~~Manufacturing capacity constraints or increased manufacturing costs may have a material adverse effect on our business, results of operations, financial condition and cash flows.~~

Griffon’s current manufacturing resources may be inadequate to meet significantly increased demand for some of its products. Griffon’s ability to increase its manufacturing capacity depends on many factors, including the availability of capital, steadily increasing consumer demand, equipment delivery, construction lead-times, installation, qualification, regulatory permitting and regulatory requirements. Increasing capacity through the use of third party manufacturers may depend on Griffon’s ability to develop and maintain such relationships and the ability of such third parties to devote additional capacity to fill its orders.

A lack of sufficient manufacturing capacity to meet demand could cause our customer service levels to decrease, which may negatively affect customer demand for our products and customer relations generally, which in turn could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, operating facilities at or near capacity may also increase production and distribution costs and negatively affect relations with our employees or contractors, which could result in disruptions in our operations.

~~In addition, our manufacturing costs may increase significantly and we may not be able to successfully recover these cost increases with increased pricing to its customers.~~

~~If Ames and ClosetMaid do not continue to develop and maintain leading brands or realize the anticipated benefits of increased advertising and promotion spend, their operating results may suffer.~~

The ability of each of Ames and ClosetMaid to compete successfully depends in part on each such company’s ability to develop and maintain leading brands so that such company’s retail and other customers will need its products to meet consumer demand. Leading brands allow each of Ames and ClosetMaid to realize economies of scale in its operations. The development and maintenance of such brands require significant investment in brand-building and marketing initiatives. While each of Ames and ClosetMaid plans to continue to increase its expenditures for advertising and promotion and other brand-building and marketing initiatives over the long term, the initiatives may not deliver the anticipated results and the results of such initiatives may not cover the costs of the increased investment.

Unionized employees could strike or participate in a work stoppage.

At September 30, ~~2017,~~2022, Griffon employed approximately ~~4,700~~6,200 people on a full-time basis, approximately 9%4% of whom are covered by collective bargaining or similar labor ~~agreements (all within Telephonics and AMES).~~agreements. If unionized employees engage in a strike or other work stoppage, or if Griffon is unable to negotiate acceptable extensions of agreements with labor unions, a significant disruption of operations and increased operating costs could occur. In addition, any renegotiation or renewal of labor agreements could result in higher wages or benefits paid to unionized employees, which could increase operating costs and as a result have a material adverse effect on profitability.

Griffon’s operations and reputation may be adversely impacted if our information technology (IT) systems, or the IT systems of third parties with whom we do business, fail to perform adequately or if we or such third parties are the subject of a data breach or cyber-attack.

We rely on IT systems, networks and services to conduct our business, including communicating with employees and our key commercial customers, ordering and managing materials and products from suppliers, shipping products to customers and analyzing and reporting results of operations. While we have taken steps to ensure the security of our information technology systems, our systems may nevertheless be vulnerable to computer viruses, security breaches and other disruptions from unauthorized users. Cyber criminals are becoming more sophisticated and knowledgeable every day, and as their tactics evolve, it is a constant challenge to ensure that our IT security practices are sufficient to protect our IT systems and data. If our IT systems are damaged or cease to function properly for an extended period of time, whether as a result of a significant cyber incident or otherwise, our ability to communicate internally as well as with our customers and suppliers could be significantly impaired, which may adversely impact our business, operations and reputation.

In the normal course of our business, we collect, store, and transmit proprietary and confidential information regarding our brands, customers, employees, suppliers and others. We also engage third parties that store, process and transmit these types of information, as well as personal information, on our behalf. An operational failure or breach of security from increasingly sophisticated cyber threats could lead to loss, misuse or unauthorized disclosure of this information about our employees or customers, which may result in regulatory or other legal proceedings, and could have a material adverse effect on ~~profitability. With~~our business and reputation. We also may not have the ~~inclusion~~resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Any such attacks or precautionary measures taken to prevent anticipated attacks may result in increasing costs, including costs for additional technologies, training, and third-party consultants. The losses incurred from a breach of data security and operational failures as well as the ~~ClosetMaid acquisition on October 2, 2017, Griffon and its subsidiaries employ approximately 6,200 people.~~

~~Griffon may be~~precautionary measures required to ~~record impairment charges for goodwill and indefinite-lived intangible assets.~~

Griffon is required to assess goodwill and indefinite-lived intangible assets annually for impairment or on an interim basis if changes in circumstances or the occurrence of events suggest impairment exists. If impairment testing indicates that the carrying value of reporting units or indefinite-lived intangible assets exceeds the respective fair value, an impairment charge would be recognized. If goodwill or indefinite-lived intangible assets were to become impaired, the results of operations could be materially andaddress this evolving risk may adversely ~~affected.~~

~~Telephonics’ business depends heavily upon government contracts and, therefore, the defense budget.~~

Telephonics sells products to the U.S. government and its agencies both directly and indirectly as a first-tier supplier to prime contractors in the defense industry such as Lockheed Martin, Boeing and Northrop Grumman. In the year ended September 30, 2017, U.S. government contracts and subcontracts accounted for approximately 18% of Griffon’s consolidated revenue. Contracts involving the U.S. government may include various risks, including:

~~Termination for default or for convenience by the government;~~

~~Reduction or modification in the event of changes in the government’s requirements or budgetary constraints;~~

Increased or unexpected costs, causing losses or reduced profits under contracts where Telephonics’ prices are fixed, or determinations that certain costs are not allowable under particular government contracts;

~~The failure or inability of the prime contractor to perform its contract in circumstances where Telephonics is a subcontractor;~~

Failure to observe and comply with government business practice and procurement regulations such that Telephonics could be suspended or barred from bidding on or receiving awards of new government contracts;

~~The failure of the government to exercise options for additional work provided for in contracts;~~

~~The inherent discretion of government agencies in determining whether Telephonics has complied with all specifications set forth in a government contract; and~~

~~The government’s right, in certain circumstances, to freely use technology developed under these contracts.~~

All of Telephonics’ U.S. Government end-user contracts contain a termination for convenience clause, regardless if Telephonics is the prime contractor or the subcontractor. This clause generally entitles Telephonics, upon a termination for convenience, to receive the purchase price for delivered items, reimbursement of allowable work-in-process costs, and an allowance for profit. Allowable costs would include the costs to terminate existing agreements with suppliers.

The programs in which Telephonics participates may extend for several years, and may be funded on an incremental basis. Decreases in the U.S. defense budget, in particular with respect to programs to which Telephonics supplies materials, could have a material adverse impact ~~on Telephonics'~~our financial ~~conditions,~~condition, results of operations and cash flows. ~~The U.S. government~~

We depend on our information systems to process orders, manage inventory and accounts receivable collections, purchase, sell, and ship products efficiently and on a timely basis, maintain cost-effective operations, and provide superior service to our customers. If these systems are damaged, infiltrated, shutdown, or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or viruses, other cyber security incidents, or otherwise), we may ~~not continue~~suffer disruption in our ability to ~~fund programs to~~manage and operate our business.

There can be no assurance that the precautions which ~~Telephonics’ development projects apply. Even if funding is continued, Telephonics may fail to compete successfully to obtain funding pursuant to~~we have taken against certain events that could disrupt the operations of our information systems will prevent the occurrence of such programs. Reductions to funding on existing programs or delays in the funding of new opportunities could affect the timing of revenue recognition, and impact Telephonics' and Griffon's results of operations.

~~Ability of government to fund and conduct its operations~~

~~The impact of~~ a ~~government shutdown for any duration~~disruption. Any such disruption could have a material adverse effect on ~~Telephonics’ revenues, profits and cash flows. Telephonics relies on government personnel to conduct routine~~our business processes related to the inspection and delivery of products for various programs, to approve and pay certain billings and invoices, to process export licenses and for other administrative services that, if disrupted, could have an immediate impact on Telephonics’ business.

~~Telephonics’ business could be adversely affected by a negative audit by the U.S. Government~~

As a government contractor, and a subcontractor to government contractors, Telephonics is subject to audits and investigations by U.S. Government Agencies such as the Defense Contract Audit Agency, the Defense Security Service, with respect to its classified contracts, other Inspectors General and the Department of Justice. These agencies review a contractor’s performance under its contracts, its cost structure and compliance with applicable laws and standards as well as compliance with applicable regulations, including those relating to facility and personnel security clearances. These agencies also review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s management, purchasing, property, estimating, compensation, and accounting and information systems. Any costs found to be misclassified or improperly allocated to a specific contract will not be reimbursed, or must be refunded if already billed and collected. Griffon could incur significant expenses in complying with audits and subpoenas issued by the government in aid of inquiries and investigations. If an audit or an investigation uncovers improper or illegal activities, Telephonics may be subject to civil and criminal penalties and/or administrative sanctions, which could include contract termination, forfeiture of profit, suspension of payments, fines, including

treble damages, and suspension or prohibition from doing business with the U.S. Government. In addition, if allegations of impropriety are made, Telephonics and Griffon could suffer serious harm to their reputation.

Many of our contracts contain performance obligations that require innovative design capabilities, are technologically complex, or are dependent upon factors not wholly within our control. Failure to meet these obligations could adversely affect customer relations, future business opportunities, and our overall profitability.

Telephonics designs, develops and manufactures advanced and innovative surveillance and communication products for a broad range of applications for use in varying environments. As with many of our programs, system specifications, operational requirements and test requirements are challenging, exacerbated by the need for quick delivery schedules. Technical problems encountered and delays in the development or delivery of such products, as well as the inherent discretion involved in government approval related to compliance with applicable specifications of products supplied under government contracts, could prevent us from meeting contractual obligations, which could subject us to termination for default. Under a termination for default, the company is entitled to negotiate payment for undelivered work if the Government requests the transfer of title and delivery of partially completed supplies and materials. Conversely, if the Government does not make this request, there is no obligation to reimburse the company for its costs incurred. We may also be subject to the repayment of advance and progress payments, if any. Additionally, the company may be liable to the Government for any of its excess costs incurred in acquiring supplies and services similar to those terminated for default, and for other damages. Should any of the foregoing events occur, it could result in a material adverse effect on our financial position.

~~Our business could be negatively affected by cyber or other security threats or other disruptions.~~

As a U.S. defense contractor, Telephonics may be the target of cyber security threats to its information technology infrastructure and unauthorized attempts to gain access to sensitive information. The types of threats could vary from attacks common to most industries to more advanced and persistent, highly organized adversaries who target us because of national security information in our possession. If we are unable to protect sensitive information, our customers or governmental authorities could question the adequacy of our security processes and procedures and our compliance with evolving government cyber security requirements for government contractors. Due to the evolving nature of these security threats, however, the impact of any future incident cannot be predicted.

The costs related to cyber or other security threats or disruptions could be significant. Security events such as these could adversely affect our internal operations, our future financial results, our reputation, as well as result in the loss of competitive advantages derived from our research and development efforts and other intellectual property.

~~If our subcontractors or suppliers fail to perform their obligations, our performance and our ability to win future business could be harmed.~~

We rely on other companies to provide materials, major components and products to fulfill our contractual obligations. Such arrangements may involve subcontracts, teaming arrangements, or supply agreements with other companies. There is a risk that we may have disputes regarding the quality and timeliness of work performed. In addition, changes in the economic environment, including defense budgets and constraints on available financing, may adversely affect the financial stability of our supply chain and their ability to meet their performance requirements or to provide needed supplies on a timely basis. A disruption or failure of any supplier could have an adverse effect on the business resulting in an impact to profitability, possible termination of a contract, imposition of fines or penalties, and harm to our reputation impacting our ability to secure future business.

~~Griffon’s companies must continually improve existing products, design and sell new products and invest in research and development in order to compete effectively.~~

The markets for Griffon’s products are characterized by rapid technological change, evolving industry standards and continuous improvements in products. Due to constant changes in these markets, future success depends on our ability to develop new technologies, products, processes and product applications. Our long-term success in the competitive retail environment and the industrial and commercial markets depends on our ability to develop and commercialize a continuing stream of innovative new products that are appealing to our ultimate end users and create demand. New product development and commercialization efforts, including efforts to enter markets or product categories in which Griffon has limited or no prior experience, have inherent risks. These risks include the costs involved, such as development and commercialization, product development or launch delays, and the failure of new products and line extensions to achieve anticipated levels of market acceptance or growth in sales or operating income.

Griffon also faces the risk that its competitors will introduce innovative new products that compete with Griffon’s products. In addition, sales generated by new products could cause a decline in sales of Griffon’s other existing products. If new product development and commercialization efforts are not successful, Griffon’s financial results could be adversely affected.

Product and technological developments are accomplished both through internally-funded R&D projects, as well as through strategic partnerships with customers. Because it is not generally possible to predict the amount of time required and costs involved in achieving certain R&D objectives, actual development costs may exceed budgeted amounts and estimated product development schedules may be extended. Griffon’s financial condition and results of ~~operations may be materially and adversely affected if:~~operations.

~~Product improvements are not completed on a timely basis;~~

~~New products are not introduced on a timely basis or do not achieve sufficient market penetration;~~

~~There are budget overruns or delays in R&D efforts; or~~

~~New products experience reliability or quality problems, or otherwise do not meet customer preferences or requirements.~~

Griffon may be unable to implement its acquisition growth strategy, which may result in added expenses without a commensurate increase in revenue and income, and divert management’s attention.

Making strategic acquisitions is a significant part of Griffon’s growth plans. The ability to successfully complete acquisitions depends on identifying and acquiring, on acceptable terms, companies that either complement or enhance currently held businesses or expand Griffon into new profitable businesses, and, for certain acquisitions, obtaining financing on acceptable terms. Additionally, Griffon must properly integrate acquired businesses in order to maximize profitability. The competition for acquisition candidates is intense and Griffon cannot assure that it will successfully identify acquisition candidates and complete acquisitions at reasonable purchase prices, in a timely manner, or at all. Further, there is a risk that acquisitions will not be properly integrated into Griffon’s existing structure. Griffon closed the acquisitions of La Hacienda, Tuscan Path, ClosetMaid and Harper Brush in the months of July through November 2017, Kelkay in February 2018, CornellCookson in June 2018, Apta in November 2019, Quatro in December 2020 and ~~this~~Hunter Fan in January 2022. This integration risk may be exacerbated when numerous acquisitions are consummated in a short time period.

In implementing an acquisition growth strategy, the following may be encountered:

•Costs associated with incomplete or poorly implemented acquisitions;

•Expenses, delays and difficulties of integrating acquired companies into Griffon’s existing organization;

•Dilution of the interest of existing stockholders;

•Diversion of management’s attention; or

•Difficulty in obtaining financing on acceptable terms, or at all.

An unsuccessful implementation of Griffon’s acquisition growth strategy, including the failure to properly integrate acquisitions, could have an adverse impact on Griffon’s results of operations, cash flows and financial condition. We may also incur debt or assume contingent liabilities in connection with acquisitions, which could impose restrictions on our business operations and harm our operating results.

The pendency of our current process to explore strategic alternatives and the possible failure to consummate a strategic transaction could adversely affect the trading price of our common stock and our future business and results of operations.

In May 2022, Griffon’s Board of Directors publicly announced that it would explore a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. This process is active and ongoing. The uncertainties associated with this process, and the expenses and efforts involved, may negatively affect our business and our relationships with employees, customers, suppliers, distributors and vendors. If we do not enter into or consummate a strategic transaction, our business and results of operations could be adversely affected. Furthermore, if we do not consummate a transaction, the price of our common stock may decline from the current market price, as the current market price might incorporate a market assumption that a transaction will be consummated. A failed transaction may also result in reduced employee morale and productivity, negative publicity and a negative impression of us in the investment community. Further, any disruptions to our business resulting from any announcement and pendency of a transaction, including any adverse changes in our relationships with our customers, suppliers, distributors, vendors and employees or recruiting and retention efforts, could continue or accelerate in the event of a failed acquisition. Matters relating to any failed transaction may require significant costs and expenses and substantial management time and resources, which could otherwise have been devoted to operating and growing our businesses.

Risks Related to Our Indebtedness

While Griffon’s senior notes, which have limited covenants, are not due until 2028; its $800 million Term Loan B (current balance of $496 million), which also has limited covenants, is not due until 2029; and its $400 million revolving line of credit, which has greater covenant requirements, does not mature until 2025, there are potential impacts from Griffon’s use of debt to finance certain of its activities, especially acquisitions and expansions, as set forth below.

Compliance with restrictions and covenants in Griffon’s debt agreements may limit its ability to take corporate actions.

The credit agreement entered into by, and, to a lesser extent, the terms of the senior notes issued by, Griffon each contain covenants that restrict the ability of Griffon and its subsidiaries to, among other things, incur additional debt, pay dividends, incur liens and make investments, acquisitions, dispositions, restricted payments and capital expenditures. Under the credit agreement, Griffon is also required to comply with specific financial ratios and tests. Griffon may not be able to comply in the future with these covenants or restrictions as a result of events beyond its control, such as prevailing economic, financial and industry conditions or a change in control of Griffon. If Griffon defaults in maintaining compliance with the covenants and restrictions in its credit agreement or the senior notes, its lenders could declare all of the principal and interest amounts outstanding due and payable and, in the case of the credit agreement, terminate the commitments to extend credit to Griffon in the future. If Griffon or its subsidiaries are unable to secure credit in the future, its business could be harmed.

Griffon may be unable to raise additional financing if needed.

Griffon may need to raise additional financing in the future in order to implement its business plan, refinance debt, or acquire new or complimentary businesses or assets. Any required additional financing may be unavailable, or only available at unfavorable terms, due to uncertainties in the credit markets. If Griffon raises additional funds by issuing equity securities, current holders of its common stock may experience significant ownership interest dilution and the holders of the new securities may have rights senior to the rights associated with current outstanding common stock.

Griffon’s indebtedness and interest expense could limit cash flow and adversely affect operations and Griffon’s ability to make full payment on outstanding debt.

Griffon’s indebtedness poses potential risks such as:

•A substantial portion of cash flows from operations could be used to pay principal and interest on debt, thereby reducing the funds available for working capital, capital expenditures, acquisitions, product development and other general corporate purposes;

•Insufficient cash flows from operations may force Griffon to sell assets, or seek additional capital, which Griffon may not be able to secure on favorable terms, if at all; and

•Its level of indebtedness may make Griffon more vulnerable to economic or industry downturns.

Risk Related to Our Common Stock

Griffon has the ability to issue additional equity securities, which would lead to dilution of issued and outstanding common stock.

The issuance of additional equity securities or securities convertible into equity securities would result in dilution to existing stockholders’ equity interests. Griffon is authorized to issue, without stockholder vote or approval, 3,000,000 shares of preferred stock in one or more series, and has the ability to fix the rights, preferences, privileges and restrictions of any such series. Any such series of preferred stock could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences or other rights superior to the rights of holders of Griffon’s common stock. While there is no present intention of issuing any such preferred stock, Griffon reserves the right to do so at any time. In addition, Griffon is authorized to issue, without stockholder approval, up to 85,000,000 shares of common stock, of which 57,064,331 shares, net of treasury shares, were outstanding as of September 30, 2022. Additionally, Griffon is authorized to issue, without stockholder approval, securities convertible into either shares of common stock or preferred stock.

General Risk Factors

Each of Griffon's businesses faces risks related to the disruption of its primary manufacturing facilities.

The manufacturing facilities for each of Griffon's businesses are concentrated in just a few locations, and in the case of CPP, some of these locations are abroad in low-cost locations. Any of Griffon's manufacturing facilities are subject to disruption for a variety of reasons, such as natural or man-made disasters, pandemics, terrorist activities, disruptions of information technology resources, and utility interruptions. Such disruptions may cause delays in shipping products, which could result in the loss of business or customer trust, adversely affecting Griffon’s businesses and operating results.

Manufacturing capacity constraints or increased manufacturing costs may have a material adverse effect on Griffon's business, results of operations, financial condition and cash flows.

Griffon’s current manufacturing resources may be inadequate to meet significantly increased demand for some of its products. Griffon’s ability to increase its manufacturing capacity depends on many factors, including the availability of capital, steadily increasing consumer demand, equipment delivery, construction lead-times, installation, qualification, and permitting and other regulatory requirements. Increasing capacity through the use of third-party manufacturers may depend on Griffon’s ability to develop and maintain such relationships and the ability of such third parties to devote additional capacity to fill its orders.

A lack of sufficient manufacturing capacity to meet demand could cause customer service levels to decrease, which may negatively affect customer demand for Griffon's products and customer relations generally, which in turn could have a material adverse effect on Griffon's business, results of operations, financial condition and cash flows. In addition, operating facilities at or near capacity may also increase production and distribution costs and negatively impact relations with employees or contractors, which could result in disruptions to operations.

In addition, manufacturing costs may increase significantly and Griffon may not be able to pass along all or any of such increase to its customers; and when such increases are passed off to customers, there will be a time lag, which may be significant.

If CPP and HBP do not continue to develop and maintain leading brands or realize the anticipated benefits of advertising and promotion spend, its operating results may suffer.

The ability of CPP and HBP to compete successfully depends in part on the company’s ability to develop and maintain leading brands so that retail and other customers will need its products to meet consumer demand. Leading brands allow both CPP and HBP to realize economies of scale in its operations. The development and maintenance of such brands require significant investment in brand-building and marketing initiatives. While CPP and HBP plan to continue to increase its expenditures for advertising and promotion and other brand-building and marketing initiatives over the long term, the initiatives may not deliver the anticipated results and the results of such initiatives may not cover the costs of the increased investment.

Griffon may be required to record impairment charges for goodwill and indefinite-lived intangible assets.

Griffon is required to assess goodwill and indefinite-lived intangible assets annually for impairment or on an interim basis if changes in circumstances or the occurrence of events suggest impairment exists. If impairment testing indicates that the carrying amount of reporting units or indefinite-lived intangible assets exceeds the respective fair value, an impairment charge would be recognized. If goodwill or indefinite-lived intangible assets were to become impaired, the results of operations could be materially and adversely affected.

For the fiscal year ended September 30, 2022, we recorded a non-cash, pre-tax goodwill impairment of $342,027, and a non-cash pre-tax indefinite-lived intangible assets impairment of $175,000. These non-cash impairments resulted in an aggregate decrease of $8.43 in our earnings per share for the fiscal year ended September 30, 2022. Should we have to record additional impairment charges in the future, it could similarly have a significant negative impact on our earnings per share for the year in which any such impairment charge is recorded.

If Griffon's subcontractors or suppliers fail to perform their obligations, Griffon's performance and ability to win future business could be harmed.

Griffon relies on other companies to provide materials, major components and products to fulfill contractual obligations. Such arrangements may involve subcontracts, teaming arrangements, or supply agreements with other companies. There is a risk that Griffon may have disputes regarding the quality and timeliness of work performed. In addition, changes in the economic environment, including constraints on available financing, may adversely affect the financial stability of Griffon's supply chain and their ability to meet their performance requirements or to provide needed supplies on a timely basis. A disruption or failure of any supplier could have an adverse effect on Griffon's business resulting in an impact to profitability, possible termination of a contract, imposition of fines or penalties, and harm to Griffon's reputation impacting its ability to secure future business.

Griffon’s companies must continually improve existing products, design and sell new products and invest in research and development in order to compete effectively.

The markets for Griffon’s products are characterized by rapid technological change, evolving industry standards and continuous improvements in products. Due to constant changes in Griffon's markets, future success depends on Griffon's ability to develop new technologies, products, processes and product applications. Griffon's long-term success in the competitive retail environment and the industrial and commercial markets depends on its ability to develop and commercialize a continuing stream of innovative new products that are appealing to ultimate end users and create demand. New product development and commercialization efforts, including efforts to enter markets or product categories in which Griffon has limited or no prior experience, have inherent risks. These risks include the costs involved, such as development and commercialization, product development or launch delays, and the failure of new products and line extensions to achieve anticipated levels of market acceptance or growth in sales or operating income.

Product and technological developments are accomplished both through internally-funded R&D projects, as well as through strategic partnerships with customers. Because it is not generally possible to predict the amount of time required and costs involved in achieving certain R&D objectives, actual development costs may exceed budgeted amounts and estimated product development schedules may be extended. Griffon’s financial condition and results of operations may be materially and adversely affected if:

•Product improvements are not completed on a timely basis;

•New products are not introduced on a timely basis or do not achieve sufficient market penetration;

•There are budget overruns or delays in R&D efforts; or

•New products experience reliability or quality problems, or otherwise do not meet customer preferences or requirements.

The loss of certain key officers or employees could adversely affect Griffon’s business.

The success of Griffon is materially dependent upon the continued services of certain key officers and employees. The loss of such key personnel could have a material adverse effect on Griffon’s operating results or financial condition.

Griffon is exposed to a variety of risks relating to non-U.S. sales and operations, including non-U.S. economic and political conditions and fluctuations in exchange rates.

Griffon and its companies conduct operations in Canada, ~~Australia, United Kingdom~~Australasia, the U.K., and China, and sell their products in many countries around the world. ~~Following the ClosetMaid acquisition on October 2, 2017, Griffon now has significant manufacturing operations in Mexico and additional manufacturing operations in China.~~ Sales of products through non-U.S. subsidiaries accounted for approximately ~~15%~~17% of consolidated revenue for the year ended September 30, ~~2017.~~2022. These sales could be adversely affected by changes in political and economic conditions, trade protection measures, such as tariffs, the ability of the Company to enter into industrial cooperation agreements ~~(off-set~~(offset agreements), differing intellectual property rights and laws and changes in regulatory requirements that restrict the sales of products or increase costs in such locations. Enforcement of existing laws in such jurisdictions can be uncertain, and the lack of a sophisticated body of laws can create various uncertainties, including with respect to customer and supplier contracts. Currency fluctuations between the U.S. dollar and the currencies in the non-U.S. regions in which Griffon does business may also have an impact on future reported financial results.

~~Our~~Griffon's international sales and operations are subject to applicable laws relating to trade, export controls and foreign corrupt practices, the violation of which could adversely affect ~~our~~ operations. ~~We are~~Griffon is subject to various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business. In addition, ~~we are~~Griffon is subject to certain export controls, laws and regulations, ~~applicable~~as well as to ~~us, including the Arms Export Control Act, the International Traffic in Arms Regulation and the Export Administration Regulations, and~~ economic sanctions, laws and embargoes imposed by various governments or organizations, including the U.S. and the European Union or member countries. Violations of anti-corruption, export controls or sanctions laws may result in severe criminal or civil sanctions and penalties, including ~~debarments from~~loss of export privileges and loss of authorizations needed to conduct ~~our~~Griffon's international ~~business, or harm our ability to enter into contracts with the U.S. Government, and we may be~~business. Such violations could also result in Griffon being subject to other liabilities, which could have a material adverse effect on ~~our~~Griffon's business, results of operations and financial condition.

Griffon may not be able to protect its proprietary rights.

Griffon relies on a combination of patent, copyright and trademark laws, common law, trade secrets, confidentiality and non-disclosure agreements and other contractual provisions to protect proprietary rights. Such measures do not provide absolute protection and Griffon cannot give assurance that measures for protecting these proprietary rights are and will be adequate, or that competitors will not independently develop similar technologies.

Griffon or its suppliers may inadvertently infringe on, or may be accused of infringing on, proprietary rights ~~held by another party.~~of others.

Griffon is regularly improving its technology and employing existing technologies in new ways. Though Griffon takes reasonable precautions to ensure it does not infringe on the rights of others, it is possible that Griffon may inadvertently infringe on, or be accused of infringing on, proprietary rights held by others. If Griffon is found to have infringed on the propriety rights held by others, any related litigation or settlement relating to such infringement may have a material effect on Griffon’s business, results of operations and financial condition.

It is also possible that Griffon’s suppliers may inadvertently infringe on, or be accused of infringing on, proprietary rights held by others. For example, a product provided to HBP by one of its suppliers was found to infringe on the intellectual property rights of a competitor of this supplier. If other Griffon suppliers are found to have infringed (or are alleged to have infringed) on

the propriety rights of others, such infringement may have a material adverse effect on Griffon’s business, results of operations and financial condition. For example, the supplier may not be able to develop an alternative design that meets Griffon’s needs at a comparable cost or at all, and the supply of certain products or components to Griffon may be interrupted.

Griffon is exposed to product liability and warranty claims.

Griffon is subject to product liability and warranty claims in the ordinary course of business, including with respect to former businesses now included within discontinued operations. These claims relate to the conformity of its products with required specifications, and to alleged or actual defects in Griffon’s products (or in end-products in which Griffon’s products were a component part) that cause damage to property or persons. There can be no assurance that the frequency and severity of product liability claims brought against Griffon will not increase, which claims can be brought either by an injured customer of an end product manufacturer who used one of Griffon's products as a component or by a direct purchaser. There is also no assurance that the number and value of warranty claims will not increase as compared to historical claim rates, or that ~~our~~Griffon's warranty reserve at any particular time is sufficient. No assurance can be given that indemnification from customers or coverage under insurance policies will be adequate to cover future product liability claims against Griffon; for example, product liability insurance typically does not cover claims for punitive damages. Warranty claims are typically not covered by insurance at all. Product liability insurance can be expensive, difficult to maintain and may be unobtainable in the future on acceptable terms. The amount and scope of any insurance coverage may be inadequate if a product liability claim is successfully asserted. Furthermore, if any significant claims are made, the business and the related financial condition of Griffon may be adversely affected by negative publicity.

Griffon has been, and may in the future be, subject to claims and liabilities under environmental laws and regulations.

Griffon’s operations and assets are subject to environmental laws and regulations pertaining to the discharge of materials into the environment, the handling and disposal of wastes, including solid and hazardous wastes, orand otherwise relating to health, safety and protection of the environment, in the various jurisdictions in which it operates. Griffon does not expect to make any expenditure with respect to ongoing compliance with or remediation under these environmental laws and regulations that would have a material adverse effect on its business, operating results or financial condition. However, the applicable requirements under environmental laws and regulations may change at any time.

Griffon can incur environmental costs related to sites that are no longer owned or operated, as well as third-party sites to which hazardous materials are sent. ~~It cannot be assured that material~~Material expenditures or liabilities ~~will not~~may be incurred in connection with such claims. See the Commitment and Contingencies footnote in the Notes to Consolidated Financial Statements for further information on environmental contingencies. Based on facts presently known, the outcome of current environmental matters are not expected to have a material adverse effect on Griffon’s results of operations and financial condition. However, presently unknown environmental conditions, changes in environmental laws and regulations or other unanticipated events may give rise to claims that may involve material expenditures or liabilities.

Changes in income tax laws and regulations or exposure to additional income tax liabilities could adversely affect profitability.

Griffon is subject to Federal, state and local income taxes in the U.S. and in various taxing jurisdictions outside the U.S. Tax provisions and liabilities are subject to the allocation of income among various U.S. and international tax jurisdictions. Griffon’s effective tax rate could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in any valuation allowance for deferred tax assets or the amendment or enactment of tax laws. The amount of income taxes paid is subject to audits by U.S. Federal, state and local tax authorities, as well as tax authorities in the taxing jurisdictions outside the U.S. If such audits result in assessments different from recorded income tax liabilities, Griffon’s future financial results may include unfavorable adjustments to its income tax provision.

~~Compliance~~Actions taken by activist shareholders could be disruptive and costly and may conflict with ~~restrictions~~or disrupt the strategic direction of our business.

Similar to the activist shareholder campaign initiated in 2021, activist shareholders may from time to time attempt to effect changes in our strategic direction and ~~covenants in~~seek changes regarding Griffon’s ~~debt agreements may limit its ability~~corporate governance or structure. Our Board of Directors and management team strive to ~~take corporate actions.~~

~~The credit agreement entered into by,~~maintain constructive, ongoing communications with all shareholders who wish to speak with us, including activist shareholders, and ~~the terms of the senior notes issued by, Griffon each contain covenants that restrict the ability of Griffon~~welcomes their views and its subsidiaries to, among other things, incur additional debt, pay dividends, incur liens and make investments, acquisitions, dispositions, restricted payments and capital expenditures. Under the credit agreement, Griffon is also required to comply with specific financial ratios and tests. Griffon may not be able to comply in the future with these covenants or restrictions as a result of events beyond its control, such as prevailing economic, financial and industry conditions or a change in control of Griffon. If Griffon defaults in maintaining complianceopinions with the ~~covenants~~goal of working together constructively to enhance value for all shareholders. However, activist campaigns that contest, or conflict with, our strategic direction could have an adverse effect on us because:

a.responding to actions by activist shareholders can disrupt our operations, be costly and ~~restrictions in its credit agreement~~time consuming, and divert the attention of our Board and senior management from the pursuit of our business strategies, and

b.perceived uncertainties as to our future direction may cause (i) instability or ~~the senior notes, its lenders could declare all~~lack of the principal and interest amounts outstanding due and payable and, in the case of the credit agreement, terminate their commitments to extend credit to Griffon in the future. If Griffon or its subsidiaries are unable to secure credit in the future, its business could be harmed.

~~Griffon~~continuity, which may be ~~unable to raise additional financing if needed~~exploited by our competitors, (ii) concern on the part of current or potential customers, (iii) loss of business opportunities, or (iv) difficulties in attracting and retain qualified personnel and business partners.

~~Griffon~~Activist campaigns may ~~need to raise additional financing~~also cause significant fluctuations in ~~the future in order to implement its business plan, refinance debt,~~our stock price based on temporary or to acquire new or complimentary businesses or assets. Any required additional financing may be unavailable, or only available at unfavorable terms, due to uncertainties in the credit markets. If Griffon raises additional funds by issuing equity securities, current holders of its common stock may experience significant ownership interest dilution and the holders of the new securities may have rights senior to the rights associated with current outstanding common stock.

~~Griffon’s indebtedness and interest expense could limit cash flow and adversely affect operations and Griffon’s ability to make full payment on outstanding debt.~~

~~Griffon’s indebtedness poses potential risks such as:~~

A substantial portion of cash flows from operations could be used to pay principal and interest on debt, thereby reducing the funds available for working capital, capital expenditures, acquisitions, product development and other general corporate purposes;

~~Insufficient cash flows from operations may force Griffon to sell assets, or seek additional capital, which Griffon may not be able to accomplish on favorable terms, if at all; and~~

~~The level of indebtedness may make Griffon more vulnerable to economic or industry downturns.~~

~~Griffon has the ability to issue additional equity securities, which would lead to dilution of issued and outstanding common stock.~~

The issuance of additional equity securities or securities convertible into equity securities would result in dilution to existing stockholders’ equity interests. Griffon is authorized to issue, without stockholder vote or approval, 3,000,000 shares of preferred stock in one or more series, and has the ability to fix the rights, preferences, privileges and restrictions of any such series. Any such series of preferred stock could contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferencesspeculative market perceptions, or other ~~rights superior to~~factors that do not necessarily reflect the ~~rights~~fundamental underlying value of holders of Griffon’s common stock. While there is no present intention of issuing any such preferred stock, Griffon reserves the right to do so in the future. In addition, Griffon is authorized to issue, without stockholder approval, up to 85,000,000 shares of common stock, of which 47,106,202 shares, net of treasury shares, were outstanding as of September 30, 2017. Additionally, Griffon is authorized to issue, without stockholder approval, securities convertible into either shares of common stock or preferred stock.our businesses.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Griffon occupies approximately ~~6,700,000~~10,460,000 square feet of general office, factory and warehouse space primarily throughout the U.S., Canada, Mexico, Australia, ~~United Kingdom~~U.K., Ireland and China. For a description of the encumbrances on certain of these properties, see the Notes Payable, Capitalized Leases and Long-Term Debt footnote in the Notes to Consolidated Financial Statements. The following table sets forth certain information related to Griffon’s major facilities:

Location

Business Segment

Primary Use

Approx.
Square
Footage

Owned/
Leased

Lease
End Year

New York, NY

Corporate

Headquarters

13,000

Leased

2025

Huntington, NY(1)

Corporate

Manufacturing

90,000

Owned

Troy, OH

Home and Building Products

Manufacturing

1,230,000

Owned

Russia, OH

Home and Building Products

Manufacturing

250,000

Owned

Mountain Top, PA

Home and Building Products

Manufacturing

279,000

Owned

Goodyear, AZ

Home and Building Products

Manufacturing

163,000

Owned

Carlisle, PA

Consumer and Professional Products

Manufacturing, Distribution

1,409,000

Leased

2035

Reno, NV

Consumer and Professional Products

Manufacturing, Distribution

997,000

Leased

2034

Camp Hill, PA

Consumer and Professional Products

Manufacturing

380,000

Owned

Harrisburg, PA

Consumer and Professional Products

Manufacturing

264,000

Owned

St. Francois, Quebec

Consumer and Professional Products

Manufacturing, Distribution

353,000

Owned

Champion, PA

Consumer and Professional Products

Wood Mill

225,000

Owned

Cork, Ireland

Consumer and Professional Products

Manufacturing, Distribution

74,000

Owned

Pollington Site, UK

Consumer and Professional Products

Manufacturing, Distribution

115,000

Owned

Gloucestershire, UK

Consumer and Professional Products

Distribution

139,000

Leased

2023

Barmby Moor, UK

Consumer and Professional Products

Manufacturing

240,000

Leased

2027

Kent, UK

Consumer and Professional Products

Distribution

32,000

Leased

2026

Australia (various)

Consumer and Professional Products

8 Distribution

661,000

Leased

2023 - 2028

Quebec, Canada

Consumer and Professional Products

Distribution

41,000

Lease

2023

Ocala, FL

Consumer and Professional Products

Manufacturing

676,000

Leased

2030

Grantsville, MD

Consumer and Professional Products

Manufacturing

155,000

Owned

Reynosa, MX

Consumer and Professional Products

Manufacturing (owned), Distribution (leased)

133,000

Owned /Leased

2023

Fairfield, IA

Consumer and Professional Products

Manufacturing

54,000

Leased

2024

Byhalia, MS

Consumer and Professional Products

Distribution

600,000

Leased

2025

Guangdong, China

Consumer and Professional Products

Manufacturing

211,000

Leased

2023

(1) This property is owned by Griffon and is leased to a third party.

Location Business Segment Primary Use
Approx.
Square
Footage

Owned/
Leased

Lease
End Year
New York, NY Corporate Headquarters 20,000
Leased 2025
Jericho, NY Corporate Office 6,900
Leased 2018
Farmingdale, NY Telephonics Manufacturing/R&D 180,000
Owned
Huntington, NY Telephonics Manufacturing 90,000
Owned
Huntington, NY Telephonics Manufacturing 100,000
Leased 2021
Columbia, MD Telephonics Engineering 33,000
Leased 2023
Elizabeth City, NC Telephonics Repair and Service 22,000
Leased 2039
Troy, OH Home & Building Products Office, Manufacturing 1,230,000
Leased 2021
Russia, OH Home & Building Products Manufacturing 250,000
Owned
Carlisle, PA Home & Building Products Manufacturing, Distribution 1,227,000
Leased 2020
Reno, NV Home & Building Products Manufacturing, Distribution 400,000
Leased 2022
Camp Hill, PA Home & Building Products Office, Manufacturing 380,000
Owned
Harrisburg, PA Home & Building Products Manufacturing 264,000
Owned
St. Francois, Quebec Home & Building Products Manufacturing, Distribution 353,000
Owned
Falls City, NE Home & Building Products Manufacturing 82,000
Owned
Cork, Ireland Home & Building Products Manufacturing, Distribution 74,000
Owned
Victoria, Australia Home & Building Products Manufacturing 29,000
Leased 2019
Champion, PA Home & Building Products Wood Mill 225,000
Owned
Victoria, Australia Home & Building Products Distribution 174,000
Leased 2023
Queensland, Australia Home & Building Products Distribution 50,000
Leased 2018
New South Wales, Australia Home & Building Products Distribution 76,000
Leased 2020
Regency Park, South Australia Home & Building Products Distribution 62,000
Leased 2019
Welshpool, Western Australia Home & Building Products Distribution 97,000
Leased 2019
New South Wales, Australia Home & Building Products Distribution 32,000
Leased 2019
Gloucestershire, UK Home & Building Products Distribution 46,000
Leased 2022

~~Griffon~~HBP also leases approximately ~~990,000~~1,176,000 square feet of space for ~~the CBP~~ distribution centers in numerous facilities throughout the U.S. and in Canada. In addition, ~~AMES~~HBP and CPP leases approximately 331,000 square feet of office space throughout the U.S. and various international locations. CPP also owns approximately ~~200,000~~169,000 square feet of additional space for operational wood mills in the U.S.

~~As of September 30, 2017, Griffon classified the following Clopay Plastics Products properties in discontinued operations:~~

Location Business Segment Primary Use Approx.
Square
Footage Owned/
Leased Lease
End Year
Mason, OH Home & Building Products/ Clopay Plastic Products Office/R&D 131,000
Owned
Aschersleben, Germany Clopay Plastic Products Manufacturing 289,000
Owned
Dombuhl, Germany Clopay Plastic Products Manufacturing 124,000
Owned
Augusta, KY Clopay Plastic Products Manufacturing 354,000
Owned
Nashville, TN Clopay Plastic Products Manufacturing 210,000
Owned
Nashville, TN Clopay Plastic Products Manufacturing 190,000
Leased 2019
Jundiai, Brazil Clopay Plastic Products Manufacturing 114,000
Owned
Hangzhou, China Clopay Plastic Products Manufacturing 66,000
Leased 2024

~~As of October 2, 2017, Griffon occupies the following ClosetMaid properties:~~

Location Business Segment Primary Use Approx.
Square
Footage Owned/
Leased Lease
End Year
Ocala, FL Home & Building Products Headquarters 620,000
Leased 2020
Grantsville, MD Home & Building Products Manufacturing 155,000
Owned
Reynosa, MX Home & Building Products Manufacturing (owned), Distribution (leased) 133,000
Owned / Leased 2020
Chino, CA Home & Building Products Distribution 202,000
Leased 2021
Pharr, TX Home & Building Products Distribution 80,000
Leased 2018
Belle Vernon, PA Home & Building Products Distribution 233,000
Leased 2022

All facilities are generally well maintained and suitable for the operations conducted.

