility and other Total Capital Investments
Phase I$12,000 $4,000 $19,000 $35,000 $40,000 
Phase II14,000 16,000 — 30,000 25,000 
Reduction in Scope(9,500)(1,000)(4,500)(15,000)(50,000)
Total Anticipated Charges16,500 19,000 14,500 50,000 15,000 
Total 2020 restructuring charges(5,620)(3,357)(4,692)(13,669)(6,733)
Total 2021 restructuring charges(3,190)(11,573)(6,655)(21,418)(8,774)
Q1 FY2022 Activity(260)(1,167)(289)(1,716)(1,690)
Q2 FY2022 Activity(1,878)(1,122)(1,766)(4,766)(861)
Total cumulative charges(10,948)(17,219)(13,402)(41,569)$(18,058)
 Estimate to Complete$5,552 $1,781 $1,098 $8,431 $(3,058)(a)
(a) Includes future proceeds from the sale of revenue in the first twelve months after the acquisition.exited facilities.
On December 30, 2016, AMES Australia acquired Hills for approximately $6,051 (AUD 8,400). Hills, founded in 1946, is a market leader in the supply of clothesline, laundry and garden products. The Hills acquisition adds to AMES' existing broad category of products and enhances its lawn and garden product offerings in Australia.
43

Telephonics 
  For the Three Months Ended December 31,
  2017 2016
Revenue $66,325
  
 $88,093
  
Segment operating profit $1,480
 2.2% $5,391
 6.1%
Depreciation and amortization 2,719
  
 2,717
  
Segment adjusted EBITDA $4,199
 6.3% $8,108
 9.2%
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Home and Building Products
 For the Three Months Ended March 31,For the Six Months Ended March 31,
 2022202120222021
Residential$211,229 $148,060 $389,016 $302,602 
Commercial157,376 94,751 288,165 190,690 
Total Revenue$368,605  $242,811  $677,181  $493,292  
Adjusted EBITDA104,474 28.3 %40,060 16.5 %$160,771 23.7 %$88,429 17.9 %
Depreciation and amortization4,324  4,379  $8,662  $8,720  

For the quarter ended DecemberMarch 31, 2017,2022, HBP revenue decreased $21,768increased $125,794, or 25%52%, compared to the prior year quarter, primarilyperiod due to decreased maritime surveillance radarfavorable mix and airborne intercommunications systems revenue.pricing with increased commercial volume offset by reduced residential volume due to labor and supply chain disruptions.


For the quarter ended DecemberMarch 31, 2017, Segment operating profit decreased $3,9112022, Adjusted EBITDA increased 161% to $104,474 compared to $40,060 in the prior year period. EBITDA benefited from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

For the six months ended March 31, 2022, revenue increased $183,889, or 73%37%, compared to the prior year quarter, primarilyperiod, due to favorable mix and pricing of 43% driven by both residential and commercial, partially offset by reduced margin onvolume of 6% driven by decreased residential volume due to labor and supply chain disruptions.
For the six months ended March 31, 2022, Adjusted EBITDA increased 82% to $160,771 compared to $88,429 in the prior year period. The favorable variance resulted from the increased revenue noted above.above, partially offset by increased material, labor and transportation costs.


DuringFor the threequarter and six months ended DecemberMarch 31, 2017, Telephonics was awarded several new contracts2022, segment depreciation and received incremental funding on existing contracts approximating $47,500. Contract backlog was $332,000 at December 31, 2017,amortization remained consistent with 70% expected to be fulfilled in the next 12 months. Backlog was $350,900 at September 30, 2017. Backlog is defined as unfilled firm orders for products and services for which funding has been both authorized and appropriated by the customer or Congress, in the case of US government agencies. The decrease in backlog was primarily due to the timing of various US and international contract awards associated with radar and surveillance opportunities.prior year comparable periods.


Unallocated
 
For the quarter ended DecemberMarch 31, 2017,2022, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $12,750 compared to $12,104 in the prior year quarter; for the six months ended March 31, 2022, unallocated amounts totaled $10,436$25,707 compared to $10,311$24,733 in the prior year period. The increase in both the current quarter and six month periods, compared to their respective comparable prior year periods, primarily relates to increased medical claims, travel and stock compensation (Q1) expenses.

Proxy expenses

During the three and six months ended March 31, 2022, we incurred $4,661 and $6,952, respectively, of proxy expenses (including legal and advisory fees) in unallocated amounts as a result of a proxy contest initiated by a shareholder during the most recently completed fiscal quarter. There were no similar costs in the comparable period of the prior year. The increase inproxy contest was completed at the current quarter compared to the respective prior year period primarily relates to compensation and incentive expenses.shareholder meeting on February 17, 2022.


Segment Depreciation and Amortization
 
Segment depreciation and amortization increased $968$3,116 and $3,520 for the quarter and six months ended DecemberMarch 31, 20172022, respectively, compared to the comparable prior year period,periods, primarily due to depreciation and amortization on acquirednew assets placed in service and assets acquired in acquisitions.

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Other Income (Expense)


For the quarters ended DecemberMarch 31, 20172022 and 2016,2021, Other income (expense) included $(437)of $1,675 and ($132)$1,081, respectively, includes $168 and $320, respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $1,079 and $227, respectively, as well as $(331) and $55, respectively, of net investment income. Other income (expense) also includes rental income of $462 in each of the three months ended March 31, 2022 and 2021. Additionally, it includes royalty income of $616 for the three months ended March 31, 2022.

For the six months ended March 31, 2022 and 2021, Other income (expense) of $3,056 and $1,438, respectively, includes $562 and $(379), respectively, of net currency exchange losses in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $2,027 and $454, respectively, as well as $(5)$238 and $87,$386, respectively, of net investment income. Other income (loss).(expense) also includes rental income of $924 in each of the six months ended March 31, 2022 and 2021. Additionally, it includes royalty income of $616 for the six months ended March 31, 2022.


Provision for income taxes

On December 22, 2017, the “Tax Cuts and Jobs Act” ("TCJA") was signed into law, significantly impacting several sections of the Internal Revenue Code. ASC 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions, January 1, 2018. Though certain key aspects of the TCJA are effective January 1, 2018 and have an immediate accounting effect, other significant provisions are not effective or may not result in accounting effects for September 30 fiscal year companies until October 1, 2018.
Given the significance of the TCJA, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period”. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed.
Among the significant changes to the U.S. Internal Revenue Code, the TCJA lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The Company will compute its income tax expense for the September 30, 2018 fiscal year using a blended Federal Tax Rate of 24.5%. The 21% Federal Tax Rate will apply to fiscal years ending September 30, 2019 and each year thereafter.

The Company has recorded provisional amounts for the effects of the TCJA where accounting is not complete but a reasonable estimate has been determined. The company recorded a $23,941 benefit on the revaluation of deferred tax liabilities as a provisional amount for the re-measurement of deferred tax assets and liabilities, as well as an amount for deductible executive compensation expense, both of which have been reflected in the tax benefit for the quarter ended DecemberMarch 31, 2017.

A reasonable estimate cannot yet be made and therefore taxes are reflected based on the law in effect prior to the enactment of the TCJA for the impact of the one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer’s foreign subsidiaries, bonus depreciation expensing for qualified property placed in service after September 27, 2017 and the impact on state income taxes.