Item 3. Legal Proceedings

Griffon is involved in litigation, investigations and claims arising out of the normal conduct of business, including those relating to commercial transactions, product liability and warranty claims, environmental, employment, and health and safety matters. Griffon estimates and accrues liabilities resulting from such matters based on a variety of factors, including the stage of the proceeding; potential settlement value; assessments by internal and external counsel; and assessments by environmental engineers and consultants of potential environmental liabilities and remediation costs. Such estimates are not discounted to reflect the time value of money due to the uncertainty in estimating the timing of the expenditures, which may extend over several years.

While it is impossible to ascertain the ultimate legal and financial liability with respect to certain contingent liabilities and claims, Griffon believes, based upon examination of currently available information, experience to date, and advice from legal counsel, that the individual and aggregate liabilities resulting from the ultimate resolution of these contingent matters, after taking into consideration ~~our~~ existing insurance coverage and amounts already provided for, will not have a material adverse impact on consolidated results of operations, financial position or cash flows. Refer to Note 16 - Commitments and Contingent Liabilities for a discussion of the Company's litigation.

Item 4. ~~Reserved~~Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Griffon’s Common Stock is listed for trading on the New York Stock Exchange under the symbol “GFF”. ~~The following table shows, for the periods indicated, the quarterly range in the high and low sales prices for Griffon’s Common Stock and the amount of dividends paid during the last two years:~~

Fiscal 2017 Fiscal 2016
Market Prices Dividends Market Prices Dividends
High Low Per Share High Low Per Share
Quarter ended December 31, $ 26.95
$ 16.18
$ 0.06
$ 19.24
$ 15.58
$ 0.05
Quarter ended March 31, 27.15
23.30
0.06
17.58
13.45
0.05
Quarter ended June 30, 25.15
21.15
0.06
17.30
14.69
0.05
Quarter ended September 30, 22.58
17.65
0.06
17.87
15.88
0.05

$ 0.24

$ 0.20

Dividends

During ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, the Company declared and paid, in quarterly increments, cash dividends totaling ~~$0.24~~$0.36 per share, ~~$0.20~~$0.32 per share and ~~$0.16~~$0.30 per share, respectively. In addition, on June 27, 2022, the Board of Directors declared a special cash dividend of $2.00 per share, paid on July 20, 2022 to shareholders of record as of the close of business on July 8, 2022. 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.

Holders

As of October 31, ~~2017,~~2022, there were approximately ~~8,000 record~~12,900 holders of Griffon’s Common Stock.

Securities Authorized for Issuance Under Equity Compensation Plans

~~Information regarding securities authorized for issuance under~~The following sets forth information relating to Griffon’s equity compensation plans ~~is contained~~as of September 30, 2022:


	(a)	(b)		(c)
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted- average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders (1)	—	$	—	835,122

Equity compensation plans not approved by security holders	—	$	—	—

(1)Excludes restricted shares and restricted stock units issued in ~~Part III, Item 12~~connection with Griffon’s equity compensation plans. The total reflected in column (c) includes shares available for grant as any type of ~~this Form 10-K.~~equity award under the Incentive Plan.

Issuer Purchase of Equity Securities

The table below presents shares of Griffon Stock which were acquired by Griffon during the fourth quarter of ~~2017:~~2022:

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

July 1 - 31, 2017 2,150
(2) $ 21.04
—

August 1 - 31, 2017 —

—
—

September 1 - 30, 2017 —

—
—

Total 2,150
$ 21.04
—
$ 49,437
(1)


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
July 1 - 31, 2022	—	$	—	—
August 1 - 31, 2022	—	—		—
September 1 - 30, 2022	—	—		—
Total	—	$	—	—	$	57,955	(1)


1.	Shares were purchased by the Company in open market purchases pursuant to share repurchases authorized by the Company’s Board of Directors. On August 3, 2016, the Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of September 30, 2017, $49,437 remained available for purchase under the Board authorization program.


2.	~~Shares acquired by the Company from holders of restricted stock upon vesting of the restricted stock to satisfy tax withholding obligations of the holders.~~

1.Shares, if any, purchased by the Company in open market purchases are pursuant to share repurchases authorized by the Company’s Board of Directors. 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 September 30, 2022, $57,955 remained available for purchase under these Board authorized repurchase programs.

Performance Graph

The performance graph does not constitute soliciting material, is not deemed filed with the SEC and is not incorporated by reference in any of Griffon’s filings under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language in any such filings, except to the extent Griffon specifically incorporates this performance graph by reference therein.

The following graph sets forth the cumulative total return to Griffon’s stockholders during the five years ended September 30, ~~2017,~~2022, as well as an overall stock market (S&P Small Cap 600 Index) and Griffon’s peer group index (Dow Jones U.S. Diversified Industrials Index). Assumes $100 was invested on September 30, ~~2012,~~2017, including the reinvestment of dividends, in each category.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

Among Griffon Corporation, the S&P Smallcap 600 Index

and the Dow Jones US Diversified Industrials Index

Item 6. ~~Selected Financial Data~~[Reserved]

For the Years Ended September 30,
(in thousands, except per share amounts) 2017 2016 2015 2014 2013
Revenue $ 1,524,997
$ 1,477,035
$ 1,483,291
$ 1,398,448
$ 1,308,136

Income (loss) before taxes and discontinued operations $ 16,698
$ 32,213
$ 19,066
$ (20,957 ) $ 11,779
Provision (benefit) for income taxes (1,085 ) 12,432
6,772
(10,151 ) 5,981
Income (loss) from continuing operations 17,783
19,781
12,294
(10,806 ) 5,798
Income (loss) from discontinued operations (2,871 ) 10,229
21,995
10,629
(2,031 )
Net Income (loss) $ 14,912
$ 30,010
$ 34,289
$ (177 ) $ 3,767

Basic earnings (loss) per share:

Continuing operations $ 0.43
$ 0.48
$ 0.28
$ (0.22 ) $ 0.11
Discontinued operations (0.07 ) 0.25
0.49
0.22
(0.04 )
Net income (loss) $ 0.36
$ 0.73
$ 0.77
$ —
$ 0.07
Weighted average shares outstanding 41,005
41,074
44,608
49,367
54,428

Diluted earnings (loss) per share:

Continuing operations $ 0.41
$ 0.45
$ 0.26
$ (0.22 ) $ 0.10
Discontinued operations (0.07 ) 0.23
0.47
0.22
(0.04 )
Net income (loss) $ 0.35
$ 0.68
$ 0.73
$ —
$ 0.07
Weighted average shares outstanding 43,011
44,109
46,939
49,367
56,563

Cash dividends declared per common share $ 0.24
$ 0.20
$ 0.16
$ 0.12
$ 0.10

Capital expenditures $ 34,937
$ 59,276
$ 46,308
$ 57,392
$ 41,932
Depreciation and amortization $ 47,878
$ 46,342
$ 45,834
$ 39,986
$ 44,011
Total assets $ 1,873,541
$ 1,782,096
$ 1,712,813
$ 1,808,826
$ 1,777,608

Current portion of debt $ 11,078
$ 13,932
$ 8,170
$ 4,580
$ 3,029
Long term portion of debt, net 968,080
896,946
803,617
791,301
666,904
Total debt, net $ 979,158
$ 910,878
$ 811,787
$ 795,881
$ 669,933


~~Notes:~~	Results of operations from acquired businesses are included from the date of acquisition forward. The fair value of assets and liabilities, inclusive of changes resulting from operating the businesses, are included in the first period ended after the date of each acquisition, and all periods thereafter.

~~Excludes results of operations and assets and liabilities of discontinued operations for all periods presented.~~

2017 includes $9,617 of acquisition related costs ($6,145,000, net of tax, or $0.14 per share), $5,137 of contract settlement charges ($3,300, net of tax, or $0.08 per share) and discrete tax benefits, net, of $8,274, or $0.19 per share.

~~2016 includes discrete tax benefits, net, of $857 or $0.02 per share.~~

~~2015 includes discrete tax benefits, net, of $219 or $0.00 per share.~~

2014 includes $6,136 of restructuring charges ($3,804, net of tax, or $0.07 per share), $3,161 of acquisition costs ($1,960, net of tax, or $0.04 per share), $38,890 loss on debt extinguishment ($24,964, net of tax, or $0.49 per share) and discrete tax benefits, net, of $4,179 or $0.08 per share.

2013 includes $13,262 of restructuring charges ($8,266, net of tax, or $0.15 per share), a loss on pension settlement of $2,142 ($1,392, net of tax, or $0.02 per share) and discrete tax benefits, net, of $325 or $0.01 per share.

~~Due to rounding, the sum of earnings per share of Continuing operations and Discontinued operations may not equal earnings per share or Net income.~~

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Unless otherwise indicated, all references to years or year-end refers to the fiscal year ending September 30 and dollars are in thousands, except per share data)

OVERVIEW

The Company

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.

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).

On September ~~5, 2017,~~27, 2021, Griffon announced it ~~will explore~~was exploring strategic alternatives for ~~Clopay Plastic Products Company,~~its Defense Electronics ("DE") segment, which consisted of our Telephonics Corporation ("Telephonics") subsidiary. On June 27, 2022, we completed the sale of Telephonics to TTM Technologies, Inc. (NASDAQ:TTMI) ("~~PPC") and on November 16, 2017, announced it entered into a definitive agreement to sell PPC to Berry Global Group, Inc. (NYSE:BERY) ("Berry"~~TTM") for ~~$475 million~~$330,000 in ~~cash. The transaction is subject~~cash, excluding customary post-closing adjustments, primarily related to ~~regulatory approval and customary closing conditions, and is expected to close in the first quarter of calendar 2018. As a result, Griffon~~working capital. Since September 2021, we have classified the results of operations of ~~the PPC~~our Telephonics business as a discontinued ~~operations~~operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued ~~operations~~operation as held for sale in the consolidated balance sheets. ~~All~~Accordingly, all references made to results and information ~~presented exclude PPC~~in this Annual Report on Form 10-K are to Griffon's continuing operations, unless ~~otherwise noted. PPC, incorporated in 1934, is a global leader in the development~~noted otherwise.

Griffon now conducts its operations through two reportable segments:

•Consumer 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. Griffon acquired PPC in 1986 as part of the acquisition of Clopay Corporation. See Note 6, Discontinued Operations to the Notes of the Financial Statements.

~~On October 2, 2017, Griffon acquired ClosetMaid LLC ("ClosetMaid"~~Professional Products (“CPP”)~~. ClosetMaid, founded in 1965,~~ is a leading North American manufacturer and ~~marketer~~a global provider of ~~closet organization,~~branded consumer and professional tools; residential, industrial and commercial fans; home storage and ~~garage storage~~organization products; and products that enhance indoor and outdoor lifestyles. CPP sells ~~to some~~products globally through a portfolio of ~~the largest home center retail chains, mass merchandisers,~~leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ~~direct-to-builder professional installers in North America. Due to the acquisition of ClosetMaid occurring subsequent to Griffon's fiscal year end, ClosetMaid's results of operations, assets~~ClosetMaid. CPP revenue was 47%, 54%, and ~~liabilities were not included in Griffon's 2017 financial results or 2017 year-end balance sheet.~~

~~Griffon currently conducts its continuing 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"). HBP revenue accounted for 73%55% of Griffon’s consolidated revenue in ~~2017~~2022, 2021 and ~~71%~~2020, respectively.

•Home and Building Products ("HBP") conducts its operations through Clopay. Founded in ~~both 2016~~1964, Clopay is the largest manufacturer and ~~2015:~~


◦	AMES, founded in 1774, is the leading U.S. manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals. AMES’ revenue was 36%, 35%, and 36% of Griffon’s consolidated revenue in 2017, 2016 and 2015, respectively.


◦	~~CBP, since 1964, is a leading manufacturer and~~ marketer of ~~residential and commercial~~ garage doors and rolling steel doors and sells to professional dealers and some of the largest home center retail chains in North America. CBP’s revenue was 37%, 36% and 35% of Griffon’s consolidated revenue in 2017, 2016 and 2015, respectively.


◦	ClosetMaid was acquired on October 2, 2017. ClosetMaid's 2017 revenue was $298,737, or 16% of Griffon's pro forma 2017 revenue of $1,823,734 (unaudited), giving effect to the acquisition of ClosetMaid as if it had occurred on October 1, 2016. With the inclusion of ClosetMaid, HBP pro forma revenue would have accounted for 77% of Griffon's 2017 consolidated pro forma revenue.

~~Telephonics Corporation ("Telephonics"), founded~~ in ~~1933, is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace~~North America. Residential and commercial ~~customers. Telephonics’~~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 Cornell and Cookson brands. HBP revenue was ~~27%~~53%, 46% and 45% of Griffon’s consolidated revenue in ~~2017~~2022, 2021 and ~~29%~~2020, respectively.

On May 16, 2022, Griffon announced that its Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. This process is active and discussions with potential counterparties are ongoing with respect to a number of these options. The Committee on Strategic Considerations, a committee comprised of independent directors who serve on Griffon's Board, is overseeing the process and working with Griffon's management and Goldman Sachs & Co. LLC, the Company's financial advisor. There is no assurance that the process will result in ~~both 2016~~any transaction being entered into or consummated.

On December 17, 2021, Griffon entered into a definitive agreement to acquire Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and ~~2015.~~industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of $845,000 and completed the acquisition on January 24, 2022.Hunter, part of our CPP segment, complements and diversifies our portfolio of leading consumer brands and products.We financed the acquisition of Hunter with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of

glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects. Quatro contributed approximately $5,000 in revenue in the first twelve months after the acquisition.

In August 2020 Griffon Corporation completed the public offering of 8,700,000 shares of our common stock for total net proceeds of $178,165 (the "Public Offering"). The Company used a portion of the net proceeds to repay outstanding borrowings under its Credit Agreement. The Company used the remainder of the proceeds for working capital and general corporate purposes.

On February 19, 2020, Griffon issued, at par, $850,000 of 5.75% Senior Notes due in 2028 and on June 8, 2020 Griffon issued an additional $150,000 of notes under the same indenture at 100.25% of par (collectively 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 (the "2022 Senior Notes").

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 (the "Credit Agreement").

On November 29, 2019, AMES acquired Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK 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 UK market and increases its in-country operational footprint. Apta contributed approximately $20,000 in revenue in the first 12 months after the acquisition.

Update of COVID-19 on Our Business

The health and safety of our employees, our customers and their families is always a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. When COVID-19 struck, we 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. While many of these precautions have been relaxed or eliminated as the health risk of COVID-19 has decreased, we would not hesitate to reinstitute and/or modify these policies and procedures as necessary should the health risk return to an unacceptable level. In such event, our businesses or our suppliers could be required by government authorities to temporarily cease operations; might be limited in their production capacity due to complying with restrictions relating to the operation of businesses to mitigate the impacts of COVID-19; or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us. While we are unable to determine or predict the nature, duration or scope of the overall impact COVID-19 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 we have responded (and will continue to respond) to COVID 19 and how our operations and financial condition may change as COVID-19 evolves. See information provided in Part 1, Item 1A, “Risk Factors” in this Form 10-K.

CONSOLIDATED RESULTS OF OPERATIONS

~~2017~~2022 Compared to ~~2016~~2021

Revenue ~~from continuing operations~~ for the year ended September 30, ~~2017 was $1,524,997,~~2022 of $2,848,488 compared to ~~$1,477,035 in~~$2,270,626 for the ~~prior~~ year ~~an increase of 3%, with~~ended September 30, 2021 increased 25% resulting from increased revenue at ~~Home & Building Products was partially offset by decreased~~HBP and CPP of 45% and 9%, respectively. Hunter (purchased on January 24, 2022) contributed $246,474 of revenue ~~at Telephonics.~~ in 2022.

Gross profit for ~~2017~~2022 was ~~$408,116~~$936,886 compared to ~~$400,693~~$641,113 in ~~2016, with gross margin~~2021. Gross profit as a percent of sales (“gross margin”) ~~of 26.8%~~for 2022 and ~~27.1%~~2021 was 32.9% and 28.2%, respectively. In the years ended 2022 and 2021, gross profit included restructuring charges of $7,964 and $7,923, respectively. In the year ended 2022, gross profit also included amortization of $5,401 related to the fair value step-up of acquired inventory sold in connection with the Hunter Fan acquisition. Excluding these charges from both years, gross profit would have been $950,251 or 33.4% of revenue, compared to $649,036 or 28.6% in the prior year.

Selling, general and administrative (“SG&A”) expenses in 2022 of $608,926 increased 29% from ~~continuing operations of $339,089 increased 7% from the prior year amount of $318,353.~~$470,530 in 2021. The 2022 SG&A ~~for 2017, as a percent~~expenses included restructuring charges of $8,818, acquisition costs of $9,303, strategic review (retention and other) of $9,683, special dividend ESOP charges of $10,538, proxy expenses of $6,952. The 2021 SG&A expenses included restructuring charges of $13,495. Excluding these items from both periods, 2022 SG&A expenses would have been $563,632, or 19.8% of revenue ~~was 22.2%,~~ compared to ~~21.6%~~$457,035 or 20.1%, with the increase in ~~the prior year,~~expenses primarily due to the inclusion of ~~$9,617~~expenses related to Hunter, which was acquired in January 2022, and increased distribution and shipping costs.

In connection with the preparation of ~~acquisition~~our financial statements for the fiscal year ended September 30, 2022, Griffon performed its annual impairment testing of its goodwill and indefinite lived intangibles. Indicators of impairment were present due to decreases in comparable company market multiples for the CPP reporting units and increased interest rates, and the related ~~expenditures.~~impact on weighted average cost of capital rates. Accordingly, a quantitative assessment was performed, which resulted in non-cash, pre-tax impairment charges for goodwill and indefinite lived intangibles of $342,027 and $175,000. respectively, recorded in the fourth fiscal quarter of 2022.

Interest expense ~~from continuing operations~~ in ~~2017~~2022 of ~~$51,513~~$84,379 increased 3%34% compared to ~~the prior year~~2021 of ~~$49,943~~$63,175, primarily as a result of increased debt levels related to the ~~May 2016 add-on offering~~$800,000 seven year Term Loan B facility entered into in connection with the Hunter acquisition, of ~~$125,000~~which Griffon repaid $300,000 aggregate principal amount in the third quarter of ~~5.25% senior notes due 2022 and higher outstanding borrowings on our Revolving Credit Facility.~~2022.

Other income (expense) ~~from continuing operations~~ of ~~$(880)~~$6,881 and $2,107 in ~~2017~~2022 and ~~$(250) in 2016 consists primarily~~2021, respectively, includes $305 and ($81), respectively, of net currency exchange transaction gains ~~and losses~~(losses) from receivables and payables held in non-functional currencies, $(225) and $283, respectively, of net gains (losses) on ~~investments.~~

~~Griffon reported pretax~~investments, and $4,256 and $907, respectively, of net periodic benefit plan income. Other income ~~from continuing operations~~(expense) also includes rental income of ~~$16,698~~$689 in 2022 and $624 in 2021. Additionally, it includes royalty income of $2,250 for the year ended September 30, ~~2017~~2022.

Griffon reported Income (loss) before tax from continuing operations for 2022 of $(270,879) compared to ~~$32,213~~$109,955 for ~~the prior year.~~2021. In ~~2017,~~2022, the Company ~~recognized a~~had an effective income tax ~~benefit~~rate of ~~(6.5)~~(6.2)% compared to a36.1% in 2021. The 2022 tax ~~provision of 38.6% in 2016. The 2017 tax rates~~rate included ~~$8,274~~$3,913 of discrete and certain other tax ~~benefits,~~provisions net, ~~related primarily to excess~~and other items that affect comparability, as listed below. The 2021 tax ~~benefits from the vesting of equity awards within income tax expense, a federal domestic production activities deduction and a federal R&D credit. The 2016 tax rates~~rate included ~~an $857~~$3,245 of discrete and certain other tax ~~benefits,~~provisions, net, ~~related primarily to excess tax benefits from the vesting of equity awards within income tax expense~~ and ~~the release of unrecognized tax benefits.~~

other items that affect comparability, as listed below. Excluding the discrete and certain other tax ~~benefits,~~provisions, net, and ~~certain~~ other items ~~from continuing operations,~~that affect comparability, as listed below, the effective income tax rates for ~~the year ended September 30, 2017~~2022 and ~~2016~~2021 were ~~39.7%~~29.0% and ~~41.3%~~31.7%, respectively. These rates reflect the impact of tax reserves and changes in earnings mix between U.S. and non-U.S. operations.

Loss from continuing operations for 2022 was $287,715, or $5.57 per share, compared to Income from continuing operations ~~was $17,783,~~of $70,302, or ~~$0.41 per share, for 2017 compared to $19,781, or $0.45~~$1.32 per share in ~~the prior year.~~

2021. The ~~current year results~~2022 income from continuing operations included the ~~following from continuing operations:~~following:


–	~~Acquisition costs of $9,617 ($6,145, net of tax, or $0.14 per share);~~


–	~~Contract settlement charges of $5,137 ($3,300, net of tax, or $0.08 per share); and~~


–	~~Discrete and certain other tax benefits, net, of $8,274, or $0.19 per share.~~

~~The prior year results included discrete~~–Restructuring charges of $16,782 ($12,479, net of tax, or $0.23 per share);

– Debt extinguishment, net $4,529 ($3,474, net of tax, or $0.06 per share);

–Acquisition costs of $9,303 ($8,149, net of tax, or $0.15 per share);

– Strategic review - retention and other of $9,683 ($7,280, net of tax, or $0.13 per share);

– Special dividend ESOP charges of $10,538 ($8,083, net of tax, or $0.15 per share);

– Proxy expenses of $6,952 ($5,359, net of tax, or $0.10 per share);

– Fair value step-up of acquired inventory sold of $5,401 ($4,012, net of tax, or $0.07 per share);

– Goodwill and intangible asset impairments of $517,027 ($454,753, net of tax, or $8.43 per share); and

–Discrete and certain other tax ~~benefits,~~provision, net, of ~~$857~~$3,913 or ~~$0.02~~0.07 per ~~share~~share.

The 2021 income from continuing ~~operations.~~operations included the following:

–Restructuring charges of $21,418 ($16,131, net of tax, or $0.30 per share); and

–Discrete and certain other tax provision, net, of $3,245 or $0.06 per share.

Excluding these items from both reporting periods, ~~2017~~2022 Income from continuing operations would have been ~~$18,954,~~$219,786, or ~~$0.44~~$4.07 per share compared to ~~$18,924,~~$89,678, or ~~$0.43~~$1.68 per share, in ~~2016.~~2021.

~~Net income was $14,912, or $0.35 per share, for 2017 compared~~2021 Compared to ~~$30,010, or $0.68 per share in the prior year.~~2020

~~The current year results included the following:~~


–	~~Acquisition costs of $9,617 ($6,145, net of tax, or $0.14 per share);~~


–	~~Contract settlement charges of $5,137 ($3,300, net of tax, or $0.08 per share);~~


–	~~Environmental and warranty reserves of $5,700 ($3,703, net of tax, or $0.09 per share); and~~


–	~~Discrete and certain other tax provisions, net, of $9,385, or $0.22 per share.~~

~~The prior year results included the following:~~


–	~~Restructuring charges of $5,900 ($4,247 net of tax, or $0.10 per share); and~~


–	~~Discrete and certain other tax provisions $2,658 or $0.06 per share.~~

~~Excluding these items from both reporting periods, 2017 Net income would have been $37,445, or $0.87 per share compared to $36,915, or $0.84 per share, in 2016.~~

The tax provisions on all pre-tax income inclusive of discontinued operations for the years ended September 30, 2017 and 2016 resulted in tax rates of 61.7% and 43.6%, respectively. These 2017 and 2016 tax rates included $9,385 and $2,658, respectively, of discrete and certain other tax provisions. Excluding these tax items and certain other items, as listed above, the effective tax ratesRevenue for the year ended September 30, ~~2017 and 2016 were 37.0% and 37.5%, respectively.~~

~~2016 Compared~~2021 of $2,270,626 compared to ~~2015~~

~~Revenue from continuing operations for~~$2,066,546 in the year ended September 30, ~~2016~~2020 increased 10% resulting from increased revenue at HBP and CPP of ~~$1,477,035~~12% and 8%, respectively.

Gross profit for 2021 was $641,113 compared to $583,994 in ~~line with~~2020. Gross margin as a percent of sales (“gross margin”) for 2021 and 2020 was 28.2% and 28.3%, respectively. In the ~~$1,483,291~~years ended 2021 and 2020, gross profit included restructuring charges of $7,923 and $4,159, respectively. Excluding restructuring charges from both years, gross profit would have been $649,036 or 28.6% of revenue, compared to $588,153 or 28.5% in the prior year. Excluding the unfavorable impact of foreign currency at HBP, revenue trailed the prior year by 1%. Gross profit from continuing operations for 2016 was $400,693 compared to $392,347 in 2015, with gross margin of 27.1% and 26.5%, respectively.

Selling, general and administrative (“SG&A”) expenses in 2021 of $470,530 increased 6% from ~~continuing operations for 2016~~$444,454 in 2020. The 2021 SG&A expenses included restructuring charges of ~~$318,353 decreased 2%~~$13,495. The 2020 SG&A expenses included restructuring charges of $9,510, acquisition costs of $2,960 and income from the ~~prior year amount~~reversal of ~~$325,435.~~contingent consideration related to the Kelkay acquisition of $1,733. Excluding these items from both periods, the 2021 SG&A ~~for 2016, as a percent~~expenses would have been $457,035, or 20.1% of revenue ~~was 21.6%,~~ compared to ~~21.9%~~$433,717 or 21.0%, with the increase in ~~the prior year~~expenses primarily due to ~~plant~~increased distribution and ~~distribution center consolidations and management cost control measures in the HBP segment.~~shipping costs.

Interest expense ~~from continuing operations~~ in ~~2016 totaled $49,943,~~2021 of $63,175 decreased 5% compared to 2020 of $66,544, primarily as a ~~5% increase from the prior year primarily due to the May 2016 add-on offering~~result of ~~$125,000 of 5.25% senior notes due 2022.~~decreased outstanding borrowings and decreased variable interest rates on our Revolving Credit Facility.

Other income (expense) of ~~$(250)~~$2,107 and $1,661 in ~~2016~~2021 and ~~$(331) in 2015 consists primarily~~2020, respectively, includes $81 and $915, respectively, of net currency exchange transaction ~~gains and~~ losses from receivables and payables held in non-functional currencies, $283 and $184, respectively, of net gains on ~~investments.~~investments, and $907 and $1,559, respectively, of net periodic benefit plan income. Other income (expense) also includes rental income of $624 in both 2021 and 2020.

Griffon reported ~~pretax income~~Income before tax from continuing operations for 2021 of ~~$32,213 for the year ended September 30, 2016~~$109,955 compared to ~~$19,066~~$67,481 for ~~the prior year.~~2020. In ~~2016,~~2021, the Company ~~recognized a~~had an effective income tax ~~provision~~rate of ~~38.6%~~36.1% compared to ~~35.5%~~38.6% in ~~2015.~~2020. The ~~2016 tax rates included $857 of net discrete tax benefits related primarily to excess tax benefits from the vesting of equity awards within income tax expense. The 2015~~2021 tax rate included ~~a net~~$3,245 of discrete ~~benefit of $219.~~

~~Excluding the above discrete tax~~ and certain other tax provisions, net, and other items ~~from continuing operations,~~that affect comparability, as listed below. The 2020 tax rate included $966 of discrete and certain other tax provisions, net, and other items that affect comparability, as listed below. Excluding the discrete and certain other tax provisions, net, and other items that affect comparability, as listed below, the effective income tax rates for ~~the year ended September 30, 2016~~2021 and ~~2015~~2020 were ~~41.3%~~31.7% and ~~36.7%~~33.9%, respectively. These rates reflect the impact of tax reserves and changes in earnings mix between U.S. and non-U.S. operations.

Income from continuing operations for 2021 was ~~$19,781,~~$70,302, or $0.45 per share, for 2016 compared to $12,294, or $0.26 per share in the prior year. The 2016 results included a discrete tax benefit, net, of $(857) or $(0.02) per share. The 2015 results included discrete tax benefits, net, of $(219) or $0.00 per share. Excluding discrete items from both reporting periods, 2016 Income from continuing operations would have been $18,924, or $0.43$1.32 per share, compared to ~~$12,075,~~$41,444, or ~~$0.26~~$0.92 per share in ~~2015.~~

~~Net~~2020. The 2021 income ~~was $30,010, or $0.68 per share, for 2016 compared to $34,289, or $0.73 per share in the prior year.~~

~~The 2016 results~~from continuing operations included the following:


–	~~Restructuring charges of $5,900 ($4,247, net of tax, or $0.10 per share); and~~

–Restructuring charges of $21,418 ($16,131, net of tax, or $0.30 per share); and


–	~~Discrete tax provisions, net, of $2,658 or $0.06 per share.~~

–Discrete and certain other tax provision, net, of $3,245 or $0.06 per share.

The ~~2015 results~~2020 income from continuing operations included ~~discrete tax benefits,~~the following:

–Restructuring charges of $13,669 ($10,177, net of ~~$(62)~~tax, or ~~$0.00~~$0.23 per ~~share.~~share);

–Loss from debt extinguishment $7,925 ($6,167, net of tax, or $0.14 per share);

–Acquisition costs of $2,960 ($2,297, net of tax, or $0.05 per share); and

–Acquisition contingent consideration benefit of $1,733 ($1,403, net of tax, or $0.03 per share); and

–Discrete and certain other tax provision, net, of $966 or $0.02 per share.

Excluding these items from both reporting periods, ~~2016 Net income~~2021 Income from continuing operations would have been ~~$36,915,~~$89,678, or ~~$0.84~~$1.68 per share compared to ~~$34,227,~~$59,647, or ~~$0.73~~$1.33 per share, in ~~2015.~~

2020.

Griffon evaluates performance based on Earnings (loss) per share and ~~Net income~~Income (loss) from continuing operations excluding non-cash impairment charges, restructuring charges, ~~loss on~~ debt extinguishment, acquisition related expenses, discrete and certain other tax items, as well 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 (loss) from continuing operations to Adjusted income from continuing operations and Earnings (loss) per common share from continuing operations to Adjusted earnings per common share from continuing operations:

GRIFFON CORPORATION AND SUBSIDIARIES

RECONCILIATION OF INCOME (LOSS) FROM CONTINUING OPERATIONS

TO ADJUSTED INCOME FROM CONTINUING OPERATIONS

(Unaudited)

For the Years Ended September 30,
2017
2016
2015
Income from continuing operations $ 17,783

$ 19,781

$ 12,294
Adjusting items, net of tax:

Acquisition costs 6,145

—

—
Contract settlement charges 3,300

—

—
Discrete tax benefits (8,274 )
(857 )
(219 )
Adjusted income from continuing operations $ 18,954

$ 18,924

$ 12,075

Earnings per common share from continuing operations $ 0.41

$ 0.45

$ 0.26

Adjusting items, net of tax:

Acquisition costs 0.14

—

—
Contract settlement charges 0.08

—

—
Discrete tax benefits (0.19 )
(0.02 )
—
Adjusted earnings per share from continuing operations $ 0.44

$ 0.43

$ 0.26
Weighted-average shares outstanding (in thousands) 43,011

44,109

46,939

~~The following table provides a reconciliation~~


	For the Years Ended September 30,
	2022		2021		2020
Income (loss) from continuing operations	$	(287,715)	$	70,302	$	41,444
Adjusting items:
Restructuring charges	16,782		21,418		13,669
Debt extinguishment, net	4,529		—		7,925
Acquisition costs	9,303		—		2,960
Strategic review - retention and other	9,683		—		—
Acquisition contingent consideration	—		—		(1,733)
Special dividend ESOP charges	10,538		—		—
Proxy expenses	6,952		—		—
Fair value step-up of acquired inventory sold	5,401		—		—
Goodwill and intangible asset impairments	517,027		—		—
Tax impact of above items1	(76,627)		(5,287)		(5,584)
Discrete and other certain tax provision	3,913		3,245		966
Adjusted income from continuing operations	$	219,786	$	89,678	$	59,647

Earnings (loss) per common share from continuing operations	$	(5.57)	$	1.32	$	0.92

Adjusting items, net of tax:
Anti-dilutive share impact2	0.24		—		—
Restructuring charges	0.23		0.30		0.23
Debt extinguishment, net	0.06		—		0.14
Acquisition costs	0.15		—		0.05
Strategic review - retention and other	0.13		—		—
Acquisition contingent consideration	—		—		(0.03)
Special dividend ESOP charges	0.15		—		—
Proxy expenses	0.10		—		—
Fair value step-up of acquired inventory sold	0.07		—		—
Goodwill and intangible asset impairments	8.43		—		—
Discrete and other certain tax (benefit) provision	0.07		0.06		0.02
Adjusted earnings per share from continuing operations	$	4.07	1.68		$	1.33
Weighted-average shares outstanding (in thousands)	51,672		53,369		45,015
Diluted weighted average shares outstanding (in thousands)2	53,966		53,369		45,015

Note: Due to rounding, the sum of ~~Net income to Adjusted net income and Earnings~~earnings per common share ~~to Adjusted~~and adjusting items, net of tax, may not equal adjusted earnings per common ~~share:~~

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~RECONCILIATION OF NET INCOME~~

~~TO ADJUSTED NET INCOME~~

~~(Unaudited)~~

share.

For the Years Ended September 30,
2017
2016
2015
Net Income $ 14,912

$ 30,010

$ 34,289
Adjusting items, net of tax:

Acquisition costs 6,145

—

—
Contract settlement charges 3,300

—

—
Environmental and warranty reserves 3,703
—
—
Restructuring —

4,247

—
Discrete tax provisions (benefits) 9,385

2,658

(62 )
Adjusted net income $ 37,445

$ 36,915

$ 34,227

Earnings per common share $ 0.35

$ 0.68

$ 0.73

Adjusting items, net of tax:

Acquisition costs 0.14

—

—
Contract settlement charges 0.08

—

—
Environmental and warranty reserves 0.09
—
—
Restructuring —

0.10

—
Discrete tax provisions (benefits) 0.22

0.06

—
Adjusted earnings per share $ 0.87

$ 0.84

$ 0.73
Weighted-average shares outstanding (in thousands) 43,011

44,109

46,939

(1) Tax impact for the above reconciling adjustments from GAAP to non-GAAP Income from continuing operations and the related EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments.

(2) Loss from continuing operations is calculated using basic shares on the face of the income statement. Per share impact of using diluted shares represents the impact of converting from the basic shares used in calculating earnings per share from the Loss from continuing operations to the diluted shares used in calculating earnings per share form the adjusted income from continuing operations.

REPORTABLE SEGMENTS

~~The following table provides a reconciliation of Segment operating profit to Income (loss) before taxes and discontinued operations:~~

For the Years Ended September 30,
INCOME BEFORE TAXES FROM CONTINUING OPERATIONS 2017 2016 2015
Segment operating profit:
Home & Building Products $ 89,495
$ 79,682
$ 58,883
Telephonics 29,943
42,801
43,006
PPC 25,291
20,313
33,137
Segment operating profit 144,729

142,796

135,026
Less: Operating (profit) from discontinued operations 25,291

20,313

33,137
Segment operating profit from continuing operations 119,438

122,483

101,889
Net interest expense (51,449 ) (49,877 ) (47,515 )
Unallocated amounts (42,398 ) (40,393 ) (35,308 )
Acquisition costs (8,893 ) —
—
Income before taxes from continuing operations $ 16,698
$ 32,213
$ 19,066

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

~~The following~~See table ~~provides~~provided in Note 18 - Reportable Segments, for a reconciliation of Segment ~~adjusted~~Adjusted EBITDA to Income ~~(loss)~~ before taxes from continuing operations.

Consumer and ~~discontinued operations:~~

For the Years Ended September 30,
2017 2016 2015
Segment adjusted EBITDA:

Home & Building Products $ 126,766
$ 114,949
$ 94,226
Telephonics 45,931
53,385
53,028
PPC 52,760
50,079
57,103
Segment adjusted EBITDA 225,457

218,413

204,357
Less: EBITDA from discontinued operations 52,760

50,079

57,103
Total Segment adjusted EBITDA from continuing operations 172,697

168,334

147,254
Net interest expense (51,449 ) (49,877 ) (47,515 )
Segment depreciation and amortization (47,398 ) (45,851 ) (45,365 )
Unallocated amounts (42,398 ) (40,393 ) (35,308 )
Acquisition costs (9,617 ) —
—
Contract settlement charges (5,137 ) —
—
Income before taxes from continuing operations $ 16,698
$ 32,213
$ 19,066

~~Home & Building~~Professional Products

For the Years Ended September 30,
2017 2016 2015
Revenue:
AMES $ 545,269
$ 513,973
$ 535,881

CBP 568,001
527,370
516,320

Home & Building Products $ 1,113,270
$ 1,041,343
$ 1,052,201

Segment operating profit $ 89,495
8.0 % $ 79,682
7.7 % $ 58,883
5.6 %
Depreciation and amortization 36,547
35,267
35,343

Acquisition costs 724
—
—

Segment adjusted EBITDA $ 126,766
11.4 % $ 114,949
11.0 % $ 94,226
9.0 %


	For the Years Ended September 30,
	2022				2021				2020

United States	$	858,956			$	766,150			$	769,100
Europe	106,471				123,607				85,339
Canada	92,930				85,676				74,072
Australia	258,945				244,674				203,012
All other countries	24,304				9,411				7,710

Total Revenue	$	1,341,606			$	1,229,518			$	1,139,233

Adjusted EBITDA	$	99,308	7.4	%	$	115,673	9.4	%	$	104,053	9.1	%

Depreciation and amortization	$	47,562			$	34,433			$	32,788

~~2017~~2022 Compared to ~~2016~~2021

~~Segment~~CPP revenue in 2022 increased ~~$71,927,~~$112,088, or 7%9%, compared to 2021, primarily resulting from a 20% or $246,474 contribution from the ~~prior year period. AMES revenue increased 6%~~Hunter acquisition, and price and mix of 11%. These benefits were partially offset by a 20% reduction in volume primarily from reduced consumer demand and rebalancing of customer inventory levels in North America and the United Kingdom (U.K.), in part offset by Australia. Foreign exchange was an unfavorable impact of 2%.

CPP Adjusted EBITDA in 2022 decreased 14% to $99,308 compared to $115,673 in 2021. Excluding the Hunter contribution of $43,579, EBITDA of $55,729 decreased 52% primarily due to the unfavorable impact of the reduced volume noted above and the related impact on manufacturing absorption, and increased ~~UK market expansion~~material, labor and ~~contributions~~transportation costs, partially offset by the benefits of price and mix.The year ended September 30, 2022 included increased demurrage and detention costs, primarily related to COVID-19 and global supply chain disruptions, of approximately $15,172 ($9,512 related to Hunter).

Segment depreciation and amortization increased $13,129 from the ~~La Hacienda and Hills acquisitions, and increased Canadian snow and lawn tools sales. CBP revenue increased 8% from the~~comparable prior year period primarily due to depreciation for new assets placed in service and the Hunter assets acquired.

On January 24, 2022, Griffon completed the acquisition of Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans for a contractual purchase price of $845,000.Hunter adds to Griffon's CPP segment, complementing and diversifying our portfolio of leading consumer brands and products.

Strategic Initiative and Restructuring Charges

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

We continue to expect that this initiative with result in annual cash savings of $25,000. Realization of expected cash savings will begin in the first quarter of fiscal 2023. The cost to implement this new business platform, over the duration of the project, included one-time charges of approximately $51,869 and capital investments of approximately $15,000, net of future proceeds from the sale of exited facilities. Cumulative charges of $51,869 consisted of cash charges totaling $35,691 and non-cash, asset-related charges totaling $16,178; the cash charges included $12,934 for one-time termination benefits and other personnel-related costs and $22,757 for facility exit costs. During the years ended September 30, 2022 and 2021, CPP incurred pre-tax restructuring and related exit costs approximating $16,782 and $21,418, respectively.During the years ended September, 30, 2022 and 2021, capital expenditures of $6,337 and $8,774, respectively, were driven by investment in CPP business intelligence systems and e-commerce facility.


	Cash Charges				Non-Cash Charges
	Personnel related costs		Facilities, exit costs and other		Facility and other		Total		Capital Investments

Phase I	$	12,000	$	4,000	$	19,000	35,000		$	40,000
Phase II	14,000		16,000		—		30,000		25,000
Increase (Reduction) in Scope	(13,066)		2,757		(2,822)		(13,131)		(50,000)
Total Charges	12,934		22,757		16,178		51,869		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)
Total 2022 restructuring charges	(4,124)		(7,827)		(4,831)		(16,782)		(6,337)
Total cumulative charges	$	(12,934)	$	(22,757)	$	(16,178)	$	(51,869)	$	(21,844)
Estimate to Complete	$	—	$	—	$	—	$	—	$	(6,844)	(a)

(a) Includes future proceeds from the sale of exited facilities.

2021 Compared to 2020

CPP revenue in 2021 increased ~~volume, pricing and favorable mix.~~

~~Segment operating profit in 2017 was $89,495~~$90,285, or 8%, compared to ~~$79,682~~2020, comprised of a 3% increase in ~~2016, an increase~~volume, driven by increased consumer demand across all international geographies, partially offset by reduced volume in the U.S. due to labor, transportation and supply chain disruptions. Revenue also benefited from favorable price and mix of ~~$9,813,~~1%, and a favorable impact from foreign exchange of 4%.

CPP Adjusted EBITDA in 2021 increased $11,620 or ~~12% driven by~~11% to $115,673 compared to $104,053 in 2020. The favorable variance resulted primarily from the increased revenue noted above and a favorable ~~product mix,~~foreign exchange impact of 5%, partially offset by increased ~~steel~~U.S. material costs coupled with the lag in realization of price increases and ~~resin~~COVID-19 related inefficiencies.