The provisional amounts incorporate assumptions made based upon the Company’s current interpretation of the TCJA and may change as the Company receives additional clarification and implementation guidance.

In accordance with SAB 118 adjustments recorded to the provisional amounts will be reflected within the measurement period through the quarter ended December 31, 2018 and will be included in income from continuing operations and net income as an adjustment to tax expense.

In the quarter ended December 31, 2017,2022, the Company recognized a tax benefitprovision of $24,904$24,533 on a Lossincome before taxes from continuing operations of $2,073,$83,104, compared to a tax benefitprovision of $2,613$11,082 on Incomeincome before taxes from continuing operations of $4,431$29,201 in the comparable prior year quarter.

The quarters ended December 31, 2017current year quarter results included restructuring charges of $4,766 ($3,496, net of tax), acquisition costs of $6,708 ($6,146, net of tax), proxy expenses of $4,661 ($3,591, net of tax), fair value step-up of acquired inventory sold of $2,701 ($2,007, net of tax), and 2016 tax rates included netdiscrete and certain other tax benefits, net, that affect comparability of $23,018 and $4,421, respectively. The current year quarter ended December 31, 2017 included discrete tax benefits from the December 22, 2017 tax reform bill primarily from approximately $23,941 related to revaluation of deferred tax liabilities. $693.The prior year quarter ended December 31, 2016results included restructuring charges of $7,502 ($5,605, net of tax), and discrete benefits from the adoptiontax and certain other tax provisions, net, that affect comparability of Financial Accounting Standards Board guidance which requires the Company to recognize excess tax benefits from the vesting of equity awards within income tax expense.$1,417. Excluding these tax items, the effective tax rates for the quarters ended DecemberMarch 31, 20172022 and 20162021 were 35.4%28.3% and 40.8%31.5%, respectively.


During the six months ended March 31, 2022, the Company recognized a tax provision of $31,851 on income before taxes of $107,327, compared to a tax provision of $22,790 on income before taxes of $66,339 in the comparable prior year period. The six month period ended March 31, 2022 included restructuring charges of $6,482 ($4,826, net of tax), acquisition costs of $9,303 ($8,149, net of tax), proxy expenses of $6,952 ($5,359, net of tax), fair value step-up of acquired inventory sold of $2,701 ($2,007, net of tax), and discrete and certain other tax benefits, net, that affect comparability of $1,574. The six month period ended March 31, 2021 included restructuring charges of $10,581 ($7,906, net of tax), and discrete tax and certain other tax provisions, net, that affect comparability of $369. Excluding these items, the effective tax rates for the six months ended March 31, 2022 and 2021 were 29.0% and 32.6%, respectively.
Stock based compensation
For the quarters ended DecemberMarch 31, 20172022 and 2016,2021, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled $5,092 and $5,293, respectively. For the six months ended March 31, 2022 and 2021, stock based compensation expense totaled $2,555$9,959 and $2,452,$9,501, respectively.

Comprehensive income (loss)
 
For the quarter ended DecemberMarch 31, 2017,2022, total other comprehensive income (loss), net of taxes, of $8,358,$4,949 included a $1,289 lossgain of $6,049 from foreign currency translation adjustments primarily due to the strengthening of the Euro, Canadian Dollar and British Pound, offset by the weakening of the Australian and Canadian currencies, offset by the strengthening of the Euro currency,Dollar, all in comparison to the US Dollar,Dollar; a $9,559$140 benefit from pension amortization of actuarial lossesamortization; and a $88 gain$1,240 loss on cash flow hedges.


For the quarter ended DecemberMarch 31, 2016,2021, total other comprehensive loss,income, net of taxes, of $11,312,$4,775 included a $13,479 lossgain of $1,739 from foreign currency translation adjustments primarily due to the strengthening of the British Pound and Canadian Dollar, partially offset by the weakening of the Euro, Canadian and Australian currencies, all in comparison to the US Dollar,Dollar; a $544$1,245 benefit from pension amortization; and a $1,791 gain on cash flow hedges.

For the six months ended March 31, 2022, total other comprehensive income, net of taxes, of $2,198 included a gain of $3,730 from foreign currency translation adjustments primarily due to the strengthening of the Canadian and Australian Dollars, offset by the weakening of the Euro and the British Pound, all in comparison to the US Dollar; a $808 benefit from pension amortization of actuarial losseslosses; and a $1,623$2,340 loss on cash flow hedges.
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Table of Contents

For the six months ended March 31, 2021, total other comprehensive income, net of taxes, of $17,916 included a gain of $13,862 from foreign currency translation adjustments primarily due to the strengthening of the British Pound and Canadian and Australian Dollars, all in comparison to the US Dollar; a $2,951 benefit from pension amortization of actuarial losses; and a $1,103 gain on cash flow hedges.


Discontinued operations

DISCONTINUED OPERATIONS
Plastic Products Company

Defense Electronics  

On September 5, 2017, Griffon27, 2021, we announced it would explorewe are exploring strategic alternatives for Clopay Plastic Products Company, Inc. ("PPC")our DE segment, which consists of our Telephonics subsidiary, and on November 16, 2017, announced itApril 18, 2022, Griffon entered into a definitive agreement to sell PPCTelephonics to BerryTTM for $475 million$330,000 in cash. As a result,The transaction is expected to close within the following PPC results have been classified PPCsecond calendar quarter of 2022. Griffon believes this will increase long-term value for Griffon shareholders, while creating enhanced growth opportunities for Telephonics. Telephonics is recognized globally as a discontinued operation.leading provider of highly sophisticated intelligence, surveillance and communications solutions that are deployed across a wide range of land, sea and air applications. Telephonics designs, develops, manufactures and provides logistical support and lifecycle sustainment services to defense, aerospace and commercial customers worldwide.


  For the Three Months Ended December 31,
  2017 2016
Revenue $120,430
  
 $114,823
  
Segment operating profit $12,448
 10.3% $8,031
 7.0%
Depreciation and amortization —
  
 6,406
  
Segment adjusted EBITDA $12,448
 10.3% $14,437
 12.6%


For the quarter ended DecemberMarch 31, 2017,2022, DE revenue increased $5,607 or 5%decreased 6% to $56,273 from $60,150 compared to the prior year quarter, drivenand Adjusted EBITDA increased by increased volume in North America, favorable product mix in Europe and favorable resin pricing of $1,500, or 1%, partially offset by reduced volume in Europe and unfavorable mix in North America. PPC adjusts selling prices based on underlying resin costs on a delayed basis.

23% to $2,729 from $2,220. For the quartersix months ended DecemberMarch 31, 2017, Segment operating profit increased $4,417 or 55%2022, revenue decreased by 14% to $110,266 from $127,918 compared to the prior year quarter. Depreciationperiod, and amortization was excludedAdjusted EBITDA decreased by 8% to $7,201 from $7,805. The six months ended March 31, 2021 included $6,713 of revenue and $412 of EBITDA from the current year results since PPC is classified as a discontinued operations and accordingly, the Company ceased depreciation and amortizationSEG business divested in accordance with discontinued operations accounting guidelines. Depreciation and amortization would have been approximately $7,400 in the quarter ended December 31, 2017. Including depreciation and amortization in the current year results, Segment operating profit would have been approximately $5,048, a decrease of $2,983 or 37%, driven by unfavorable product mix. Resin pricing did not have a material impact on EBITDA for the quarter.2020.