Home and Building Products


	For the Years Ended September 30,
	2022				2021				2020




Residential	$	876,816			$	633,523			$	572,397
Commercial	630,066				407,585				354,916
Total Revenue	$	1,506,882			$	1,041,108			$	927,313

Adjusted EBITDA	$	412,738	27.4	%	$	181,015	17.4	%	$	153,631	16.6	%

Depreciation and amortization	$	16,539			$	17,370			$	18,361

2022 Compared to 2021

HBP revenue in 2022 increased $465,774, or 45%, compared to 2021, primarily due to favorable pricing and mix of 47% driven by both residential and commercial. Total volume decreased 2%, primarily due to labor and supply chain disruptions impacting residential deliveries, partially offset by increased commercial volume.

HBP Adjusted EBITDA in 2022 increased 128% to $412,738 compared to $181,015 in 2021. EBITDA benefited from the increased revenue noted above, partially offset by increased material, labor and transportation costs.

Segment depreciation and amortization ~~increased $1,280~~decreased $831 from the ~~prior year period.~~

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-handle 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.

On October 2, 2017, Griffon completed the acquisition of ClosetMaid, a market leader of home storage and organization products, for approximately $200,000, or $175,000 inclusive of the net present value of tax benefits. 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.

On September 29, 2017, AMES Australia completed the acquisition of Tuscan Landscape Group Pty, Ltd. ("Tuscan Path"), a leading Australian provider of pots, planters, pavers, decorative stone, and garden decor products, for approximately $18,000 (AUD 22,250). 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 of revenue in the first twelve months after the acquisition.

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). 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 December 30, 2016, AMES Australia acquired Home Living ("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. Hills is expected to generate approximately AUD 10,000 of revenue in the first twelve months after acquisition.

On February 14, 2016, AMES Australia acquired substantially all of the Intellectual Property (IP) assets of Australia-based Nylex Plastics Pty Ltd. for $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 of the Cyclone acquisition and supports AMES' Australian watering products strategy.

On October 15, 2015, CBP announced plans to expand its manufacturing facility in Troy, Ohio. In the second quarter of 2017, CBP completed this 250,000 square foot expansion of its state-of-the-art facility, which reflects increased customer demand for its core products, and CBP's success in bringing new technologies to market. The Troy facility now has 1.23 million square feet of combined manufacturing and office space. CBP’s Russia, Ohio facility provides additional production capacity, particularly for specialized and custom products.

~~2016 Compared to 2015~~

Segment revenue decreased $10,858, or 1%, compared to the prior year period. Excluding a $14,900 or 1% unfavorable foreign currency impact, revenue remained consistent with the prior year period. AMES revenue decreased 4%, mainly driven by a combination of a warm winter and a cold and wet spring in both the U.S. and Canada, resulting in reduced snow and spring tool category sales, respectively, partially offset by improved sales of North American pots and planters and increased product offerings in Australia; foreign currency was 2% unfavorable. CBP revenue increased 2% compared to thecomparable prior year period primarily due to ~~improved volume and favorable mix; the impact of foreign currency was not material.~~fully depreciated assets.

~~Segment operating profit~~2021 Compared to 2020

HBP revenue in ~~2016 was $79,682~~2021 increased $113,795, or 12%, compared to ~~$58,883 in 2015, an increase~~2020, primarily due to favorable mix and pricing of ~~$20,799, or 35%~~8% driven by ~~operational efficiency improvements, cost control measures at AMES~~both residential and commercial, and increased volume of 4% equally driven by both residential and favorable mix at CBP and decreased material costs, which more than offset the impact of reduced revenue at AMES; foreign currency was 4% unfavorable. Segment depreciation and amortization remained consistent with the prior year.commercial.

~~Telephonics~~

For the Years Ended September 30,
2017 2016 2015
Revenue $ 411,727
$ 435,692
$ 431,090

Segment operating profit $ 29,943
7.3 % $ 42,801
9.8 % $ 43,006
10.0 %
Depreciation and amortization 10,851
10,584
10,022

Contract settlement charges 5,137
—
—

Segment adjusted EBITDA $ 45,931
11.2 % $ 53,385
12.3 % $ 53,028
12.3 %

~~2017 Compared~~HBP Adjusted EBITDA in 2021 increased $27,384, or 18% to ~~2016~~

~~Revenue in 2017 decreased $23,965, or 6%,~~$181,015 compared to $153,631 in 2020.EBITDA benefited from the ~~prior year period, primarily due to decreased multi-mode radar~~increased revenue ~~and certain ground surveillance systems,~~noted above, partially offset by ~~favorable performance on electronic countermeasure systems revenue.~~

Segment operating profit decreased $12,858 from the prior year period. During 2017, Telephonics recorded a $5,137 charge, consisting of a settlement in the amount of $4,250 plus 2% interest and associated legalincreased material costs related to certain amounts the civil division of the US Department of Justice indicated it believed it was owed from Telephonics with respect to certain US government contracts, performed during the 2005 to 2013 time period, in which Telephonics acted as a subcontractor. Excluding these charges, segment operating profit in the current year would have been $35,080, a $7,721 decrease from the prior year period primarily due to the decreased revenue noted above, unfavorable program mix and the impact of revised estimates to complete remaining performance obligations on certain radar and communication programs.

During 2017, Telephonics was awarded several new contracts and incremental funding on existing contracts approximating $342,400. Contract backlog was $350,900 at September 30, 2017 with 70% expected to be fulfilled in the next 12 months; backlog was $420,000 at September 30, 2016. 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 the U.S. government agencies. The decrease in backlog was primarily due to the timing of various U.S. and international contract awards associated with radar and surveillance opportunities.

In December 2015, Telephonics invested an additional $2,726 increasing its equity stake from 26% to 49% in Mahindra Telephonics Integrated Systems (MTIS), a joint venture with Mahindra Defence Systems, a Mahindra Group Company. MTIS is an aerospace and defense manufacturing and development facility in Prithla, India.

~~2016 Compared to 2015~~

Revenue in 2016 increased $4,602, or 1%, compared to the prior year period, due to mobile ground surveillance systems and dismounted Electronic Countermeasure systems, partially offset by airborne maritime and Identification Friend or Foe ("IFF") radar systems.

~~Segment operating profit remained consistent~~coupled with the ~~prior year period.~~lag in realization of price increases and COVID-19 related inefficiencies.

Unallocated Amounts

For ~~2017,~~2022, unallocated amounts, ~~consisting~~excluding depreciation, consisted primarily of corporate overhead costs, totaled ~~$42,398~~$53,888 compared to ~~$40,393~~$50,278 in ~~2016,~~2021, with the increase primarily due to compensation and incentive costs.

For ~~2016,~~2021, unallocated amounts, ~~which consist~~excluding depreciation, consisted primarily of corporate overhead costs, totaled ~~$40,393~~$50,278 compared to ~~$35,308~~$49,487 in ~~2015~~2020, with the increase primarily due to ~~expenses related to the pursuit of acquisition opportunities, expenses relating to an intellectual property legal claim (in which Griffon is the plaintiff)~~compensation and ~~increased insurance~~incentive costs.

~~Segment~~ Depreciation and Amortization

~~Segment depreciation~~Depreciation and amortization of$~~47,398~~64,658 in ~~2017~~2022 compared to $52,302 in 2021; the ~~prior year of $45,851, increased $1,547~~increase was primarily due to depreciation for new assets placed in ~~service.~~service and the Hunter assets acquired.

~~Segment depreciation~~Depreciation and amortization of ~~$45,851~~$52,302 in ~~2016 remained consistent with~~2021 compared to $52,100 in 2020; the ~~prior year of $45,365.~~increase was primarily due to depreciation for new assets placed in service.

Comprehensive Income (Loss)

During ~~2017,~~2022, total other comprehensive income (loss), net of taxes, of ~~$20,760 consisted~~$(36,761) included a loss of $37,920 from foreign currency translation adjustments primarily due to the weakening of the British, Australian and Canadian currencies, all in comparison to the U.S. Dollar; a ~~$10,667~~$1,503 gain from pension and other post-retirement benefits, primarily associated with an increase in the assumed discount rate compared to 2021; and a $344 loss on cash flow hedges.

During 2021, total other comprehensive income ~~on Foreign~~(loss), net of taxes, of $26,115 included a gain of $6,433 from foreign currency translation adjustments primarily due to the strengthening of the ~~Euro,~~British, Australian and Canadian ~~British Pound, Brazilian and Australian~~ currencies, all in comparison to the U.S. ~~Dollar,~~Dollar; a ~~$9,203~~$17,796 gain from ~~Pension~~pension and other post-retirement benefits, primarily ~~due~~related to ~~higher assumed discount rates~~the change between actual and expected return on assets compared to ~~the prior year~~2020; and a ~~$890~~$1,886 gain on cash flow hedges.

During 2016, total other comprehensive income, net of taxes, of $9,947 consisted of a $17,284 income on Foreign currency translation adjustments primarily due to the strengthening of the Euro, Canadian, Brazilian and Australian currencies, all in comparison to the U.S. Dollar, a $5,651 loss from Pension and other post-retirement benefits, primarily due to lower assumed discount rates compared to the prior year and a $1,686 loss on cash flow hedges.

DISCONTINUED OPERATIONS

~~Plastic Products Company~~Defense Electronics

On September ~~5, 2017,~~27, 2021, Griffon announced it ~~will explore~~was exploring strategic alternatives for ~~Clopay Plastic Products Company, Inc.~~its Defense Electronics segment, which consisted of Telephonics Corporation ("~~PPC"~~Telephonics"), and on ~~November 16, 2017, announced it entered into a definitive agreement~~June 27, 2022, Griffon completed the sale of Telephonics to ~~sell PPC~~TTM for $330,000, excluding customary post-closing adjustments, primarily related to ~~Berry for $475 million in cash.~~working capital. As a result, Griffon classified the ~~following PPC~~ results ~~have been classified PPC~~of operations of the Telephonics business as a discontinued ~~operation.~~

For the Years Ended September 30,
2017 2016 2015
Revenue $ 460,914
$ 480,126
$ 532,741

Segment operating profit $ 25,291
5.5 % $ 20,313
4.2 % $ 33,137
6.2 %
Depreciation and amortization 27,469
23,866
23,966

Restructuring charges —
5,900
—

Segment adjusted EBITDA $ 52,760
11.4 % $ 50,079
10.4 % $ 57,103
10.7 %

~~2017 Compared to 2016~~

Revenue in 2017 decreased $19,212 or 4%, in comparison to 2016, primarily due to unfavorable volume of 4% driven by Europe, partially offset by increased volume in North America and Brazil, as well as unfavorable mix of 2%. These decreases were partially offset by a favorable resin impact of $3,600, or 1% and favorable foreign currency of 1%. PPC adjusts selling prices based on underlying resin costs on a delayed basis.

Segment operating profit increased $4,978 or 25%, compared to the prior year. During 2016, PPC recorded restructuring charges of $5,900 primarily related to headcount reductions at PPC’s Dombuhl, Germany facility, other location headcount reductions and the shut down of PPC's Turkey facility. Excluding these charges, prior year Segment operating profit was $26,213 compared to the current year of $25,291, a decrease of $922 or 4%, due to reduced volume, unfavorable mix, a $2,100 change in the impact of resin pricing pass through and increased depreciation of $3,603 resulting from investment in worldwide breathable film and printing capacity, partially offset by improved operations.

During April 2016, PPC announced a breathable film investment, which will expand breathable film capacity in North America, Europe and Brazil, increase PPC's extrusion and print capacity, and enhance PPC's innovation and technology capabilities. Griffon expect the project to be completed in fiscal 2018. These investments will allow PPC to maintain and extend its technological advantage and allow it to differentiate itself from competitors, while meeting increasing customer demand for lighter, softer, more cost effective and more environmentally friendly products.

~~2016 Compared to 2015~~

Revenue in 2016 decreased $52,615 or 10%, in comparison to 2015, primarily due to decreased volume of 4% driven by reduced North America and Europe baby care orders, unfavorable mix of 3% and a $17,100 or 3% unfavorable foreign currency impact. Resin pricing had no material impact on revenue in the current year. PPC adjusts selling prices based on underlying resin costs on a delayed basis.

Segment operating profit decreased $12,824 or 39%, compared to the prior year. During 2016, PPC recorded restructuring charges of $5,900 primarily related to headcount reductions at PPC’s Dombuhl, Germany facility, other location headcount reductions and the shut down of PPC's Turkey facility. Excluding these charges, current year Segment operating profit was $26,213, a decrease of $6,924 or 21%, compared to the prior year, due to reduced volume and unfavorable mix, partially offset by decreased SG&A spending. Resin pricing and foreign currency did not have a material impact on Segment operating profit for the year. Segment depreciation and amortization remained consistent with the prior year.

~~Restructuring~~

In 2016, PPC incurred pre-tax restructuring and related exit costs approximating $5,900 primarily related to headcount reductions at PPC’s Dombuhl, Germany facility, other location headcount reductions and the shut down of PPC's Turkey facility. These actions resulted in the elimination of approximately 86 positions. The Dombuhl charges were related to an optimization plan that will drive innovation and enhance PPC's industry leading position in printed breathable back sheet. In conjunction with this effort, PPC's customer base will be streamlined, and PPC will dispose of old assets and reduce overhead costs, allowing for gains in efficiencies. Management estimates that these actions will result in annual cash savings of $4,000 based on current operating levels.

~~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. 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 operationsoperation in the Consolidated Statements of Operations ~~and Comprehensive Income (Loss)~~ for all periods ~~presented; Installation Services is excluded from segment reporting.~~presented and classified the related assets and liabilities associated with the discontinued operation as held for sale in the consolidated balance sheets. Accordingly, all references made to results and information in this Annual Report on Form 10-K are to Griffon's continuing operations unless noted otherwise.

Griffon substantially concluded remaining disposal activities in 2009. There was no reported revenue in 2017, 2016 and 2015. Future net cash outflows to satisfy liabilities related to disposal activities accrued as of September 30, 2017 are estimated to be $5,679.

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 September 30, ~~2017, Griffon’s~~2022 and 2021, Griffon's discontinued assets and liabilities includes the Company's obligation of $8,846 in connection with the sale of Telephonics related to certain customary post-closing adjustments, primarily working capital and retention bonuses. At September 30, 2022 and 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance claims, income taxes, ~~and~~ product liability, warranty and environmental ~~reserves.~~reserves totaled $10,049 and $7,074, respectively. See Note 8, Discontinued Operations.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

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 existing businesses and strategic acquisitions while managing its capital structure on both a short-term and long-term basis.

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

Cash Flows from Continuing Operations Years Ended September 30,
(in thousands) 2017 2016
Net Cash Flows Provided By (Used In):

Operating activities $ 49,151
$ 80,118
Investing activities (71,337 ) (62,261 )
Financing activities (700 ) 15,414

Cash flows provided by operating activities from continuing operations for 2017 decreased $30,967, to $49,151 compared to $80,118 in 2016, with the decrease driven by increased working capital, primarily from increased inventory.

Cash used in investing activities from continuing operations for 2017 increased $9,076, to $71,337 compared to $62,261 in 2016, with the increase primarily driven by acquisitions. On September 29, 2017, Ames Australia competed the acquisition of Tuscan Landscape Group Pty, Ltd., a leading Australian provider of pots, planters, pavers, decorative stone, and garden decor products for approximately $18,000 (AUD 22,250). 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). On December 30, 2016, AMES Australia acquired Hills Home Living, a market leader in the supply of clothesline, laundry and garden products, for approximately $6,051 (AUD 8,400). On February 14, 2016, AMES Australia acquired substantially all of the Intellectual Property assets of Australia-based Nylex Plastics Pty Ltd. for approximately $1,700 (AUD 2,452). Previously, the Nylex name was licensed. In December 2015, Telephonics invested an additional $2,726 increasing its equity stake from 26% to 49% in Mahindra Telephonics Integrated Systems (MTIS), a joint venture with Mahindra Defence Systems, a Mahindra Group Company. In 2017, capital expenditures, net, totaled $34,794 compared to $58,506 in 2016.

Cash used in financing activities from continuing operations in 2017 totaled $700 compared to a source of $15,414 in the prior year. The current year included net proceeds from debt of $62,989, a share premium payment of $24,997 related to the settlement of Griffon's 4% convertible subordinated notes, $15,841 for the repurchase of common stock, $10,908 for the purchase of common stock for Griffon's ESOP plan and $10,325 for the payment of dividends.

At September 30, 2017, there were $144,216 in outstanding borrowings under the Credit Agreement compared to no outstanding borrowings at the same date in the prior year. 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, utilizing the Credit Agreement, and $48,858, or 1,954,993 shares of common stock issued from treasury. On each of March 20, 2015, July 29, 2015 and August 3, 2016, Griffon’s Board of Directors authorized 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. During 2017, Griffon purchased 129,000 shares of common stock under these programs, for a total of $2,201 or $17.06 per share. At September 30, 2017, $49,437 remains under the August 2016 Board authorized repurchase program. In addition to the repurchases under Board authorized programs, during 2017, 586,219 shares, with a market value of $13,640, or $23.27 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during 2017, Griffon's ESOP purchased 621,875 shares of common stock for a total of $10,908 or $17.54 per share with proceeds from a Line Note.

In 2016, cash used in financing activities from continuing operations primarily consisted of $65,307 for the repurchase of common stock and $8,798 for the payment of dividends, partially offset by net proceeds from debt of $93,848. On May 18, 2016, Griffon completed an add-on offering of $125,000 principal amount of its 5.25% Senior Notes due 2022, at 98.76% of par, to Griffon's previously issued $600,000 principal amount of its 5.25% Senior Notes due 2022, at par. The net proceeds were used to pay down outstanding borrowings on the Revolving Credit Facility.

During 2017, the Board of Directors approved four quarterly cash dividends each for $0.06 per share. On November 15, 2017, the Board of Directors declared a cash dividend of $0.07 per share, payable on December 21, 2017 to shareholders of record as of the close of business on November 29, 2017.

As of September 30, ~~2017,~~2022, the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries was ~~$26,500.~~$54,200. 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~~U.S. taxes to repatriate these funds (unless applicable U.S. taxes have already been paid).

Griffon's primary sources of liquidity are cash flows generated from operations, cash on hand and our January 2025 five-year secured $400,000 revolving credit facility ("Credit Facility"). During the fiscal year ended September 30, 2022, the Company generated $59,240 of net cash from continuing operating activities and had $290,385 available, subject to certain loan covenants, for borrowing on September 30, 2022.

The table below provides a summary of the Consolidated Statements of Cash Flows for the periods indicated.


Cash Flows from Continuing Operations	Years Ended September 30,
(in thousands)	2022		2021
Net Cash Flows Provided By (Used In):
Operating activities	$	59,240	$	69,808
Investing activities	(583,227)		(56,167)
Financing activities	393,345		(28,245)

Cash provided by operating activities from continuing operations for 2022 was $59,240 compared to $69,808 in 2021, a decrease of $10,568. For 2022, Net income from continuing operations adjusted for items to reconcile net income to net cash provided by operating activities of continuing operations was offset by increased working capital, predominately consisting of increased inventory, receivables and prepaid and other current assets and a decrease in accounts payable, accrued liabilities and income tax payable. For 2021, Net income from continuing operations adjusted for items to reconcile net income to net cash provided by operating activities of continuing operations was offset by increased working capital, predominately consisting of increased inventory, receivables, and prepaid and other current assets, partially offset by an increase in accounts payable, accrued liabilities and income tax payable.

Cash flows from investing activities from continuing operations is primarily comprised of capital expenditures and business acquisitions as well as proceeds from the sale of businesses, investments and property, plant and equipment. During 2022, Griffon used $583,227 in investing activities from continuing operations compared to $56,167 in 2021. Payments for acquired businesses totaled $851,464 in 2022 to acquire Hunter compared to $2,242 in 2021 to acquire Quatro. On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, and on December 22, 2020, AMES acquired Quatro, a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects. On June 27, 2022, the Company completed the sale of Telephonics to TTM for $330,000, excluding customary post-closing adjustments, primarily related to ~~Telephonics revenue~~working capital. Capital expenditures, net of proceeds from the sale of assets, totaled $42,398 in 2022 compared to $36,714 in 2021. Proceeds from the sale of investments totaled $14,923 in 2022 compared to cash used to purchase investments of $17,211 in the prior year comparable period.

Cash provided by financing activities from continuing operations was $393,345 in 2022 compared to cash used in financing activities of $28,245 in 2021. During 2022, cash flows from financing activities from continuing operations primarily consisted of the payment of dividends of $126,677, purchase of treasury shares to satisfy vesting of restricted stock of $10,886 and net proceeds from long-term debt of $547,715. During 2022, Griffon prepaid $300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance. In connection with the prepayment of the Term Loan B Griffon recognized a $6,296 charge related to the write-off of capitalized debt issuance costs. In addition, during 2022, Griffon purchased $25,225 of 2028 Senior Notes in the open market at a weighted average discount of 91.82% of par, or $23,161. In connection with these purchases, Griffon recognized a $1,767 net gain on the early extinguishment of debt. During 2021, cash flows from financing activities from continuing operations primarily consisted of the payment of dividends of $17,139, purchase of treasury shares to satisfy vesting of restricted stock of $3,357 and net repayments of long-term debt and lease payments of $6,921. At September 30, 2022, there were $97,328 in outstanding borrowings under the Credit Agreement, compared to $13,483 in outstanding borrowings at the same date in 2021.

During 2022, the Board of Directors approved four quarterly cash dividends each for $0.09 per share, totaling $0.36. In addition, on June 27, 2022, the Board of Directors declared a special cash dividend of $2.00 per share, paid on July 20, 2022 to shareholders of record as of the close of business on July 8, 2022. 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 November 16, 2022, the Board of Directors declared a cash dividend of $0.10 per share, payable on December 16, 2022 to shareholders of record as of the close of business on November 29, 2022.

During 2022, 421,860 shares, with a market value of $10,742, or $25.46 per share were withheld to settle employee taxes due upon the vesting of restricted stock and were added to treasury stock.During 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.

On each of 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 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. During 2021, Griffon did not purchase any shares of common stock under these repurchase programs. At September 30, 2022, $57,955 remains under Griffon's Board authorized repurchase programs.

During 2022 and 2021, cash provided by discontinued operations from operating activities of $10,198 and $41,961, respectively, primarily related to DE operations and the payment of income taxes, stay bonuses and transaction related expenses as well as payments associated with the settling of certain Installation services and environmental liabilities. During 2022, cash used by discontinued operations from investing activities of $(2,627) primarily related to DE capital expenditures. During 2021, $6,751 cash provided by discontinued operations from investing activities was comprised of net proceeds received of $14,345 from DE's sale of its SEG business less capital expenditures of $10,343 and a recovery of insurance proceeds received of $2,749 associated with other discontinued operations.

Debt

At September 30, 2022 and 2021, Griffon had debt, net of cash and equivalents, as follows:


Cash and Equivalents and Debt	At September 30,		At September 30,
(in thousands)	2022		2021
Cash and equivalents	$	120,184	$	248,653
Notes payables and current portion of long-term debt	$	12,653	$	12,486
Long-term debt, net of current maturities	1,560,998		1,033,197
Debt discount and issuance costs	21,909		14,823
Total debt	1,595,560		1,060,506
Debt, net of cash and equivalents	$	1,475,376	$	811,853

During 2020, Griffon issued, at par $1,000,000 of 5.75% Senior Notes due 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 (the "2022 Senior Notes"). In connection with the issuance and exchange of the 2028 Senior Notes, Griffon capitalized $16,448 of underwriting fees and other expenses incurred, which will amortize over the term of such notes. Additionally, during 2020 Griffon recognized a $7,925 loss on the early extinguishment of debt of the 2022 Senior Notes, comprised primarily of the write-off of $6,725 of remaining deferred financing fees, $607 of tender offer net premium expense and $593 of redemption interest expense. Furthermore, all of the obligations associated with the 2022 Senior Notes were discharged.

During the year ended September 30, 2022, Griffon purchased $25,225 of 2028 Senior Notes in the open market at a weighted average discount of 91.82% of par, or $23,161. In connection with these purchases, Griffon recognized a $1,767 net gain on the early extinguishment of debt comprised of $2,064 of face value in excess of purchase price, offset by $297 related to the write-off of underwriting fees and other expenses. As of September 30, 2022, outstanding 2028 Senior Notes due totaled $974,775; interest is payable semi-annually on March 1 and September 1.

The 2028 Senior Notes are ~~received~~senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions.The 2028 Senior Notes were 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 $833,433 on September 30, 2022 based upon quoted market prices (level 1 inputs). At September 30, 2022, $10,939 of underwriting fees and other expenses incurred remained to be amortized.

On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, the "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 Term Loan B contains a SOFR floor of 0.50% and a current spread of 2.50%.Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds, the first of which was achieved during the year ended September 30, 2022.The Original Issue Discount for the Term Loan B was 99.75%. 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.

The Term Loan B facility requires nominal quarterly principal payments of $2,000, which began 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. During the year ended September 30, 2022, Griffon prepaid $300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance. In connection with the prepayment of the Term Loan B Griffon recognized a $6,296 charge on the prepayment of debt, $5,575 related to the write-off of underwriting fees and other expenses and $721 of the original issue discount. 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.The fair value of the Term Loan B facility approximated $476,160 on September 30, 2022 based upon quoted market prices (level 1 inputs). At September 30, 2022, $8,823 of underwriting fees and other expenses incurred remained to be amortized.

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 0.50% for base rate loans, 1.50% for SOFR loans and 1.50% 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 September 30, 2022, under the Credit Agreement, there were $97,328 in outstanding borrowings; outstanding standby letters of credit were $12,287; and $290,385 was available, subject to certain loan covenants, for borrowing at that date.

At September 30, 2022, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements. Net Debt to EBITDA (Leverage), as calculated in accordance with the ~~terms~~definition in the Credit Agreement, was 2.89x at September 30, 2022.

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 ~~development~~approximately 5.6%. The Ocala, Florida lease contains two five-year renewal options. At September 30, 2022, $13,091 was outstanding. During the year ended September 30, 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 ~~production subcontracts;~~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 15,000 ($10,956 as of September 30, 2022) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (4.44% LIBOR USD and 4.76% Bankers Acceptance Rate CDN as of September 30, 2022). The revolving facility was amended and matures in October 2024, and is renewable upon mutual agreement with the lender. Garant is required to maintain a certain minimum equity. As of ~~such receipts~~September 30, 2022, there were no borrowings under the revolving credit facility with CAD 15,000 ($10,956 as of September 30, 2022) available for borrowing.

In March 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (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 in July 2016 and further amended in fiscal 2020.Griffon Australia paid offthe term loan in the amount of AUD 9,625 and canceled the AUD 20,000 revolver. The amendment refinanced the existing AUD 15,000 receivable purchase facility. The receivable purchase facility matures in March 2023, but is renewable upon mutual agreement with the lender.The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25% per annum (3.96% at September 30, 2022). At September 30, 2022, there was no balance outstanding under the receivable purchase facility with AUD $15,000 ($9,722 as of September 30, 2022) available.Thereceivable 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 1.80% (3.99% at September 30, 2022). The revolving facility accrues interest at the Bank of England Base Rate plus 3.25% (5.50% as of September 30, 2022). The revolving credit facility matures in July 2023, but is renewable upon mutual agreement with the lender. As of September 30, 2022, the revolver had no outstanding balancewhile the term and mortgage loan balances amounted to GBP $11,060 ($12,090 as of September 30, 2022).The revolver and the term loan are ~~progress~~both secured by substantially all the assets of AMES UK and its subsidiaries.AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

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

Capital Resource Requirements

Griffon's debt requirements include principal on our outstanding debt, most notably our Senior Notes totaling $974,775 payable in 2028 and related annual interest payments of $57,105. As noted above, Griffon entered into a new $800,000 seven year Term Loan B facility with initial pricing of a SOFR floor of 50 basis points plus a spread of 275 basis points.The OID was99.75.During the period ended June 30, 2022, Griffon prepaid $300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance.The Term Loan B facility requires quarterly payments equal to 0.25% of the outstanding principal amount, or ~~performance based payments. With respect~~$2,000, which began with the quarter ended June 30, 2022, and a balloon payment due at maturity.

Griffon's purchase obligations, which are generally for the purchase of goods and services in the ordinary course of business over the next twelve months is approximately $184,422. Griffon uses blanket purchase orders to ~~HBP, uncollected receivables have been immaterial~~communicate expected requirements to certain vendors. Purchase obligations reflect those purchase orders in ~~amount.~~which the commitment is considered to be firm.

Griffon rents real property and equipment under operating leases expiring at various dates. Operating lease obligations over the next twelve months is approximately $40,998. Refer to Note 21 - Leases.

Customers

A small number of customers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue. In ~~2017:~~2022, Home Depot represented 13% of Griffon’s consolidated revenue, 19% of CPP's revenue and 7% of HBP's revenue.


a.	~~The U.S. Government and its agencies, through prime and subcontractor relationships, represented 18% of Griffon’s consolidated revenue and 66% of Telephonics' revenue.~~


b.	~~Home Depot represented 17% of Griffon’s consolidated revenue and 23% of HBP's revenue.~~

No other customer exceeded 10% or more of consolidated revenue. Future operating results will continue to substantially depend on the success of Griffon’s largest customers and our 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.

~~At September 30, 2017, Griffon had debt, net of cash and equivalents, as follows:~~

Cash and Equivalents and Debt At September 30, At September 30,
(in thousands) 2017 2016
Cash and equivalents $ 47,681
$ 72,553
Notes payables and current portion of long-term debt 11,078
13,932
Long-term debt, net of current maturities 968,080
896,946
Debt discount and issuance costs 13,243
15,971
Total debt 992,401
926,849
Debt, net of cash and equivalents $ 944,720
$ 854,296
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

On May 18, 2016, in an unregistered offering through a private placement under Rule 144A, Griffon completed the add-on offering of $125,000 principal amount of its 5.25% senior notes due 2022, at 98.76% of par, to Griffon's previous issuance of $600,000 5.25% senior notes due in 2022, at par, which was completed on February 27, 2014 (collectively the “Senior Notes”). As of September 30, 2017, outstanding Senior Notes due totaled $725,000; interest is payable semi-annually on March 1 and September 1. The net proceeds of the add-on offering were used to pay down outstanding borrowings under Griffon's Revolving Credit Facility (the "Credit Agreement").

Proceeds from the $600,000 5.25% senior notes due in 2022 were used to redeem $550,000 of 7.125% senior notes due 2018, to pay a call and tender offer premium of $31,530 and to make interest payments of $16,716, with the balance used to pay a portion of the related transaction fees and expenses. In connection with the issuance of the Senior Notes, all obligations under the $550,000 of 7.125% senior notes due in 2018 were discharged.

~~The~~Griffon’s Senior Notes are ~~senior unsecured obligations of Griffon~~fully and unconditionally guaranteed, jointly and severally by ~~certain domestic subsidiaries,~~Clopay Corporation, The AMES Companies, Inc., Clopay AMES Holding Corp., ClosetMaid LLC, AMES Hunter Holdings Corporation, Hunter Fan Company, CornellCookson, LLC and ~~subject to certain covenants, limitations and restrictions. On July 20, 2016 and June 18, 2014, Griffon exchanged~~Cornell Real Estate Holdings, LLC, all of ~~the $125,000 and $600,000 Senior Notes, respectively, for substantially identical Senior Notes registered~~which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, ~~of 1933 via an exchange offer. The fair value~~presented below are summarized financial information of the Senior Notes approximated $737,688 on September 30, 2017 based upon quoted market prices (level 1 inputs). In connection with the issuance and exchange of the $125,000 senior notes, Griffon capitalized $3,016 of underwriting fees and other expenses, which will amortize over the term of such notes; Griffon capitalized $10,313 in connection with the previously issued $600,000 senior notes.

On October 2, 2017, Griffon completed an add-on offering of $275,000 aggregate principle amount of 5.25% senior notes due 2022 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. As of October 2, 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 add-on offering were used to acquire ClosetMaid, with the remaining proceeds used to pay down outstanding borrowings under Griffon's Credit Agreement.

On March 22, 2016, Griffon amended the Credit Agreement to increase the credit facility from $250,000 to $350,000, extend its maturity from March 13, 2020 to March 22, 2021, and modify certain other provisions of the facility. 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 domesticParent (Griffon) 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~~Guarantor 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). On October 2, 2017, Griffon further amended the Credit Agreement to modify the maximum total leverage covenant for the quarters ending December 31, 2017, through March 31, 2019, to provide additional financial and operating flexibility. At September 30, 2017, there were $144,216 outstanding borrowings and standby letters of credit were $13,890 under the Credit Agreement; $191,894 was available, subject to certain loan covenants, for borrowing at that date.

On December 21, 2009, Griffon issued $100,000 principal 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 September 30, 2017, mortgage loans outstanding related to continuing operations was $23,322, 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, with proceeds from the Line Note. The remaining amount available on the authorization is $0. 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 $655 on September 30, 2017 and $569 thereafter, with a balloon payment due at maturity on March 22, 2020. As of September 30, 2017, $42,365, 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.

In October 2006, CBP entered into a capital lease totaling $14,290 for real estate in Troy, Ohio. The lease matures in 2022, bears interest at a fixed rate of 5.0%, is secured by a mortgage on the real estate and is guaranteed by Griffon. As of September 30, 2017, $5,207 was outstanding, net of issuance costs.

~~In November 2012, Garant G.P. (“Garant”) entered into a CAD 15,000 ($12,033~~ as of September 30, ~~2017) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.63% LIBOR USD~~2022 and ~~2.65% Bankers Acceptance Rate CDN as of~~ September 30, ~~2017). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity. As of~~2021 and for the years ended September 30, ~~2017, there were no borrowings~~2022 and 2021. All intercompany balances and transactions between subsidiaries under Parent and subsidiaries under the ~~revolving credit facility with CAD 15,000 ($12,033~~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 ~~of September 30, 2017) available for borrowing.~~

~~In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries ("Griffon Australia") entered into an AUD 30,000 term loan and an AUD 10,000 revolver.~~independent entities. The ~~term loan refinanced two existing term loans~~guarantor companies and the ~~revolver replaced two existing lines. In December 2016,~~non-guarantor companies include the ~~amount available~~consolidated financial results of their wholly-owned subsidiaries accounted for under the ~~revolver was increased~~equity method.

The indentures relating to the Senior Notes (the “Indentures”) contain terms providing that, under certain limited circumstances, a guarantor will be released from ~~AUD 10,000~~its obligations to ~~AUD 20,000 and, in March 2017~~guarantee the ~~term loan commitment was increased by AUD 5,000 to AUD 33,500. In September 2017,~~Senior Notes. These circumstances include (i) a sale of at least a majority of the term loan commitment was increased by AUD 15,000 to AUD 46,750. 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 (3.76% at September 30, 2017). As of September 30, 2017, the term had an outstanding balance of AUD 45,875 ($35,943 as of September 30, 2017). The revolving facility matures in November 2017, but is renewable upon mutual agreement with the bank, and accrues interest at BBSY plus 2.0% per annum (3.67% at September 30, 2017). At September 30, 2017, the revolver had an outstanding balance of AUD 12,000 ($9,402 at September 30, 2017). The revolver and the term loan are both secured bystock, or all or substantially all of the assets, of ~~Griffon Australia and its subsidiaries. Griffon guarantees~~ the ~~term loan. Griffon Australia is required to maintain~~subsidiary guarantor as permitted by the Indentures; (ii) a ~~certain minimum~~public equity ~~level and is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.~~

~~Other long-term debt primarily consists~~offering of a ~~loan with~~subsidiary guarantor that qualifies as a “Minority Business” as defined in the ~~Pennsylvania Industrial Development Authority~~Indentures (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 ~~capital leases.~~

~~At September 30, 2017, Griffon and its subsidiaries were~~that meets certain other specified conditions as set forth in the Indentures; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indentures, in compliance with the terms ~~and covenants of its credit and loan agreements.~~

On each of March 20, 2015, July 29, 2015 and August 3, 2016, Griffon’s Board of Directors authorized 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. During 2017, Griffon purchased 129,000 shares of common stock under these programs, for a total of $2,201 or $17.06 per share. From August 2011 through September 30, 2017, Griffon repurchased 20,429,298 shares of its common stock, for a total of $261,621 or $12.81 per share. This includes 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. At September 30, 2017, $49,437 remains under Board repurchase authorizations.

On December 10, 2013, Griffon repurchased 4,444,444 shares of its common stock for $50,000 from GS Direct. The repurchase was effected in a private transaction at a per share price of $11.25, an approximate 9.2% discount to the stock’s closing price on November 12, 2013, the day before announcement of the ~~transaction. The transaction was exclusive of~~Indentures; (iv) Griffon exercising its right to defease the ~~Company’s August 2011 $50,000 authorized share repurchase program. GS Direct continues~~Senior Notes, or to ~~hold approximately 5.6 million shares of Griffon’s common stock. Subject to certain exceptions, if GS Direct intends to sell~~otherwise discharge its ~~remaining shares of Griffon common stock at any time prior to December 31, 2018, it will first negotiate~~obligations under the Indentures, in ~~good faith to sell such shares to the Company.~~

In addition to the repurchases under Board authorized programs, during 2017, 586,219 shares, with a market value of $13,640, or $23.27 per share, were withheld to settle employee taxes due upon the vesting of restricted stock.

~~During 2017, 2016 and 2015, the Company declared and paid dividends totaling $0.24 per share, $0.20 per share and $0.16 per share, respectively. 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 November 15, 2017, the Board of Directors declared a cash dividend of $0.07 per share, payable on December 21, 2017 to shareholders of record as of the close of business on November 29, 2017.~~

During the year ended September 30, 2017, Griffon used cash for discontinued operations from operating, investing and financing activities of $2,150, primarily related to PPC operations and the settling of certain Installation Services and environmental liabilities. Cash flows from investing activities of $45,075 for discontinued operations related primarily driven by capital expenditures.

~~Contractual Obligations~~

~~At September 30, 2017, payments to be made pursuant to significant contractual obligations are as follows:~~

Payments Due by Period
(in thousands)
Total
Less Than 1 Year 1-3 Years 3-5 Years
More than 5
Years
Other
Long-term debt (a) $ 992,401
$ 11,078
$ 54,646
$ 10,559
$ 916,118
$ —
Interest expense 302,938
61,732
120,915
119,296
995
—
Rental commitments 106,152
27,282
44,912
19,399
14,559
—
Purchase obligations (b) 221,621
209,924
11,123
574
—
—
Capital expenditures 2,406
2,406
—
—
—
—
Supplemental & post-retirement benefits (c) 30,790
4,057
7,768
6,930
12,035
—
Uncertain tax positions (d) 1,486
—
—
—
—
1,486
Total obligations $ 1,657,794
$ 316,479
$ 239,364
$ 156,758
$ 943,707
$ 1,486

~~______________~~


~~(a)~~	~~Included in long-term debt are capital leases of: $1,787 (less than 1 year), $3,636 (1-3 years), $1,984 (3-5 years) and $0 (more than 5 years).~~

~~(b)~~

Purchase obligations are generally for the purchase of goods and services in the ordinary course of business. Griffon uses blanket purchase orders to communicate expected requirements to certain vendors. Purchase obligations reflect those purchase orders where the commitment is considered to be firm. Purchase obligations that extend beyond 2017 are principally related to long-term contracts received from customers of Telephonics.


~~(c)~~	~~Griffon funds required payouts under its non-qualified supplemental defined benefit plan from its general assets and the expected payments are included in each period, as applicable.~~


~~(d)~~	Due to the uncertainty of the potential settlement of future uncertain tax positions, management is unable to estimate the timing of related payments, if any, that will be made subsequent to 2017. These amounts do not include any potential indirect benefits resulting from deductions or credits for payments made to other jurisdictions.

~~Off-Balance Sheet Arrangements~~

~~Except for operating leases and purchase obligations as disclosed herein, Griffon is not a party to any off-balance sheet arrangements.~~

~~Off-Set Agreements~~

Telephonics may enter into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to obtaining orders for its products and services from customers in foreign countries. These agreements promote investment in the country, and may be satisfied through activities that do not require Griffon to use its cash, including transferring technology, providing manufacturing and other consulting support. These agreements may also be satisfied through the use of cash for such activities as purchasing supplies from in-country vendors, setting up support centers, research and development investments, acquisitions, and building or leasing facilities for in-country operations, if applicable. The amount of the offset requirement is determined by contract value awarded and negotiated percentages with customers. At September 30, 2017, Telephonics had outstanding offset agreements approximating $56,000, primarily related to its Radar Systems division, some of which extend through 2029. Offset programs usually extend over several years and in some cases provide for penalties in the event Telephonics fails to performcase in accordance with ~~contract requirements. Historically, Telephonics has not been required to pay any such penalties~~the terms of the Indentures; and as(v) upon obtaining the requisite consent of ~~September 30, 2017, no such penalties are estimable or probable.~~the holders of the Senior Notes.

Summarized Statements of Operations and Comprehensive Income (Loss)


	For the Year Ended				For the Year Ended
	September 30, 2022				September 30, 2021
	Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Net sales	$	—	$	2,301,215	$	—	$	1,727,074
Gross profit	$	—	$	752,982	$	—	$	459,879
Income (loss) from operations	$	(43,492)	$	(127,982)	$	(22,321)	$	135,510
Equity in earnings of Guarantor subsidiaries	$	(184,618)	$	—	$	75,769	$	—
Net income (loss)	$	(74,423)	$	(184,618)	$	(40,047)	$	75,769

Summarized Balance Sheet Information


	For the Year Ended				For the Year Ended
	September 30, 2022				September 30, 2021
	Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Current assets	$	49,238	$	915,329	$	116,260	$	746,371
Non-current assets	15,571		1,393,864		15,782		999,138
Total assets	$	64,809	$	2,309,193	$	132,042	$	1,745,509

Current liabilities	$	78,635	$	275,165	$	41,334	$	321,363
Long-term debt	1,538,235		12,886		998,787		$	14,482
Other liabilities	4,331		322,224		43,337		$	156,694
Total liabilities	$	1,621,201	$	610,275	$	1,083,458	$	492,539

CRITICAL ACCOUNTING POLICIES AND ~~PRONOUNCEMENTS~~ESTIMATES

~~Critical Accounting Policies~~

The preparation of Griffon’s consolidated financial statements in conformity with accounting principles generally accepted in the U.S. 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.