Installation Services and

Other Discontinued ActivitiesOperations

In 2008, as a result of the downturn in the residential housing market, Griffon exited substantially all operating activities of its Installation Services segment which sold, installed and serviced garage doors and openers, fireplaces, floor coverings, cabinetry and a range of related building products, primarily for the new residential housing market. Griffon sold eleven units, closed one unit and merged two units into CBP. Operating results of substantially this entire segment have been reported as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented; Installation Services is excluded from segment reporting.

Griffon substantially concluded remaining disposal activities in 2009. There was no revenue or income from the Installation Services’ business for the quarters ended December 31, 2017 and 2016.

During the year ended September 30, 2017, Griffon recorded $5,700 of reserves in discontinued operations related to historical environmental remediation efforts and to increase the reserve for homeowner association claims (HOA) related to installation services.


At DecemberMarch 31, 2017, Griffon’s2022, Griffon's other discontinued assets and liabilities for discontinued operationsare primarily related to income taxes andinsurance claims, product liability, warranty reserves, environmental reserves and environmental reserves. Future net cash outflows to satisfy liabilities related to disposal activities accrued asincome taxes. See Note 16, Discontinued Operations.

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Table of December 31, 2017 are estimated to be $5,679.Contents

LIQUIDITY AND CAPITAL RESOURCES


Liquidity

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2022 secured $400,000 Credit Agreement. At March 31, 2022 , $233,039 of revolver capacity was available under the Credit Agreement and we had cash and cash equivalents of $122,293.

Management assesses Griffon’s liquidity in terms of its ability to generate cash to fund its operating, investing and financing activities. Significant factors affecting liquidity are:include cash flows from operating activities, capital expenditures, acquisitions, dispositions, bank lines of credit and the ability to attract long-term capital under satisfactory terms. Griffon believes it has sufficient liquidity available to invest in its existing businesses and execute strategic acquisitions while managing its capital structure on both a short-term and long-term basis.


As of March 31, 2022, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was $53,700. Our intent is to permanently reinvest these funds outside the U.S., and we do not currently anticipate that we will need funds generated from foreign operations to fund our domestic operations. In the event we determine that funds from foreign operations are needed to fund operations in the U.S., we will be required to accrue and pay U.S. taxes to repatriate these funds (unless applicable U.S. taxes have already been paid).

The following table is derived from the Condensed Consolidated Statements of Cash Flows:

Cash Flows from OperationsFor the Six Months Ended March 31,
20222021
Net Cash Flows Provided by (Used In):  
Operating activities$(172,633)$(44,411)
Investing activities(858,539)(22,106)
Financing activities899,924 (5,916)
Cash Flows from Continuing OperationsFor the Three Months Ended December 31,
(in thousands)2017 2016
Net Cash Flows Provided by (Used In): 
  
Operating activities$(5,654) $282
Investing activities(209,029) (13,655)
Financing activities258,526
 4,455


Cash used in operating activities from continuing operations for the threesix months ended DecemberMarch 31, 20172022 was $5,654$172,633 compared to a sourcecash used in continuing operations of $282$44,411 in the comparable prior year period. Current assetsCash provided by income from continuing operations, adjusted for non-cash expenditures, was more than offset by a net increase in working capital predominately consisting of current liabilities, excluding short-term debt, cashincreased accounts receivable and fair value acquisition related adjustments, increasedinventory primarily to $728,196 at December 31, 2017 compared to $690,447 at September 30, 2017,meet seasonal demands.

Cash flows used in investing activities from continuing operations is primarily due to increases in inventorycomprised of capital expenditures and prepaid and other current assetsbusiness acquisitions as well as decreases in accounts payableproceeds from the sale of businesses, investments and accrued expenses, partially offset by decreases in accounts receivable.

property, plant and equipment. During the quartersix months ended DecemberMarch 31, 2017,2022, Griffon used $209,029 of cash$858,539 in investing activities from continuing operations compared to $13,655$22,106 used in the prior year withcomparable period. Griffon used $851,464 to acquire Hunter during the increase primarily driven by acquisitions. On October 2, 2017,six months ended March 31, 2022. Griffon completed the acquisition of ClosetMaid, a market leader of home storage and organization products, for approximately $185,700, inclusive of post-closing adjustments, or $165,000 net of the estimated present value of tax benefits under the current tax law. Additionally, on November 6, 2017, AMES acquired Harper, a division of Horizon Global, for approximately $5,000. Harper is a leading U.S. manufacturer of cleaning products for professional, home, and industrial use. Inused $2,242 in the prior year quarter ended December 31, 2016, AMES Australia acquired Hills for approximately $6,051 (AUD 8,400).comparable period to acquire Quatro. Capital expenditures, net of proceeds from the sale of assets, for the quartersix months ended DecemberMarch 31, 20172022 totaled $10,785,$21,998, an increase of $3,095$4,245 from the prior year.year period. Proceeds from the sale of investments totaled $14,923 during the six months ended March 31, 2022 compared to cash used to purchase investments of $2,138 in the prior year comparable period.


During the quartersix months ended DecemberMarch 31, 2017,2022, cash provided by financing activities from continuing operations totaled $258,526$899,924 compared to the $4,455 providedcash used of $5,916 used in the prior year. On October 2, 2017, Griffon completed an add-on offeringyear comparable period. Cash provided by financing activities in the current period consisted primarily of $275,000 aggregate principal amountnet proceeds from long-term debt of 5.25% senior notes due 2022$937,385, partially offset by financing costs of $16,457, purchases of treasury shares to satisfy vesting of restricted stock of $10,886 and the payment of dividends of $10,091. Cash used in an unregistered offering through a private placement. The $275,000 senior notes were issued under the same indenture pursuant to which Griffon previously issued $725,000 in aggregate principal amount of its 5.25% Senior Notes due 2022. The proceeds were used, among other things, to purchase ClosetMaid and for general corporate purposes (including to temporarily reduce the outstanding balance of Griffon's revolving credit facility (the "Credit Agreement")).

At December 31, 2017, there were $147,743 in outstanding borrowings under the Credit Agreement compared to no outstanding borrowings at the same datefinancing activities in the prior year.year comparable period consisted primarily of payments of dividends of 8,678 and purchases of treasury shares to satisfy vesting of restricted stock of $2,909, partially offset by net proceeds from long-term debt of $6,456.


On August 3, 2016, Griffon’s Board of Directors authorizedDuring the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. There were no repurchases under these programs during the quartersix months ended DecemberMarch 31, 2017. As of December 31, 2017, $49,437 remains under the August 2016 Board authorization. In addition, during the quarter ended December 31, 2017, 191,3322022, 421,860 shares, with a market value of $4,332,$10,742, or $22.64$25.46 per share were withheld to settle employee taxes due upon the vesting of restricted stock and were added to treasury stock. Furthermore, during the six months ended March 31, 2022, an additional 5,480 shares, with a market value of $144, or $26.31 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.


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During 2021, the quarterCompany declared and paid regular cash dividends totaling $0.32 per share, or $0.08 per share each quarter. During the six months ended DecemberMarch 31, 2017,2022, the Board of Directors approved aand paid two quarterly cash dividends of $0.07$0.09 per share each. The Company currently intends to pay dividends each quarter; however, payment of dividends is determined by the Board of Directors at its discretion based on various factors, and no assurance can be provided as to the payment of future dividends. On January 30, 2018,April 27, 2022, the Board of Directors declared a quarterly cash dividend of $0.07$0.09 per share, payable on March 22, 2018June 16, 2022 to shareholders of record as of the close of business on February 22, 2018.May 19, 2022.


PaymentsOn each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. As of March 31, 2022, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs. No shares were repurchased during the six months ended March 31, 2022 under these share repurchase programs.

During the six months ended March 31, 2022, cash provided by discontinued operations from operating activities of $9,846 primarily related to Telephonics revenue are received in accordanceDE operations and the settling of certain liabilities and environmental costs associated with the termsformer Installations Services business. Cash provided by discontinued operations from investing activities related to DE operations capital expenditures.

During the six months ended March 31, 2021, Griffon used cash for discontinued operations from operating activities of development$17,058 primarily related to DE operations and production subcontracts;the settling of certain liabilities and environmental costs associated with other discontinued operations. Cash provided by discontinued operations from investing activities of such receipts are progress or performance based payments. With respect11,323 primarily related to HBP, there have been no material adverse impacts on payment for sales.net proceeds received of $14,725 from DE's sale of its SEG business less capital expenditures of $6,151.

Cash and Equivalents and DebtMarch 31,September 30,
20222021
Cash and equivalents$122,293 $248,653 
Notes payables and current portion of long-term debt25,110 12,486 
Long-term debt, net of current maturities1,941,725 1,033,197 
Debt discount/premium and issuance costs30,720 14,823 
Total debt1,997,555 1,060,506 
Debt, net of cash and equivalents$1,875,262 $811,853 
 
A small number of customers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue from continuing operations. For the quarter ended December 31, 2017:
The United States Government and its agencies, through either prime or subcontractor relationships, represented 9% of Griffon’s consolidated revenue and 60% of Telephonics’ revenue.
The Home Depot represented 19% of Griffon’s consolidated revenue and 22% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue. Future operating results will continue to substantially depend on the success of Griffon’s largest customers and our ongoing relationships with them. Orders from these customers are subject to change

and may fluctuate materially. The loss of all or a portion of volume from any one of these customers could have a material adverse impact on Griffon’s liquidity and operations.
Cash and Equivalents and DebtDecember 31, September 30,
(in thousands)2017 2017
Cash and equivalents$84,420
 $47,681
Notes payables and current portion of long-term debt12,593
 11,078
Long-term debt, net of current maturities1,238,393
 968,080
Debt discount/premium and issuance costs16,803
 13,243
Total debt1,267,789
 992,401
Debt, net of cash and equivalents$1,183,369
 $944,720
On October 2, 2017, in an unregistered offering through a private placement under Rule 144A,During 2020, Griffon completed the add-on offering of $275,000 principal amount of its 5.25% senior notes due 2022, at 101.00% of par, to Griffon's previously issued, $125,000 principal amount of its 5.25% senior notes due 2022, at 98.76% of par, completed on May 18, 2016 and $600,000 5.25% senior notes due 2022, at par, completed on February 27, 2014 (collectively the “Senior$1,000,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”). Proceeds from the 2028 Senior Notes were used to redeem the $1,000,000 of 5.25% Senior Notes due 2022. As of DecemberMarch 31, 2017,2022, the outstanding 5.75% Senior Notes due totaled $1,000,000; interest is payable semi-annually on March 1 and September 1. The net proceeds of the $275,000 add-on offering were used, among other things, to acquire ClosetMaid with the remaining proceeds used to pay down outstanding loan borrowings under Griffon's Credit Agreement. The net proceeds of the previously issued $125,000 add-on offering were used to pay down outstanding revolving loan borrowings under Griffon's Credit Agreement.


The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On December 18, 2017, July 20, 2016restrictions and June 18, 2014, Griffon exchanged all of the $275,000, $125,000 and $600,000 Senior Notes, respectively, for substantially identical Senior Notesare registered under the Securities Act of 1933 via an exchange offer.Act. The fair value of the Senior Notes approximated $1,020,000$945,000 on DecemberMarch 31, 20172022 based upon quoted market prices (level 1 inputs). In connection with the issuance and exchange of the $275,000 senior notes,Senior Notes, Griffon capitalized $8,434 of underwriting fees and other expenses; Griffon capitalized $3,016$16,448 of underwriting fees and other expenses in connection withincurred related to the $125,000 senior notes;issuance and Griffon capitalized $10,313 in connection withexchange of the previously issued $600,000 senior notes. All capitalized feesSenior Notes, which will amortize over the term of the notes.such notes, and, at March 31, 2022, $12,257 remained to be amortized.


On March 22, 2016,January 24, 2022, Griffon amended theand restated its Revolving Credit AgreementFacility (as amended, "Credit Agreement") to increase theprovide for a new $800,000 Term Loan B facility, due January 24, 2029, in addition to its current $400,000 revolving credit facility from $250,000 to $350,000, extend its maturity from March 13, 2020 to March 22, 2021,("Revolver"), and modify certain other provisionsreplaced LIBOR with SOFR (Secured Overnight Financing Rate). The fair value of the facility. On October 2, 2017, Griffon further amendedTerm Loan B facility approximated $792,000 on March 31, 2022 based upon quoted market prices (level 1 inputs). The Term Loan B contains a SOFR floor of 0.50% and a current spread of 2.75%, for a total current interest rate of 3.25%. The Original Issue Discount for the Credit Agreement in associationTerm Loan B was 99.75%. Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds. The Term Loan B facility requires nominal quarterly principal payments equal to 0.25% of the original outstanding principal amount, beginning with the ClosetMaid Acquisition to modify the net leverage covenant through the quarter ended June 30, 2022; potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023; and a final balloon payment due at maturity. Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed. The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the same collateral as the Revolver. In connection with this amendment, Griffon capitalized $15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan. At March 31, 2019. 2022, $15,235 remained to be amortized.

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The facilityRevolver's maximum borrowing availability is $400,000 and it matures on March 22, 2025. The Revolver includes a letter of credit sub-facility with a limit of $50,000 and$100,000; a multi-currency sub-facility of $50,000. The Credit Agreement provides for same day borrowings of base$200,000; and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $100,000.