An estimate is considered to be critical if it is subjective and if changes in the estimate using different assumptions would result in a material impact on Griffon’s financial position or results of operations. The following have been identified as the most critical accounting policies and estimates:

Revenue Recognition

~~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 ~~following circumstances are satisfied: a) persuasive evidence of an arrangement exists, b) delivery has occurred, title has~~promised products is transferred to the customer, or services are ~~rendered, c)~~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).

A contract's transaction price is ~~fixed~~allocated to each distinct performance obligation and ~~determinable~~recognized as revenue when each performance obligation is satisfied. A majority of the Company’s contracts have a single performance obligation which represents, in most cases, the product being sold to the customer. To a lesser extent, some contracts include multiple performance obligations such as a product, the related installation, and ~~d) collectability~~extended warranty services. These contracts require judgment in determining the number of performance obligations. For contracts with multiple performance obligations, judgment is ~~reasonably assured. Goods~~required to determine whether performance obligations specified in these contacts are ~~sold~~distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of contracts, the Company allocates the total transaction price to each performance obligation in an amount based on ~~terms~~the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. The transaction price includes variable consideration, such as discounts and volume rebates, when it is probable that ~~transfer~~a significant reversal of revenue recognized will not occur. Variable consideration is determined using either the expected value or the most likely amount of consideration to be received based on historical experience and the specific facts and circumstances at the time of evaluation.

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, and revenue is recognized when title, and risk and rewards of ~~loss at~~ownership, have transferred to the customer, which is generally upon shipment.

A majority of the Company's revenue is short cycle in nature with shipments occurring within one year from order and does not include a ~~specified location. Revenue recognition~~material long-term financing component, implicitly or explicitly. Payment terms generally range between 15 to 90 days and vary by the location of the business, the type of products manufactured to be sold and the volume of products sold, among other factors.

The Company recognizes revenue from product sales ~~occurs~~ when all factors are met, including ~~transfer~~when control of ~~title and risk~~a product transfers to the customer upon its shipment, completion of ~~loss, which occurs either upon shipment~~installation, testing, certification or ~~upon receipt by customers at~~other substantive acceptance required under the ~~location specified in the terms of sale.~~contract. Other than standard product warranty provisions, sales arrangements provide for no other significant post-shipment ~~obligations.~~obligations on the Company. From ~~time to time~~time-to-time and for certain customers, rebates and other sales incentives, promotional allowances or discounts are offered, typically related to customer purchase volumes, all of which are fixed or determinable and are classified as a reduction of revenue and recorded at the time of sale. Griffon provides for sales returns and allowances based upon historical returns experience. The Company includes shipping costs billed to customers in revenue and the related shipping costs in either Cost of Goods and Services and Selling, general and administrative expenses, as applicable.

~~Telephonics earns a substantial portion~~The majority of ~~its revenue as either a prime or subcontractor from contract awards~~the Company’s contracts offer assurance-type warranties in connection with the ~~U.S. Government,~~sale of a product to a customer. Assurance-type warranties provide a customer with assurance that the related product will function as well as non-U.S. governments and other commercial customers. These formal contracts are typically long-term in nature, usually greater than one year. Revenue and profits from these long-term fixed price contracts are recognized under the ~~percentage-of-completion method of accounting. Revenue and profits on fixed-price contracts that contain engineering as well as production requirements are recorded based~~parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation.

Payment terms vary depending on the ~~ratio~~type and location of ~~total actual incurred costs to date to~~ the ~~total estimated costs for each contract (cost-to-cost method). Using~~customer and the ~~cost-to-cost method,~~products or services offered. Generally, the period between the time revenue is ~~recorded at amounts equal to~~recognized and the ratio of actual cumulative costs incurred divided by total estimated costs at completion, multiplied by the total estimated contract revenue, less the cumulative revenue recognized in prior periods. The profit recorded ontime payment is due is not significant. Shipping and handling charges are not considered a contract using this method is equal to the current estimated total profit margin multiplied by the cumulative revenue recognized, less the amount of cumulative profit previously recorded for the contract in prior periods. As this method relies on the substantial use of estimates, these projections may be revised throughout the life of a contract. Components of this formula and ratio that may be estimated include gross profit margin and total costs at

~~completion. The cost~~separate performance and estimates to complete on long-term contracts are reviewed, at a minimum, on a quarterly basis, as well as when information becomes available that would necessitate a review of the current estimate. Adjustments to estimates for a contract's estimated costs at completion and estimated profit or loss often are required as experience is gained, and as more information is obtained, even though the scope of work required under the contract may or may not change, or if contract modifications occur. The impact of such adjustments or changes to estimates is made on a cumulative basis in the period when such information has become known. In 2017, 2016 and 2015, income from operations included net favorable/(unfavorable) catch-up adjustments approximating $600, $(700) and $(400), respectively. Gross profit is affectedobligation. Additionally, all taxes assessed by a ~~variety of factors, including the mix of products, systems~~governmental authority that are both imposed on and ~~services, production efficiencies, price competition~~concurrent with a specific revenue-producing transaction and ~~general economic conditions.~~

~~Revenue~~collected from a customer (e.g., sales, use, value added, and ~~profits on cost-reimbursable type contracts~~some excise taxes) are recognized as allowable costs are incurred on the contract at an amount equal to the allowable costs plus the estimated profit on those costs. The estimated profit on a cost-reimbursable contract may be fixed or variable based on the contractual fee arrangement. Incentive and award fees on these contracts are recorded as revenue when the criteria under which they are earned are reasonably assured of being met and can be estimated.

For contracts whose anticipated total costs exceed total expected revenue, an estimated loss is recognized in the period when identifiable. A provision for the entire amount of the estimated loss is recorded on a cumulative basis. The estimated remaining costs to complete loss contracts, as of September 30, 2017 was $9,900 and is recorded as a reduction to gross margin on the Consolidated Statements of Operations and Comprehensive Income (Loss). This loss had an immaterial impact to Griffon's Consolidated Financial Statements.

Amounts representing contract change orders or claims are included in revenue only when they can be reliably estimated and their realization is probable, and are determined on a percentage-of-completion basis measured by the cost-to-cost method.

From time to time, Telephonics may combine contracts if they are negotiated together, have specific requirements to combine, or are otherwise closely related. Contracts are segmented based on customer requirements.

excluded from revenue.

Inventories

Inventories, stated at the lower of cost (first-in, first-out or average) or ~~market,~~net realizable value, include material, labor and manufacturing overhead costs.

Griffon’s businesses typically do not require inventory that is susceptible to becoming obsolete or dated. In general, ~~Telephonics sells products in connection with programs authorized~~HBP produces residential and ~~approved under contracts awarded by the U.S. Government or agencies thereof,~~commercial sectional garage doors, commercial rolling steel door and ~~in accordance with customer specifications. PPC primarily produces fabricated materials used by customers in the production of their~~grille products, and ~~these materials are produced against orders from those customers. HBP~~CPP produces ~~doors and~~ long-handled tools and landscaping products, storage and organizational products and residential, industrial and commercial fans, all in response to orders from customers of retailers and dealers or based on expected orders, as applicable.

Warranty Accruals

Direct customer and end-user warranties are provided on certain products. These warranties cover manufacturing defects that would prevent the product from performing in line with its intended and marketed use. The terms of such warranties vary by product line and generally provide for the repair or replacement of the defective product. Warranty claims data is collected and analyzed with a focus on the historical amount of claims, the products involved, the amount of time between the warranty claims and the products’ respective sales and the amount of current sales. Based on such analysis, warranty accruals are recorded as an increase to cost of sales and regularly reviewed for adequacy.

Stock-based Compensation

Griffon has issued stock-based compensation to certain employees, officers and directors in the form of restricted stock and restricted stock units.

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 or units granted multiplied by the stock price on the date of grant, and for performance shares or units, the likelihood of achieving the performance criteria. For certain restricted stock grants with a performance metric related to Griffon's stock price, the company performs a valuation as of the date of grant and recognizes the expense over the vesting period. The Company recognizes forfeitures as they occur.

Expected Loss Allowances for Discount, Doubtful Account and Returns

Trade receivables are recorded at their stated amount, less allowances for discounts, doubtful accounts and returns. The ~~allowances represent~~expected loss allowance represents 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 expected loss allowance for doubtful accounts includes amounts for certain customers in which a risk of default 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 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.

Acquisitions

Acquired businesses are accounted for using the acquisition method of accounting which requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the fair value of acquired in-process research and development be recorded on the balance sheet. Related transaction costs are expensed as incurred. Any excess of the purchase price over the assigned values of the net assets acquired is recorded as goodwill.

Goodwill, Long-Lived Intangible and Tangible Assets, and Impairment

~~Griffon has significant intangible and tangible long-lived assets~~As of September 30, 2022, the balance of goodwill on ~~its~~our balance sheet ~~that includes goodwill~~is $335,790 and other intangible assets related to acquisitions. Goodwill represents the excess of the cost of net assets acquired in business combinations over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. As required under GAAP,indefinite-lived intangibles representing our trademarks is $399,668. We test goodwill and indefinite-lived intangibles ~~are reviewed~~ for impairment at least annually ~~for Griffon as of September 30, or~~in the fourth quarter, and more frequently whenever events or circumstances change that would more likely than not reduce the fair value below the carrying amount. Such events or changes in circumstance include significant deterioration in overall economic conditions, changes in the business climate in which our reporting units operate, a decline in our market capitalization, operating performance indicators, when some portion of a reporting unit ~~below its carrying amount, using discounted future cash flows~~is disposed of or classified as held for ~~each~~sale, or when a change in the composition of reporting ~~unit. The testing of~~units occurs for other reasons, such as a change in operating segments. To test goodwill and indefinite-lived ~~intangibles~~intangible assets for impairment, ~~involves significant use~~we may perform both a qualitative assessment and quantitative assessment. If we elect to perform a qualitative assessment, we consider operating results as well as circumstances impacting the operations or cash flows of ~~judgment~~the reporting unit or indefinite-lived intangible assets, including macroeconomic conditions, industry and ~~assumptions in~~market conditions and reporting unit events and circumstances. For the ~~determination~~quantitative test, the assessment is based on both an income-based and market-based valuation approach. If it is determined that an impairment exists, we recognize an impairment loss for the amount by which the carrying amount of the reporting unit or indefinite-lived intangible asset exceeds its estimated fair value.

Under the income-based approach, we determine the fair value of a reporting ~~unit’s~~unit by using discounted cash flows that require significant judgement and assumptions, such as our best estimate of future revenue, operating costs, cash flows, expected long-term cash flow growth rates (terminal value growth rates), and risk adjusted discount rates. Under the market-based approach, we determine the fair ~~market value. Based upon~~value of a reporting unit by applying those multiples exhibited by comparable publicly traded companies and those multiples paid in acquisitions of peer company transactions to the financial results of the ~~annual~~reporting units. We then compare the fair value estimates resulting from the income and market-based valuations to the sum of Griffon’s market capitalization and net debt position to assess the reasonableness of the implied control premium. We determine the fair value of indefinite-lived intangible assets by using the relief from royalty method, which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it.

financial statements for the fiscal year ended September 30, 2022, we performed a quantitative assessment of the CPP reporting units using both an income-based and market-based approach. The impairment tests resulted in a pre-tax, non-cash goodwill impairment charge of $342,027. Further, we compared the estimated fair values of the CPP indefinite lived intangibles to their carrying amounts which resulted in a pre-tax, non-cash impairment charge of $175,000. A 100-basis point increase in the discount rate would have resulted in an additional impairment charge to our indefinite-lived intangible assets of $34,000.

We performed a qualitative assessment as of September 30, 2021, and 2020, as the estimated fair values of each reporting unit significantly exceeded the carrying amount based on our baseline quantitative assessment, which was performed as of March 31, 2020. Our qualitative assessment determined that indicators that the fair value of each reporting unit ~~substantially exceeded~~was less than the carrying ~~value of the assets, and no impairment existed~~amount were not present. We performed a qualitative assessment as of September 30, ~~2017.~~2021, and 2020 considering all the above factors and determined that indefinite-lived intangibles fair values were greater than their book values.

Long-lived ~~amortizable intangible~~ assets, such as customer relationships and software, and tangible assets, primarily ~~Property,~~property, plant and equipment, are amortized over their expected useful lives, which involve significant assumptions and estimates. ~~Long-lived~~We assess the recoverability of the carrying amount of our long-lived assets, including amortizable intangible assets, whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. We evaluate the recoverability of such assets based on the expectations of undiscounted cash flows attributable to the asset group. If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset group, a loss would be recognized for the difference between the fair value and the carrying amount. For the fiscal year ended September 30, 2022, we tested long-lived intangible and tangible assets ~~are tested~~ for impairment by comparing estimated future undiscounted cash flows of each CPP asset group to the carrying ~~value~~amount of the asset ~~when~~group and determined that an impairment did not exist. No event or indicator ~~such as change in business, customer loss or obsolete technology, exists. With~~of impairment existed for the ~~sale of PPC, Griffon determined that there was no impairment of PPC's long-lived~~HBP assets ~~as of September 30, 2017.~~groups.

Fair value estimates are based on assumptions believed to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ materially from those estimates. Any changes in key assumptions or management judgment with respect to a reporting unit or its prospects, which may result from a decline in Griffon’s stock price, a change in market conditions, market trends, interest rates or other factors outside of Griffon’s control, or significant underperformance relative to historical or projected future operating results, could result in a significantly different estimate of the fair value of Griffon’s reporting units, which could result in an impairment charge in the future.

Leases

On October 1, 2019, the Company adopted the Accounting Standards Codifications ("ASC") Topic 842, Leases, which requires the recording of operating lease Right-of-Use ("ROU") assets and operating lease liabilities. Finance leases were not impacted by the adoption of ASC Topic 842, as finance lease liabilities and the corresponding assets were already recorded in the balance sheet under the previous guidance, ASC Topic 840. The Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also elected a practical expedient to determine the reasonably certain lease term.

The Company applied the modified retrospective approach, whereby the cumulative effect of adoption is recognized as of the date of adoption and comparative prior periods are not retrospectively adjusted. As a result, upon adoption, we recognized ROU assets of $163,552 and lease liabilities of $163,676 associated with our operating leases. The standard had no material impact to retained earnings or on our Consolidated Statements of Income or Consolidated Statements of Cash Flows.

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. 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. For leases existing as of October 1, 2019, we have elected to use the remaining lease term as of the adoption date in determining the incremental borrowing rate. 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.

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 Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, net, other accrued liabilities, and other non-current liabilities.

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 Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. The Company has lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance).

Restructuring Reserves

From time to time, Griffon will establish restructuring reserves at an operation. These reserves, for both termination and ~~other~~facility related exit costs, require the use of estimates. Though Griffon believes the estimates made are reasonable, they could differ materially from the actual costs.

Income Taxes

Griffon’s effective tax rate is based on income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which Griffon operates. For interim financial reporting, the annual tax rate is estimated based on projected taxable income for the full year, and a quarterly income tax provision is recorded in accordance with the anticipated annual rate. As the year progresses, the annual tax rate is refined as new information becomes available, including year-to-date financial results. This process often results in changes to the effective tax rate throughout the year. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets represent items to be used as a tax deduction or credit in future tax returns

for which a tax benefit has been recorded in the income statement. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses; a forecast of future profitability; the duration of statutory carryback and carryforward periods; the Company's experience with tax attributes expiring unused; and tax planning alternatives. The likelihood that the deferred tax asset balance will be recovered from future taxable income is assessed at least quarterly, and the valuation allowance, if any, is adjusted accordingly.

Tax benefits are recognized for an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the tax benefit is measured as the largest amount that is judged to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management. A number of years may elapse before a particular matter for which Griffon has recorded a liability related to an unrecognized tax benefit is audited and finally resolved. The number of years with open tax audits varies by jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, Griffon believes its liability for unrecognized tax benefits is adequate. Favorable resolution of an unrecognized tax benefit could be recognized as a reduction in Griffon’s tax provision and effective tax rate in the period of resolution. Unfavorable settlement of an unrecognized tax benefit ~~could increase the tax provision and effective tax rate and~~ may require the use of cash in the period of resolution. The liability for unrecognized tax benefits is generally presented as non-current. However, if it is anticipated that a cash settlement will occur within one year, that portion of the liability is presented as current. Interest and penalties recognized on the liability for unrecognized tax benefits is recorded as income tax expense.

Pension Benefits

Griffon sponsors defined and supplemental benefit pension plans for certain active and retired employees. Annual amounts relating to these plans are recorded based on actuarial projections, which include various actuarial assumptions, including discount rates, assumed rates of return, compensation increases and turnover rates. The actuarial assumptions used to determine pension liabilities, assets and expense are reviewed annually and modified based on current economic conditions and trends. The expected return on plan assets is determined based on the nature of the plans’ investments and expectations for long-term rates of return. The discount rate used to measure obligations is based on a corporate bond spot-rate yield curve that matches projected future benefit payments, with the appropriate spot rate applicable to the timing of the projected future benefit

payments. Assumptions used in determining Griffon’s obligations under the defined benefit pension plans are believed to be reasonable, based on experience and advice from independent actuaries; however, differences in actual experience or changes in the assumptions may materially affect Griffon’s financial position or results of operations.

All of the defined benefit plans are frozen and have ceased accruing benefits.

~~Newly issued but not yet effective accounting pronouncements~~New Accounting Standards

~~In May 2017, the FASB issued guidance to address the situation when~~For a company modifies the terms of a stock compensation award previously granted to an employee. This guidance is effective, and should be applied prospectively, for fiscal years beginning after December 15, 2017. Early adoption is permitted asdiscussion of the ~~beginning of an annual period. The~~ new ~~guidance is effective for~~accounting standards impacting 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 March 2017, the FASB issued amendments~~see Note 1 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.Consolidated Financial Statements.

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 Financial Accounting Standards Board ("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 fiscal 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 fiscal 2019. 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. We have not yet selected a transition method and are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures. 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 is currently evaluating this guidance to determine the impact it will have on its consolidated financial statements.

~~Recently adopted accounting pronouncements~~

In March 2016, the FASB issued guidance on Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2016 using either prospective, retrospective or modified retrospective transition method, depending on the area covered in this update. The Company early adopted this guidance for fiscal 2016 in order to simplify the accounting for employee share-based payments.

Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation was recognized within income tax expense for the year ended September 30, 2016. Under prior guidance, windfalls were recognized to Capital in excess of par value and shortfalls were only recognized to the extent they exceed the pool of windfall tax benefits. As a result of the adoption, a tax benefit of $2,193 was recognized within income tax expense reflecting the excess tax benefits for the year ended September 30, 2016. The adoption was on a prospective basis and therefore had no impact on prior years.

Additionally, income tax benefits at settlement of an award were previously reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. Griffon has elected to apply that change in cash flow classification on a prospective basis, which has resulted in a $2,271 increase to net cash provided by operating activities and a corresponding decrease to net cash used in financing activities in the accompanying Consolidated Statement of Cash Flows for the year ended September 30, 2016, as compared to the amounts previously reported. The remaining provisions of this accounting standard did not have a material impact on the accompanying condensed consolidated financial statements.

In November 2015, the FASB issued guidance on simplifying the presentation of deferred income taxes, requiring deferred income tax liabilities and assets to be classified as non-current in the statement of financial position. The guidance is effective for annual and interim reporting periods within those annual periods beginning after December 15, 2016 and may be applied retrospectively or prospectively. The Company early adopted this guidance in fiscal 2016 in order to simplify balance sheet presentation and applied it retrospectively for all periods presented in the financial statements.

In August 2014, the FASB issued guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and related footnote disclosures. Management is required to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. This guidance was effective prospectively for annual and interim reporting periods beginning in 2017; implementation of this guidance did not have a material effect on the Company’s financial condition or results of operations.

~~The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements.~~

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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.

~~The revolving credit facility~~Griffon's amended and restated Credit Agreement references a benchmark rate with SONIA or SOFR. In addition, certain other

of Griffon’s credit facilities have a ~~LIBOR-~~LIBOR and ~~EURIBOR-~~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 ~~or EURIBOR~~ would

not have a material impact on Griffon’s results of operations or liquidity.

Foreign Exchange

Griffon conducts business in various non-U.S. countries, primarily in ~~Germany,~~ Canada, ~~Brazil,~~ Australia, United Kingdom, Ireland, New Zealand and China; therefore, changes in the value of the currencies of these countries affect the financial position and cash flows when translated into U.S. Dollars. Griffon has generally accepted the exposure to exchange rate movements relative to its non-U.S. 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 8. Financial Statements and Supplementary Data

The financial statements of Griffon and its subsidiaries and the report thereon of Grant Thornton LLP (PCAOB ID 248) are included herein:


▪	~~Report of Independent Registered Public Accounting Firm.~~


▪	~~Consolidated Balance Sheets at September 30, 2017 and 2016.~~


▪	~~Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended September 30, 2017, 2016 and 2015.~~


▪	~~Consolidated Statements of Cash Flows for the years ended September 30, 2017, 2016 and 2015.~~


▪	~~Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2017, 2016 and 2015.~~


▪	~~Notes to Consolidated Financial Statements.~~


▪	~~Schedule II – Valuation and Qualifying Account.~~

▪Report of Independent Registered Public Accounting Firm.

▪Consolidated Balance Sheets at September 30, 2022 and 2021.

▪Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended September 30, 2022, 2021 and 2020.

▪Consolidated Statements of Cash Flows for the years ended September 30, 2022, 2021 and 2020.

▪Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2022, 2021 and 2020.

▪Notes to Consolidated Financial Statements.

▪Schedule II – Valuation and Qualifying Account.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Griffon Corporation

Opinions on the financial statements and internal control over financial reporting

We have audited the accompanying consolidated balance sheets of Griffon Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of September 30, ~~2017~~2022 and ~~2016,~~2021, and the related consolidated statements of operations and comprehensive ~~income(loss)~~income (loss), changes in shareholders’ equity, and cash flows for each of the three years in the period ended September 30, ~~2017.~~2022, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of September 30, ~~2017,~~2022, based on criteria established in the 2013 Internal ~~Control-Integrated~~Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ~~(COSO)~~(“COSO”). ~~Our audits~~

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the ~~basic consolidated financial statements included~~Company as of September 30, 2022 and 2021, and the ~~financial statement schedule listed~~results of itsoperations and itscash flows for each of the three years in the ~~index appearing under Item 15(a)(2).~~ period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

Basis for opinions

The Company’s management is responsible for these financial statements, ~~financial statement schedule,~~ for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on ~~these~~the Company’s financial statements ~~financial statement schedule~~ and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the ~~Public Company Accounting Oversight Board (United States).~~PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence ~~supporting~~regarding the amounts and disclosures in the financial ~~statements, assessing~~statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, ~~and~~as well as evaluating the overall presentation of the financial ~~statement presentation.~~statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Hunter Fan Company (“Hunter”), a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 31 percent and 9 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2022. As indicated in Management’s Report, Hunter Fan Company was acquired during 2022. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Hunter Fan Company.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

InCritical audit matter

The critical audit mattercommunicated below is amatterarising from the current period audit of the financial statements that wascommunicated or required to be communicated to the audit committee and that: (1) relatesto accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Griffon Corporation and subsidiaries as of September 30, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements, taken as a whole, ~~present fairly,~~and we are not, by communicating the critical audit matterbelow, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Annual Goodwill and Indefinite-Lived Intangible Assets Impairment Testing

As described further in ~~all material respects,~~notes 1 and 7 to the ~~information set forth therein. In addition, in our opinion,~~consolidated financial statements, the Company ~~maintained, in all material respects, effective internal control over financial~~tests goodwill and indefinite-lived intangible assets at least annually at the reporting unit level. The Company performed its annual impairment testing of goodwill as of September 30, ~~2017,~~2022, comparing the fair value of the Company’s reporting units to the respective reporting unit’s carrying value, including goodwill. For the Consumer Professional Products (“CPP”) and Hunter reporting units and associated indefinite-lived intangible assets, indicators of impairment were present, and as such, the Company performed a quantitative assessment. The fair value of CPP and Hunter were determined using a combination of the income and market-based valuation approach methodologies, which include the present value of expected future cash flows and the use of market assumptions specific to each reporting unit. The Company used prospective financial information to which discount rates were applied to calculate the fair value. Similarly to goodwill, the Company tested indefinite-lived intangibles for impairment as of September 30, 2022. The Company utilized a relief from royalty method to calculate and compare the fair value of the indefinite-lived intangible assets to their book value, which includes the use of market assumptions specific to each reporting unit. As a result of the impairment tests, the Company recorded goodwill and intangible asset impairment as of September 30, 2022. We identified the Company’s impairment testing of goodwill and indefinite-lived intangible assets for CPP and Hunter as a critical audit matter.

The principal considerations for our determination that the impairment testing is a critical audit matter are as follows: The determination of the fair value of reporting units and indefinite-lived intangibles require management to make significant estimates and assumptions related to forecasts of future cash flows and discount rates. This requires management to evaluate historical results and expectations of future operating performance based on ~~criteria established~~relevant information available to them regarding expectations of industry performance, as well as expectations for entity-specific performance. In addition, determining the discount rate requires management to evaluate the appropriate risk premium based on their judgment of industry and entity-specific risks. Management also used a selection of comparable companies that correspond to each reporting unit to derive a market-based multiple. As disclosed by management, changes in these assumptions could have a significant impact on the ~~2013~~ ~~Internal Control-Integrated Framework~~ ~~issued~~fair value of the reporting units and indefinite-lived assets. In turn, auditing these judgments and assumptions requires a high degree of auditor judgment.

Our audit procedures related to the quantitative impairment testing included the following: We tested the design and operating effectiveness of controls relating to the impairment testing, including the Company’s ability to develop the estimates utilized in calculating the fair value of the CPP and Hunter reporting units and indefinite-lived intangible assets. Such estimates included prospective financial information, long-term growth rates, discount rates and weighted average cost of capital. With the assistance of valuation specialists, we evaluated the appropriateness of the valuation methodology utilized and assessed the appropriateness of inputs utilized. We evaluated the qualifications of those responsible for preparing the calculations of fair values. We tested the inputs, significant judgments and estimates utilized in performing the annual impairment test, which included comparing management’s judgments and estimates to industry and market data. We tested the inputs, significant judgments and estimates, as follows: a) tested prospective financial information and long-term growth rates by ~~COSO.~~comparing to historical trends and industry expectations, performed a sensitivity analysis over growth rates and assessed management’s historical ability to accurately forecast; b) tested discount and royalty rates by comparing to historical rates and industry expectations, compared rates to market comparable companies, including comparable licensing agreements and independently calculated discount rates for comparison to those used by management; and c) tested weighted average cost of capital by analyzing the implied discount rate and independently calculated a weighted-average discount rate using individual discount rates and compared to the rate utilized by management.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2006.

New York, New York

November 17 , 2022

~~November 20, 2017~~

COMMON STOCK
CAPITAL IN
EXCESS OF
PAR VALUE

RETAINED
EARNINGS
TREASURY SHARES
ACCUMULATED OTHER
COMPREHENSIVE
INCOME (LOSS)

DEFERRED
COMPENSATION
Total
(in thousands) SHARES PAR VALUE SHARES COST
Balance at 9/30/2014 78,484
$ 19,621
$ 506,090
$ 427,913
25,335
$ (354,216 ) $ (30,064 ) $ (37,317 ) $ 532,027
Net income —

—

—

34,289

—

—

—

—

34,289
Dividends —

—

—

(7,654 )
—

—

—

—

(7,654 )
Tax effect from exercise/vesting of equity awards, net —

—

345

—

—

—

—

—

345
Amortization of deferred compensation —

—

—

—

—

—

—

2,786

2,786
Common stock issued 69

17

354

—

—

—

—

—

371
Common stock acquired —

—

—

—

5,402

(82,343 )
—

—

(82,343 )
Equity awards granted, net 527

132

(384 )
—

—

—

—

—

(252 )
ESOP purchase of common stock —

—

—

—
ESOP allocation of common stock —

—

970

—

—

—

—

—

970
Stock-based compensation —

—

11,110

—

—

—

—

—

11,110
Other comprehensive loss, net of tax —

—

—

—

—

—

(61,124 )
—

(61,124 )
Balance at 9/30/2015 79,080

$ 19,770

$ 518,485

$ 454,548

30,737

$ (436,559 )
$ (91,188 )
$ (34,531 )
$ 430,525
Net income —
—
—
$ 30,010
—
—
—
—
30,010
Dividends —
—
—
(8,798 ) —
—
—
—
(8,798 )
Amortization of deferred compensation —
—
—
—
—
—
—
2,853
2,853
Common stock issued 41
10
(10 ) —
—
—
—
—
—
Common stock acquired —
—
—
—
4,060
(65,307 ) —
—
(65,307 )
Equity awards granted, net 845
212
52
—
—
—
—
—
264
ESOP allocation of common stock —
—
1,317
—
—
—
—
—
1,317
Stock-based compensation —
—
10,136
—
—
—
—
—
10,136
Other comprehensive income, net of tax —
—
—
—
—
—
9,947
—
9,947
Balance at 9/30/2016 79,966
$ 19,992
$ 529,980
$ 475,760
34,797
$ (501,866 ) $ (81,241 ) $ (31,678 ) $ 410,947
Net income —
—
—
14,912
—
—
—
—
14,912
Dividends —
—
—
(10,325 ) —
—
—
—
(10,325 )
Tax effect from exercise/vesting of equity awards, net —
—
(97 ) —
586
(13,641 ) —
—
(13,738 )
Amortization of deferred compensation —
—
—
—
—
—
—
3,510
3,510
Common stock issued 3
—
22
—
—
—
—
—
22
Common stock acquired —
—
—
—
129
(2,201 ) —
—
(2,201 )
Equity awards granted, net 694
174
(174 ) —
—
—
—
—
—
Premium on settlement of convertible debt —
—
(73,855 ) —
—
—
—
—
(73,855 )
Issuance of treasury stock in settlement of convertible debt —
—
20,375
—
(1,955 ) 28,483
—
—
48,858
ESOP purchase of common stock —
—
—
—
—
—
—
(10,908 ) (10,908 )

GRIFFON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)































































































































	COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE		RETAINED EARNINGS		TREASURY SHARES			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		DEFERRED COMPENSATION		Total
(in thousands)	SHARES	PAR VALUE						SHARES	COST
Balance at 9/30/2021	84,375	$	21,094	$	602,181	$	669,998	27,762	$	(416,850)	$	(45,977)	$	(23,288)	$	807,158
Net income (loss)	—	—		—		(191,558)		—	—		—		—		(191,558)

Dividends	—	—		—		(134,380)		—	—		—		—		(134,380)
Shares withheld on employee taxes on vested equity awards	—	—		—		—		422	(10,886)		—		—		(10,886)
Amortization of deferred compensation	—	—		—		—		—	—		—		10,483		10,483


Equity awards granted, net	371	93		(7,713)		—		(502)	7,620		—		—		—



ESOP allocation of common stock	—	—		15,729		—		—	—		—		—		15,729
Stock-based compensation	—	—		17,785		—		—	—		—		—		17,785

Other comprehensive income, net of tax	—	—		—		—		—	—		(36,761)		—		(36,761)
Balance at 9/30/2022	84,746	$	21,187	$	627,982	$	344,060	27,682	$	(420,116)	$	(82,738)	$	(12,805)	$	477,570

ESOP allocation of common stock —
—
2,736
—
—
—
—
—
2,736
Stock-based compensation —
—
8,090
—
—
—
—
—
8,090
Other comprehensive income, net of tax —
—
—
—
—
—
20,760
—
20,760
Balance at 9/30/2017 80,663
$ 20,166
$ 487,077
$ 480,347
33,557
$ (489,225 ) $ (60,481 ) $ (39,076 ) $ 398,808

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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

(Unless otherwise indicated, all references to years or year-end refer to Griffon’s fiscal period ending September 30,)

NOTE 1 — DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of business

~~Headquartered in New York, N.Y., the~~The Company was founded in 1959, ~~and~~ is ~~incorporated~~a Delaware corporation headquartered in ~~Delaware. Griffon~~New York, N.Y. and is listed on the New York Stock Exchange ~~and trades under the symbol GFF.~~(NYSE:GFF).

On ~~September 5, 2017,~~May 16, 2022, Griffon announced ~~it will explore~~that its Board of Directors initiated a process to review a comprehensive range of strategic alternatives ~~for Clopay Plastic Products Company, Inc. ("PPC")~~to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction. This process is active and discussions with potential counterparties are ongoing with respect to a number of these options. The Committee on ~~November 16, 2017, announced it~~Strategic Considerations, a committee comprised of independent directors who serve on Griffon's Board, is overseeing the process and working with Griffon's management and Goldman Sachs & Co, LLC. the Company's financial advisor. There is no assurance that the process will result in any transaction being entered into or consummated.

On December 17, 2021, Griffon entered into a definitive agreement to ~~sell PPC to Berry Global Group, Inc. (NYSE:BERY) ("Berry"~~acquire Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for ~~$475 million in cash.~~ a contractual purchase price of $845,000 and completed the acquisition on January 24, 2022.The ~~transaction is subject~~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 ~~regulatory approval~~fund the balance of the purchase price and related acquisition and debt expenditures.

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its Defense Electronics segment, which consisted of Telephonics Corporation ("Telephonics"), and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000, excluding customary ~~closing conditions, and is expected~~post-closing adjustments, primarily related to ~~close in the first quarter of calendar 2018.~~working capital. As a result, Griffon classified the results of operations of the ~~PPC~~Telephonics business as a discontinued ~~operations~~operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued ~~operations~~operation as held for sale in the consolidated balance sheets. All references made to results and information ~~presented exclude PPC~~in this Annual Report on Form 10-K are to Griffon's continuing operations unless ~~otherwise noted. PPC~~noted otherwise.

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of

glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects.

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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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 a reduced scope and an accelerated timeline for the initiative, which was completed in 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 ~~leader~~information systems, will be included in the ~~development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some~~continuing operations of the ~~world's largest consumer products companies.~~business. Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

The cost to implement this new business platform, over the duration of the project, included one-time charges of approximately $51,869 and capital investments of approximately $15,000, net of future proceeds from the sale of exited facilities. Total cumulative charges of $51,869 consisted of cash charges totaling $35,691 and non-cash, asset-related charges totaling $16,178; the cash charges included $12,934 for one-time termination benefits and other personnel-related costs and $22,757 for facility exit costs.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The health and safety of our employees, our customers and their families is always a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. When COVID-19 struck, we 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. While many of these precautions have been relaxed or eliminated as the health risk of COVID-19 has decreased, we would not hesitate to reinstitute and/or modify these policies and procedures as necessary should the health risk return to an unacceptable level. In such event, our suppliers could be required by government authorities to temporarily cease operations; might be limited in their production capacity due to complying with restrictions relating to the operation of businesses to mitigate the impacts of COVID-19; or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us. While we are unable to determine or predict the nature, duration or scope of the overall impact COVID-19 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 we have responded (and will continue to respond) to COVID 19 and how our operations and financial condition may change as COVID-19 evolves. See ~~Note 6, Discontinued Operations.~~information provided in Part 1, Item 1A, “Risk Factors” in this Form 10-K

~~On October 2, 2017,~~ Griffon ~~acquired ClosetMaid LLC ("ClosetMaid"~~currently conducts its operations through two reportable segments:

•Consumer and Professional Products (“CPP”)~~. ClosetMaid, founded in 1965,~~ is a leading North American manufacturer and ~~marketer~~a global provider of ~~closet organization,~~branded consumer and professional tools; residential, industrial and commercial fans; home storage and ~~garage storage~~organization products; and products that enhance indoor and outdoor lifestyles. CPP sells ~~to some~~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. 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. Due to~~Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the ~~acquisition of ClosetMaid occurring subsequent to Griffon's fiscal year end, ClosetMaid's results of operations, assets~~Cornell and ~~liabilities were not included in Griffon's 2017 financial results or 2017 year-end balance sheet. See Note 2, Acquisitions.~~Cookson brands.

~~Griffon currently conducts its continuing operations through two reportable segments:~~

~~Home & Building Products (“HBP”) consists of three companies, The AMES Companies, Inc. (“AMES”) and Clopay Building Products (“CBP”):~~


◦	~~AMES is the leading U.S. manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals.~~


◦	~~CBP 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 LLC ("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.

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

Consolidation

The consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The results of operations of acquired businesses are included from the dates of acquisitions.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Earnings per share

Due to rounding, the sum of earnings per share may not equal earnings per share of Net income.

Discontinued operations

~~Installation Services~~

~~In 2008, as a result of~~For 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. Operating results of substantially all of this 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.

~~During the year~~years ended September 30, ~~2017, Griffon recorded $5,700 of reserves in~~2022, 2021 and 2020, discontinued operations ~~related to historical environmental remediation efforts~~includes the Telephonics business, and ~~to increase~~ the ~~reserve for homeowner association claims related to the Clopay Services Corporation discontinued operations in 2008.~~

~~Clopay Plastic Products Company, Inc. ("PPC")~~

On September 5, 2017, Griffon announced it will 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. 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~~of discontinued ~~operations as held for sale in the consolidated balance sheets. All results~~installations business and ~~information presented exclude PPC unless otherwise noted. See Note 6, Discontinued Operations to the Notes of the Financial Statements.~~

~~At September 30, 2017, Griffon’s assets and liabilities for~~other discontinued activities which have been segregated from Griffon's continuing operations ~~not held for sale related to its installation business~~ primarily related to insurance claims, ~~income taxes and~~ product liability, warranty and environmental ~~reserves and assets and liabilities for discontinued operations held for sale related to its PPC business.~~reserves. See Note 8, Discontinued Operations.

Reclassifications

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

Use of estimates

The preparation of financial statements in conformity with accounting 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,~~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, the valuation of assets and liabilities of discontinued operations, ~~acquisition~~ assumptions ~~used~~associated 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.

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

Cash and equivalents

Griffon considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash equivalents primarily consist of overnight commercial paper, highly-rated liquid money market funds backed by U.S. Treasury securities and U.S. Agency securities, as well as insured bank deposits. Griffon had cash in non-U.S. bank accounts of approximately ~~$26,500~~$54,200 and ~~$24,000~~$65,000 at September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Substantially all U.S. cash and equivalents are in excess of FDIC insured limits. Griffon regularly evaluates the financial stability of all institutions and funds that hold its cash and equivalents.

Fair value of financial instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts and notes payable and revolving credit 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 debt is based upon current market rates.

The fair value hierarchy, as outlined in the applicable accounting guidance, establishes a fair value hierarchy that requires 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:

•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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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.

The fair value of Griffon’s ~~2022 senior notes~~2028 Senior Notes approximated ~~$725,000,~~$833,433, on September 30, ~~2017.~~2022. Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with a value of ~~$3,083~~$3,447 at September 30, ~~2017~~2022 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Other current assets on the consolidated balance sheet.

Items Measured at Fair Value on a Recurring Basis

At September 30, ~~2017~~2022 and ~~2016, trading~~2021, 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~~$62 ($~~1,000~~83 cost basis) and ~~$1,314~~$16,044 ($~~1,000~~15,050 cost basis), respectively, were included in Prepaid and other current assets on the Consolidated Balance Sheets. During the year ended September 30, 2016, the Company settled trading securities with proceeds totaling $715 and recognized a loss of $13 in Other income (expense). During the year ended September 30, 2015, the Company settled all outstanding available-for-sale securities with proceeds totaling $8,891 and recognized a gain of $489 in Other income, and accordingly, a gain of $870, net of tax, on available-for-sale securities was reclassified out of Accumulated other comprehensive income (loss) ("AOCI"). Realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale 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 effect 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 2017 and 2016,~~ 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 ~~USD.~~USD as discussed below.

At September 30, ~~2017~~2022 and ~~2016,~~2021, Griffon had ~~$14,500~~$25,000 and ~~$25,500~~$20,000 of Australian dollar contracts at a weighted average rate of ~~$1.28~~$1.42 and ~~$1.30,~~$1.27, respectively, which qualified for hedge accounting. These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Other comprehensive income (loss) and Prepaid

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses were recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services. ~~AOCI~~Accumulated Other Comprehensive Income (AOCI) included deferred ~~losses~~gains of ~~$175~~$2,017 ($~~114,~~1,412, net of tax) and deferred gains of ~~$1,545~~$1,710 ($~~1,004,~~1,197, net of tax) at September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Upon settlement ~~losses~~gains/(losses) of ~~$(1,458)~~$5,477 and ~~$(752)~~$(2,204) were recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS") during ~~the years ended September 30, 2017~~2022 and ~~September 30, 2016,~~2021, respectively. All contracts expire in 1330 to ~~269~~90 days.

At September 30, ~~2017 and 2016,~~2022, Griffon had ~~$4,690~~$74,250 of Chinese Yuan contracts at a weighted average rate of $6.79, which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and ~~$4,855,~~losses related to changes in fair value deferred and recorded in 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. AOCI included deferred losses of $3,179 ($2,320, net of tax) at September 30, 2022. Upon settlement, losses of $736 were recorded in COGS during 2022. All contracts expire in 11 to 396 days.

At September 30, 2022 and 2021, Griffon had $6,300 and $4,600, respectively, of Canadian dollar contracts at a weighted average rate of ~~$1.25~~$1.28 and ~~$1.31.~~$1.26, respectively. These contracts, which protect Canadian operations from currency fluctuations for U.S. dollar based purchases, do not qualify for hedge accounting and fair value ~~losses~~gains of ~~$378~~$427 and ~~$157~~$38 were recorded in Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs), for the years ended September 30, ~~2017~~2022 and ~~2016,~~2021, respectively. Realized gains (losses) of ~~$200~~$247 and ~~$136,~~$(381) were recorded in Other income during ~~the years ended September 30, 2017~~2022 and ~~September 30, 2016,~~2021, respectively. All contracts expire in 303 to ~~358~~390 days.

Pension plan assets with a fair value of ~~$150,822~~$144,091 at September 30, ~~2017,~~2022, are measured and recorded at fair value based upon quoted prices in active markets for identical assets (level 1 inputs) ~~and~~, quoted market prices for similar assets (level 2 inputs) and fair value assumptions for unobservable inputs in which little or no market data exists (level 3).

The Company accounts for acquisitions under the acquisition method, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition using a method substantially similar to the goodwill impairment test

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

methodology (level 3 inputs). The operating results of the acquired companies are included in Griffon’s consolidated financial statements from the date of acquisition in each instance.

Non-U.S. currency translation

Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar, have been translated at year-end exchange rates and profit and loss accounts have been translated using weighted average exchange ~~rates.~~rates during the applicable fiscal year. Adjustments resulting from currency translation ~~have been~~are recorded ~~in the equity section of the balance sheet~~ in AOCI as cumulative translation adjustments. ~~Cumulative~~The Company recognized cumulative translation ~~adjustments were~~losses of $37,920 during 2022 and gains ~~(losses)~~ of ~~$32,227 and $42,894 at~~$6,433 during 2021. As of September 30, ~~2017~~2022 and ~~2016,~~2021, the cumulative foreign currency translation recorded in AOCI was a loss of $57,170 and $19,250, respectively. Assets and liabilities of an entity that are denominated in currencies other than that entity’s functional currency are ~~remeasured~~re-measured into the functional currency using period end exchange rates, or historical rates where applicable to certain balances. Gains and losses arising on remeasurements are recorded within the Consolidated Statement of Operations and Comprehensive Income ~~(Loss)~~ as a component of Other income (expense).

Revenue recognition

~~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 ~~following circumstances are satisfied: a) persuasive evidence of an arrangement exists, b) delivery has occurred, title has~~promised products is transferred to the customer, or services are ~~rendered, c) price~~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 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, and revenue is ~~fixed and determinable and d) collectability is reasonably assured. Goods are sold on terms that transfer~~recognized when title, and risk and rewards of loss at a specified location. Revenue recognition from product sales occurs when all factors are met, including transfer of title and risk of loss, which occurs either upon shipment or upon receipt by customers at the location specified in the terms of sale. Other than standard product warranty provisions, sales arrangements provide for no other significant post-shipment obligations. From time to time and for certain customers, rebates and other sales incentives, promotional allowances or discounts are offered, typically related to customer purchase volumes, all of which are fixed or determinable and are classified as a reduction of revenue and recorded at the time of sale. Griffon provides for sales returns allowances based upon historical returns experience.

Telephonics earns a substantial portion of its revenue as either a prime or subcontractor from contract awards with the U.S. Government, as well as non-U.S. governments and other commercial customers. These formal contracts are typically long-term in nature, usually greater than one year. Revenue and profits from these long-term fixed price contracts are recognized under the percentage-of-completion method of accounting. Revenue and profits on fixed-price contracts that contain engineering as well as production requirements are recorded based on the ratio of total actual incurred costs to dateownership, have transferred to the ~~total estimated costs~~customer, which is generally upon shipment.

Refer to Note 2 - Revenue for each contract (cost-to-cost method). Using the cost-to-cost method, revenue is recorded at amounts equal to the ratio of actual cumulative costs incurred divided by total estimated costs at completion, multiplied by the total estimated contract revenue, less the cumulative revenue recognized in prior periods. The profit recorded on a contract using this method is equal to the current estimated total profit margin multiplied by the cumulative revenue recognized, less the amount of cumulative profit previously recorded for the contract in prior periods. As this method relies on the substantial use of estimates, these projections may be revised throughout the life of a contract. Components of this formula and ratio that may be estimated include gross profit margin and total costs at completion. The cost performance and estimates to complete on long-term contracts are reviewed, at a minimum, on a quarterly basis, as well as when information becomes available that would necessitate a review of the current estimate. Adjustments to estimates for a contract’s estimated costs at completion and estimated profit or loss often are required as experience is gained, and as more ~~information is obtained, even though the scope of work required under the contract may or may not change, or if contract~~detail.

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

modifications occur. The impact of such adjustments or changes to estimates is made on a cumulative basis in the period when such information has become known. In 2017, 2016 and 2015, income from operations included net favorable/(unfavorable) catch-up adjustments approximating $600, $(700) and $(400), respectively. Gross profit is affected by a variety of factors, including the mix of products, systems and services, production efficiencies, price competition and general economic conditions.

Revenue and profits on cost-reimbursable type contracts are recognized as allowable costs, and are incurred on the contract at an amount equal to the allowable costs plus the estimated profit on those costs. The estimated profit on a cost-reimbursable contract may be fixed or variable based on the contractual fee arrangement. Incentive and award fees on these contracts are recorded as revenue when the criteria under which they are earned are reasonably assured of being met and can be estimated.

For contracts in which anticipated total costs exceed the total expected revenue, an estimated loss is recognized in the period when identifiable. A provision for the entire amount of the estimated loss is recorded on a cumulative basis. The estimated remaining costs to complete loss contracts as of September 30, 2017 was $9,900 and is recorded as a reduction to gross margin on the Consolidated Statements of Operations and Comprehensive Income (Loss). This loss had an immaterial impact on Griffon's Consolidated Financial Statements.

Accounts receivable, expected loss allowance for doubtful accounts and concentrations of credit risk

Accounts receivable is composed principally of trade accounts receivable, that arise from the sale of goods or services on account, and is stated at historical cost. A substantial portion of Griffon’s trade receivables are from ~~customers of HBP, of which the largest customer is~~ Home Depot, whose financial condition is dependent on the construction and related retail sectors of the economy. As a percentage of consolidated accounts receivable, ~~U.S. Government related programs were 16% and~~ Home Depot was ~~19%~~17%. Griffon performs continuing evaluations of the financial condition of its customers, and although Griffon generally does not require collateral, letters of credit may be required from customers in certain circumstances.

Trade receivables are recorded at the stated amount, less expected loss allowance for doubtful accounts and, when appropriate, for customer program reserves and cash discounts. The expected loss allowance represents estimated uncollectible receivables associated with potential customer defaults on contractual obligations (usually due to customers’ potential insolvency). The expected loss allowance for doubtful accounts includes amounts for certain customers where a risk of default 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 estimable, but cannot yet be associated with specific customers. The provision related to the expected loss allowance for doubtful accounts is recorded in Selling, general and administrative ("SG&A") expenses. The Company writes-off accounts receivable when they are deemed to be uncollectible.

Customer program reserves and cash discounts are netted against accounts receivable when it is customer practice to reduce invoices for these amounts. The amounts netted against accounts receivable in ~~2017~~2022 and ~~2016~~2021 were ~~$11,249~~$69,656 and ~~$8,509,~~$49,833, respectively.

All accounts receivable amounts are expected to be collected in less than one year.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The Company does not currently have customers or contracts that prescribe specific retainage provisions.

~~Contract costs and recognized income not yet billed~~

Contract costs and recognized income not yet billed consists of amounts accounted for under the percentage of completion method of accounting, recoverable costs and accrued profit that cannot yet be invoiced under the terms of certain long-term contracts. Amounts will be invoiced when applicable contract terms, such as the achievement of specified milestones or product delivery, are met. At September 30, 2017 and 2016, approximately $20,100 and $12,000, respectively, of contract costs and recognized income not yet billed were expected to be collected after one year. As of September 30, 2017 and 2016, the unbilled receivable balance included $2,850 and $2,600, respectively, of reserves for contract risk.

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

Inventories

Inventories, stated at the lower of cost (first-in, first-out or average) or ~~market,~~net realizable value, include material, labor and manufacturing overhead costs.

Griffon’s businesses typically do not require inventory that is susceptible to becoming obsolete or dated. In general, ~~Telephonics sells products in connection with programs authorized and approved under contracts awarded by the U.S. Government or agencies thereof and in accordance with customer specifications.~~ HBP produces residential and commercial sectional garage doors, commercial rolling steel door and grille products, and CPP produces long-handled tools and landscaping products, and storage and organizational products, both in response to orders from customers of retailers and dealers or based on expected orders, as applicable.

~~Property, plant and equipment~~Long-Lived Assets, Including Intangible Assets

Property, plant and equipment includes the historical cost of land, buildings, equipment and significant improvements to existing plant and equipment or, in the case of acquisitions, a fair market value appraisal of such assets completed at the time of acquisition. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When property or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and the gain or loss is recognized. ~~No event or indicator of impairment occurred during the three years ended September 30, 2017, which would require additional impairment testing of property, plant and equipment.~~

Depreciation expense, which includes amortization of assets under capital leases, was ~~$41,220, $39,734~~$46,443, $42,741 and ~~$39,120 for the years ended September 30, 2017, 2016~~$42,614 in 2022, 2021 and ~~2015,~~2020, respectively, and was calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation included in SG&A expenses was ~~$12,995, $11,721~~$16,683, $14,362 and ~~$11,769 for the years ended September 30, 2017, 2016~~$13,944 in 2022, 2021 and ~~2015.~~2020, respectively. The remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services. Estimated useful lives for property, plant and equipment are as follows: buildings and building improvements, 25 to 40 years; machinery and equipment, 2 to 15 ~~years~~years; and leasehold improvements, over the term of the lease or life of the improvement, whichever is shorter.

Capitalized interest costs included in Property, plant and equipment were ~~$4,807, $3,844~~$1,739, $1,592 and ~~$4,165~~$2,098 for the years ended September 30, ~~2017, 2016~~2022, 2021 and ~~2015,~~2020, respectively. The original cost of fully-depreciated property, plant and equipment remaining in use at September 30, ~~2017~~2022 was approximately ~~$286,056.~~$274,783.

Long-lived assets, including customer relationships and software, and tangible assets, primarily property, plant and equipment, are amortized over their expected useful lives, which involve significant assumptions and estimates. We assess the recoverability of the carrying amount of our long-lived assets, including amortizable intangible assets, whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. We evaluate the recoverability of such assets based on the expectations of undiscounted cash flows attributable to the asset group. If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset group, a loss would be recognized for the difference between the fair value and the carrying amount. For the fiscal year ended September 30, 2022, we tested long-lived intangible and tangible assets for impairment by comparing estimated future undiscounted cash flows of each CPP asset group to the carrying amount of the asset group and determined that an impairment did not exist. No event or indicator of impairment existed for the HBP assets groups.

Goodwill and indefinite-lived intangibles

Goodwill isrepresents the excess of the ~~acquisition~~ cost of anet assets acquired in business combinations over the fair value of the identifiable ~~net~~tangible and intangible assets ~~acquired. Goodwill is~~acquired and liabilities assumed in a business combination.

We test goodwill and indefinite-lived intangibles for impairment at least annually in the fourth quarter, and more frequently whenever events or circumstances change that would more likely than not ~~amortized, but is subject to an annual impairment test unless during an interim period, impairment indicators such as a~~reduce the fair value below the carrying amount. Such events or changes in circumstance include significant ~~change~~deterioration in overall economic conditions, changes in the business climate ~~exist.~~

Griffon performed its annual impairment testing of goodwill as of September 30, 2017. The performance of the test involves a two-step process. The first step involves comparing the fair value of Griffon’sin which our reporting units with the reporting unit’s carrying amount, including goodwill. Griffon generally determines the fair value of its reporting units using the income approach methodology of valuation that includes the present value of expected future cash flows. This method usesoperate, a decline in our market ~~assumptions specific to Griffon’s reporting units. If the carrying amount~~capitalization, operating performance indicators, when some portion of a reporting unit ~~exceeds~~is disposed of or classified as held for sale, or when a change in the ~~reporting unit’s fair value, Griffon performs the second step~~composition of ~~the goodwill impairment test to determine the amount of impairment loss. The second step compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.~~

~~Griffon defines its~~ reporting units occurs for other reasons, such as ~~its two reportable segments: HBP~~a change in operating segments. To test goodwill and ~~Telephonics. Before Griffon classified PPC into discontinued operations, it had considered PPC to be~~indefinite-lived intangible assets for impairment, we may perform both a ~~reportable segment~~qualitative assessment and ~~reporting unit and tested PPC separately as part of its annual impairment testing of goodwill as of September 30, 2017. At September 30, 2017, HBP consisted of two components, AMES and CBP, which due~~quantitative assessment. If we elect to ~~their similar economic characteristics, are aggregated into one reporting unit for goodwill testing.~~

~~Griffon used 5 year projections and~~perform a 3.0% terminal value to which discount rates between 7.5% and 9.5% were applied to calculate each unit’s fair value. To substantiate fair values derived from the income approach methodology of valuation, the implied fair value was compared to the marketplace fair value of a comparable industry grouping for reasonableness. Further, the fair values were reconciled to Griffon’s market capitalization. Both market comparisons supported the implied fair values. Any changes in

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

qualitative assessment, we consider operating results as well as circumstances impacting the operations or cash flows of the reporting unit or indefinite-lived intangible assets, including macroeconomic conditions, industry and market conditions and reporting unit events and circumstances. For the quantitative test, the assessment is based on both an income-based and market-based valuation approach. If it is determined that an impairment exists, we recognize an impairment loss for the amount by which the carrying amount of the reporting unit or indefinite-lived intangible asset exceeds its estimated fair value.

Fair value estimates are based on assumptions believed to be reasonable at the time, but such assumptions are subject to inherent uncertainty. Actual results may differ materially from those estimates. Any changes in key assumptions or management judgment with respect to a reporting unit or its prospects, which may result from a decline in Griffon’s stock price, a change in market conditions, market trends, interest rates or other factors outside of Griffon’s control, or significant underperformance relative to historical or ~~project~~projected future operating results, could result in a significantly different estimate of the fair value of ~~the~~Griffon’s reporting units, which could result in ~~a future~~an impairment charge ~~(level 3 inputs).~~in the future.

~~Based upon~~For the ~~results~~fiscal year ended September 30, 2022, we performed a qualitative assessment of the ~~annual impairment review, it was~~HBP reporting unit and determined that indicators that the fair value ~~of each reporting unit substantially exceeded~~was less than the carrying ~~value of the assets, as performed under step one, and no impairment existed.~~

~~Similar to goodwill, Griffon tests indefinite-lived intangible assets at least annually and when~~amount were not present. However, indicators of impairment ~~exist. Griffon uses~~were present for our CPP reporting units driven by a ~~discounted cash flow method~~decrease in comparable company market multiples and an increase in interest rates and the related impact on weighted average cost of capital rates. As such, in connection with the preparation of our financial statements for the fiscal year ended September 30, 2022, we performed a quantitative assessment of the CPP reporting units using both an income-based and market-based approach. The impairment tests resulted in a pre-tax, non-cash goodwill impairment charge of $342,027. Further, we compared the estimated fair values of the CPP indefinite lived intangibles to ~~calculate~~their carrying values which resulted in a pre-tax, non-cash impairment charge of $175,000.

Leases

On October 1, 2019, the Company adopted the Accounting Standards Codifications ("ASC") Topic 842, Leases, which requires the recording of operating lease Right-of-Use ("ROU") assets and ~~compare~~operating lease liabilities. Finance leases were not impacted by the ~~fair~~adoption of ASC Topic 842, as finance lease liabilities and the corresponding assets were already recorded in the balance sheet under the previous guidance, ASC Topic 840. The Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also elected a practical expedient to determine the reasonably certain lease term.

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 ~~intangible to its book value. This method uses market assumptions specific to Griffon’s reporting units, which are reasonable and supportable. If~~lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the ~~fair value is less than~~information available at the ~~book~~commencement date in determining the present value of lease payments. We use the ~~indefinite-lived intangibles,~~implicit rate when readily determinable. For leases existing as of October 1, 2019, we have elected to use the remaining lease term as of the adoption date in determining the incremental borrowing rate. 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.

The Company determines if an ~~impairment charge would be recognized.~~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.

~~There was no impairment related to~~

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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 ~~goodwill or indefinite-lived intangible at September 30, 2017, 2016 or 2015.~~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. The Company has lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance).

Definite-lived long-lived assets

Amortizable intangible assets are carried at cost less accumulated amortization. For financial reporting purposes, definite-lived intangible assets are amortized on a straight-line basis over their useful lives, generally eight to twenty-five years.Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.

There were no indicators of impairment during the three years ending September 30, ~~2017.~~2022.

Income taxes

~~Income~~We are subject to Federal, state and local income taxes ~~are accounted for under~~in the ~~liability method. Deferred taxes reflect~~U.S. and in various taxing jurisdictions outside the U.S. We recognize deferred tax ~~consequences on future years of differences between the tax basis of~~ assets and liabilities ~~and their~~for the expected future tax consequences of events that have been included in the financial ~~reporting amounts. The carrying value of Griffon’s~~statements or tax returns in accordance with applicable accounting guidance for accounting for income taxes, using currently enacted tax rates in effect for the year in which the differences are expected to reverse.

We record a valuation allowance when necessary to reduce deferred tax assets ~~is dependent upon Griffon’s ability~~ to ~~generate sufficient future taxable income in certain~~the amount expected to be realized. Deferred tax ~~jurisdictions. Should Griffon determine that~~assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be ~~realized,~~realized. Both positive and negative evidence are considered in forming our judgment as to whether a valuation allowance ~~against~~is appropriate, and more weight is given to evidence that can be objectively verified. Valuation allowances are reassessed whenever there are changes in circumstances that may cause a change in judgment.

The accounting for uncertainty in income taxes requires a more-likely-than-not threshold for financial statement recognition of tax positions taken or expected to be taken in a tax return. We record, as needed, a liability for the ~~deferred~~difference between the benefit recognized for financial statement purposes and the tax ~~assets would~~position taken or expected to be ~~established~~taken on our tax return. To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period ~~such~~in which the determination ~~was~~is made.

Griffon provides for uncertain tax positions and any related interest and penalties based upon Management’s assessment of whether a tax benefit is more likely than not of being sustained upon examination by tax authorities. At September 30, 2017 Griffon believes that it has appropriately accounted for all unrecognized tax benefits. As of September 30, 2017, 2016 and 2015, Griffon has recorded unrecognized tax benefits in the amount of ~~$4,825, $4,709 and $6,613, respectively. Accrued interest and penalties related to income tax matters are recorded in the provision for income taxes.~~

Research and development costs, shipping and handling costs and advertising costs

Research and development costs ~~not recoverable under contractual arrangements~~ are charged to SG&A expense as incurred and amounted to ~~$17,700, $18,000~~approximately $16,000 in 2022, $7,000 in 2021 and ~~$15,800~~$8,000 in ~~2017, 2016 and 2015, respectively.~~2020.

~~SG&A expenses include~~Total shipping and handling costs were $130,830 in 2022, $113,700 in 2021 and $100,135 in 2020, of ~~$32,500~~which $69,000 in ~~2017, $30,600~~2022, $58,100 in ~~2016~~2021 and ~~$33,100~~$54,500 in ~~2015 and advertising~~2020 were included in SG&A. Advertising costs, which are expensed as incurred ofin SG&A, was $22,000 in ~~2017, $23,000~~2022, $19,000 in ~~2016~~2021 and ~~$23,000~~$18,000 in ~~2015.~~2020.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Risk, retention and insurance

Griffon’s property and casualty insurance programs contain various deductibles that, based on Griffon’s experience, are reasonable and customary for a company of its size and risk profile. Griffon generally maintains deductibles for claims and liabilities related primarily to workers’ compensation, general, product and automobile liability as well as property damage and business interruption losses resulting from certain events. Griffon does not consider any of the deductibles to represent a material risk to Griffon. Griffon accrues for claim exposures that are probable of occurrence and can be reasonably estimated. Insurance is maintained to transfer risk beyond the level of self-retention and provides protection on both an individual claim and annual aggregate basis.

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

Pension benefits

Griffon sponsors defined and supplemental benefit pension plans for certain retired employees. Annual amounts relating to these plans are recorded based on actuarial projections, which include various actuarial assumptions, including discount rates, assumed rates of return, compensation increases and turnover rates. Actuarial assumptions used to determine pension liabilities, assets and expense are reviewed annually and modified based on current economic conditions and trends. The expected return on plan assets is determined based on the nature of the plan's investments and expectations for long-term rates of return. The discount rate used to measure obligations is based on a corporate bond spot-rate yield curve that matches projected future benefit payments, with the appropriate spot rate applicable to the timing of the projected future benefit payments. Assumptions used in determining Griffon’s obligations under the defined benefit pension plans are believed to be reasonable, based on experience and advice from independent actuaries; however, differences in actual experience or changes in assumptions may materially impact Griffon’s financial position or results of operations.

All of the defined benefit plans are frozen and have ceased accruing benefits.

~~Newly issued~~The Company’s non-service cost components of net periodic benefit plan cost was a benefit of $4,256, $907 and $1,559 during 2022, 2021, and 2020 respectively.

Issued but not yet effective accounting pronouncements

In May 2017, the FASB issued guidance to address the situation when a company modifies the terms of a stock compensation award previously granted to an employee. This guidance is effective, and should be applied prospectively, 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 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 August 2016,~~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 December 2019, the FASB issued guidance on simplifying the ~~Statement~~accounting for income taxes by clarifying and amending existing guidance related to the recognition of ~~Cash Flows Classification~~franchise tax, the evaluation of ~~certain cash receipts~~a step up in the tax basis of goodwill, and ~~cash payments (a consensus~~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 clarify disclosure requirements related to defined benefit pension and other post-retirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and was effective for the Company in our fiscal year beginning October 1, 2021. Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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 2 – 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 ~~emerging issues take force)~~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). ~~This guidance addresses~~

A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when each performance obligation is satisfied. A majority of the Company’s contracts have a single performance obligation which represents, in most cases, the product being sold to the customer. To a lesser extent, some contracts include multiple performance obligations such as a product, the related installation, and extended warranty services. These contracts require judgment in determining the number of performance obligations. For contracts with multiple performance obligations, judgment is required to determine whether performance obligations specified in these contacts are distinct and should be accounted for as separate revenue transactions for recognition purposes. In these types of contracts, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses an observable price to determine the stand-alone selling price for separate performance obligations or a cost plus margin approach when one is not available. The transaction price includes variable consideration, such as discounts and volume rebates, when it is probable that a significant reversal of revenue recognized will not occur. Variable consideration is determined using either the expected value or the most likely amount of consideration to be received based on historical experience and the specific facts and circumstances at the time of evaluation.

See Note 18 - Business Segments for revenue from contracts with customers disaggregated by end markets, segments and geographic location.

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 and revenue is recognized when title, and risk and rewards of ownership, have transferred to the customer, which is generally upon shipment.

A majority of the Company's revenue is short cycle in nature with shipments occurring within one year from order and does not include a material long-term financing component, implicitly or explicitly. Payment terms generally range between 15 to 90 days and vary by the location of the business, the type of products manufactured to be sold and the volume of products sold, among other factors.

The Company recognizes revenue from product sales when all factors are met, including when control of a product transfers to the customer upon its shipment, completion of installation, testing, certification or other substantive acceptance required under the contract. Other than standard product warranty provisions, sales arrangements provide for no other significant post-shipment obligations on the Company. From time-to-time and for certain customers, rebates and other sales incentives, promotional allowances or discounts are offered, typically related to customer purchase volumes, all of which are fixed or determinable and are classified as a reduction of revenue and recorded at the time of sale. Griffon provides for sales returns and allowances based upon historical returns experience. The Company includes shipping costs billed to customers in revenue and the related shipping costs in either Cost of Goods and Services or Selling, General and Administrative expenses.

The majority of the Company’s contracts offer assurance-type warranties in connection with the sale of a product to a customer. Assurance-type warranties provide a customer with assurance that the related product will function as the parties intended because it complies with agreed-upon specifications. Such warranties do not represent a separate performance obligation.

Payment terms vary depending on the type and location of the customer and the products or services offered. Generally, the period between the time revenue is recognized and the time payment is due is not significant. Shipping and handling charges

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

are not considered a separate performance obligation. Additionally, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.

NOTE 3 — ACQUISITIONS

Griffon continually evaluates potential acquisitions that either 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 as business combinations, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition and have resulted in the recognition of goodwill. The operating results of the business acquisitions are included in Griffon’s consolidated financial statements from the date of acquisition.

On December 17, 2021, Griffon entered into a definitive agreement to acquire Hunter, a market leader in residential ceiling, commercial, and industrial fans, from MidOcean for a contractual purchase price of $845,000 and completed the acquisition on January 24, 2022. The acquisition was primarily financed with a new $800,000 seven year Term Loan B facility; we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures. Hunter complements and diversifies Griffon's portfolio of leading consumer brands and products. Since the date of acquisition through September 30, 2022, Hunter's revenue and Segment Adjusted EBITDA was $246,474 and $43,579, respectively. The goodwill recognized was $258,536, which was assigned to the CPP segment, and is not expected to be deductible for income tax purposes. The final purchase price allocation, which is expected to be completed in the first quarter of fiscal 2023, will be based on final appraisals and other analysis of fair values of acquired assets and liabilities. The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on October 1, 2020:


	Proforma For the Year Ended September 30, (unaudited)
	2022		2021

Revenue	$	2,938,998	$	2,624,378
Income (loss) from continuing operations	(288,062)		77,804

Griffon did not include any material, nonrecurring proforma adjustments directly attributable to the business combination 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 Telephonics business as a discontinued operation, to the historical results of Hunter after applying Griffon’s accounting policies and the following ~~eight~~proforma adjustments:

•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, 2021.

•Additional interest and related expenses from the new $800,000 seven year Term Loan B facility that Griffon used to acquire Hunter Fan reduced by historical Hunter interest expense.

•The tax effects on the above adjustments using the statutory tax rate of 25.7% for Griffon and 27.1% for Hunter.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The calculation of the preliminary purchase price allocation is as follows:



Accounts receivable (1)	$	64,602
Inventories(2)	110,299
Other current assets	7,940
Property, plant and equipment	15,007
Operating lease right-of-use assets	12,447
Goodwill	258,536
Intangible assets	616,000

Total assets acquired	$	1,084,831

Accounts payable and accrued liabilities	69,789
Current portion of operating lease liabilities	3,323
Deferred tax liability(3)	147,294
Long-term operating lease liabilities	9,123
Other long-term liabilities	3,848
Total liabilities assumed	233,377
Total net assets acquired	$	851,454

(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.

(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 for the Hunter acquisition are as follows:


	Average Life (Years)
Goodwill		$	258,536	N/A
Indefinite-lived intangibles (Hunter and Casablanca brands)	356,000	N/A
Definite-lived intangibles (Customer relationships)	260,000	20
Total goodwill and intangible assets		$	874,536

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects for a purchase price of AUD $3,500 (approximately $2,700) in cash. The final purchase price allocated to goodwill and acquired intangibles was AUD $1,038 (approximately $784) and AUD $2,755 (approximately $2,082), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

On November 29, 2019, AMES acquired 100% of the outstanding stock of Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK 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. The purchase price was finalized and goodwill of GBP 3,449 and acquired intangible assets of GBP 3,454, was assigned to the CPP segment and is deductible for tax purposes. The purchase price was also allocated to inventory of GBP 2,914, accounts receivable and other assets of GBP 2,492 and accounts payable and other accrued liabilities of GBP 3,765,

During the year ended September 30, 2022, SG&A included acquisition costs of $9,303. During the year ended September 30, 2021, acquisition related costs were de minimis. During the year ended September 30, 2020, SG&A included acquisition costs of $2,960.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

NOTE 4 — INVENTORIES

The following table details the components of inventory:


	At September 30, 2022		At September 30, 2021
Raw materials and supplies	$	173,520	$	133,684
Work in process	50,963		48,531
Finished goods	444,710		290,579
Total	$	669,193	$	472,794

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT

The following table details the components of property, plant and equipment, net:


	At September 30, 2022		At September 30, 2021
Land, building and building improvements	$	159,693	$	155,574
Machinery and equipment	511,779		520,110
Leasehold improvements	35,489		39,912
	706,961		715,596
Accumulated depreciation and amortization	(412,400)		(425,374)
Total	$	294,561	$	290,222

Except as described in Note 10, Restructuring Charges, no impairment occurred during the year ended September 30, 2022 .

NOTE 6 – CREDIT LOSSES

Effective October 1, 2020, the Company adopted accounting guidance related to accounting for credit losses on financial instruments, including trade receivables (ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments).The guidance requires companies to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance.

The Company is exposed to credit losses primarily through sales of products 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 aging 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 a risk of default 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 estimable, but cannot yet be associated with specific ~~cash flow issues: Debt prepayment or debt extinguishment costs; settlement~~customers. Allowance for discounts and returns are recorded as a reduction of ~~zero-coupon debt instruments or~~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 ~~debt instruments~~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 ~~coupon~~this guidance in all material respects.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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:


Beginning Balance, October 1, 2020	$	8,178
Provision for expected credit losses	795
Amounts written off charged against the allowance	(393)
Other, primarily foreign currency translation	207
Ending Balance, September 30, 2021	$	8,787
Allowance for credit losses acquired	2,598
Provision for expected credit losses	1,172
Amounts written off charged against the allowance	(251)
Other, primarily foreign currency translation	(169)
Ending Balance, September 30, 2022	$	12,137

NOTE 7 — GOODWILL AND INTANGIBLES

For the fiscal year ended September 30, 2022, we performed a qualitative assessment of the HBP reporting unit and determined that indicators that the fair value was less than the carrying amount were not present. However, indicators of impairment were present for our CPP reporting units driven by a decrease in comparable company market multiples and an increase in interest rates and the related impact on weighted average cost of capital rates. As such, in connection with the preparation of our financial statements for the fiscal year ended September 30, 2022, we performed a quantitative assessment of the CPP reporting units using both an income based and market-based valuation approach. The impairment tests resulted in a pre-tax, non-cash goodwill impairment charge of $342,027 to the CPP reporting units.

The following table provides changes in carrying value of goodwill by segment through the year ended September 30, 2022:


	At September 30, 2020		Goodwill from acquisitions (a)		Foreign currency translation adjustments		At September 30, 2021		Goodwill from acquisitions (a)		Accumulated Impairment Charges		Foreign currency translation adjustments		At September 30, 2022
Consumer and Professional Products	$	232,845	$	784	$	1,266	$	234,895	$	258,536	$	(342,027)	$	(6,867)	$	144,537
Home and Building Products	191,253		—		—		191,253		—		—		—		191,253

Total	$	424,098	$	784	$	1,266	$	426,148	$	258,536	$	(342,027)	$	(6,867)	$	335,790

(a) The increase in the CPP segment was due to the acquisitions of Hunter in 2022 and Quatro in 2021.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

In connection with the preparation of our financial statements for the fiscal year ended September 30, 2022, indicators of impairment were present for our CPP indefinite-lived intangible assets. As such, we determined the fair values of the indefinite-lived intangible assets by using the relief from royalty method, which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are ~~insignificant~~saved by owning the asset rather than licensing it. We compared the estimated fair values to their carrying amounts. The impairment tests resulted in ~~relation~~a pre-tax, non-cash impairment charge of $175,000 to the ~~effective interest rate~~gross carrying amount of our Trademarks. The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:


	At September 30, 2022					At September 30, 2021
	Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Customer relationships & other	$	442,085	$	91,143	23	$	187,732	$	75,794
Unpatented technology	14,326		3,022		13	13,429		2,439
Total amortizable intangible assets	456,411		94,165			201,161		78,233
Trademarks	399,668		—			227,097		—
Total intangible assets	$	856,079	$	94,165		$	428,258	$	78,233

The gross carrying amount of intangible assets was impacted by $14,234 related to foreign currency translation.

Amortization expense for intangible assets subject to amortization was $18,215, $9,561 and $9,486 in 2022, 2021 and 2020, respectively. The increase in amortization expense in 2022 compared to the prior year was related to Intangible assets acquired in connection with the Hunter acquisition. Amortization expense for each of the ~~borrowing; contingent consideration payments made after~~next five years and thereafter, based on current intangible balances and classifications, is estimated as follows: 2023 - $21,785; 2024 - $21,305; 2025 - $21,305; 2026 - $21,305 and 2027 - $21,305; thereafter - $255,241.

NOTE 8 — DISCONTINUED OPERATIONS

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its DE segment, which consisted of its Telephonics subsidiary. On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000 in cash, excluding customary post-closing adjustments, primarily related to working capital.In connection with the sale of Telephonics, the Company recorded a ~~business combination; proceeds~~gain of $107,517 ($89,241, net of tax) for the year ended September 30, 2022.The gain and related tax for the sale of Telephonics is preliminary and is subject to finalization.

In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations 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 discontinued operations 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 discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the ~~settlement~~net income (loss) of ~~insurance claims; proceeds~~continuing operations.

Defense Electronics (DE or Telephonics)

The following amounts related to Telephonics have been segregated from Griffon's continuing operations and are reported as discontinued operations:

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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


	For the Year Ended September 30,
	2022		2021		2020
Revenue	$	161,061	$	271,060	$	340,976
Cost of goods and services	125,208		232,075		285,022
Gross profit	35,853		38,985		55,954
Selling, general and administrative expenses	26,423		35,532		42,314


Income from discontinued operations	9,430		3,453		13,640
Other income (expense)
Gain on sale of business	107,517		5,291		—
Interest income, net	2		117		4
Other, net	(604)		1,260		1,632
Total other income (expense)	106,915		6,668		1,636
Income from discontinued operations before tax	$	116,345	$	10,121	$	15,276
Provision for income taxes	20,188		1212		3,291
Income from discontinued operations	96,157		8,909		11,985

Depreciation and amortization was excluded from the ~~settlement~~current year results since DE was classified as a discontinued operation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines.Depreciation and amortization for fiscal 2022 would have been approximately $7,442 through the date of ~~corporate-owned life~~disposition on June 27, 2022.

As noted above, the Company completed the sale of Telephonics on June 27, 2022.The following amounts related to Telephonics were classified as assets and liabilities of discontinued operations held for sale in the consolidated balance sheet as of September 30, 2021:


	At September 30,
	2021
CURRENT ASSETS

Accounts receivable, net	42,020
Contract assets, net of progress payments	72,983
Inventories	83,970
Prepaid and other current assets	4,409
PROPERTY, PLANT AND EQUIPMENT, net	45,371
OPERATING LEASE RIGHT-OF-USE ASSETS	1,167
GOODWILL	17,734
INTANGIBLE ASSETS, net	131
OTHER ASSETS	5,629
Total Assets Held for Sale	$	273,414
CURRENT LIABILITIES

Accounts payable	60,486
Accrued liabilities	15,153
Current portion of operating lease liabilities	287

LONG-TERM OPERATING LEASE LIABILITIES	867
OTHER LIABILITIES	3,955
Total Liabilities Held for Sale	$	80,748

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The following amounts summarize the total assets and liabilities related to Telephonics, Installation Services and other discontinued activities which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets:


	At September 30, 2022		At September 30, 2021
Assets of discontinued operations:
Prepaid and other current assets	$	1,189	$	605
Other long-term assets	4,586		3,424
Total assets of discontinued operations	$	5,775	$	4,029

Liabilities of discontinued operations:
Accrued liabilities, current	$	12,656	$	3,280
Other long-term liabilities	4,262		3,794
Total liabilities of discontinued operations	$	16,918	$	7,074

Accrued liabilities as of September 30, 2022 includes the Company's obligation of $8,846 in connection with the sale of Telephonics primarily related to certain customary post-closing adjustments, primarily working capital and stay bonuses.

At September 30, 2022 and 2021,Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance ~~policies (including bank-owned life~~claims, income taxes, product liability, warranty and environmental reserves totaling$10,049 and $7,074, respectively.The increase in assets and liabilities for Installations Services and other discontinued operations was primarily associated with insurance ~~policies); distributions received~~claims receivable and payable.

Except for revenue from ~~equity method investees; beneficial interests~~the Telephonics business, as noted above, there was no reported revenue in ~~securitization transactions;~~2022, 2021 and ~~separately identifiable cash flows~~2020 for Installations Services and other discontinued operations.

NOTE 9 — ACCRUED LIABILITIES

The following table details the components of accrued liabilities:


	At September 30, 2022		At September 30, 2021
Compensation	$	77,823	$	72,982
Interest	6,798		4,156
Warranties and rebates	18,965		11,529
Insurance	10,533		10,390
Rent, utilities and freight	7,571		10,333
Income and other taxes	22,570		11,091
Marketing and advertising	6,682		4,665

Restructuring	650		682

Other	20,205		19,100
Total	$	171,797	$	144,928

NOTE 10 – RESTRUCTURING CHARGES

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

~~application~~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 ~~predominance principle. This guidance~~business. Future investments in equipment, particularly for automation, will be ~~effective for~~part of normal-course annual capital expenditures.

This initiative included three key development areas.First, certain AMES U.S. and global operations were consolidated to optimize facilities footprint and talent. Second, strategic investments in automation and facilities expansion were made to increase the ~~Company beginning in fiscal 2019. We are currently evaluating~~efficiency of our manufacturing and fulfillment operations, and support e-commerce growth.Third, multiple independent information systems were unified into a single data and analytics platform, which will serve the ~~impact~~whole AMES global enterprise.

The cost to implement this new business platform, over the duration of the ~~guidance on~~project, included one-time charges of approximately $51,869 and capital investments of approximately $15,000, net of future proceeds from the ~~Company's financial condition, results~~sale 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 valueexited facilities. Total cumulative charges 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 fiscal 2019. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures.

~~Recently adopted accounting pronouncements~~

In March 2016, the FASB issued guidance on Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement$51,869 consisted of cash ~~flows. The amendments are effective~~charges totaling $35,691 and non-cash, asset-related charges totaling $16,178; the cash charges included $12,934 for ~~annual periods,~~one-time termination benefits and interim reporting periods within those annual periods, beginning after December 15, 2016 using either prospective, retrospective or modified retrospective transition method, depending on the area covered in this guidance. The Company early adopted this guidance in fiscal 2016 in order to simplify the accountingother personnel-related costs and $22,757 for ~~employee share-based payments..~~facility exit costs.As a result of these transactions, headcount was reduced by approximately 420.

~~Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation was recognized within income tax expense for~~In the year ended September 30, ~~2016. Under prior guidance, windfalls were recognized to Capital in excess~~2022, CPP incurred pre-tax restructuring and related exit costs approximating $16,782. Cash charges totaled $11,951 and non-cash, asset-related charges totaled $4,831; the cash charges included $4,124 for one-time termination benefits and other personnel related costs and $7,827 for facility exit costs. Non-cash charges included a $3,805 of ~~par~~inventory that have no recoverable value and ~~shortfalls were only recognized~~$1,026 primarily related to ~~the extent they exceed the pool~~disposal of ~~windfall tax benefits. As a result of the adoption, a tax benefit of $2,193 was recognized within income tax expense reflecting the excess tax benefits for~~fixed assets at several manufacturing locations.

In the year ended September 30, ~~2016. The adoption was on a prospective basis~~2021, CPP incurred pre-tax restructuring and ~~therefore had~~related exit costs approximating $21,418. Cash charges totaled $14,763 and non-cash, asset-related charges totaled $6,655; the cash charges included $3,190 for one-time termination benefits and other personnel-related costs and $11,573 for facility and lease exit costs primarily driven by the consolidation of distribution facilities and system optimization. Non-cash charges of $6,655 predominantly related to inventory of $4,158 that have no impact on prior years. Additionally, income tax benefits at settlement of an award were previously reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. Griffon has elected to apply that change in cash flow classification on a prospective basis, which has resulted in a $2,291 increase to net cash provided by operating activitiesrecoverable value, and a ~~corresponding increase~~$1,882 impairment charge related to ~~net cash used in financing activities in~~machinery and equipment that have no recoverable value at one of the ~~accompanying condensed consolidated statement of cash flows for~~Company's owned manufacturing locations.

In the year ended September 30, ~~2016,~~2020, CPP incurred pre-tax restructuring and related exit costs approximating $13,669. Cash charges totaled $8,977 and non-cash, asset-related charges totaled $4,692; the cash charges included $5,620 for one-time termination benefits and other personnel-related costs and $3,357 for facility exit costs. Non-cash charges included a $1,968 impairment charge related to a facility’s operating lease as ~~compared~~well as $671 of leasehold improvements made to the ~~amounts previously reported. The remaining provisions~~leased facility and $304 of ~~this accounting standard did not~~inventory that have no recoverable value, and a ~~material impact on~~$1,749 impairment charge related to machinery and equipment that have no recoverable value at one of the ~~accompanying condensed consolidated financial statements.~~Company's owned manufacturing locations.

~~In November 2015,~~A summary of the ~~FASB issued guidance on simplifying the presentation~~restructuring and other related charges included in Cost of ~~deferred income taxes, requiring deferred income tax liabilities~~goods and ~~assets to be classified as non-current~~services and Selling, general and administrative expenses in the ~~statement~~Company's Consolidated Statements of financial position. The guidance is effective for annual and interim reporting periods within those annual periods beginning after December 15, 2016 and may be applied retrospectively or prospectively. The Company early adopted this guidance in fiscal 2016 in order to simplify balance sheet presentation and applied it retrospectively for all periods presented in the financial statements. Accordingly, we reclassified current deferred taxes to non-current on the Consolidated Balance SheetOperations were as ~~of September 30, 2015 resulting in a decrease to both non-current deferred tax assets and non-current tax liabilities of $3,793 and $14,827, respectively.~~follows:


	For the Year Ended September 30,
	2022		2021		2020
Cost of goods and services	$	7,964	$	7,923	$	4,159
Selling, general and administrative expenses	8,818		13,495		9,510
Total restructuring charges	$	16,782	$	21,418	$	13,669


	For the Year Ended September 30,
	2022		2021		2020
Personnel related costs	$	4,124	$	3,190	$	5,620
Facilities, exit costs and other	7,827		11,573		3,357

Non-cash facility and other	4,831		6,655		4,692
Total	$	16,782	$	21,418	$	13,669

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

~~The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements.~~

~~NOTE 2 — ACQUISITIONS~~

Griffon accounts for acquisitions under the acquisition method, in which assets acquired and liabilities assumed are recorded at fair value as of the date of acquisition using a method substantially similar to the goodwill impairment test methodology (level 3 inputs). The operating results of the acquired companies 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.