In addition, on December 9, 2021, Griffon replaced the Revolver GBP LIBOR benchmark rate loans.with a Sterling Overnight Index Average ("SONIA"). Borrowings under the Credit AgreementRevolver may be repaid and re-borrowed at any time, subject to final maturity of the facility or the occurrence of an event of default under the Credit Agreement.time. Interest is payable on borrowings at either a LIBORSOFR, SONIA or base rate benchmark rate, in each case without a floor, plus an applicable margin, which adjusts based on financial performance. Current margins are 1.25%1.00% for base rate loans, 2.00% for SOFR loans and 2.25%2.00% for LIBORSONIA loans. The Credit AgreementRevolver has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants, and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. BorrowingsBoth the Revolver and Term Loan B borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries (except that a lien on the assetssubsidiaries. At March 31, 2022, there were $153,146 of Griffon's material domestic subsidiaries securing a limited amount of the debtoutstanding borrowings under the Credit Agreement relating to Griffon's Employee Stock Ownership Plan ("ESOP") ranks pari passu with the lien granted on such assets under the Credit Agreement). At December 31, 2017, there were $147,743 inRevolver; outstanding borrowings and standby letters of credit were $14,938 under the Credit Agreement; $187,319$13,815; and $233,039 was available, subject to certain loan covenants, for borrowing at that date.


On December 21, 2009, Griffon issued $100,000 principal amount of 4% convertible subordinated notes due 2017 (the “2017 Notes”). On July 14, 2016, Griffon announced that it would settle, upon conversion, up to $125,000 of the conversion value of the 2017 Notes in cash, with amounts in excess of $125,000, if any, to be settled in shares of Griffon common stock. On January 17, 2017, Griffon settled the convertible debt for $173,855 with $125,000 in cash, utilizing borrowings under the Credit Agreement, and $48,858, or 1,954,993 shares of common stock issued from treasury.


In September 2015 and March 2016, Griffon entered into mortgage loans in the amounts of $32,280 and $8,000, respectively. The mortgage loans are secured by four properties occupied by Griffon's subsidiaries. The loans mature in September 2025 and April 2018, respectively, are collateralized by the specific properties financed and are guaranteed by Griffon. The loans bear interest at a rate of LIBOR plus 1.50%. At December 31, 2017, mortgage loans outstanding relating to continuing operations was $22,743, net of issuance costs.

In August 2016, Griffon’s ESOP entered into an agreement that refinanced the existing ESOP loan into a new Term Loan in the amount of $35,092 (the "Agreement"). The Agreement also provided for a Line Note with $10,908 available to purchase shares of Griffon common stock in the open market. During 2017, Griffon's ESOP purchased 621,875 shares of common stock for a total of $10,908 or $17.54 per share, under a borrowing line that has now been fully utilized. On June 30, 2017, the Term Loan and Line Note were combined into a single Term Loan. The Term Loan bears interest at LIBOR plus 2.50%. The Term Loan requires a quarterly principal payment of $569 with a balloon payment due at maturity on March 22, 2020. As of December 31, 2017, $41,827, net of issuance costs, was outstanding under the Term Loan. The Term Loan is secured by shares purchased with the proceeds of the loan and with a lien on a specific amount of Griffon assets (which lien ranks pari passu with the lien granted on such assets under the Credit Agreement) and is guaranteed by Griffon.

Two Griffon subsidiaries have capital leasesone finance lease outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases both maturelease matures in 2022,2025 and bearbears interest at a fixed ratesrate of approximately 5.0% and 8.0%, respectively. The Troy Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon.5.6%. The Ocala, Florida lease contains two five-year renewal options. At DecemberMarch 31, 2017, $9,6062022, $13,757 was outstanding, net of issuance costs. During the period ended March 31, 2022, the financing lease on the Troy, Ohio location expired.The lease bore interest at a rate of approximately 5.0%, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease. Griffon exercised the one dollar buyout option in November 2021.


In November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD $15,00015,000 ($11,90112,018 as of DecemberMarch 31, 2017)2022) revolving credit facility.  The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.98%(1.75% LIBOR USD and 2.78%2.38% Bankers Acceptance Rate CDN as of DecemberMarch 31, 2017)2022). The revolving facility matures in October 2019.2022. Garant is required to maintain a certain minimum equity.  At DecemberMarch 31, 2017,2022, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($$11,901as12,018 as of DecemberMarch 31, 2017) available for borrowing.2022) available.


In July 2016,On March 30, 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries ("Griffon(collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into an AUD 30,000 term loanin July 2016 and an AUD 10,000 revolver. The term loan refinanced two existing term loansfurther amended in fiscal 2020. Griffon Australia paid in full and the revolver replaced two existing lines. In December 2016, the amount available under the revolver was increased from AUD 10,000 to AUD 20,000 and, in March 2017,canceled the term loan commitment was increased byin the amount of AUD 5,000 to9,625 and canceled the AUD 33,500. In September 2017,20,000 revolver. The amendment refinanced the term commitment was increased byexisting AUD 15,000 to AUD 46,750.receivable purchase facility. The term loan requires quarterly principal payments of AUD 1,250 plus interest, with a balloon payment of AUD 37,125 due upon maturity in June 2019, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 2.00% per annum (3.84% at December 31, 2017). As of December 31, 2017, the term loan had an outstanding balance of AUD 44,625 ($34,765 as of December 31, 2017). The revolvingreceivable purchase facility matures in November 2018,March 2023, but is renewable upon mutual agreement with the bank, andlender. The receivable purchase facility accrues interest at BBSY (Bank Bill Sap Rate) plus 2.0%1.25%, respectively, per annum (3.70%(1.31% at DecemberMarch 31, 2017)2022). At DecemberMarch 31, 2017,2022, there was no balance outstanding under the receivable purchase facility with AUD 15,000 ($11,273 as of March 31, 2022) available. The receivable purchase facility is secured by substantially all of the assets of Griffon Australia and its subsidiaries.

In July 2018, The AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349, respectively. Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA. The Term Loan and Mortgage Loans each accrue interest at the SONIA Rate plus 1.92% (2.61% at March 31, 2022). The revolving facility accrues interest at the Bank of England Base Rate plus 3.25% (4.00% as of March 31, 2022) and was renewed in June 2021. The revolving credit facility matures in July 2022, but it is renewable upon mutual agreement with the lender. As of March 31, 2022, the revolver had an outstanding balance of AUD 6,000GBP 2,827 ($4,675 at December3,713 as of March 31, 2017)2022) while the term and mortgage loan balances amounted to GBP 12,145 ($15,948 as of March 31, 2022). The revolver and the term loan are both secured by substantially all of the assets of Griffon AustraliaAMES UK and its subsidiaries. Griffon guarantees the term loan. Griffon Australia is required to maintain a certain minimum equity level andAMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. On February 14, 2022, AMES UK entered into a $8,500 trade facility agreement. The trade facility has a maximum loan period of 135 days and is due on June 29, 2022. The trade facility accrues interest at the Mid-point of the FED Target Range plus 2.50% (2.88% as of March 31, 2022). The trade facility had an outstanding balance of $8,000 as of March 31, 2022.


Other long-term debt primarily consists primarily of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.

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At DecemberMarch 31, 2017,2022, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

On August 3, 2016, Griffon’s Board of Directors authorized Gross Debt to EBITDA (Leverage), as calculated in accordance with the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under this share repurchase program, the Company may, from time to time, purchase shares of its common stockdefinition in the open market, including pursuant toCredit Agreement, was 4.4x at March 31, 2022.