On October 2, 2017, Griffon Corporation completed the acquisition of ClosetMaid, a market leader of home storage and organization products, for approximately $200,000, or $175,000 inclusive of the net present value of tax benefits. ClosetMaid adds to Griffon's Home and Building Products segment, complementing and diversifying Griffon's portfolio of leading consumer brands and products. SG&A expenses included $8,055 of related acquisition costs in 2017.

The accounts of ClosetMaid, after adjustments to reflect fair market values assigned to assets purchased, will be included in the consolidated financial statements from the date of acquisition of October 2, 2017, and as such will be included in Griffon's first quarter 2018 results. The Company has recorded an allocation of the purchase price to the Company’s tangible and identifiable intangible assets acquired and liabilities assumed based on their fair market values (level 3 inputs) at the acquisition date. The excess of the purchase price over the fair value of the net tangible 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. The calculation of the purchase price allocation, which is pending finalization of tax-related items and completion of the related final valuation, is as follows:

Cash and cash equivalents $ 8,833
Accounts receivable, net 31,967
Inventories, net 36,354
Property, plant and equipment, net 44,134
Intangible assets, net 83,773
Goodwill 40,786
Other current and non-current assets 8,929
Total assets acquired 254,776

Accounts payable and accrued liabilities 54,776
Total liabilities assumed 54,776
Total $ 200,000

~~The amounts assigned to goodwill and major intangible asset classifications, all of which are tax deductible, for the ClosetMaid acquisition are as follows:~~

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

Average
Life
(Years)
Goodwill $ 40,786
N/A
Indefinite-lived intangibles 53,290
N/A
Definite-lived intangibles 30,483
15
Total goodwill and intangible assets $ 124,559

On September 29, 2017, AMES Australia completed the acquisition of Tuscan Landscape Group Pty, Ltd. ("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. The purchase price was primarily allocated to intangible assets of AUD 3,900 and inventory and accounts receivable of AUD 7,900. SG&A expenses included $311 of related acquisition costs in 2017.

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), 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 allocation was primarily allocated to intangible assets of approximately GBP 3,100. SG&A expenses included $647 of related acquisition costs in 2017.

On December 30, 2016, AMES Australia acquired Home Living ("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. The purchase price was primarily allocated to intangible assets of approximately AUD 6,400.

In December 2015, Telephonics invested an additional $2,726 increasing its equity stake from 26% to 49% in Mahindra Telephonics Integrated Systems ("MTIS"), a joint venture with Mahindra Defence Systems, a Mahindra Group Company. MTIS is an aerospace and defense manufacturing and development facility in Prithla, India.~~This investment is accounted for using the equity method.~~

On April 16, 2015, AMES acquired the assets of an operational wood mill in Champion, PA from the Babcock Lumber Company for $2,225. The purchase price was allocated to property, plant and equipment. The wood mill secures wood supplies, lowers overall production costs and mitigates risk associated with manufacturing handles for wheelbarrows and long-handled tools.

~~NOTE 3 — INVENTORIES~~

The following table ~~details~~summarizes the ~~components~~accrued liabilities of ~~inventory:~~the Company's restructuring actions:

At September 30,
2017 At September 30,
2016
Raw materials and supplies $ 67,990
$ 59,207
Work in process 78,846
69,164
Finished goods 152,601
132,946
Total $ 299,437
$ 261,317

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~NOTE 4 — PROPERTY, PLANT AND EQUIPMENT~~


	Cash Charges		Cash Charges		Non Cash Charges
	Personnel related costs		Facilities & Exit Costs		Facility and Other Costs		Total
Accrued liability at September 30, 2019	$	—	$	—	$	—	$	—
Charges	5,620		3,357		4,692		13,669
Payments	(5,039)		(3,093)		—		(8,132)
Non-cash charges (1)	—		$	—	(4,692)		(4,692)
Accrued liability at September 30, 2020	$	581	$	264	$	—	$	845
Charges	3,190		11,573		6,655		21,418
Payments	(3,353)		(11,573)		—		(14,926)
Non-cash charges (1)	—				(6,655)		(6,655)
Accrued liability at September 30, 2021	$	418	$	264	$	—	$	682
Charges	4,124		7,827		4,831		16,782
Payments	(4,156)		(7,827)		—		(11,983)
Non-cash charges (1)	—				(4,831)		(4,831)
Accrued liability at September 30, 2022	$	386	$	264	$	—	$	650
(1) Non-cash charges in Facility and Other Costs primarily represent the non-cash write-off of certain long-lived assets and inventory that has no recoverable value in connection with certain facility closures.

~~The following table details the components of property, plant and equipment, net:~~

At September 30,
2017 At September 30,
2016
Land, building and building improvements $ 71,764
$ 65,615
Machinery and equipment 462,173
444,250
Leasehold improvements 43,040
37,414
576,977
547,279
Accumulated depreciation and amortization (344,842 ) (310,374 )
Total $ 232,135
$ 236,905

~~NOTE 5 — GOODWILL AND OTHER INTANGIBLES~~

~~The following table provides changes in carrying value of goodwill by segment through the year ended September 30, 2017:~~

At September 30,
2015 Foreign currency translation adjustments September 30,
2016 Goodwill from acquisitions Foreign currency translation adjustments September 30,
2017
Home & Building Products $ 285,825
$ 1,793
$ 287,618
$ 12,417
$ 559
$ 300,594
Telephonics 18,545
—
18,545
—
—
18,545
Total $ 304,370
$ 1,793
$ 306,163
$ 12,417
$ 559
$ 319,139

~~The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:~~

At September 30, 2017 At September 30, 2016
Gross Carrying Amount Accumulated Amortization
Average
Life
(Years)

Gross Carrying
Amount
Accumulated Amortization
Customer relationships & other $ 152,025
$ 43,421
25 $ 148,288
$ 36,867
Unpatented technology 6,193
4,719
12.5 6,073
4,061
Total amortizable intangible assets 158,218
48,140
154,361
40,928
Trademarks 95,049
—
84,516
—
Total intangible assets $ 253,267
$ 48,140
$ 238,877
$ 40,928

Amortization expense for intangible assets subject to amortization was $6,658, $6,608 and $6,713 for the years ended September 30, 2017, 2016 and 2015, respectively. Amortization expense for each of the next five years and thereafter, based on current intangible balances and classifications, is estimated as follows: 2018 - $6,556; 2019 - $6,513; 2020 - $6,027; 2021 - $6,027 and 2022 - $6,027; thereafter - $78,928.

~~No event or indicator or impairment occurred during the current year, which would require impairment testing of long-lived intangible assets including goodwill.~~

~~NOTE 6 — DISCONTINUED OPERATIONS~~

~~PPC~~

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

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.

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

For the Year Ended September 30,
2017 2016 2015
Revenue $ 460,914
$ 480,126
$ 532,741
Cost of goods and services 389,416
407,385
449,310
Gross profit 71,498
72,741
83,431
Selling, general and administrative expenses 43,518
45,673
49,324
Restructuring charges —
5,900
—
Total operating expenses 43,518
51,573
49,324
Income from discontinued operations 27,980
21,168
34,107
Other income (expense)

Interest expense, net 63
1,234
358
Other, net (59 ) (1,018 ) (821 )
Total other income (expense) 4
216
(463 )
Income from operations of discontinued operations 27,976
20,952
34,570

During the third quarter of 2016, PPC incurred pre-tax restructuring and related exit costs approximating $5,900 primarily related to headcount reductions at PPC’s Dombuhl, Germany facility, other location headcount reductions and the shut down of PPC's Turkey facility. These actions resulted in the elimination of approximately 86 positions. The Dombuhl charges are related to an optimization plan that will drive innovation and enhance our industry leading position in printed breathable back sheet. The facility will be transformed into a state of the art hygiene products facility focused on breathable printed film and siliconized products. In conjunction with this effort, our customer base will be streamlined, and we will dispose of old assets and reduce overhead costs, allowing for gains in efficiencies.

A summary of the restructuring and other related charges included in the line item “Restructuring and other related charges” in the Consolidated Statements of Operations recognized for 2016 was as follows:

Workforce
Reduction

Facilities &
Exit Costs

Other Related
Costs

Non-cash
Facility and
Other
Total
Amounts incurred in the year ended:
September 30, 2016 3,337
659
1,073
831
5,900

~~In 2017 and 2015, no restructuring and other related charges were incurred.~~

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~The activity in the restructuring accrual recorded in Accrued liabilities consisted of the following:~~

Workforce
Reduction

Facilities &
Exit Costs

Other Related
Costs
Total
Accrued liability at September 30, 2015 $ 163
$ —
$ —
$ 163
Charges 3,337
659
1,073
5,069
Payments (1,331 ) (659 ) (69 ) (2,059 )
Accrued liability at September 30, 2016 $ 2,169
$ —
$ 1,004
$ 3,173
Payments (1,761 ) —
(856 ) (2,617 )
Accrued liability at September 30, 2017 $ 408
$ —
$ 148
$ 556

The following amounts related to the PPC segment have been segregated from Griffon's continuing operations and are reported as assets and liabilities of discontinued operations in the consolidated balance sheets:

At September 30, 2017 At September 30, 2016
ASSETS

Accounts receivable, net $ 51,768
$ 49,412

Inventories, net 45,742
47,551

Prepaid and other current assets 11,000
15,176

PROPERTY, PLANT AND EQUIPMENT, net 185,940
168,500

GOODWILL 57,087
55,022

INTANGIBLE ASSETS, net 12,298
12,650

OTHER ASSETS 6,889
14,413

Total Assets Held for Sale $ 370,724
362,724

LIABILITIES

Notes payable and current portion of long-term debt $ 11,163
$ 8,712

Accounts payable 36,619
42,211

Accrued liabilities 14,553
19,535

LONG-TERM DEBT, net 10,549
16,968

OTHER LIABILITIES 11,566
14,103

Total Liabilities Held for Sale $ 84,450
$ 101,529

In September 2015, Griffon entered into mortgage loans in the amount of $32,280, secured by four properties occupied by Griffon's subsidiaries. Two of the four properties belong to PPC. The loan matures in September 2025, 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 September 30, 2017, the loan related to the two PPC properties had an outstanding balance of $11,601, net of issuance costs.

In September 2015, Clopay Europe GmbH (“Clopay Europe”) entered into a EUR 5,000 ($5,884 as of September 30, 2017) revolving credit facility and a EUR 15,000 term loan. The term loan is payable in twelve quarterly installments of EUR 1,250, bears interest at a fixed rate of 2.5% and matures in September 2018. The revolving facility matures in September 2018, but is renewable upon mutual agreement with the bank. The revolving credit facility accrues interest at EURIBOR plus 2.55% per annum (2.55% at September 30, 2017). The revolver and the term loan are both secured by substantially all of the assets of Clopay Europe and its subsidiaries. Griffon guarantees the revolving facility and term loan. The term loan had an outstanding balance of EUR 5,000 ($5,884 at September 30, 2017) and the revolver had outstanding borrowings of EUR 2,500 ($2,942) at September 30, 2017. Clopay Europe is required to maintain a certain minimum equity to assets ratio and is subject to a maximum debt leverage ratio (defined as the ratio of total debt to EBITDA). Clopay Europe is in compliance with these covenants.

Clopay do Brasil maintains a line of credit of approximately R$7,000 ($2,210 as of September 30, 2017). Interest on borrowings accrues at various fixed rates (approximately 14.26% at September 30, 2017). As of September 30, 2017, there was approximately R$4,317 ($1,363 as of September 30, 2017) borrowed under the line. PPC guarantees the line.

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~Installation Services and Other Discontinued Activities~~

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 2017, 2016 and 2015.

At September 30, 2017, Griffon’s assets and liabilities for discontinued operations primarily related to insurance claims, income taxes and product liability, warranty and environmental reserves. The following amounts related primarily to the installation services segment and other discontinued activities have been segregated from Griffon’s continuing operations and are reported as assets and liabilities of discontinued operations in the consolidated balance sheets:

At September 30,
2017 At September 30,
2016
Assets of discontinued operations:

Prepaid and other current assets $ 329
$ 219
Other long-term assets 2,960
1,968
Total assets of discontinued operations $ 3,289
$ 2,187

Liabilities of discontinued operations:

Accrued liabilities, current $ 8,342
$ 1,684
Other long-term liabilities 3,037
1,706
Total liabilities of discontinued operations $ 11,379
$ 3,390

~~NOTE 7 — ACCRUED LIABILITIES~~

~~The following table details the components of accrued liabilities:~~

At September 30,
2017 At September 30,
2016
Compensation $ 37,692
$ 38,551
Interest 3,671
4,011
Warranties and rebates 6,236
6,322
Insurance 12,216
13,131
Rent, utilities and freight 2,149
1,525
Income and other taxes 6,291
10,687
Marketing and advertising 1,859
1,961
Other 13,144
7,871
Total $ 83,258
$ 84,059

NOTE 811 –WARRANTY LIABILITY

~~Telephonics offers~~CPP 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 models. Typical warranties require ~~CBP~~CPP and ~~Telephonics~~HBP 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. CPP offers an express limited warranty for a period of ninety days on all products from the date of the original purchase unless otherwise stated on the product or packaging from the date of original purchase.

Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:


	Years Ended September 30,
	2022		2021
Balance, beginning of period	$	7,818	$	6,268
Warranties issued and changes in estimated pre-existing warranties	19,028		15,560
Actual warranty costs incurred	(16,413)		(14,010)
Other warranty liabilities assumed from acquisitions	$	6,353	$	—
Balance, end of period	$	16,786	$	7,818

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

warranty obligations and adjusts the liability as necessary. AMES offers an express limited warranty for a period of ninety days on all products unless otherwise stated on the product or packaging from the date of original purchase.

~~Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:~~

Years Ended September 30,
2017 2016
Balance, beginning of period $ 6,322
$ 6,040
Warranties issued and changes in estimated pre-existing warranties 6,393
6,501
Actual warranty costs incurred (6,479 ) (6,219 )
Balance, end of period $ 6,236
$ 6,322

NOTE 912 — ~~NOTES PAYABLE, CAPITALIZED LEASESAND~~ LONG-TERM DEBT

~~The present value of the net minimum payments on capitalized leases as of September 30, 2017 was follows:~~

At September 30,
2017
Total minimum lease payments $ 8,213
Less amount representing interest payments (806 )
Present value of net minimum lease payments 7,407
Current portion (1,787 )
Capitalized lease obligation, less current portion $ 5,620

~~Minimum payments under capital leases for the next five years are as follows: $2,120 in 2018, $1,967 in 2019, $2,073 in 2020, $1,761 in 2021, $291 in 2022 and $1 thereafter.~~

~~Included in the consolidated balance sheet~~Debt at September 30, ~~2017 under Property, plant~~2022 and ~~equipment, are costs and accumulated depreciation subject to capitalized leases~~2021 consisted of ~~$19,238 and $11,831, respectively, and included in Other assets are deferred interest charges of $105.Included in~~ the consolidated balance sheet at September 30, 2016, under Property, plant and equipment are costs and accumulated depreciation subject to capitalized leases of $18,039 and $10,148, respectively, and included in Other assets are deferred interest charges of $131. Amortization expense was $1,683, $1,628, and $1,765 in 2017, 2016 and 2015, respectively.following:


		At September 30, 2022
		Outstanding Balance		Original Issuer Premium (Discount)		Capitalized Fees & Expenses		Balance Sheet		Coupon Interest Rate
Senior Notes due 2028	(a)	$	974,775	$	266	$	(10,939)	$	964,102	5.75	%
Term Loan B due 2029	(b)	496,000		(1,144)		(8,823)		486,033		Variable
Revolver due 2025	(b)	97,328		—		(1,227)		96,101		Variable
Finance lease - real estate	(c)	13,091		—		—		13,091		Variable
Non U.S. lines of credit	(d)	—		—		(2)		(2)		Variable
Non U.S. term and mortgage loans	(d)	12,090		—		(27)		12,063		Variable
Other long term debt	(e)	2,276		—		(13)		2,263		Variable
Totals		1,595,560		(878)		(21,031)		1,573,651
less: Current portion		(12,653)		—		—		(12,653)
Long-term debt		$	1,582,907	$	(878)	$	(21,031)	$	1,560,998

In October 2006, a subsidiary of Griffon entered into a capital lease totaling $14,290 for real estate it occupies in Troy, Ohio. Approximately $10,000 was used to acquire the building and the remaining amount was used for improvements. The lease matures in 2022, bears interest at a fixed rate of 5.0%, is secured by a mortgage on the real estate and is guaranteed by Griffon.


		At September 30, 2021
		Outstanding Balance		Original Issuer Premium		Capitalized Fees & Expenses		Balance Sheet		Coupon Interest Rate
Senior notes due 2028	(a)	$	1,000,000	$	315	$	(13,293)	$	987,022	5.75	%
Revolver due 2025	(b)	13,483		—		(1,718)		11,765		Variable



Finance lease - real estate	(c)	14,594		—		(4)		14,590		Variable
Non U.S. lines of credit	(d)	3,012		—		(17)		2,995		Variable
Non U.S. term and mortgage loans	(d)	25,684		—		(91)		25,593		Variable
Other long term debt	(e)	3,733		—		(15)		3,718		Variable
Totals		1,060,506		315		(15,138)		1,045,683
less: Current portion		(12,486)		—		—		(12,486)
Long-term debt		$	1,048,020	$	315	$	(15,138)	$	1,033,197

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

~~Debt at September 30, 2017 and 2016 consisted~~Interest expense consists of the ~~following:~~following for 2022, 2021 and 2020.

At September 30, 2017

Outstanding
Balance

Original
Issuer
Discount
Capitalized Fees & Expenses
Balance
Sheet

Coupon
Interest Rate
Senior note due 2022 (a) $ 725,000
(1,177 ) $ (9,220 ) $ 714,603
5.25 %
Revolver due 2020 (b) 144,216
—
(1,951 ) 142,265
n/a
Real estate mortgages (d) 23,642
—
(320 ) 23,322
n/a
ESOP Loans (e) 42,675
—
(310 ) 42,365
n/a
Capital lease - real estate (f) 5,312
—
(105 ) 5,207
5.00 %
Non U.S. lines of credit (g) 9,402

(31 ) 9,371
n/a
Non U.S. term loans (g) 35,943
—
(108 ) 35,835
n/a
Other long term debt (h) 6,211
—
(21 ) 6,190
n/a
Totals 992,401
(1,177 ) (12,066 ) 979,158

less: Current portion (11,078 ) —
—
(11,078 )
Long-term debt $ 981,323
$ (1,177 ) $ (12,066 ) $ 968,080


		Year Ended September 30, 2022
		Effective Interest Rate		Cash Interest		Amort. Debt (Premium) Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.95	%	$	57,105	$	(48)	$	2,056	$	59,113

Term Loan B due 2029	(b)	Variable		18,116		135		1,068		19,319
Revolver due 2025	(b)	Variable		3,762		—		491		4,253


Finance lease - real estate	(c)	5.60	%	759		—		4		763
Non U.S. lines of credit	(d)	Variable		17		—		15		32
Non U.S. term and mortgage loans	(d)	Variable		610		—		53		663
Other long term debt	(e)	Variable		544		—		1		545
Capitalized interest				(309)		—		—		(309)
Totals				$	80,604	$	87	$	3,688	$	84,379


		Year Ended September 30, 2021
		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.95	%	$	57,500	$	(48)	$	2,084	$	59,536

Revolver due 2025	(b)	Variable		1,078		—		491		1,569



Finance lease - real estate	(c)	5.65	%	875		—		25		900
Non U.S. lines of credit	(d)	Variable		15		—		15		30
Non U.S. term and mortgage loans	(d)	Variable		655		—		71		726
Other long term debt	(e)	Variable		443		—		2		445
Capitalized interest				(31)		—		—		(31)
Totals				$	60,535	$	(48)	$	2,688	$	63,175

At September 30, 2016

Outstanding
Balance

Original
Issuer
Discount
Capitalized
Fees &
Expenses
Balance
Sheet

Coupon
Interest Rate
Senior notes due 2022 (a) $ 725,000
$ (1,447 ) $ (9,799 ) $ 713,754
5.25 %
Revolver due 2020 (b) —
—
(2,425 ) (2,425 ) n/a
Convert. debt due 2017 (c) 100,000
(1,248 ) (148 ) 98,604
4.00 %
Real estate mortgages (d) 25,280
—
(418 ) 24,862
n/a
ESOP Loans (e) 34,387
—
(237 ) 34,150
n/a
Capital lease - real estate (f) 6,447
—
(131 ) 6,316
5.00 %
Non U.S. lines of credit (g) 9,260

(1 ) 9,259
n/a
Non U.S. term loans (g) 22,446
—
(97 ) 22,349
n/a
Other long term debt (h) 4,029
—
(20 ) 4,009

Totals 926,849
(2,695 ) (13,276 ) 910,878

less: Current portion (13,932 ) —
—
(13,932 )
Long-term debt $ 912,917
$ (2,695 ) $ (13,276 ) $ 896,946

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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


		Year Ended September 30, 2020
		Effective Interest Rate		Cash Interest		Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.90	%	$	32,511	$	—	$	1,072	$	33,583
Senior notes due 2022	(a)	5.67	%	$	22,816	122		$	1,735	$	24,673
Revolver due 2025	(b)	Variable		5,866		—		635		6,501


Finance lease - real estate	(c)	4.45	%	386		—		25		411
Non U.S. lines of credit	(d)	Variable		12		—		15		27
Non U.S. term and mortgage loans	(d)	Variable		975		—		55		1,030
Other long term debt	(e)	Variable		445		—		2		447

Capitalized interest				(128)		—		—		(128)
Totals				$	62,883	$	122	$	3,539	$	66,544

~~Interest expense consists~~

Minimum payments under debt agreements for the next five years are as follows: $12,653 in 2023, $12,267 in 2024, $109,522 in 2025, $12,261 in 2026, $12,324 in 2027 and $1,436,533 thereafter.

(a)During 2020, Griffon issued, at par $1,000,000 of 5.75% Senior Notes due 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 (the "2022 Senior Notes"). In connection with the issuance and exchange of the ~~following for~~2028 Senior Notes, Griffon capitalized $16,448 of underwriting fees and other expenses incurred, which will amortize over the ~~years~~term of such notes. Additionally, during 2020 Griffon recognized a $7,925 loss on the early extinguishment of debt of the 2022 Senior Notes, comprised primarily of the write-off of $6,725 of remaining deferred financing fees, $607 of tender offer net premium expense and $593 of redemption interest expense. Furthermore, all of the obligations associated with the 2022 Senior Notes were discharged.

During the year ended September 30, ~~2017, 2016~~2022, Griffon purchased $25,225 of 2028 Senior Notes in the open market at a weighted average discount of 91.82% of par, or $23,161. In connection with these purchases, Griffon recognized a $1,767 net gain on the early extinguishment of debt comprised of $2,064 of face value in excess of purchase price, offset by $297 related to the write-off of underwriting fees and ~~2015.~~other expenses. As of September 30, 2022, outstanding 2028 Senior Notes due totaled $974,775; 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.The 2028 Senior Notes were 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 $833,433 on September 30, 2022 based upon quoted market prices (level 1 inputs). At September 30, 2022, $10,939 of underwriting fees and other expenses incurred 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 Term Loan B contains a SOFR floor of 0.50% and a current spread of 2.50%.Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds, the first of which was achieved during the year ended September 30, 2022.The Original Issue Discount for the Term Loan B was 99.75%. 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.

Year Ended September 30, 2017

Effective
Interest Rate
Cash Interest
Amort. Debt
Discount

Amort.
Deferred Cost
& Other Fees

Total Interest
Expense
Senior notes due 2022 (a) 5.55 % 38,063
270
1,857
40,190
Revolver due 2018 (b) n/a
4,951
—
567
5,518
Convert. debt due 2017 (c) 8.9 % 1,167
1,248
148
2,563
Real estate mortgages (d) 2.6 % 582
—
58
640
ESOP Loans (e) 4.2 % 1,557
—
133
1,690
Capital lease - real estate (f) 5.5 % 296
—
25
321
Non U.S. lines of credit (g) n/a
76
—
128
204
Non U.S. term loans (g) n/a
860
—
67
927
Other long term debt (h) n/a
245

10
255
Capitalized interest
(795 )

(795 )
Totals
$ 47,002
$ 1,518
$ 2,993
$ 51,513

Year Ended September 30, 2016

Effective
Interest Rate
Cash Interest
Amort. Debt
Discount

Amort.
Deferred Cost
& Other Fees

Total Interest
Expense
Senior notes due 2022 (a) 5.48 % 33,906
103
1,481
35,490
Revolver due 2018 (b) n/a
2,564
—
512
3,076
Convert. debt due 2017 (c) 9.0 % 4,000
4,346
443
8,789
Real estate mortgages (d) 2.2 % 439
—
62
501
ESOP Loans (e) 3.1 % 1,090
—
236
1,326
Capital lease - real estate (f) 5.5 % 353
—
25
378
Non U.S. lines of credit (g) n/a
553
—
91
644
Non U.S. term loan (g) n/a
659
—
13
672
Other long term debt (h)
260

9
269
Capitalized interest
(1,202 )

(1,202 )
Totals
42,622
4,449
2,872
49,943

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Year Ended September 30, 2015

Effective
Interest Rate
Cash Interest
Amort. Debt
Discount

Amort.
Deferred Cost
& Other Fees

Total Interest
Expense
Senior notes due 2018 (a) n/a

$ —
Senior notes due 2022 (a) 5.46 % 31,500
1,289
32,789
Revolver due 2018 (b) n/a
2,301
—
520
2,821
Convert. debt due 2017 (c) 9.1 % 4,000
3,989
444
8,433
Real estate mortgages (d) 3.8 % 468
—
576
1,044
ESOP Loans (e) 2.9 % 1,025
—
69
1,094
Capital lease - real estate (f) 5.3 % 405
—
25
430
Non U.S. lines of credit (g) n/a
95
—
—
95
Non U.S. term loan (g) n/a
1,335
—
57
1,392
Other long term debt (h) 135
—
13
148
Capitalized interest
(470 ) —
—
(470 )
Totals
$ 40,794
$ 3,989
$ 2,993
$ 47,776

~~Minimum payments under debt agreements for the next five years are as follows: $11,078 in 2018, $48,381 in 2019, $6,265 in 2020, $5,990 in 2021, $4,569 in 2022 and $916,118 thereafter.~~

~~(a)~~

On May 18, 2016, in an unregistered offering through a private placement under Rule 144A, Griffon completed the add-on offering of $125,000 principal amount of its 5.25% senior notes due 2022, at 98.76% of par, to Griffon's previous issuance of $600,000 5.25% senior notes due in 2022, at par, which was completed on February 27, 2014 (collectively the “Senior Notes”). As of September 30, 2017, outstanding Senior Notes due totaled $725,000; interestoriginal issue discount. The Term Loan B facility is payable semi-annually on March 1 and September 1. The net proceeds of the add-on offering were used to pay down outstanding borrowings under Griffon's Revolving Credit Facility (the "Credit Agreement").

~~The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and~~ subject to ~~certain~~the same affirmative and negative covenants ~~limitations and restrictions. On July 20, 2016 and June 18, 2014, Griffon exchanged all of~~that apply to the ~~$125,000 and $600,000 Senior Notes, respectively, for substantially identical Senior Notes registered under~~Revolver, but is not subject to any financial maintenance covenants. Term Loan B borrowings are secured by the ~~Securities Act of 1933 via an exchange offer.~~ same collateral as the Revolver.The fair value of the ~~Senior Notes~~Term Loan B facility approximated ~~$737,688~~$476,160 on September 30, ~~2017~~2022 based upon quoted market prices (level 1 inputs). ~~In connection with the issuance and exchange of the $125,000 senior notes, Griffon capitalized $3,016~~At September 30, 2022, $8,823 of underwriting fees and other expenses incurred, remained to be amortized.

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 ~~quarter, which will amortize over~~maximum aggregate amount that can be borrowed by up to an additional $100,000.

In addition, on December 9, 2021, Griffon replaced the ~~term of such notes; Griffon capitalized $10,313 in connection~~Revolver GBP LIBOR benchmark rate with ~~the previously issued $600,000 senior notes.~~

~~On October 2, 2017, Griffon completed an add-on offering of $275,000 aggregate principal amount of 5.25% senior notes due 2022 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. As of October 2, 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 add-on offering were used to acquire ClosetMaid, with the remaining proceeds used to pay down outstanding borrowings under Griffon's Credit Agreement.


~~(b)~~	On March 22, 2016, Griffon amended its Credit Agreement to increase the credit facility from$250,000 to $350,000, extend its maturity from March 13, 2020 to March 22, 2021, and modify certain other provisions of the facility. The facility includes a letter sub-facility with a limit of $50,000 and a multi-currency sub-facility of $50,000. The Credit Agreement provides for

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~same day borrowings of base rate loans.~~Sterling Overnight Index Average ("SONIA"). Borrowings under the ~~Credit Agreement~~Revolver may be repaid and re-borrowed at any ~~time, subject to final maturity of the facility or the occurrence or event of default under the Credit Agreement.~~ time.Interest is payable on borrowings at either a ~~LIBOR~~SOFR, 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%~~0.50% for base rate loans, 1.50% for SOFR loans and ~~2.25%~~1.50% for ~~LIBOR~~SONIA loans. The ~~Credit Agreement~~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. ~~Borrowings~~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 (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 assetssubsidiaries.At September 30, 2022, under the Credit ~~Agreement; see footnote (d) below). On October 2, 2017, Griffon further amended the Credit~~ Agreement, ~~to modify the maximum total leverage covenant for the quarters ending December 31, 2017, through March 31, 2019, to provide additional financial and operating flexibility. At September 30, 2017,~~ there were ~~$144,216~~$97,328 in outstanding ~~borrowings and~~borrowings; outstanding standby letters of credit were ~~$13,890 under the Credit Agreement; $191,894~~$12,287; and $290,385 was available, subject to certain loan covenants, for borrowing at that date.

~~(c)~~

~~(d)~~

In September 2015 and March 2016, Griffon entered into mortgage loans in the amount 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 September 30, 2017, mortgage loans outstanding relating to continuing operations was $23,322, 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%. The Term Loan requires quarterly principal payments of $569 with a balloon payment due at maturity on March 22, 2020. As of September 30, 2017, $42,365, 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.


~~(f)~~	In October 2006, CBP entered into a capital lease totaling $14,290 for real estate in Troy, Ohio. The lease matures in 2022, bears interest at a fixed rate of 5.0%, is secured by a mortgage on the real estate and is guaranteed by Griffon. As of September 30, 2016, $5,207 was outstanding, net of issuance costs.

~~(g)~~

In November 2012, Garant G.P. (“Garant”) entered into a CAD 15,000 ($12,033 as of September 30, 2017) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.63% LIBOR USD and 2.65% Bankers Acceptance Rate CDN as of September 30, 2017). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity. As of September 30, 2017, there were no borrowings under the revolving credit facility with CAD 15,000 ($12,033 as of September 30, 2017) available for borrowing.

(c) 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 two five-year renewal options. At September 30, 2022, $13,091 was outstanding. During the year ended September 30, 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. Refer to Note 21- Leases for further details.

(d) In ~~July 2016,~~November 2012, Garant G.P. (“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($10,956 as of September 30, 2022) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (4.44% LIBOR USD and 4.76% Bankers Acceptance Rate CDN as of September 30, 2022). In October 2022 the revolving facility was amended and matures in October 2024 and is renewable upon mutual agreement with the lender. Garant is required to maintain a certain minimum equity. As of September 30, 2022, there were no borrowings under this revolving credit facility with CAD 15,000 ($10,956 as of September 30, 2022) available for borrowing.

In March 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries ("(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 in July 2016 and further amended in fiscal 2020.Griffon ~~Australia"~~Australia paid offthe term loan in the amount of AUD 9,625 and canceled the AUD 20,000 revolver. The amendment refinanced the existing AUD 15,000 receivable purchase facility. The receivable purchase facility matures in March 2023 and is renewable upon mutual agreement with the lender.The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25% per annum (3.96% at September 30, 2022). At September 30, 2022, there was no balance outstanding under the receivable purchase facility with AUD $15,000 ($9,722 as of September 30, 2022) available.Thereceivable 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 ~~an AUD 30,000~~a GBP 14,000 term loan, GBP 4,000 mortgage loan and ~~an AUD 10,000~~GBP 5,000 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, in March 2017 the term~~mortgage loan ~~commitment was increased by AUD 5,000 to AUD 33,500. In September 2017, the term loan commitment was increased by AUD 15,000 to AUD 46,750. The term loan requires~~require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023,

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

of ~~AUD 1,250 plus interest~~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 ~~a balloon payment of AUD 37,125 due upon maturity in June 2019,~~SONIA. The term loan and ~~accrues~~mortgage loan each accrue interest at ~~Bank Bill Swap Bid~~the SONIA Rate ~~“BBSY”~~ plus ~~2.00% per annum (3.76% at September 30, 2017). As of September 30, 2017, the term had an outstanding balance of AUD 45,875 ($35,943~~1.80% (3.99% as of September 30, ~~2017)~~2022). The ~~revolving facility~~revolver accrues interest at the Bank of England Base Rate plus 3.25% (5.50% as of September 30, 2022). The revolver matures in ~~November 2018, but~~July 2023, and is renewable upon mutual agreement with the ~~bank, and accrues interest at BBSY plus 2.0% per annum (3.65% at~~lender. As of September 30, ~~2017). At September 30, 2017,~~2022, the revolver had anno outstanding balance, and the term and mortgage loan balances were GBP 11,060 ($12,090 as of ~~AUD 12,000 ($9,402 at~~ September 30, ~~2017)~~2022).The revolver and the term loan are both secured by substantially all of the assets of ~~Griffon Australia~~AMES UK and its subsidiaries. ~~Griffon guarantees~~The mortgage loan is secured by the ~~term loan. Griffon Australia is required to maintain a certain minimum equity level and~~underlying property.AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

~~(h)~~

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

At September 30, ~~2017,~~2022, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

NOTE 1013 – EMPLOYEE BENEFIT PLANS

Griffon offers defined contribution plans to most of its U.S. employees. In addition to employee contributions to the plans, Griffon makes contributions based upon various percentages of compensation and/or employee contributions, which were ~~$8,714~~$11,080 in ~~2017, $8,301~~2022, $8,576 in ~~2016~~2021 and ~~$7,988~~$6,855 in ~~2015.~~2020.

The Company also provides healthcare and life insurance benefits for certain groups of retirees through several plans. For certain employees, the benefits are at fixed amounts per retiree and are partially contributory by the retiree. The post-retirement benefit obligation was ~~$2,014~~$1,796 and ~~$2,081~~$1,678 as of September 30, ~~2017~~2022 and ~~2016.~~2021. The accumulated other comprehensive income (loss) for these plans was ~~$(107)~~$399 and ($~~140)~~118) as of September 30, ~~2017~~2022 and ~~2016,~~2021, respectively, and the ~~2017~~2022 and ~~2016~~2021 benefit expense was ~~$41~~$47 and ~~$57,~~$35, respectively. It is the Company’s practice to fund these benefits as incurred.

Griffon also has qualified and non-qualified defined benefit plans covering certain employees ~~with~~which provide benefits based on years of service and employee compensation. Over time, these amounts will be recognized as part of net periodic pension costs in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Griffon is responsible for overseeing the management of the investments of ~~the~~two qualified defined benefit plan and uses the services of an investment manager to manage ~~these~~the plans' assets based on agreed upon risk profiles. The primary objective of the qualified defined benefit plan is to secure participant retirement benefits. As such, the key objective in this plan’s financial management is to promote stability and, to the extent appropriate, growth in the funded status. Financial objectives are established in conjunction with a review of current and projected plan financial requirements. The fair values of a majority of the plan assets were determined by the plans’ trustee using quoted market prices for identical instruments (level 1 inputs) as of September 30, ~~2017~~2022 and ~~2016.~~2021. The fair value of various other investments was determined by the ~~plan’s trustee~~plans' trustees using direct observable market corroborated inputs, including quoted market prices for similar assets (level 2 inputs). ~~There were no pension~~A small amount of plan assets ~~measured~~are invested in private equity which consist primarily of investments in private companies which are valued using ~~level~~the net asset values provided by the underlying private investment companies as a practical expedient (level 3 ~~inputs.~~

Effective January 1, 2012, the Clopay Pension Plan merged with the Ames True Temper Inc. Pension Plan. The merged qualified defined benefit plan was named the Clopay Ames Pension Plan (the “Clopay AMES Plan”)inputs).

The Clopay ~~portion of~~AMES Pension Plan, the ~~Clopay AMES~~Hunter Fan Pension Plan ~~has been frozen to new entrants since December 2000. Certain employees who were part of~~and the ~~plan prior to December 2000 continued to accrue a service benefit through December 2010, at which time all plan participants stopped accruing service benefits.~~

~~The AMES portion of the Clopay AMES Plan has been frozen to all new entrants since November 2009 and stopped accruing benefits in December 2009.~~

~~The~~ AMES supplemental executive retirement plan ~~was~~are frozen to new entrants and participants in the ~~plan stopped accruing benefits in 2008.~~plans no longer accrue benefits.

~~In 2016, the Company changed the method used to estimate the service and interest~~The Company’s non-service cost components of net periodic benefit plan cost ~~for pension~~was a benefit of $4,256, $907 and ~~other post-retirement benefits from the single weighted-average discount rate to the spot rate method. There was no impact on the total benefit obligation.~~$1,559 during 2022, 2021, and 2020 respectively.

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

Griffon uses judgment to establish the assumptions used in determining the future liability of the plan, as well as the investment returns on the plan assets. The expected return on assets assumption used for pension expense was developed through analysis of historical market returns, current market conditions and past experience of plan investments. The long-term rate of return assumption represents the expected average rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations. The assumption is based on several factors including historical market index returns, the anticipated long-term asset allocation of plan assets and the historical return. The discount rate assumption is determined by developing a yield curve based on high quality bonds with maturities matching the plans’ expected benefit payment stream. The

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

plans’ expected cash flows are then discounted by the resulting year-by-year spot rates. A 10% change in the discount rate ~~average wage increase~~ or return on assets would not have a material effect on the financial statements of Griffon.

Net periodic costs (benefits) were as follows:


	Defined Benefits for the Years Ended September 30,									Supplemental Benefits for the Years Ended September 30,							Defined Benefits for the Years Ended September 30,						Supplemental Benefits for the Years Ended September 30,
	2017			2016			2015			2017		2016		2015			2022		2021		2020		2022		2021		2020
Net periodic (benefits) costs:																Net periodic (benefits) costs:

Interest cost	$	4,892		$	5,465		$	7,526		$	715	$	1,243	$	1,302	Interest cost	$	3,448	$	2,816	$	4,267	$	172	$	162	$	335
Expected return on plan assets	(10,943		)	(10,934		)	(11,728		)	—		—		—		Expected return on plan assets	(11,255)		(10,177)		(10,343)		—		—		—

Amortization of:																Amortization of:
Prior service costs	1			1			1			15		19		16		Prior service costs	—		—		—		—		—		14
Actuarial loss	1,980			1,131			1,008			1,347		1,224		1,157		Actuarial loss	2,818		5,776		3,769		561		516		399
Total net periodic (benefits) costs	$	(4,070	)	$	(4,337	)	$	(3,193	)	$	2,077	$	2,486	$	2,475	Total net periodic (benefits) costs	$	(4,989)	$	(1,585)	$	(2,307)	$	733	$	678	$	748

The tax benefits in ~~2017, 2016~~2022, 2021 and ~~2015~~2020 for the amortization of pension costs in Other comprehensive income (loss) were ~~$1,170, $831~~$280, $270 and ~~$764,~~$878, respectively.

~~The estimated net actuarial loss and prior service cost that will be amortized from AOCI into Net periodic pension cost during 2018 is $2,132 and $21, respectively.~~

The weighted-average assumptions used in determining the net periodic (benefits) costs were as follows:


	Defined Benefits for the Years Ended September 30,						Supplemental Benefits for the Years Ended September 30,
	2022		2021		2020		2022		2021		2020
Discount rate	2.63	%	2.30	%	2.92	%	1.94	%	1.69	%	2.64	%

Expected return on assets	6.72	%	6.75	%	7.00	%	—	%	—	%	—	%

Defined Benefits for the Years Ended
September 30,

Supplemental Benefits for the Years
Ended September 30,
2017 2016 2015 2017 2016 2015
Discount rate 3.64 % 3.42 % 3.98 % 3.18 % 2.86 % 3.50 %
Expected return on assets 7.25 % 7.50 % 8.00 % — % — % — %

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Plan assets and benefit obligation of the defined and supplemental benefit plans were as follows:


	Defined Benefits at September 30,						Supplemental Benefits at September 30,							Defined Benefits at September 30,				Supplemental Benefits at September 30,
	2017			2016			2017			2016				2022		2021		2022		2021
Change in benefit obligation:													Change in benefit obligation:
Benefit obligation at beginning of fiscal year	$	189,156		$	184,846		$	35,774		$	37,305		Benefit obligation at beginning of fiscal year	$	170,505	$	183,003	$	14,775	$	16,070

Business acquisition													Business acquisition	21,839		—		—		—
Interest cost	4,892			5,465			715			1,243			Interest cost	3,448		2,816		172		162

Benefits paid	(10,393		)	(10,460		)	(4,057		)	(4,060		)	Benefits paid	(11,281)		(10,743)		(1,927)		(1,936)

Actuarial (gain) loss	(9,318		)	9,305			195			1,286			Actuarial (gain) loss	(35,490)		(4,571)		(1,098)		479

Benefit obligation at end of fiscal year	174,337			189,156			32,627			35,774			Benefit obligation at end of fiscal year	149,021		170,505		11,922		14,775
Change in plan assets:													Change in plan assets:
Fair value of plan assets at beginning of fiscal year	144,316			144,625			—			—			Fair value of plan assets at beginning of fiscal year	160,523		147,145		—		—
Business acquisition													Business acquisition	22,288		—		—		—
Actual return on plan assets	13,152			10,151			—			—			Actual return on plan assets	(27,439)		23,199		—		—

Company contributions	3,747			—			4,057			4,060			Company contributions	—		922		1,927		1,936

Benefits paid	(10,393		)	(10,460		)	(4,057		)	(4,060		)	Benefits paid	(11,281)		(10,743)		(1,927)		(1,936)

Fair value of plan assets at end of fiscal year	150,822			144,316			—			—			Fair value of plan assets at end of fiscal year	144,091		160,523		—		—
Projected benefit obligation in excess of plan assets	$	(23,515	)	$	(44,840	)	$	(32,627	)	$	(35,774	)	Projected benefit obligation in excess of plan assets	$	(4,930)	$	(9,982)	$	(11,922)	$	(14,775)
Amounts recognized in the statement of financial position consist of:													Amounts recognized in the statement of financial position consist of:
Accrued liabilities	$	—		$	—		$	(3,984	)	$	(4,030	)	Accrued liabilities	$	—	$	—	$	(1,866)	$	(1,884)
Other liabilities (long-term)	(23,515		)	(44,840		)	(28,646		)	(31,744		)	Other liabilities (long-term)	(4,930)		(9,982)		(10,056)		(12,891)
Total Liabilities	(23,515		)	(44,840		)	(32,630		)	(35,774		)	Total Liabilities	(4,930)		(9,982)		(11,922)		(14,775)
Net actuarial losses	24,608			38,115			20,045			21,195			Net actuarial losses	32,176		38,296		6,003		7,662
Prior service cost	—			1			42			56			Prior service cost	—		—		—		—
Deferred taxes	(9,069		)	(13,341		)	(7,486		)	(7,438		)	Deferred taxes	(6,757)		(8,042)		(1,261)		(1,609)
Total Accumulated other comprehensive loss, net of tax	15,539			24,775			12,601			13,813			Total Accumulated other comprehensive loss, net of tax	25,419		30,254		4,742		6,053
Net amount recognized at September 30,	$	(7,976	)	$	(20,065	)	$	(20,029	)	$	(21,961	)	Net amount recognized at September 30,	$	20,489	$	20,272	$	(7,180)	$	(8,722)
Accumulated benefit obligations	$	174,337		$	189,156		$	32,627		$	35,774		Accumulated benefit obligations	$	149,021	$	170,505	$	11,922	$	14,775
Information for plans with accumulated benefit obligations in excess of plan assets:													Information for plans with accumulated benefit obligations in excess of plan assets:
ABO	$	174,337		$	189,156		$	32,627		$	35,774		ABO	$	149,021	$	170,505	$	11,922	$	14,775
PBO	174,337			189,156			32,627			35,774			PBO	149,021		170,505		11,922		14,775
Fair value of plan assets	150,822			144,316			—			—			Fair value of plan assets	144,091		160,523		—		—

For the Years Ended September 30,
DEPRECIATION and AMORTIZATION 2017 2016 2015
Segment:
Home & Building Products $ 36,547
$ 35,267
$ 35,343
Telephonics 10,851
10,584
10,022
Total segment depreciation and amortization 47,398
45,851
45,365
Corporate 480
491
469
Total consolidated depreciation and amortization $ 47,878
$ 46,342
$ 45,834

CAPITAL EXPENDITURES

Segment:

Home & Building Products $ 24,476
$ 49,351
$ 38,896
Telephonics 8,204
9,007
6,347
Total segment 32,680
58,358
45,243
Corporate 2,257
918
1,065
Total consolidated capital expenditures $ 34,937
$ 59,276
$ 46,308

ASSETS At September 30, 2017 At September 30, 2016 At September 30, 2015
Segment assets:

Home & Building Products $ 1,084,103
$ 1,020,297
$ 1,034,032
Telephonics 343,445
334,631
302,560
Total segment assets 1,427,548
1,354,928
1,336,592
Corporate 71,980
62,257
36,030
Total continuing assets 1,499,528
1,417,185
1,372,622
Assets of discontinued operations 374,013
364,911
340,191
Consolidated total $ 1,873,541
$ 1,782,096
$ 1,712,813

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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


ASSETS	At September 30, 2022		At September 30, 2021
Segment assets:
Consumer and Professional Products	$	1,914,529	$	1,377,618
Home and Building Products	737,860		666,422


Total segment assets	2,652,389		2,044,040
Corporate	158,310		280,802
Total continuing assets	2,810,699		2,324,842
Discontinued operations - held for sale	—		275,814
Other discontinued operations	5,775		4,029
Consolidated total	$	2,816,474	$	2,604,685

~~Segment information by geographic region was as follows:~~

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

For the Years Ended September 30,
REVENUE BY GEOGRAPHIC AREA - DESTINATION 2017
2016
2015
United States $ 1,164,958
$ 1,149,448
$ 1,118,206
Europe 67,048
68,604
80,580
Canada 106,080
102,333
120,862
Australia 124,757
106,780
110,338
All other countries 62,154
49,870
53,305
Consolidated revenue $ 1,524,997
$ 1,477,035
$ 1,483,291

For the Years Ended September 30,
LONG-LIVED ASSETS BY GEOGRAPHIC AREA 2017 2016 2015
United States $ 358,795
$ 370,332
$ 367,248
Canada 36,383
35,984
36,449
Australia 35,917
26,196
22,136
United Kingdom 4,144
—
—
All other countries 2,023
2,342
2,872
Consolidated long-lived assets, net $ 437,262
$ 434,854
$ 428,705
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.


	For the Years Ended September 30,
	2022		2021		2020
Residential repair and remodel	$	392,490	$	185,896	$	173,859
Retail	456,735		577,839		575,947

Residential new construction	45,243		50,437		59,907
Industrial	76,430		43,411		40,285
International excluding North America	370,708		371,935		289,235
Total Consumer and Professional Products	1,341,606		1,229,518		1,139,233
Residential repair and remodel	736,525		516,995		467,112
Commercial construction	630,066		407,585		354,916
Residential new construction	140,291		116,528		105,285
Total Home and Building Products	1,506,882		1,041,108		927,313




Total Revenue	$	2,848,488	$	2,270,626	$	2,066,546

The following table presents revenue disaggregated by geography based on the location of the Company's customer:


	For the Year Ended September 30, 2022
Revenue by Geographic Area - Destination	Consumer and Professional Products		Home and Building Products		Total
United States	$	858,956	$	1,437,085	$	2,296,041
Europe	106,471		60		106,531
Canada	92,930		57,916		150,846
Australia	258,945		—		258,945
All other countries	24,304		11,821		36,125
Total Revenue	$	1,341,606	$	1,506,882	$	2,848,488


	For the Year Ended September 30, 2021
Revenue by Geographic Area - Destination	Consumer and Professional Products	Home and Building Products	Total
United States	$766,150	$986,925	$1,753,075
Europe	123,607	72	123,679
Canada	85,676	44,661	130,337
Australia	244,674	—	244,674
All other countries	9,411	9,450	18,861
Total Revenue	$1,229,518	$1,041,108	$2,270,626

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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


	For the Year Ended September 30, 2020
Revenue by Geographic Area - Destination	Consumer and Professional Products		Home and Building Products		Total
United States	$	769,100	$	877,115	$	1,646,215
Europe	85,339		130		85,469
Canada	74,072		38,662		112,734
Australia	203,012		—		203,012
All other countries	7,710		11,406		19,116
Total Revenue	$	1,139,233	$	927,313	$	2,066,546

As a percentage of ~~consolidated~~segment revenue, ~~from continuing operations,~~CPP sales to The Home Depot approximated 19%, 26% and 27% in 2022, 2021 and 2020, respectively; HBP sales to The Home Depot approximated ~~17%~~7%, 10% and 12% in ~~2017~~2022, 2021 and ~~17% in 2016 and 16% in 2015, respectively; and Telephonics aggregate~~2020, respectively.

As a percentage of Griffon's consolidated revenue, CPP sales to ~~the United States Government~~The Home Depot approximated 13%, 14% and ~~its agencies~~13% in 2022, 2021 and 2020, respectively; HBP sales to The Home Depot approximated ~~18%~~7% in ~~2017, 21%~~2022 and 5% in ~~2016~~both 2021 and ~~19% in 2015.~~2020.

NOTE 1819 – OTHER INCOME (EXPENSE)

For the year ended September 30, 2022, 2021 and 2020, Other income (expense) ~~included~~from continuing operations of $6,881, $2,107 and $1,661, respectively, includes $305, ($~~723)~~81) and $(915), ~~($550)~~respectively, of net currency exchange transaction gains (losses) from receivables and ~~$(516)~~payables held in non-functional currencies, $(225), $283 and $184, respectively, of net gains or (losses) on investments, and $4,256, $907 and $1,559, respectively, of net periodic benefit plan income. Other income (expense) also includes rental income of $689 in 2022, and $624 in both 2021 and 2020. Additionally, it includes royalty income of $2,250 for the ~~years~~year ended September 30, 2017, 2016 and 2015, respectively, of currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, as well as $53, $316 and $424, respectively, of investment income.2022.

NOTE 1920 - OTHER COMPREHENSIVE INCOME (LOSS)

The amounts recognized in other comprehensive income (loss) were as follows:


	Years Ended September 30,
	2022						2021						2020
	Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax
Foreign currency translation adjustments	$	(37,920)	$	—	$	(37,920)	$	6,433	$	—	$	6,433	$	5,601	$	—	$	5,601
Pension and other defined benefit plans	1,907		(404)		1,503		22,583		(4,787)		17,796		(14,955)		3,171		(11,784)
Cash flow hedge	(491)		147		(344)		2,694		(808)		1,886		10		(3)		7

Total other comprehensive income (loss)	$	(36,504)	$	(257)	$	(36,761)	$	31,710	$	(5,595)	$	26,115	$	(9,344)	$	3,168	$	(6,176)

Years Ended September 30,
2017 2016 2015
Pre-tax Tax Net of tax Pre-tax Tax Net of tax Pre-tax Tax Net of tax
Foreign currency translation adjustments $ 10,667
$ —
$ 10,667
$ 17,284
$ —
$ 17,284
$ (56,358 ) $ —
$ (56,358 )
Pension and other defined benefit plans 14,160
(4,957 ) 9,203
(8,694 ) 3,043
(5,651 ) (6,655 ) 2,329
(4,326 )
Cash flow hedge 1,370
(480 ) 890
(2,593 ) 907
(1,686 ) 662
(232 ) 430
Available-for-sale securities —
—
—
—
—
—
(1,370 ) 500
(870 )
Total other comprehensive income (loss) $ 26,197
$ (5,437 ) $ 20,760
$ 5,997
$ 3,950
$ 9,947
$ (63,721 ) $ 2,597
$ (61,124 )

The components of Accumulated other comprehensive income (loss) are as follows:


	At September 30,
	2022		2021
Foreign currency translation	(57,170)		(19,250)
Pension and other defined benefit plans	(27,299)		(28,802)
Cash flow hedge	1,731		2,075

Total	$	(82,738)	$	(45,977)

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

~~The components of Accumulated other comprehensive income (loss) are as follows:~~

At September 30,
2017 2016
Foreign currency translation adjustments $ (32,227 ) $ (42,894 )
Pension and other defined benefit plans (28,140 ) (37,343 )
Cash flow hedge (114 ) (1,004 )
$ (60,481 ) $ (81,241 )

Total comprehensive income (loss) were as follows:


	For the Years Ended September 30,
	2022		2021		2020
Net income (loss)	$	(191,558)	$	79,211	$	53,429
Other comprehensive income (loss), net of taxes	(36,761)		26,115		(6,176)
Comprehensive income (loss)	$	(228,319)	$	105,326	$	47,253

For the Years Ended September 30,
2017 2016 2015
Net income (loss) $ 14,912
$ 30,010
$ 34,289
Other comprehensive income (loss), net of taxes 20,760
9,947
(61,124 )
Comprehensive income (loss) $ 35,672
$ 39,957
$ (26,835 )

Amounts reclassified from accumulated other comprehensive income (loss) to income (loss) were as follows:


	For the Years Ended September 30,
Gain (Loss)	2022		2021		2020
Pension amortization	$	(3,379)	$	(6,292)	$	(4,182)


Cash flow hedges	4,741		(2,204)		(2,163)
Total before tax	1,362		(8,496)		(6,345)
Tax	(286)		1,784		1,332
Net of tax	$	1,076	$	(6,712)	$	(5,013)

For the Years Ended September 30,
Gain (Loss) 2017 2016 2015
Pension amortization $ (3,343 ) $ (2,375 ) $ (2,182 )
Available-for-sale securities —
—
1,370
Cash flow hedges (1,458 ) (752 ) 1,223
Total before tax (4,801 ) (3,127 ) 411
Tax 2
225
(164 )
Net of tax $ (4,799 ) $ (2,902 ) $ 247

NOTE ~~20 – CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION~~21 — LEASES

~~Griffon’s Senior Notes~~In February 2016, the FASB issued an Accounting Standards Update (ASU 2016-02) related to the accounting and financial statement presentation for leases. This new guidance requires a lessee to recognize right-of-use ("ROU") assets and lease liabilities on the balance sheet, with an election to exempt leases with a term of twelve months or less. The Company adopted the requirements of the new standard as of October 1, 2019 and applied the modified retrospective approach, whereby the cumulative effect of adoption is recognized as of the date of adoption and comparative prior periods are ~~fully and unconditionally guaranteed, jointly and severally, on~~not retrospectively adjusted. As a ~~senior secured basis by the domestic~~result, upon adoption, we recognized ROU assets of ~~Clopay Building Products~~$163,552 and lease liabilities of $163,676 associated with our operating leases. The standard had no material impact to retained earnings or on our Consolidated Statements of Income or Consolidated Statements of Cash Flows. The Company ~~Inc., Clopay Plastic Products Company, Inc., Telephonics Corporation, The AMES Companies, Inc., ATT Southern, Inc., and Clopay Ames True Temper Holding, Corp., all~~has elected the package of ~~which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated~~practical expedients permitted under the ~~Securities Act of 1933, presented below~~transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also elected a practical expedient to determine the reasonably certain lease term.

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 ~~condensed consolidating financial information~~shown as ~~of September 30, 2017~~separate line items on our Condensed Consolidated Balance Sheets. Finance leases are included in property, plant, and ~~2016,~~equipment, net, other accrued liabilities, and other non-current liabilities. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment. In connection with the ~~years~~Company's restructuring activities, during the year ended September 30, ~~2017, 2016~~2020, a $1,968 impairment charge was recorded related to a facility’s operating lease as well as $671 and ~~2015. The financial information may not necessarily be indicative~~ of results of operations or financial position had the guarantor companies or non-guarantor companies 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~~leasehold improvements made to the ~~Senior Notes (the “Indenture”) contains terms providing~~leased facility that ~~under certain limited circumstances, a guarantor will be released~~have no recoverable value. See Note 10, Restructuring Charges.

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 ~~its obligations~~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. 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. For leases existing as of October 1, 2019, we have elected to ~~guarantee~~use the ~~Senior Notes. These circumstances include (i) a sale of at least a majority~~remaining lease term as of the ~~stock, or all or substantially all~~adoption date in determining the ~~assets,~~incremental borrowing rate. Our determination of the ~~subsidiary guarantor as permitted by~~lease term may include options to extend or terminate the ~~Indenture; (ii) a public equity offering of a subsidiary guarantor~~lease when it is reasonably certain 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), andwe will exercise 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.option.

100

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~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. The Company has lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance). Components of operating lease costs are as follows:

~~At September 30, 2017~~


	For the Year Ended September 30,
	2022		2021		2020
Fixed (a)	$	44,457	$	38,362	$	36,155
Variable (a), (b)	8,615		7,573		7,178
Short-term (b)	7,438		4,210		5,470
Total	$	60,510	$	50,145	$	48,803

(a) Primarily related to common-area maintenance and property taxes.

(b) Not recorded on the balance sheet.

Supplemental cash flow information were as follows:


	For the Year Ended September 30,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	47,275	$	43,444	$	48,141
Financing cash flows from finance leases	2,462		3,815		4,122
Total	$	49,737	$	47,259	$	52,263

Supplemental Condensed Consolidated Balance Sheet information related to leases were as follows:


	As of September 30,
	2022		2021
Operating Leases:
Right of use assets:
Operating right-of-use assets	$	183,398	$	144,598

Lease Liabilities:
Current portion of operating lease liabilities	$	31,680	$	29,881
Long-term operating lease liabilities	159,414		119,315
Total operating lease liabilities	$	191,094	$	149,196

Finance Leases:
Right of use assets:
Property, plant and equipment, net(1)	$	13,696	$	16,466

Lease Liabilities:
Notes payable and current portion of long-term debt	$	2,065	$	2,347
Long-term debt, net	11,995		14,120
Total financing lease liabilities	$	14,060	$	16,467

101

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 assets 21,131
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 Assets 24,371
738,945
355,091
(20,278 ) 1,098,129
PROPERTY, PLANT AND EQUIPMENT, net 645
200,362
31,128
—
232,135
GOODWILL —
280,797
38,342
—
319,139
INTANGIBLE ASSETS, net 93
143,415
61,619
—
205,127
INTERCOMPANY RECEIVABLE 552,017
757,608
915,551
(2,225,176 ) —
EQUITY INVESTMENTS IN SUBSIDIARIES 863,149
877,641
1,613,891
(3,354,681 ) —
OTHER ASSETS 12,171
12,054
(1,002 ) (7,172 ) 16,051
ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE —
—
—
—
—
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 liabilities 14,683
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 —
—
8,342
—
8,342
Total Current Liabilities 17,537
248,681
98,230
6,631
371,079
LONG-TERM DEBT, net 903,609
6,044
58,427
—
968,080
INTERCOMPANY PAYABLES 84,068
1,259,413
854,518
(2,197,999 ) —
OTHER LIABILITIES 48,424
76,036
14,135
(6,058 ) 132,537
LIABILITIES OF DISCONTINUED OPERATIONS HELD FOR SALE —
—
—
—
—
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE —
—
3,037
—
3,037
Total Liabilities 1,053,638
1,590,174
1,028,347
(2,197,426 ) 1,474,733
SHAREHOLDERS’ EQUITY 398,808
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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

(1) For the years ended September 30, 2022 and 2021, finance lease assets are recorded net of accumulated depreciation of $4,972 and $6,136, respectively.

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

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 two five-year renewal options. At September 30, ~~2016~~

Parent
Company

Guarantor
Companies

Non-Guarantor
Companies
Elimination Consolidation
CURRENT ASSETS

Cash and equivalents $ 6,517
$ 27,692
$ 38,344
$ —
$ 72,553
Accounts receivable, net of allowances —
157,738
32,243
(5,642 ) 184,339
Contract costs and recognized income not yet billed, net of progress payments —
126,959
2
—
126,961
Inventories, net —
217,143
44,174
—
261,317
Prepaid and other current assets 39,763
26,744
5,718
(48,796 ) 23,429
Assets of discontinued operations held for sale —
45,731
66,408
—
112,139
Assets of discontinued operations not held for sale —
—
219
—
219
Total Current Assets 46,280
602,007
187,108
(54,438 ) 780,957
PROPERTY, PLANT AND EQUIPMENT, net 957
207,801
28,147
—
236,905
GOODWILL —
280,797
25,366
—
306,163
INTANGIBLE ASSETS, net 92
147,867
49,990
—
197,949
INTERCOMPANY RECEIVABLE 539,938
708,093
307,051
(1,555,082 ) —
EQUITY INVESTMENTS IN SUBSIDIARIES 824,889
866,595
1,669,799
(3,361,283 ) —
OTHER ASSETS 6,436
10,905
1,314
(11,086 ) 7,569
ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE —
100,094
150,491
—
250,585
ASSETS OF DISCONTINUED OPERATIONS NOT HELD FOR SALE —
—
1,968
—
1,968
Total Assets $ 1,418,592
$ 2,924,159
$ 2,421,234
$ (4,981,889 ) $ 1,782,096

CURRENT LIABILITIES

Notes payable and current portion of long-term debt $ 3,153
$ 1,408
$ 9,371
$ —
$ 13,932
Accounts payable and accrued liabilities 65,750
176,912
29,212
(39,685 ) 232,189
Liabilities of discontinued operations held for sale —
26,643
43,815
—
70,458
Liabilities of discontinued operations not held for sale —
—
1,684
—
1,684
Total Current Liabilities 68,903
204,963
84,082
(39,685 ) 318,263
LONG-TERM DEBT, net 848,588
7,366
40,992
—
896,946
INTERCOMPANY PAYABLES 57,648
732,955
725,900
(1,516,503 ) —
OTHER LIABILITIES 32,506
102,666
19,777
(31,786 ) 123,163
LIABILITIES OF DISCONTINUED OPERATIONS HELD FOR SALE —
23,331
7,740
—
31,071
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE —
—
1,706
—
1,706
Total Liabilities 1,007,645
1,071,281
880,197
(1,587,974 ) 1,371,149
SHAREHOLDERS’ EQUITY 410,947
1,852,878
1,541,037
(3,393,915 ) 410,947
Total Liabilities and Shareholders’ Equity $ 1,418,592
$ 2,924,159
$ 2,421,234
$ (4,981,889 ) $ 1,782,096

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For~~2022, $13,091 was outstanding. During the ~~Year Ended~~year ended September 30, ~~2017~~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. The remaining lease liability balance relates to finance equipment leases.

Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 1,284,189
$ 270,520
$ (29,712 ) $ 1,524,997
Cost of goods and services —
966,293
181,634
(31,046 ) 1,116,881
Gross profit —
317,896
88,886
1,334
408,116
Selling, general and administrative expenses 42,273
232,720
64,466
(370 ) 339,089
Restructuring and other related charges —
—
—
—
—
Total operating expenses 42,273
232,720
64,466
(370 ) 339,089
Income (loss) from operations (42,273 ) 85,176
24,420
1,704
69,027
Other income (expense)

Interest income (expense), net (13,804 ) (24,242 ) (13,403 ) —
(51,449 )
Other, net 59
1,395
(630 ) (1,704 ) (880 )
Total other income (expense) (13,745 ) (22,847 ) �� (14,033 ) (1,704 ) (52,329 )
Income (loss) before taxes from continuing operations (56,018 ) 62,329
10,387
—
16,698
Provision (benefit) for income taxes (11,338 ) 24,560
(14,307 ) —
(1,085 )
Income (loss) before equity in net income of subsidiaries (44,680 ) 37,769
24,694
—
17,783
Equity in net income (loss) of subsidiaries 59,592
(25,231 ) 37,770
(72,131 ) —
Income (loss) from continuing operations 14,912
12,538
62,464
(72,131 ) 17,783
Income from operations of discontinued businesses —
16,827
5,449
—
22,276
Provision (benefit) from income taxes —
4,476
20,671
—
25,147
Loss from discontinued operations —
12,351
(15,222 ) —
(2,871 )
Net income (loss) $ 14,912
$ 24,889
$ 47,242
$ (72,131 ) $ 14,912

Comprehensive income (loss) $ 35,672
$ 35,575
$ 38,337
$ (73,912 ) $ 35,672

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~(US dollars~~The aggregate future maturities of lease payments for operating leases and ~~non US currencies in thousands, except per share data)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Year Ended~~finance leases as of September 30, ~~2016~~2022 are as follows (in thousands):


	Operating Leases		Finance Leases
2023	$	40,998	$	2,774
2024	33,985		2,290
2025	31,356		2,129
2026	22,734		2,106
2027	18,597		2,074
Thereafter	96,938		5,702

Total lease payments	244,608		17,075
Less: Imputed Interest	(53,514)		(3,015)
Present value of lease liabilities	$	191,094	$	14,060

Average lease terms and discount rates were as follows:


	As of September 30,
	2022		2021
Weighted-average remaining lease term (years)
Operating Leases	8.4		8.0
Finance Leases	7.4		8.1

Weighted-average discount rate
Operating Leases	5.47	%	4.48	%
Finance Leases	5.51	%	5.48	%

Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 1,277,241
$ 228,350
$ (28,556 ) $ 1,477,035
Cost of goods and services —
952,296
154,181
(30,135 ) 1,076,342
Gross profit —
324,945
74,169
1,579
400,693

Selling, general and administrative expenses 26,427
228,961
63,335
(370 ) 318,353
Restructuring and other related charges —
1,299
(1,299 ) —
—
Total operating expenses 26,427
230,260
62,036
(370 ) 318,353

Income (loss) from operations (26,427 ) 94,685
12,133
1,949
82,340

Other income (expense)

Interest income (expense), net (12,549 ) (24,050 ) (13,278 ) —
(49,877 )
Other, net 337
1,862
(500 ) (1,949 ) (250 )
Total other income (expense) (12,212 ) (22,188 ) (13,778 ) (1,949 ) (50,127 )

Income (loss) before taxes (38,639 ) 72,497
(1,645 ) —
32,213
Provision (benefit) for income taxes 4,964
29,445
(21,977 ) —
12,432
Income (loss) before equity in net income of subsidiaries (43,603 ) 43,052
20,332
—
19,781
Equity in net income (loss) of subsidiaries 73,613
(2,858 ) 43,052
(113,807 ) —
Income (loss) from continuing operations $ 30,010
$ 40,194
$ 63,384
$ (113,807 ) $ 19,781
Income from operations of discontinued businesses —
15,625
5,327
—
20,952
Provision (benefit) from income taxes —
4,720
6,003
—
10,723
Income (loss) from discontinued operations —
10,905
(676 ) —
10,229
Net income (loss) $ 30,010
$ 51,099
$ 62,708
$ (113,807 ) $ 30,010

Comprehensive income (loss) $ 39,957
$ 44,391
$ 90,560
$ (134,951 ) $ 39,957

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Year Ended September 30, 2015~~

Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 1,265,201
$ 258,733
$ (40,643 ) $ 1,483,291
Cost of goods and services —
957,461
175,449
(41,966 ) 1,090,944
Gross profit —
307,740
83,284
1,323
392,347
Selling, general and administrative expenses 22,637
236,777
66,391
(370 ) 325,435
Income (loss) from operations (22,637 ) 70,963
16,893
1,693
66,912
Other income (expense)

Interest income (expense), net (8,741 ) (24,322 ) (14,452 ) —
(47,515 )
Other, net 438
1,847
(923 ) (1,693 ) (331 )
Total other income (expense) (8,303 ) (22,475 ) (15,375 ) (1,693 ) (47,846 )
Income (loss) before taxes (30,940 ) 48,486
1,520
—
19,066
Provision (benefit) for income taxes (31,241 ) 21,408
16,605
—
6,772
Income (loss) before equity in net income of subsidiaries 301
27,078
(15,085 ) —
12,294
Equity in net income (loss) of subsidiaries 33,987
(38,487 ) 27,078
(22,578 ) —
Income (loss) from continuing operations 34,288
(11,409 ) 11,993
(22,578 ) 12,294
Income (loss) from operations of discontinued businesses 2
33,175
1,393
—
34,570
Provision (benefit) from income taxes 1
11,890
684
—
12,575
Income (loss) from discontinued operations 1
21,285
709
—
21,995
Net Income (loss) $ 34,289
$ 9,876
$ 12,702
$ (22,578 ) $ 34,289

Comprehensive income (loss) $ (26,835 ) $ (14,316 ) $ (21,980 ) $ 36,296
$ (26,835 )

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~For the Year Ended September 30, 2017~~

Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 14,912
$ 24,889
$ 47,242
$ (72,131 ) $ 14,912
Net (income) loss from discontinued operations —
(12,351 ) 15,222
—
2,871
Net cash provided by operating activities (10,771 ) 56,320
3,602
—
49,151
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (15 ) (27,902 ) (7,020 ) —
(34,937 )
Acquired business, net of cash acquired —
—
(34,719 ) —
(34,719 )
Purchase of securities (1,824 ) —
—
—
(1,824 )
Proceeds from sale of property, plant and equipment —
144
(1 ) —
143
Net cash used in investing activities (1,839 ) (27,758 ) (41,740 ) —
(71,337 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury (15,841 ) —
—
—
(15,841 )
Proceeds from long-term debt 201,124
—
32,319
—
233,443
Payments of long-term debt (149,109 ) (1,282 ) (20,063 ) —
(170,454 )
Share premium payment on settled debt (24,997 ) —
—
—
(24,997 )
Change in short-term borrowings —
—
—
—
—
Financing costs (1,548 ) —
—
—
(1,548 )
Purchase of ESOP shares (10,908 ) —
—
—
(10,908 )
Dividends paid (10,325 ) —
—
—
(10,325 )
Other, net 20,937
(34,806 ) 13,799
—
(70 )
Net cash used in financing activities 9,333
(36,088 ) 26,055
—
(700 )
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used in) discontinued operations —
(12,100 ) 9,950
—
(2,150 )
Effect of exchange rate changes on cash and equivalents —
—
164
—
164
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (3,277 ) (19,626 ) (1,969 ) —
(24,872 )
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 6,517
27,692
38,344
—
72,553
CASH AND EQUIVALENTS AT END OF PERIOD $ 3,240
$ 8,066
$ 36,375
$ —
$ 47,681

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~For the Year Ended September 30, 2016~~

Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 30,010
$ 51,099
$ 62,708
$ (113,807 ) $ 30,010
Net income (loss) from discontinued operations —
10,905
(676 ) —
10,229
Net cash provided by (used in) operating activities (11,879 ) 87,252
4,745
—
80,118
CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property, plant and equipment (259 ) (62,176 ) 3,159
—
(59,276 )
Intercompany distributions —
(2,726 ) (1,744 ) —
(4,470 )
Proceeds from sale of property, plant and equipment —
763
7
—
770
Investment purchases 715
—
—
—
715
Net cash provided by (used in) investing activities 456
(64,139 ) 1,422
—
(62,261 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of shares for treasury (65,307 ) —
—
—
(65,307 )
Proceeds from long-term debt 271,340
2,311
28,711
—
302,362
Payments of long-term debt (177,513 ) (1,237 ) (29,764 ) —
(208,514 )
Change in short-term borrowings —
—
—
—
—
Financing costs (4,277 ) —
(107 ) —
(4,384 )
Tax effect from exercise/vesting of equity awards, net —
—
—
—
—
Dividends paid (8,798 ) —
—
—
(8,798 )
Other, net 55
(1,926 ) 1,926
—
55
Net cash provided by (used in) financing activities 15,500
(852 ) 766
—
15,414
CASH FLOWS FROM DISCONTINUED OPERATIONS:

Net cash provided by (used in) discontinued operations —
(5,241 ) (8,364 ) —
(13,605 )
Effect of exchange rate changes on cash and equivalents —
—
886
—
886
NET DECREASE IN CASH AND EQUIVALENTS 4,077
17,020
(545 ) —
20,552
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 2,440
10,672
38,889
—
52,001
CASH AND EQUIVALENTS AT END OF PERIOD $ 6,517
$ 27,692
$ 38,344
$ —
$ 72,553

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~For the Year Ended September 30, 2015~~

Parent Company
Guarantor Companies
Non-Guarantor Companies
Elimination
Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 34,289

$ 9,876

$ 12,702

$ (22,578 )
$ 34,289
Net (income) loss from discontinued operations (1 ) (21,285 ) (709 ) —
(21,995 )
Net cash provided by (used in) operating activities 59,245

11,686

(39,075 )
—

31,856
CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property, plant and equipment (274 )
(27,281 )
(18,753 )
—

(46,308 )
Acquired business, net of cash acquired —

(2,225 )
—

—

(2,225 )
Intercompany distributions —

—

—

—

—
Investment sales 8,891

—

—

—

8,891
Proceeds from sale of property, plant and equipment —
141
62
—
203
Net cash provided by (used in) investing activities 8,617

(29,365 )
(18,691 )
—

(39,439 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stock 371
—
—
—
371
Purchase of shares for treasury (82,343 )
—

—

—

(82,343 )
Proceeds from long-term debt 124,500

13,596

65,120

—

203,216
Payments of long-term debt (116,702 )
(364 )
(70,669 )
—

(187,735 )
Change in short-term borrowings —

—

—

—

—
Financing costs (615 )
(196 )
(77 )
—

(888 )
Tax effect from exercise/vesting of equity awards, net 345

—

—

—

345
Dividends paid 2,346

(10,000 )
—

—

(7,654 )
Other, net 347

6,341

(6,341 )
—

347
Net cash provided by (used in) financing activities (71,751 )
9,377

(11,967 )
—

(74,341 )
CASH FLOWS FROM DISCONTINUED OPERATIONS:

Net cash used in discontinued operations —

5,139

40,533

—

45,672
Effect of exchange rate changes on cash and equivalents —

—

(4,152 )
—

(4,152 )
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (3,889 )
(3,163 )
(33,352 ) —

(40,404 )
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 6,329

13,835

72,241

—

92,405
CASH AND EQUIVALENTS AT END OF PERIOD $ 2,440

$ 10,672

$ 38,889

$ —

$ 52,001

~~GRIFFON CORPORATION~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

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

NOTE 22 – SUBSEQUENT EVENTS

On November ~~15, 2017,~~16, 2022, the Board of Directors declared a cash dividend of ~~$0.07~~$0.10 per share, payable on December ~~21, 2017~~16, 2022 to shareholders of record as of the close of business on November 29, ~~2017.~~2022. Griffon 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.

*****

102

SCHEDULE II

GRIFFON CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended September 30, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

(in thousands)


Description	Balance at Beginning of Year		Additions		Reductions		Other (1)		Balance at End of Year
FOR THE YEAR ENDED SEPTEMBER 30, 2022



Allowance for Doubtful Accounts	$	8,787	$	1,172	$	(251)	$	2,429	$	12,137

Inventory valuation	$	31,605	$	4,725	$	(14,103)	$	648	$	22,875

Deferred tax valuation allowance	$	10,425	$	4,330	$	(1,265)	$	—	$	13,490

FOR THE YEAR ENDED SEPTEMBER 30, 2021



Allowance for Doubtful Accounts	$	8,178	$	795	$	(393)	$	207	$	8,787

Inventory valuation	$	18,903	$	24,400	$	(12,099)	$	401	$	31,605

Deferred tax valuation allowance	$	9,824	$	601	$	—	$	—	$	10,425

FOR THE YEAR ENDED SEPTEMBER 30, 2020
Allowance for Doubtful Accounts


Allowance for Doubtful Accounts	$	7,588	$	5,175	$	(4,584)	$	(1)	$	8,178

Inventory valuation	$	15,218	$	6,771	$	(3,412)	$	326	$	18,903

Deferred tax valuation allowance	$	10,823	$	—	$	(999)	$	—	$	9,824

Note (1): For the year ended September 30, 2022, Other primarily consists of foreign currency and opening balances of reserves assumed from the Hunter acquisition. See Note 6 for the detail on the Allowance for Doubtful Accounts.

103

Description
Balance at
Beginning of
Year

Recorded to
Cost and
Expense

Accounts
Written Off,
net
Other
Balance at
End of Year
FOR THE YEAR ENDED SEPTEMBER 30, 2017

Allowance for Doubtful Accounts

Bad debts $ 1,217
$ 279
(387 ) $ —
$ 1,109
Sales returns and allowances 3,475
1,401
(19 ) —
4,857
$ 4,692
$ 1,680
$ (406 ) $ —
$ 5,966

Inventory valuation $ 15,338
$ (2,954 ) $ 4,008
$ 27
$ 16,419

Deferred tax valuation allowance $ 12,832
$ 4,634
$ —
$ —
$ 17,466

FOR THE YEAR ENDED SEPTEMBER 30, 2016

Allowance for Doubtful Accounts

Bad debts $ 1,628
$ 349
$ (759 ) $ (1 ) $ 1,217
Sales returns and allowances 2,277
1,205
(7 ) —
3,475
$ 3,905
$ 1,554
$ (766 ) $ (1 ) $ 4,692

Inventory valuation $ 13,003
$ 10,835
$ (8,743 ) $ 243
$ 15,338

Deferred tax valuation allowance $ 10,462
$ 2,370
$ —
$ —
$ 12,832

FOR THE YEAR ENDED SEPTEMBER 30, 2015

Allowance for Doubtful Accounts

Bad debts $ 2,333
$ 66
$ (769 ) $ (2 ) $ 1,628
Sales returns and allowances 3,047
(748 ) (22 ) —
2,277
$ 5,380
$ (682 ) $ (791 ) $ (2 ) $ 3,905

Inventory valuation $ 15,358
$ 5,368
$ (6,822 ) $ (901 ) $ 13,003

Deferred tax valuation allowance $ 15,649
$ (5,187 ) $ —
$ —
$ 10,462

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation and Disclosure Controls and Procedures

Griffon’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of Griffon’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, Griffon’s disclosure controls and procedures were effective to ensure that information required to be disclosed by Griffon in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

SEC guidance permits the exclusion of an evaluation of the effectiveness of a registrant's disclosure controls and procedures as they relate to the internal control over financial reporting for an acquired business during the first year following such acquisition. As discussed in Note 3 to the consolidated financial statements contained in this Report, the Company acquired Hunter Fan Company ("Hunter"). The acquisition represents approximately 9.0% of the Company's consolidated revenue for the year ended September 30, 2022, and approximately 31.0% of the Company's consolidated assets at September 30, 2022. Management's evaluation and conclusion as to the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2022 excludes any evaluation of the internal control over financial reporting of Hunter.

Management’s Report on Internal Control over Financial Reporting

Griffon’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Griffon’s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Griffon’s financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management evaluates the effectiveness of Griffon’s internal control over financial reporting using the criteria set forth by the 2013 Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Management, under the supervision and with the participation of Griffon’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of Griffon’s internal control over financial reporting as of September 30, ~~2017~~2022 and concluded that it is effective.

Griffon’s independent registered public accounting firm, Grant Thornton LLP, has audited the effectiveness of Griffon’s internal control over financial reporting as of September 30, ~~2017,~~2022, and has expressed an unqualified opinion in their report which appears in this Annual Report on Form 10-K.

Changes in Internal Controls

There were no changes in Griffon’s internal control over financial reporting identified in connection with the evaluation referred to above that occurred during the fourth quarter of the year ended September 30, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

In 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.

104

Inherent Limitations on the Effectiveness of Controls

Griffon’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Griffon’s internal control over financial reporting includes those policies and procedures that:


~~(i)~~	~~pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of Griffon’s assets;~~


~~(ii)~~	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that Griffon’s receipts and expenditures are being made only in accordance with authorizations of Griffon’s management and directors; and


~~(iii)~~	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Griffon’s assets that could have a material effect on the financial statements.

(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of Griffon’s assets;

(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that Griffon’s receipts and expenditures are being made only in accordance with authorizations of Griffon’s management and directors; and

(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Griffon’s assets that could have a material effect on the financial statements.

Management, including Griffon’s Chief Executive Officer and Chief Financial Officer, does not expect that Griffon’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future

periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

None.

105

PART III

The information required by Part III: Item 10, Directors, ~~and~~ Executive Officers and Corporate Governance(with respect to directors and corporate governance); Item 11, Executive Compensation; Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; Item 13, Certain Relationships and Related Transactions, and Director Independence; and Item 14, Principal Accountant Fees and Services, is included in and incorporated by reference to Griffon’s definitive proxy statement in connection with its Annual Meeting of Stockholders scheduled to be held in ~~January, 2018,~~March, 2023, to be filed with the Securities and Exchange Commission within 120 days following the end of Griffon’s fiscal year ended September 30, ~~2017.~~2022. Information required by Part III, Item 10, relating to the executive officers of the Registrant, appears under Item 1 of this report.

~~Item 12.~~ ~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~

The information regarding security ownership of certain beneficial owners and management that is required to be included pursuant to this Item 12 is included in and incorporated by reference to Griffon’s definitive proxy statement in connection with its Annual Meeting of Stockholders scheduled to be held in January, 2018.

~~The following sets forth information relating to Griffon’s equity compensation plans as of September 30, 2017:~~

(a) (b) (c)
Plan Category
Number of
securities to be
issued upon
exercise of
outstanding options,
warrants and rights

Weighted-
average exercise
price of
outstanding
options, warrants
and rights

Number of securities
remaining available for
future issuance under
equity plans (excluding
securities reflected in
column (a))
Equity compensation plans approved by security
holders (1)
350,000
$ 20.00
1,276,824

Equity compensation plans not approved by security holders —
$ —
—


~~(1)~~	Excludes restricted shares and restricted stock units issued in connection with Griffon’s equity compensation plans. The total reflected in Column (c) includes shares available for grant as any type of equity award under the Incentive Plan.

~~PART IV~~

Item 15. Exhibits and Financial Statement Schedules

(a)

(1)

Financial Statements – Covered by Report of Independent Registered Public Accounting Firm

(A)

Consolidated Balance Sheets at September 30, ~~2017~~2022 and ~~2016~~2021

(B)

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Fiscal Years Ended September 30, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

(C)

Consolidated Statements of Cash Flows for the Fiscal Years Ended September 30, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

(D)

Consolidated Statements of Shareholders’ Equity for the Fiscal Years Ended September 30, ~~2017, 2016~~2022, 2021 and ~~2015~~2020

(E)

Notes to the Consolidated Financial Statements

(2)

Financial Statement Schedule – Covered by Report of Independent Registered Public Accounting Firm

Schedule II – Valuation and Qualifying Accounts

All other schedules are not required and have been omitted.

(3)

The information required by this Section (a)(3) of Item 15 is set forth on the exhibit index that follows the signatures page of this Form 10-K.