Capital Resource Requirements

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $1,000,000 payable in 2028 and related annual interest payments of approximately $57,500. As noted above, Griffon entered into a 10b5-1 plan, or in privately negotiated transactions. There were no repurchases under these programs during the quarter ended December 31, 2017. From August 2011 through December 31, 2017, Griffon repurchased 20,429,298 sharesnew $800,000 seven year Term Loan B facility with initial pricing of its common stock,SOFR floor of 50 basis points plus a spread of 275 basis points, for a total interest rate of $261,621 or $12.81 per share. This included325 basis points. The OID was 99.75%. The Term Loan B facility requires quarterly payments equal to 0.25% of the repurchaseoutstanding principal amount, with a balloon payment due at maturity.

Customers

A small number of 15,984,854 sharescustomers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue. For the six months ended March 31, 2022, The Home Depot represented 13% of Griffon’s consolidated revenue, 19% of CPP's revenue and 8% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue. Future operating results will continue to depend substantially on the open market, as well assuccess of Griffon’s largest customers and our ongoing relationships with them. Orders from these customers are subject to change and may fluctuate materially. The loss of all or a portion of the December 10, 2013 repurchasevolume from any one of 4,444,444 shares from GS Direct for $50,000, or $11.25 per share. Asthese customers could have a material adverse impact on Griffon’s liquidity and results of December 31, 2017, $49,437 remainsoperations.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally by Clopay Corporation, Telephonics Corporation, The AMES Companies, Inc., Clopay AMES Holding Corp., ClosetMaid LLC, AMES Hunter Holdings Corporation, Hunter Fan Company, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the August 2016 Board authorization.Securities Act, presented below are summarized financial information of the Parent (Griffon) subsidiaries and the Guarantor subsidiaries as of March 31, 2022 and September 30, 2021 and for the six months ended March 31, 2022 and for the year ended September 30, 2021. All intercompany balances and transactions between subsidiaries under Parent and subsidiaries under the Guarantor have been eliminated. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. The summarized information excludes financial information of the Non-Guarantors, including earnings from and investments in these entities. The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities. The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly-owned subsidiaries accounted for under the equity method.


The December 10, 2013 repurchase of 4,444,444 shares of common stock from GS Direct was effected in a private transaction at a per share price of $11.25, an approximate 9.2% discountindentures relating to the stock’s closing price on November 12, 2013,Senior Notes (the “Indentures”) contain terms providing that, under certain limited circumstances, a guarantor will be released from its obligations to guarantee the day before announcementSenior Notes.  These circumstances include (i) a sale of at least a majority of the transaction. GS Direct continues to hold approximately 5.6 million sharesstock, or all or substantially all the assets, of Griffon’s common stock.

Subject to certain exceptions, if GS Direct intends to sell its remaining sharesthe subsidiary guarantor as permitted by the Indentures; (ii) a public equity offering of Griffon common stock at any time prior to December 31, 2018, it will first negotiatea subsidiary guarantor that qualifies as a “Minority Business” as defined in good faith to sell such shares to the Company.

In addition, duringIndentures (generally, a business the quarter ended December 31, 2017, 191,332 shares, with a market valueEBITDA of $4,332, or $22.64 per share, were withheld to settle employee taxes due uponwhich constitutes less than 50% of the vestingsegment adjusted EBITDA of restricted stock, and were added to treasury stock.

On November 17, 2011, the Company began declaring quarterly dividends. During 2017,for the Company declaredmost recently ended four fiscal quarters), and paid dividends totaling $0.24 per share. Duringthat meets certain other specified conditions as set forth in the quarter ended December 31, 2017,Indentures; (iii) the Boarddesignation of Directors approved a quarterly cash dividend of $0.07 per share. The Company currently intends to pay dividends each quarter; however, payment of dividends is determined byguarantor as an “unrestricted subsidiary” as defined in the Board of Directors at its discretion based on various factors, and no assurance can be provided as toIndentures, in compliance with the payment of future dividends.

On January 30, 2018, the Board of Directors declared a quarterly cash dividend of $0.07 per share, payable on March 22, 2018 to shareholders of record asterms of the closeIndentures; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indentures, in each case in accordance with the terms of business on February 22, 2018.the Indentures; and (v) upon obtaining the requisite consent of the holders of the Senior Notes.


During the quarter months ended December 31, 2017

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Summarized Statements of Operations and 2016, Griffon used cash for discontinued operations from operating, investing and financing activities of $6,419 and $10,149, respectively, primarily related to PPC operations and capital expenditures, and expenditures related to remaining Installation Services liabilities and environmental costs.Comprehensive Income (Loss)

For the Six Months EndedFor the Year Ended
March 31, 2022September 30, 2021
Parent CompanyGuarantor CompaniesParent CompanyGuarantor Companies
Net sales$— $1,182,806 $— $1,991,434 
Gross profit$— $341,200 $— $497,829 
Income (loss) from operations$(29,973)$129,427 $(22,321)$123,870 
Equity in earnings of Guarantor subsidiaries$81,860 $— $79,055 $— 
Net income (loss)$(28,340)$81,860 $(40,035)$79,055 

Summarized Balance Sheet Information
For the Six Months EndedFor the Year Ended
March 31, 2022September 30, 2021
Parent CompanyGuarantor CompaniesParent CompanyGuarantor Companies
Current assets$58,337 $1,241,063 $114,377 $951,609 
Non-current assets15,351 1,965,964 17,665 1,069,540 
Total assets$73,688 $3,207,027 $132,042 $2,021,149 
Current liabilities$71,811 $425,053 $41,334 $397,121 
Long-term debt1,914,502 13,697 998,787 14,482 
Other liabilities26,677 318,099 43,337 164,122 
Total liabilities$2,012,990 $756,849 $1,083,458 $575,725 

CRITICAL ACCOUNTING POLICIES


The preparation of Griffon’s consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on assets, liabilities, revenue and expenses. These estimates can also affect supplemental information contained in public disclosures of Griffon, including information regarding contingencies, risk and its financial condition. These estimates, assumptions and judgments are evaluated on an ongoing basis and based on historical experience, current conditions and various other assumptions, and form the basis for estimating the carrying values of assets and liabilities, as well as identifying and assessing the accounting treatment for commitments and contingencies. Actual results may materially differ from these estimates. There have been no changes in Griffon’s critical accounting policies from September 30, 2017.2021.


Griffon’s significant accounting policies and procedures are explained in the Management Discussion and Analysis section in the Annual Report on Form 10-K for the year ended September 30, 2017.2021. In the selection of the critical accounting policies, the objective is to properly reflect the financial position and results of operations for each reporting period in a consistent manner that can be understood by the reader of the financial statements. Griffon considers an estimate to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact on the financial position or results of operations of Griffon.


RECENT ACCOUNTING PRONOUNCEMENTS


The FASB issues, from time to time, new financial accounting standards, staff positions and emerging issues task force consensus. See the Notes to Condensed Consolidated Financial Statements for a discussion of these matters.


FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q, especially “Management’s Discussion and Analysis”, contains certain “forward-looking statements” within the meaning of the Securities Act, of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income (loss), earnings, cash flows,
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revenue, changes in operations, operating improvements, the impact of the Hunter Fan transaction, industries in which Griffon Corporation (the “Company” or “Griffon”) operates and the United States and global economies. Statements in this Form 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” “may,” “will,” “estimates,” “intends,” “explores,” “opportunities,” the negative of these expressions, use of the future tense and similar words or phrases. Such forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statements. These risks and uncertainties include, among others: current economic conditions and uncertainties in the housing, credit and capital markets; Griffon’s ability to achieve expected savings from cost control, restructuring, integration and disposal initiatives; the ability to identify and successfully consummate, and integrate, value-adding acquisition opportunities;opportunities (including, in particular, integration of the Hunter Fan acquisition); increasing competition and pricing pressures in the markets served by Griffon’s operating companies; the ability of Griffon’s operating companies to expand into new geographic and product markets, and to anticipate and meet customer demands for new products and product enhancements and innovations; reduced military spending

by the government on projects for which Griffon’s Telephonics Corporation supplies products, including as a result of defense budget cuts or other government actions; the ability of the federal government to fund and conduct its operations; increases in the cost or lack of availability of raw materials such as resin, wood and steel;steel, components or purchased finished goods, including any potential impact on costs or availability resulting from tariffs; changes in customer demand or loss of a material customer at one of Griffon’s operating companies; the potential impact of seasonal variations and uncertain weather patterns on certain of Griffon’s businesses; political events that could impact the worldwide economy; a downgrade in Griffon’s credit ratings; changes in international economic conditions including interest rate and currency exchange fluctuations; the reliance by certain of Griffon’s businesses on particular third party suppliers and manufacturers to meet customer demands; the relative mix of products and services offered by Griffon’s businesses, which impacts margins and operating efficiencies; short-term capacity constraints or prolonged excess capacity; unforeseen developments in contingencies, such as litigation, regulatory and environmental matters; unfavorable results of government agency contract audits of Telephonics Corporation; our strategy, future operations, prospects and the plans of our businesses, including the closing of the disposition of Telephonics Corporation; Griffon’s ability to adequately protect and maintain the validity of patent and other intellectual property rights; the cyclical nature of the businesses of certain of Griffon’s operating companies; and possible terrorist threats and actions and their impact on the global economy.economy; the impact of COVID-19 on the U.S. and the global economy, including business disruptions, reductions in employment and an increase in business and operating facility failures, specifically among our customers and suppliers; Griffon’s ability to service and refinance its debt; and the impact of recent and future legislative and regulatory changes, including, without limitation, changes in tax laws. Additional important factors that could cause the statements made in this Quarterly Report on Form 10-Q or the actual results of operations or financial condition of Griffon to differ are discussed under the caption “Item 1A. Risk Factors” and “Special Notes Regarding Forward-Looking Statements” in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2017.2021. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Such statements reflect the views of the Company with respect to future events and are subject to these and other risks, as previously disclosed in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date made. Griffon undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.


Item 3 - Quantitative and Qualitative Disclosure About Market Risk
 
Griffon’s business’business activities necessitatesnecessitate the management of various financial and market risks, including those related to changes in interest rates, foreign currency rates and commodity prices.
 
Interest Rates
 
Griffon’s exposure to market risk for changes in interest rates relates primarily to variable interest rate debt and investments in cash and equivalents.
 
TheGriffon's amended and restated Credit Agreement andreferences a benchmark rate with SONIA or SOFR. In addition, certain other of Griffon’s credit facilities have a LIBOR-basedLIBOR and BBSY (Bank Bill Swap Rate) based variable interest rate. Due to the current and expected level of borrowings under these facilities, a 100 basis point change in SONIA, SOFR, BBSY, or LIBOR would not have a material impact on Griffon’s results of operations or liquidity.


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Foreign Exchange
 
Griffon conducts business in various non-US countries, primarily in Canada, Australia, Mexicothe United Kingdom, Ireland, New Zealand and China; therefore, changes in the value of the currencies of these countries affect Griffon's financial position and cash flows when translated into US Dollars. Griffon has generally accepted the exposure to exchange rate movements relative to its non-US operations. Griffon may, from time to time, hedge its currency risk exposures. A change of 10% or less in the value of all applicable foreign currencies would not have a material effect on Griffon’s financial position and cash flows.
 
Item 4 - Controls and Procedures
 
Under the supervision and with the participation of Griffon’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and 15d-15(e), were evaluated as of the end of the period covered by this report. Based on that evaluation, Griffon’s CEO and CFO concluded that Griffon’s disclosure controls and procedures were effective at the reasonable assurance level.

DuringIn connection with the Hunter acquisition, Griffon is in the process of integrating its controls and procedures with respect to Hunter's operations. Griffon expects to include the internal controls with respect to Hunter operations in its assessment of the effectiveness of its internal controls over financial reporting as of the end of fiscal year 2023. Other than the acquisition of Hunter, during the period covered by this report, there were no changes in Griffon’s internal control over financial reporting which materially affected, or are reasonably likely to materially affect, Griffon’s internal control over financial reporting.
 
Limitations on the Effectiveness of Controls
 
Griffon 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. Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e) and 15d-15(e), are designed to provide reasonable assurance of achieving their objectives.
 

PART II - OTHER INFORMATION


Item 1    Legal Proceedings
None


Item 1A    Risk Factors


In addition to the other information set forth in this report, carefully consider the factors discussed in Item 1A to Part I in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2017,2021, which could materially affect Griffon’s business, financial condition or future results. The risks described in Griffon’s Annual Report on Form 10-K are not the only risks facing Griffon. Additional risks and uncertainties not currently known to Griffon or that Griffon currently deems to be immaterial also may materially adversely affect Griffon’s business, financial condition and/or operating results.




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Item 2    Unregistered Sales of Equity Securities and Use of Proceeds


(c)    ISSUER PURCHASES OF EQUITY SECURITIES
Period
(a) Total Number
of Shares (or
Units) Purchased
  
(b) Average Price
Paid Per Share (or
Unit)
 
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs (1)
 
(d) Maximum Number (or
Approximate Dollar
Value) of Shares (or Units)
That May Yet Be
Purchased Under the
Plans or Programs(1)
October 1 - 31, 2017—
  $—
 —
  
November 1 - 30, 2017190,097
(2) —
 —
  
December 1 - 31, 20171,235
(2) —
 —
  
Total191,332
  $—
 —
 $49,437

1.PeriodOn August 3, 2016,(a) Total Number
of Shares (or
Units) Purchased		(b) Average Price
Paid Per Share (or
Unit)
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs (1)
(d) Maximum Number (or
Approximate Dollar
Value) of Shares (or Units)
That May Yet Be
Purchased Under the Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of December
Plans or Programs (1)
January 1 - 31, 2017, an aggregate of $49,437 remained available for the purchase of Griffon common stock under the August 3, 2016 Board authorization.2022
— $— — 
2.February 1 - 28, 2022Shares acquired by the Company from holders of restricted stock upon vesting of the restricted stock, to satisfy tax-withholding obligations of the holders.— — — 
March 1 - 31, 2022— — — 
Total— $— — $57,955 


1.On each of August 3, 2016 and August 1, 2018, the Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of March 31, 2022, an aggregate of $57,955 remained available for the purchase of Griffon common stock under these repurchase programs.

Item 3    Defaults Upon Senior Securities
None


Item 4    Mine Safety Disclosures
None



Item 5    Other Information

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.





Amendment No. 1to Employment Agreement

Following a review of our severance arrangements with our named executive officers, certain differences were identified between the provisions relating to the Griffon Corporation 2016 Equity Incentive Plan

On January 31, 2018, Griffon’s stockholders approvedpayment of a pro-rata bonus for the year of an executive’s termination (the “Pro Rata Bonus”) upon certain terminations of employment occurring within two years following a change in control. To make these provisions uniform, on April 28, 2022, we entered into amendments (collectively, the “Amendments”) to each of the employment agreement with our Chief Executive Officer, Ronald J. Kramer, and the severance agreements with our Senior Vice President and Chief Financial Officer, Brian G. Harris, and our Senior Vice President, General Counsel and Secretary, Seth L. Kaplan. The Amendment No. 1 to the Griffon Corporation Equity Incentive Plan (the "Incentive Plan") at the 2018 annual meeting of stockholders (the “Annual Meeting”), pursuant to which 1,000,000 shares were added to the Incentive Plan and which providedMr. Kramer’s employment agreement provides that any dividend or other distribution payable with respectMr. Kramer’s Pro Rata Bonus be equal to a restricted share award (orpro rata portion of the greater of the total bonus received in the immediately preceding year and the “Target Bonus” (with “Target Bonus” being defined as 150% of Mr. Kramer’s current salary). This is consistent with respectsimilar provisions in the agreements we have with our other named executive officers. The Amendments also provide for payment of the Pro Rata Bonus, and related payments due in the event of certain terminations of employment occurring within two years following a change in control, to any other award), will be paid if, and only at such time as,made within 10 days following the restricted share award (or other award) vests.

This summarydate on which the executive’s release of claims becomes effective. The foregoing description of Amendment No. 1 to the Incentive Plan is qualified in its entirety by reference to (i) the description of the Incentive Plan and Amendment No. 1 to the Incentive Plan included in Griffon’s Proxy Statement relating to its Annual Meeting filed with the Securities and Exchange Commission on December 18, 2017 (the “Proxy Statement”), and (ii) the actual Incentive Plan and Amendment No. 1 to the Incentive Plan, a copyAmendments, copies of each of which were includedare filed as Annexes A and Bexhibits to the Proxy Statement, respectively, and are incorporated herein by reference.this Quarterly Report on Form 10-Q.


Submission of Matters to a Vote of Security Holders.

On January 31, 2018, Griffon held its Annual Meeting. Of the 47,310,984 shares of common stock outstanding and entitled to vote, 45,393,721 shares, or 96%, were represented at the meeting in person or by proxy, and therefore a quorum was present. The final results for each of the matters submitted to a vote of stockholders at the Annual Meeting are as follows:

Item No. 1: All of the Board’s nominees for Class II directors were elected to serve until Griffon’s 2021 Annual Meeting of Stockholders, by the votes set forth below:
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NomineeForWithheldBroker Non-Votes
    
Henry A. Alpert*40,838,0412,545,1582,010,522
Bradley J. Gross41,562,2671,820,9322,010,522
General Donald J. Kutyna41,715,2481,667,9512,010,522
Kevin Sullivan42,260,0181,123,1812,010,522

Item No. 2: The stockholders approved, on an advisory basis, the compensationTable of the named executive officers as disclosed in Griffon’s Proxy Statement, by the votes set forth below:
ForAgainstAbstainBroker Non-votes
36,239,5155,851,6741,292,0102,010,522

Item No. 3: The stockholders approved Amendment No. 1 to the Incentive Plan, by the votes set forth below:
ForAgainstAbstainBroker Non-votes
41,545,9961,397,346439,8572,010,522

Item No. 4: The stockholders ratified the appointment of Grant Thornton LLP as Griffon’s independent registered public accounting firm for fiscal 2018, by the votes set forth below:
ForAgainstAbstain
45,003,081244,632146,008

*As previously disclosed, Harvey R. Blau, who was up for re-election as a Class II director, passed away prior to the Annual Meeting. In accordance with the Proxy Statement, the Board, upon the recommendation of the Nominating and Corporate Governance Committee, designated Mr. Henry A. Alpert as the substitute nominee for the Class II directorship for which Mr. Blau was nominated. As a result, any shares voted by proxy FOR the election of Mr. Blau as a Class II director at the Annual Meeting were instead voted for the election of Mr. Alpert as a Class II director. Because Mr. Alpert was elected as a Class II director at the Annual Meeting, concurrently with such election, he ceased to serve as a Class III director. The Board intends to appoint a successor director to fill the resulting Class III director vacancy in due course in accordance with the terms of the Company’s certificate of incorporation and by-laws.


Mr. Blau was also the Company’s Chairman of the Board. The Board has appointed Ronald J. Kramer, the Company’s Chief Executive Officer, to succeed Mr. Blau as Chairman of the Board.

Contents
Item 6Exhibits
Item 62.1*Exhibits
10.1
TransactionShare Purchase Agreement by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation, dated as of November 15, 2017, by and among Clopay Ames True Temper Holding Corp., Clopay Plastic Products Company, Inc. and Berry Global, Inc.April 18, 2022 (incorporated by reference to Exhibit 2.1 to the Registrant’sof Current Report on Form 8-K filed NovemberApril 21, 20172022 (Commission File No. 1-06620)).
10.2*3.1Certificate of Amendment to Amended and Restated Certificate of Incorporation of Griffon Corporation (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K dated February 18, 2022 (Commission File No. 001-06620)).
3.2
Amendment No. 1 to theAmended and Restated By-laws of Griffon Corporation 2016 Equity Incentive Plan (incorporated by reference to Annex BExhibit 3.2 to Griffon’s Proxy Statement relatingCurrent Report on Form 8-K dated February 18, 2022 (Commission File No. 001-06620)).


10.1
Second Amendment to Fourth Amended and Restated Credit Agreement, dated as of January 24, 2022,
to that certain Fourth Amended and Restated Credit Agreement, dated as of January 30, 2020, among Griffon
Corporation, the 2018 Annual Meetingseveral banks and other financial institutions or entities from time to time parties thereto,
Bank of Shareholders,America, N.A., as administrative agent, and the other agents party thereto (Exhibit 99.1 of Current
Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2017January 28, 2022 (Commission File No. 1-06620)).
10.3*10.2**
31.110.3**Griffon Corporation Amended and Restated 2016 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K dated February 18, 2022 (Commission File No. 001-06620)).
10.4**
10.5**
10.6**
31.1
Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
101.INS
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Document
101.DEFXBRL Taxonomy Extension Definitions Document
101.LABXBRL Taxonomy Extension Labels Document
101.PREXBRL Taxonomy Extension Presentations Document
*
*The registrant has omitted schedules and similar attachments to the subject agreement pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

** Indicates a management contract or compensatory plan or arrangement.

55
SIGNATURES
 
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
/s/ Brian G. Harris
Brian G. Harris
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ W. Christopher Durborow
W. Christopher Durborow
Vice President Controller and Chief Accounting Officer
(Principal Accounting Officer)
 
Date: February 1, 2018April 28, 2022



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