(b)

Reference is made to the exhibit index that follows the signatures page of this Form 10-K.

106

Exhibit Index



Exhibit No.
~~3.1~~2.1		Agreement and Plan of Merger, dated as of December 17, 2021, by and among MidOcean Hunter Holdings, Inc., The Ames Companies Inc., Ames Hunter Holdings Corporation and MidOcean Partners III-D, L.P., as representative for the equityholders of MidOcean Hunter Holdings, Inc. (Exhibit 2.1 of Current Report on Form 8-K file December 21, 2021 (Commission File No. 1-06620)).
2.2		Share Purchase Agreement by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation, dated as of April 18, 2022 (incorporated by reference to Exhibit 2.1 of Current Report on Form 8-K filed April 21, 2022 (Commission File No. 1-06620)).
2.3		First Amendment to Share Purchase Agreement, dated as of June 11, 2022, to that certain Share Purchase Agreement, dated as of April 18, 2022, by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation (Exhibit 2.2 of Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (Commission File No. 1-06620)).
2.4		Letter Agreement, dated as of June 11, 2022, modifying that certain Share Purchase Agreement, dated as of April 18, 2022, by and among TTM Technologies, Inc., Exphonics, Inc. and Griffon Corporation (Exhibit 2.3 of Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 (Commission File No. 1-06620)).
3.1		Restated Certificate of Incorporation, as amended (Exhibit 3.1 of Annual Report on Form 10-K for the year ended September 30, 1995 (Commission File No. 1-06620) ~~and~~, Exhibit 3.1 of Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (Commission File No. 1-06620), and Exhibit 3.1 of Current Report on Form 8-K dated February 18, 2022 (Commission File No. 1-06620)).
3.2		Amended and Restated By-laws, as amended (Exhibit 3.1 of Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-06620), Exhibit 3.2 of Current Report on Form 8-K dated February 18, 2022 (Commission File No. 1-06620), and Exhibit 3.1 of Current Report on Form 8-K dated October 6, 2022 (Commission File No. 1-06620)).
4.1		Specimen Certificate for Shares of Common Stock of Registrant (Exhibit 4.3 of Registration Statement on Form S-3 Registration Statement No. ~~333-109171)~~333-109171 (Commission File No. 1-06620)).
4.2		Indenture, dated as of February ~~27, 2014,~~19, 2020, among Griffon Corporation, the Guarantors named on the signature pages thereto and Wells Fargo Bank, National Association, as Trustee (Exhibit 4.1 to Current Report on Form 8-K dated February ~~27, 2014~~20, 2020 (Commission File No. 1-06620)).
4.3		~~Registration Rights Agreement, dated as~~Description of ~~October 2, 2017, by and among Griffon Corporation, the Guarantors party thereto and Deutsche Bank Securities Inc., as the Representative~~Registrant’s Securities. (Exhibit 4.6 of ~~the several Initial Purchaser (Exhibit 4.1 to Current~~Annual Report on Form ~~8-K dated October 2, 2017~~10-K for the year ended September 30, 2020 (Commission File No. 1-06620)).
10.1**10.1(b)		~~Employment Agreement dated as of July 1, 2001 between the Registrant and Harvey R. Blau (Exhibit 10.1 of Current Report on Form 8-K filed May 18, 2001 (Commission File No. 1-06620)).~~
10.2**	Employment Agreement dated as of July 1, 2001 between the Registrant and Robert Balemian (Exhibit 10.2 of Current Report on Form 8-K file May 18, 2001 (Commission File No. 1-06620)).
~~10.3~~10.2		Form of Indemnification Agreement between the Registrant and its officers and directors (Exhibit 10.2 of Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 (Commission File No. 1-06620)).
10.4**10.3(b)		Amendment to Employment Agreement between the Registrant and Harvey R. Blau dated August 8, 2003 (Exhibit 10.1 of Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 (Commission File No. 1-06620)).
10.5**	~~Non-Qualified Stock Option Agreement (Exhibit 4.1 of Form S-8 Registration Statement No. 333-131737).~~
10.6**	~~Griffon Corporation 2006 Equity Incentive Plan, as amended (Exhibit 10.1 of Quarterly Report on Form 10-Q for the period ended December 31, 2008 (Commission File No. 1-06620)).~~
10.7**	~~Amendment No. 2 to Employment Agreement, dated July 18, 2006 between the Registrant and Harvey R. Blau (Exhibit 10.1 to Current Report on Form 8-K filed July 21, 2006 (Commission File No. 1-06620)).~~
10.8**	Supplemental Executive Retirement Plan as amended through July 18, 2006 (Exhibit 10.3 to Current Report on Form 8-K filed July 21, 2006 (Commission File No. 1-06620)).
10.9**10.4(b)		Amendment No. 3 to Employment Agreement, dated August 3, 2007, between the Registrant and Harvey R. Blau (Exhibit 10.1 to Current Report on Form 8-K filed August 6, 2007 (Commission File No. 1-06620)).
10.10**	Amendment No. 1 to the Amended and Restated Supplemental Executive Retirement Plan dated August 3, 2007 (Exhibit 10.3 to the Current Report on Form 8-K filed August 6, 2007 (Commission File No. 1-06620)).
10.11**10.5(b)		Employment Agreement, dated March 16, 2008, between the Registrant and Ronald J. Kramer. (Exhibit 10.1 to the Current Report on Form 8-K filed March 20, 2008 (Commission File No. 1-06620)).


10.6(b)
~~Exhibit~~ ~~No.~~
~~10.12~~	~~Investment Agreement, dated August 7, 2008, between Griffon Corporation and GS Direct, L.L.C. (Exhibit 10.1 to the Current Report on Form 8-K filed August 13, 2008 (Commission File No. 1-06620)).~~
10.13**	~~Offer Letter Agreement, dated April 27, 2010 between the Company and Seth L. Kaplan (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (Commission File No. 1-06620)).~~
10.14**	~~Severance Agreement, dated April 27, 2010 between the Company and Seth L. Kaplan (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (Commission File No. 1-06620)).~~
10.15**	Letter Agreement, dated February 3, 2011, between Griffon Corporation and Harvey R. Blau (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (Commission File No. 1-06620)).
10.16**	~~Griffon Corporation 2011 Equity Incentive Plan (Exhibit 99.1 to the Current Report on Form 8-K filed February 9, 2011 (Commission File No. 1-06620)).~~
10.17**	~~Griffon Corporation 2011 Equity Incentive Plan, amended as of January 30, 2013 (Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (Commission File No. 1-06620)).~~
10.18**	Form of Award Agreement for Restricted Share Award under Griffon Corporation 2011 Equity Incentive Plan (Exhibit 99.2 to the Current Report on Form 8-K filed February 9, 2011 (Commission File No. 1-06620)).
10.19**	~~Griffon Corporation 2011 Performance Bonus Plan (Exhibit 99.3 to the Current Report on Form 8-K filed February 9, 2011 (Commission File No. 1-06620)).~~
10.20**	Amendment No.1 to Employment Agreement made as of February 3, 2011 by and between Griffon Corporation and Ronald J. Kramer (Exhibit 99.4 to the Current Report on Form 8-K filed February 9, 2011 (Commission File No. 1-06620)).
~~10.21~~		Guarantee and Collateral Agreement, dated as of March 18, 2011, by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as administrative agent (Exhibit 99.3 to the Current Report on Form 8-K filed March 18, 2011 (Commission File No. 1-06620)).
~~10.22~~	Amendment, dated as of March 28, 2013, to Guarantee and Collateral Agreement, dated as of March 18, 2011, by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as administrative agent (Exhibit 99.2 to the Current Report on Form 8-K filed April 1, 2013 (Commission File No. 1-06620)).
10.23**	Employment Agreement, dated December 7, 2012, by and between Griffon Corporation and Robert F. Mehmel (Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 (Commission File No. 1-06620)).
10.24**	Restricted Share Award letter made as of December 10, 2012, by and between Griffon Corporation and Robert F. Mehmel (Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 (Commission File No. 1-06620)).


10.7(b)
10.25**	Griffon Corporation 2011 Equity Incentive Plan, as amended and restated through January 30, 2014 (Exhibit A to the Registrant’s Proxy Statement relating to the 2014 Annual Meeting of Shareholders, filed with the Securities and Exchange Commission on December 20, 2013 (Commission File No. 1-06620)).
10.26**	Amendment No. 2 to Employment Agreement made as of December 12, 2013 by and between Griffon Corporation and Ronald J. Kramer (Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, ~~2013~~2013. (Commission File No. 1-06620)) .
10.27**10.8(b)		Amendment No. 3 to Employment Agreement made as of April 28, 2022 by and between Griffon Corporation ~~Director Compensation Program, amended~~ and ~~restated as of January 29, 2015~~Ronald J. Kramer (Exhibit ~~10.2~~10.4 to the Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2015~~2022. (Commission File No. 1-06620)).
~~10.28~~10.9(a)(b)		~~Purchase~~Amendment No. 4 to Employment Agreement ~~dated~~made as of November ~~13, 2013,~~14, 2022 by and ~~between G.S. Direct, L.L.C. and Griffon Corporation (Exhibit 10.43 to the Annual Report on form 10-K for the year ended September 30, 2014 (Commission File No. 1-06620)).~~
~~10.29~~	Letter agreement, dated November 12, 2014, by and between G.S. Direct, L.L.C and Griffon Corporation, amending that certain Purchase Agreement, dated as of November 13, 2013, by and between G.S. Direct, L.L.C. and Griffon Corporation. (Exhibit 10.44 to the Annual Report on form 10-K for the year ended September 30, 2014 (Commission File No. 1-06620)).
10.30**	~~Letter Agreement, dated January 28, 2015,~~ between Griffon Corporation and ~~Harvey R. Blau~~Ronald J. Kramer.

107


Exhibit No.
10.10(b)						Offer Letter, dated April 27, 2010 between the Company and Seth L. Kaplan (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended ~~March 31, 2015~~June 30, 2010 (Commission File No. 1-06620)).
10.11(b)						Severance Agreement, dated April 27, 2010 between the Company and Seth L. Kaplan (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (Commission File No. 1-06620)).
10.12(b)						Amendment No. 2 to Severance Agreement made as of April 28, 2022 by and between Griffon Corporation and Seth L. Kaplan (Exhibit 10.6 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. (Commission File No. 1-06620)).
10.13(a) (b)						Amendment No. 3 to Severance Agreement made as of April 28, 2022 by and between Griffon Corporation and Seth L. Kaplan.
10.31**10.14(b)						Employment Agreement, dated December 7, 2012, by and between Griffon Corporation and Robert F. Mehmel (Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2012 (Commission File No. 1-06620)).



10.15(a) (b)						Amendment No. 2 to Employment Agreement made as of April 28, 2022 by and between Griffon Corporation and Robert F. Mehmel.
10.16(b)						Offer Letter, dated June 1, 2015 between the Company and Brian G. Harris (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-06620)).
10.32**10.17(b)						Severance Agreement, dated July 30, 2015 between the Company and Brian G. Harris (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (Commission File No. 1-06620)).
10.33**10.18(b)						~~Transition~~Amendment No. 2 to Severance Agreement made as of April 28, 2022 by and ~~Consulting Services Agreement~~ between Griffon Corporation and ~~Douglas J. Wetmore, dated June 1, 2015~~Brian G. Harris (Exhibit ~~10.3~~10.5 to the Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2015~~March 31, 2022. (Commission File No. 1-06620)).


10.19(a) (b)
~~Exhibit~~ Amendment No.
~~10.34~~	~~Letter agreement, dated November 12, 2015,~~ 3 to Severance Agreement made as of April 28, 2022 by and between ~~G.S. Direct, L.L.C and~~ Griffon Corporation ~~amending that certain Purchase Agreement, dated as of November 13, 2013, by~~ and between G.S. Direct, L.L.C. and Griffon Corporation as amended by the letter agreement dated November 12, 2014 (Exhibit 10.42 to Annual Report on Form 10-K for the year ended September 30, 2015 (Commission File No. 1-06620)).Brian G. Harris.
~~10.35~~10.20(b)		Letter agreement, dated November 16, 2016, by and between G.S. Direct, L.L.C and Griffon Corporation, amending that certain Purchase Agreement, dated as of November 13, 2013, by and between G.S. Direct, L.L.C. and Griffon Corporation as amended by the letter agreement dated November 12, 2014 and as further amended by the letter agreement dated November 12, 2015 (Exhibit 10.38 to Annual Report on Form 10-K for the year ended September 30, 2016 (Commission File No. 1-06620)).
10.36*	Letter agreement, dated November 15, 2017, by and between G.S. Direct, L.L.C and Griffon Corporation, amending that certain Purchase Agreement, dated as of November 13, 2013, by and between G.S. Direct, L.L.C. and Griffon Corporation as amended by the letter agreement dated November 12, 2014, the letter agreement dated November 12, 2015 and the letter agreement dated November 16, 2016.
10.37**	Griffon Corporation 2016 Equity Incentive Plan (Exhibit A to the Registrant’s Proxy Statement relating to the 2016 Annual Meeting of Shareholders, filed with the Securities and Exchange Commission on December 17, 2015 (Commission File No. 1-06620)).
10.38**10.21(b)		Amendment No. 1 to the Griffon Corporation 2016 ~~Performance Bonus~~Equity Incentive Plan ~~(Exhibit~~(Annex B to ~~the Registrant’s~~Griffon's Proxy Statement relating to the 2018 Annual Meeting of Shareholders, filed with the Securities and Exchange Commission on December 18, 2017 (Commission File No. 1-06620)).
10.22(b)		Amendment No. 2 to the 2016 Equity Incentive Plan (Annex B to Griffon’s Proxy Statement relating to the 2020 Annual Meeting of Shareholders, filed with the Securities and Exchange Commission on December 17, ~~2015~~2019 (Commission File No. 1-06620)).
~~10.39~~10.23(b)		~~Purchase Agreement, dated as of May 13,~~Amended and Restated 2016 ~~by and among Griffon Corporation, the Guarantors named therein and Deutsche Bank Securities Inc., as the Initial Purchaser~~Equity Incentive Plan (Exhibit 99.1 to the Current Report on Form 8-K ~~dated May 13, 2016~~filed February 18, 2022 (Commission File No. 1-06620)).
~~10.40~~10.24(b)		Amended and Restated 2016 Performance Bonus Plan, dated as January 29, 2020 (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 (Commission File No. 1-06620)).
10.25(b)		Griffon Corporation Director Compensation Program, Amended and Restated as of March 3, 2022 (Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 (Commission File No. 1-06620)).

108


Exhibit No.
10.26			Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, a Delaware corporation, the several banks and other financial institutions or entities from time to time party thereto, Deutsche Bank Securities Inc. and Wells Fargo Bank, National Association, as co-syndication agents, Bank of America, N.A., Capital One, N.A. and Citizens Bank, National Association, as co-documentation agents and JPMorgan Chase Bank, N.A., as administrative agent (Exhibit 99.1 to Current Report on Form 8-K dated March 22, 2016 (Commission File No. 1-06620)).
~~10.41~~10.27			First Amendment, dated as of June 2, 2017, to Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, ~~a Delaware corporation,~~ the several banks and other financial institutions or entities from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (Exhibit 99.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (Commission File No. 1-06620)).
~~10.42~~10.28			Second Amendment, dated as of October 2, 2017, to Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, the several banks and other financial institutions or entities from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (Exhibit 99.3 to Current Report on Form 8-K dated October 2, 2017 (Commission File No. 1-06620)).


10.29			Third Amendment, dated as of February 9, 2018, to Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, the several banks and other financial institutions or entities from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the year ended September 30, 2019 (Commission File No. 1-06620)).
10.30			Fourth Amendment, dated as of May 31, 2018, to Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, the several banks and other financial institutions or entities from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto (Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed June 1, 2018 (Commission File No. 1-06620)).
10.31			Fifth Amendment, dated as of February 22, 2019, to Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, the several banks and other financial institutions or entities from time to time parties thereto, Bank of America, N.A., as administrative agent, and the other agents party thereto (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (Commission File No. 1-06620)).
10.32			Sixth Amendment to Third Amended and Restated Credit Agreement, dated as of January 30, 2020, to that certain Third Amended and Restated Credit Agreement, dated as of March 22, 2016, among Griffon Corporation, the several banks and other financial institutions or entities from time to time parties thereto, Bank of America, N.A., as administrative agent, and the other agents party thereto (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 (Commission File No. 1-06620)).
10.33			First Amendment to Fourth Amended and Restated Credit Agreement, dated as of December 9, 2021, to that certain Fourth Amended and Restated Credit Agreement, dated as of January 30, 2020, among Griffon Corporation, the several banks and other financial institutions or entities from time to time parties thereto, Bank of America, N.A., as administrative agent, and the other agents party thereto (Exhibit 10.1 to Quarterly Report on Form 10-Q for the quarter ended December 31, 2021 (Commission File No. 1-06620)).
10.34			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 several banks and other financial institutions or entities from time to time parties thereto, Bank of America, N.A., as administrative agent, and the other agents party thereto (Exhibit 99.1 of Current Report on Form 8-K filed January 28, 2022 (Commission File No. 1-06620)).
10.35			Guarantee and Collateral Agreement, dated as of March 18, 2011, by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as administrative agent (Exhibit 99.3 to the Current Report on Form 8-K filed March 18, 2011 (Commission File No. 1-06620)).
10.36			Amendment, dated as of March 28, 2013, to Guarantee and Collateral Agreement, dated as of March 18, 2011, by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as administrative agent (Exhibit 99.2 to the Current Report on Form 8-K filed April 1, 2013 (Commission File No. 1-06620)).
10.37			Second Amendment, dated as of June 2, 2017, to Guarantee and Collateral Agreement, dated as of March 18, 2011 (as amended by the Amendment to Guarantee and Collateral Agreement, dated as of March 28, 2013), by Griffon Corporation and certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as administrative agent. (Exhibit 99.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (Commission File No. 1-06620)).
~~10.43~~		Asset and Stock Purchase Agreement, dated as of September 1, 2017, by and between Emerson Electric Co. and ClosetMaid Acquisition Corp. (Exhibit 2.1 to the Current Report on Form 8-K filed September 8, 2017 (Commission File No. 1-06620)).
~~10.44~~	Debt Commitment Letter, dated September 1, 2017, among Griffon Corporation, Deutsche Bank AG Cayman Islands Branch, as sole administrative agent and initial lender, and Deutsche Bank Securities Inc., as sole book-running manager and lead arranger (Exhibit 99.1 to the Current Report on Form 8-K filed September 8, 2017 (Commission File No. 1-06620)).
~~10.45~~	Amendment No. 1 to Asset and Stock Purchase Agreement dated as of September 1, 2017, entered into September 25, 2017, by and among Emerson Electric Co. and ClosetMaid LLC (Exhibit 2.1 to Current Report on Form 8-K dated September 27, 2017 (Commission File No. 1-06620)).
~~10.46~~	Amended and Restated Debt Commitment Letter, dated September 25, 2017, among Griffon Corporation, Deutsche Bank AG Cayman Islands Branch, as sole administrative agent and initial lender, and Deutsche Bank Securities Inc., as sole book-running manager and lead arranger (Exhibit 99.1 to the Current Report on Form 8-K filed September 27, 2017 (Commission File No. 1-06620)).
~~10.47~~	Purchase Agreement, dated as of September 27, 2017, by and among Griffon Corporation, the Guarantors named therein, the Initial Purchasers named therein, and Deutsche Bank Securities Inc., as representative of the Initial Purchasers (Exhibit 99.1 to the Current Report on Form 8-K filed September 28, 2017 (Commission File No. 1-06620)).

109


21*Exhibit No.
21(a)						Subsidiaries of the Registrant ~~(Exhibit 21 to the Annual Report on Form 10-K for the year ended September 30, 2014 (Commission File No. 1-06620)).~~
23*23(a)						Consent of Grant Thornton LLP
31.1*31.1(a)						Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act
31.2*31.2(a)						Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act
32*32(a)						Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 18 USC Section 1350.




101.INS						XBRL Instance Document***

101.SCH						XBRL Taxonomy Extension Schema Document***

101.CAL						XBRL Taxonomy Extension Calculation Document***

101.DEF						XBRL Taxonomy Extension Definitions Document***

101.LAB						XBRL Taxonomy Extension Labels Document***

101.PRE						XBRL Taxonomy Extension Presentation Document***



_______________________
*(a)			Filed herewith. All other exhibits are incorporated herein by reference to the exhibit indicated in the parenthetical references.
**(b)			Indicates a management contract or compensatory plan or arrangement.
~~***~~(c)			In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall be deemed to be “furnished” and not “filed.”

Item 16. Form 10-K Summary.

None.

110

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Griffon has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the ~~20th~~17th day of November ~~2017.~~

2022.



			Griffon Corporation
			By:			/s/ Ronald J. Kramer
						Ronald J. Kramer,
						Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on November ~~20, 2017~~17, 2022 by the following persons on behalf of the Registrant in the capacities indicated:



~~/s/ Harvey R. Blau~~		~~Chairman of the Board~~
~~Harvey R. Blau~~
/s/ Ronald J. Kramer		Chairman of the Board and Chief Executive Officer
Ronald J. Kramer			(Principal Executive Officer)
/s/ Brian G. Harris			Senior Vice President and Chief Financial Officer
Brian G. Harris			(Principal Financial Officer)
/s/ W. Christopher Durborow			Vice President ~~Controller~~ and Chief Accounting Officer
W. Christopher Durborow			(Principal Accounting Officer)

/s/ Henry A. Alpert			Director
Henry A. Alpert
/s/ Jerome L. Coben			Director
Jerome L. Coben
/s/ Thomas J. Brosig			Director
Thomas J. Brosig
/s/ ~~Blaine V. Fogg~~H. C. Charles Diao			Director
~~Blaine V. Fogg~~H. C. Charles Diao
/s/ Louis J. Grabowsky			Director
Louis J. Grabowsky
/s/ ~~Bradley J. Gross~~Lacy M. Johnson			Director
~~Bradley J. Gross~~Lacy M. Johnson
~~/s/ Robert G. Harrison~~		~~Director~~
~~Robert G. Harrison~~
~~/s/ Donald J. Kutyna~~	~~Director~~
~~Donald J. Kutyna~~
/s/ Victor Eugene Renuart		Director
Victor Eugene Renuart
/s/ James W. Sight			Director
James W. Sight
/s/ Kevin F. Sullivan			Director
Kevin F. Sullivan
/s/ ~~William H. Waldorf~~Samanta Hegedus Stewart			Director
~~William H. Waldorf~~Samanta Hegedus Stewart
/s/ Michelle L. Taylor			Director
Michelle L. Taylor
/s/ Cheryl L. Turnbull			Director
Cheryl L. Turnbull

~~117~~

111


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

~~Delaware~~			~~11-1893410~~
~~(State or other jurisdiction of incorporation or organization)~~712 Fifth Ave, 18th Floor		New York		~~(I.R.S. Employer Identification No.)~~New York	10019

~~712 Fifth Avenue, 18~~th ~~Floor, New York, New York~~	~~10019~~
(Address of Principal Executive Offices)			(Zip Code)

~~Registrant’s telephone number, including area code:~~ ~~(212) 957-5000~~


	Years Ended September 30,
	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES - CONTINUING OPERATIONS:
Net income (loss)	$	(191,558)	$	79,211	$	53,429
Net income from discontinued operations	(96,157)		(8,909)		(11,985)
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:

Depreciation and amortization	64,658		52,302		52,100
Fair value write-up of acquired inventory sold	5,401		—		—
Stock-based compensation	33,135		20,088		17,580
Goodwill and intangible asset impairments	517,027		—		—
Asset impairment charges - restructuring	4,831		6,655		4,692
Provision for losses on accounts receivable	1,416		501		1,332
Amortization of deferred financing costs and debt discounts	3,775		2,640		3,661
Debt extinguishment, net	4,529		—		7,925
Deferred income tax	(56,706)		13,763		2,122
(Gain)/ loss on sale/disposal of assets and investments	(469)		231		(287)

Change in assets and liabilities, net of assets and liabilities acquired:
Increase in accounts receivable	(20,662)		(7,002)		(72,463)
Increase in inventories	(106,753)		(154,515)		23,262
Increase in prepaid and other assets	(20,005)		(9,598)		(15,878)
Increase (decrease) in accounts payable, accrued liabilities and income taxes payable	(96,372)		72,773		40,381
Other changes, net	13,150		1,668		1,017
Net cash provided by operating activities - continuing operations	59,240		69,808		106,888
CASH FLOWS FROM INVESTING ACTIVITIES - CONTINUING OPERATIONS:
Acquisition of property, plant and equipment	(42,488)		(36,951)		(41,168)
Acquired business, net of cash acquired	(851,464)		(2,242)		(10,531)
Proceeds (payments) from investments	14,923		(17,211)		(130)
Proceeds from sale of business	295,712		—		—

Proceeds from sale of property, plant and equipment	90		237		352

Net cash used in investing activities - continuing operations	(583,227)		(56,167)		(51,477)
CASH FLOWS FROM FINANCING ACTIVITIES - CONTINUING OPERATIONS:
Proceeds from issuance of common stock	—		—		178,165
Dividends paid	(126,677)		(17,139)		(14,529)
Purchase of shares for treasury	(10,886)		(3,357)		(7,479)
Proceeds from long-term debt	1,058,909		20,912		1,240,080
Payments of long-term debt	(511,194)		(27,833)		(1,308,915)


Financing costs	(17,065)		(571)		(17,384)

Contingent consideration for acquired businesses	—		—		(1,733)

Other, net	258		(257)		(15)
Net cash provided by (used) in financing activities - continuing operations	393,345		(28,245)		68,190



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



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


◦	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. CBP’s revenue was 37%, 36% and 35% of Griffon’s consolidated revenue in 2017, 2016 and 2015, respectively.



	Fiscal 2017						Fiscal 2016
	Market Prices				Dividends		Market Prices				Dividends
	High		Low		Per Share		High		Low		Per Share
Quarter ended December 31,	$	26.95	$	16.18	$	0.06	$	19.24	$	15.58	$	0.05
Quarter ended March 31,	27.15		23.30		0.06		17.58		13.45		0.05
Quarter ended June 30,	25.15		21.15		0.06		17.30		14.69		0.05
Quarter ended September 30,	22.58		17.65		0.06		17.87		15.88		0.05
					$	0.24					$	0.20



	For the Years Ended September 30,
(in thousands, except per share amounts)	2017			2016		2015		2014			2013
Revenue	$	1,524,997		$	1,477,035	$	1,483,291	$	1,398,448		$	1,308,136

Income (loss) before taxes and discontinued operations	$	16,698		$	32,213	$	19,066	$	(20,957	)	$	11,779
Provision (benefit) for income taxes	(1,085		)	12,432		6,772		(10,151		)	5,981
Income (loss) from continuing operations	17,783			19,781		12,294		(10,806		)	5,798
Income (loss) from discontinued operations	(2,871		)	10,229		21,995		10,629			(2,031		)
Net Income (loss)	$	14,912		$	30,010	$	34,289	$	(177	)	$	3,767

Basic earnings (loss) per share:
Continuing operations	$	0.43		$	0.48	$	0.28	$	(0.22	)	$	0.11
Discontinued operations	(0.07		)	0.25		0.49		0.22			(0.04		)
Net income (loss)	$	0.36		$	0.73	$	0.77	$	—		$	0.07
Weighted average shares outstanding	41,005			41,074		44,608		49,367			54,428

Diluted earnings (loss) per share:
Continuing operations	$	0.41		$	0.45	$	0.26	$	(0.22	)	$	0.10
Discontinued operations	(0.07		)	0.23		0.47		0.22			(0.04		)
Net income (loss)	$	0.35		$	0.68	$	0.73	$	—		$	0.07
Weighted average shares outstanding	43,011			44,109		46,939		49,367			56,563

Cash dividends declared per common share	$	0.24		$	0.20	$	0.16	$	0.12		$	0.10

Capital expenditures	$	34,937		$	59,276	$	46,308	$	57,392		$	41,932
Depreciation and amortization	$	47,878		$	46,342	$	45,834	$	39,986		$	44,011
Total assets	$	1,873,541		$	1,782,096	$	1,712,813	$	1,808,826		$	1,777,608

Current portion of debt	$	11,078		$	13,932	$	8,170	$	4,580		$	3,029
Long term portion of debt, net	968,080			896,946		803,617		791,301			666,904
Total debt, net	$	979,158		$	910,878	$	811,787	$	795,881		$	669,933



	For the Years Ended September 30,
INCOME BEFORE TAXES FROM CONTINUING OPERATIONS	2017			2016			2015
Segment operating profit:
Home & Building Products	$	89,495		$	79,682		$	58,883
Telephonics	29,943			42,801			43,006
PPC	25,291			20,313			33,137
Segment operating profit	144,729			142,796			135,026
Less: Operating (profit) from discontinued operations	25,291			20,313			33,137
Segment operating profit from continuing operations	119,438			122,483			101,889
Net interest expense	(51,449		)	(49,877		)	(47,515		)
Unallocated amounts	(42,398		)	(40,393		)	(35,308		)
Acquisition costs	(8,893		)	—			—
Income before taxes from continuing operations	$	16,698		$	32,213		$	19,066



	Payments Due by Period
(in thousands)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Other
Long-term debt (a)	$	992,401	$	11,078	$	54,646	$	10,559	$	916,118	$	—
Interest expense	302,938		61,732		120,915		119,296		995		—
Rental commitments	106,152		27,282		44,912		19,399		14,559		—
Purchase obligations (b)	221,621		209,924		11,123		574		—		—
Capital expenditures	2,406		2,406		—		—		—		—
Supplemental & post-retirement benefits (c)	30,790		4,057		7,768		6,930		12,035		—
Uncertain tax positions (d)	1,486		—		—		—		—		1,486
Total obligations	$	1,657,794	$	316,479	$	239,364	$	156,758	$	943,707	$	1,486


	At September 30, 2017			At September 30, 2016				At September 30, 2022		At September 30, 2021
CURRENT ASSETS							CURRENT ASSETS
Cash and equivalents	$	47,681		$	72,553		Cash and equivalents	$	120,184	$	248,653
Accounts receivable, net of allowances of $5,966 and $4,692	208,229			184,339
Contract costs and recognized income not yet billed, net of progress payments of $4,407 and $8,001	131,662			126,961
Inventories, net	299,437			261,317
Accounts receivable, net of allowances of $12,137 and $8,787							Accounts receivable, net of allowances of $12,137 and $8,787	361,653		294,804

Inventories							Inventories	669,193		472,794
Prepaid and other current assets	40,067			23,429			Prepaid and other current assets	62,453		76,009
Assets of discontinued operations held for sale	370,724			112,139			Assets of discontinued operations held for sale	—		275,814
Assets of discontinued operations not held for sale	329			219			Assets of discontinued operations not held for sale	1,189		605
Total Current Assets	1,098,129			780,957			Total Current Assets	1,214,672		1,368,679
PROPERTY, PLANT AND EQUIPMENT, net	232,135			236,905			PROPERTY, PLANT AND EQUIPMENT, net	294,561		290,222
OPERATING LEASE RIGHT-OF-USE ASSETS							OPERATING LEASE RIGHT-OF-USE ASSETS	183,398		144,598
GOODWILL	319,139			306,163			GOODWILL	335,790		426,148
INTANGIBLE ASSETS, net	205,127			197,949			INTANGIBLE ASSETS, net	761,914		350,025
OTHER ASSETS	16,051			7,569			OTHER ASSETS	21,553		21,589
ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE	—			250,585
ASSETS OF DISCONTINUED OPERATIONS NOT HELD FOR SALE	2,960			1,968

ASSETS OF DISCONTINUED OPERATIONS							ASSETS OF DISCONTINUED OPERATIONS	4,586		3,424
Total Assets	$	1,873,541		$	1,782,096		Total Assets	$	2,816,474	$	2,604,685
CURRENT LIABILITIES							CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	11,078		$	13,932		Notes payable and current portion of long-term debt	$	12,653	$	12,486
Accounts payable	183,951			148,130			Accounts payable	194,793		260,038
Accrued liabilities	83,258			84,059			Accrued liabilities	171,797		144,928
Current portion of operating lease liabilities							Current portion of operating lease liabilities	31,680		29,881
Liabilities of discontinued operations held for sale	84,450			70,458			Liabilities of discontinued operations held for sale	—		81,023
Liabilities of discontinued operations not held for sale	8,342			1,684
Liabilities of discontinued operations							Liabilities of discontinued operations	12,656		3,280
Total Current Liabilities	371,079			318,263			Total Current Liabilities	423,579		531,636
LONG-TERM DEBT, net	968,080			896,946			LONG-TERM DEBT, net	1,560,998		1,033,197
LONG-TERM OPERATING LEASE LIABILITIES							LONG-TERM OPERATING LEASE LIABILITIES	159,414		119,315
OTHER LIABILITIES	132,537			123,163			OTHER LIABILITIES	190,651		109,585
LIABILITIES OF DISCONTINUED OPERATIONS HELD FOR SALE	—			31,071
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE	3,037			1,706

LIABILITIES OF DISCONTINUED OPERATIONS							LIABILITIES OF DISCONTINUED OPERATIONS	4,262		3,794
Total Liabilities	1,474,733			1,371,149			Total Liabilities	2,338,904		1,797,527
COMMITMENTS AND CONTINGENCIES - See Note 13
COMMITMENTS AND CONTINGENCIES - See Note 16							COMMITMENTS AND CONTINGENCIES - See Note 16
SHAREHOLDERS’ EQUITY							SHAREHOLDERS’ EQUITY
Preferred stock, par value $0.25 per share, authorized 3,000 shares, no shares issued	—			—			Preferred stock, par value $0.25 per share, authorized 3,000 shares, no shares issued	—		—
Common stock, par value $0.25 per share, authorized 85,000 shares, issued 80,663 shares and 79,966 shares	20,166			19,992
Common stock, par value $0.25 per share, authorized 85,000 shares, issued shares of 84,746 and 84,375, respectively.							Common stock, par value $0.25 per share, authorized 85,000 shares, issued shares of 84,746 and 84,375, respectively.	21,187		21,094
Capital in excess of par value	487,077			529,980			Capital in excess of par value	627,982		602,181
Retained earnings	480,347			475,760			Retained earnings	344,060		669,998
Treasury shares, at cost, 33,557 common shares and 34,797 common shares	(489,225		)	(501,866		)
Treasury shares, at cost, 27,682 common shares and 27,762 common shares, respectively.							Treasury shares, at cost, 27,682 common shares and 27,762 common shares, respectively.	(420,116)		(416,850)
Accumulated other comprehensive loss	(60,481		)	(81,241		)	Accumulated other comprehensive loss	(82,738)		(45,977)
Deferred compensation	(39,076		)	(31,678		)	Deferred compensation	(12,805)		(23,288)
Total Shareholders’ Equity	398,808			410,947			Total Shareholders’ Equity	477,570		807,158
Total Liabilities and Shareholders’ Equity	$	1,873,541		$	1,782,096		Total Liabilities and Shareholders’ Equity	$	2,816,474	$	2,604,685


CASH FLOWS FROM DISCONTINUED OPERATIONS:										CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by operating activities										Net cash provided by operating activities	10,198		41,961		27,121
Net cash provided by (used in) investing activities										Net cash provided by (used in) investing activities	(2,627)		6,751		(7,387)

Net cash provided by (used in) financing activities	(4,268		)	(6,526		)	29,490
Net cash provided by (used in) discontinued operations	(2,150		)	(13,605		)	45,672
Net cash provided by discontinued operations										Net cash provided by discontinued operations	7,571		48,712		19,734
Effect of exchange rate changes on cash and equivalents	164			886			(4,152		)	Effect of exchange rate changes on cash and equivalents	(5,398)		(3,544)		2,377
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	(24,872		)	20,552			(40,404		)	NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	(128,469)		30,564		145,712
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	72,553			52,001			92,405			CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	248,653		218,089		72,377
CASH AND EQUIVALENTS AT END OF PERIOD	$	47,681		$	72,553		$	52,001		CASH AND EQUIVALENTS AT END OF PERIOD	$	120,184	$	248,653	$	218,089
Supplemental Disclosure of Cash Flow Information:										Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	48,137		$	43,208		$	41,269		Cash paid for interest	$	78,274	$	60,781	$	63,139
Cash paid for taxes	20,998			3,431			16,446			Cash paid for taxes	80,264		41,216		21,016



ESOP allocation of common stock	—	—		2,736		—		—	—			—			—			2,736
Stock-based compensation	—	—		8,090		—		—	—			—			—			8,090
Other comprehensive income, net of tax	—	—		—		—		—	—			20,760			—			20,760
Balance at 9/30/2017	80,663	$	20,166	$	487,077	$	480,347	33,557	$	(489,225	)	$	(60,481	)	$	(39,076	)	$	398,808



Cash and cash equivalents	$	8,833
Accounts receivable, net	31,967
Inventories, net	36,354
Property, plant and equipment, net	44,134
Intangible assets, net	83,773
Goodwill	40,786
Other current and non-current assets	8,929
Total assets acquired	254,776

Accounts payable and accrued liabilities	54,776
Total liabilities assumed	54,776
Total	$	200,000



	At September 30, 2017		At September 30, 2016
Raw materials and supplies	$	67,990	$	59,207
Work in process	78,846		69,164
Finished goods	152,601		132,946
Total	$	299,437	$	261,317



	At September 30, 2015		Foreign currency translation adjustments		September 30, 2016		Goodwill from acquisitions		Foreign currency translation adjustments		September 30, 2017
Home & Building Products	$	285,825	$	1,793	$	287,618	$	12,417	$	559	$	300,594
Telephonics	18,545		—		18,545		—		—		18,545
Total	$	304,370	$	1,793	$	306,163	$	12,417	$	559	$	319,139



	Workforce Reduction	Facilities & Exit Costs	Other Related Costs	Non-cash Facility and Other	Total
Amounts incurred in the year ended:
September 30, 2016	3,337	659	1,073	831	5,900



	At September 30, 2017
Total minimum lease payments	$	8,213
Less amount representing interest payments	(806		)
Present value of net minimum lease payments	7,407
Current portion	(1,787		)
Capitalized lease obligation, less current portion	$	5,620



		At September 30, 2017
		Outstanding Balance			Original Issuer Discount			Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior note due 2022	(a)	$	725,000		(1,177		)	$	(9,220	)	$	714,603		5.25	%
Revolver due 2020	(b)	144,216			—			(1,951		)	142,265			n/a
Real estate mortgages	(d)	23,642			—			(320		)	23,322			n/a
ESOP Loans	(e)	42,675			—			(310		)	42,365			n/a
Capital lease - real estate	(f)	5,312			—			(105		)	5,207			5.00	%
Non U.S. lines of credit	(g)	9,402						(31		)	9,371			n/a
Non U.S. term loans	(g)	35,943			—			(108		)	35,835			n/a
Other long term debt	(h)	6,211			—			(21		)	6,190			n/a
Totals		992,401			(1,177		)	(12,066		)	979,158
less: Current portion		(11,078		)	—			—			(11,078		)
Long-term debt		$	981,323		$	(1,177	)	$	(12,066	)	$	968,080



		Year Ended September 30, 2017
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2022	(a)	5.55	%	38,063			270		1,857		40,190
Revolver due 2018	(b)	n/a		4,951			—		567		5,518
Convert. debt due 2017	(c)	8.9	%	1,167			1,248		148		2,563
Real estate mortgages	(d)	2.6	%	582			—		58		640
ESOP Loans	(e)	4.2	%	1,557			—		133		1,690
Capital lease - real estate	(f)	5.5	%	296			—		25		321
Non U.S. lines of credit	(g)	n/a		76			—		128		204
Non U.S. term loans	(g)	n/a		860			—		67		927
Other long term debt	(h)	n/a		245					10		255
Capitalized interest				(795		)					(795		)
Totals				$	47,002		$	1,518	$	2,993	$	51,513



		Year Ended September 30, 2016
		Effective Interest Rate		Cash Interest		Amort. Debt Discount	Amort. Deferred Cost & Other Fees	Total Interest Expense
Senior notes due 2022	(a)	5.48	%	33,906		103	1,481	35,490
Revolver due 2018	(b)	n/a		2,564		—	512	3,076
Convert. debt due 2017	(c)	9.0	%	4,000		4,346	443	8,789
Real estate mortgages	(d)	2.2	%	439		—	62	501
ESOP Loans	(e)	3.1	%	1,090		—	236	1,326
Capital lease - real estate	(f)	5.5	%	353		—	25	378
Non U.S. lines of credit	(g)	n/a		553		—	91	644
Non U.S. term loan	(g)	n/a		659		—	13	672
Other long term debt	(h)			260			9	269
Capitalized interest				(1,202	)			(1,202	)
Totals				42,622		4,449	2,872	49,943



		Year Ended September 30, 2015
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2018	(a)	n/a									$	—
Senior notes due 2022	(a)	5.46	%	31,500					1,289		32,789
Revolver due 2018	(b)	n/a		2,301			—		520		2,821
Convert. debt due 2017	(c)	9.1	%	4,000			3,989		444		8,433
Real estate mortgages	(d)	3.8	%	468			—		576		1,044
ESOP Loans	(e)	2.9	%	1,025			—		69		1,094
Capital lease - real estate	(f)	5.3	%	405			—		25		430
Non U.S. lines of credit	(g)	n/a		95			—		—		95
Non U.S. term loan	(g)	n/a		1,335			—		57		1,392
Other long term debt	(h)			135			—		13		148
Capitalized interest				(470		)	—		—		(470		)
Totals				$	40,794		$	3,989	$	2,993	$	47,776


For the years ending September 30,	Defined Benefits		Supplemental Benefits
2023	$	3,494	$	1,866
2024	3,573		1,736
2025	3,646		1,601
2026	3,722		1,464
2027	3,770		1,325
2028 through 2031	18,990		4,600


At September 30, 2022	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and equivalents	$	6,178	$	—	$	—	$	6,178

Government agency securities	25,932		2,703		—		28,635
Debt instruments	1,326		3,604		—		4,930
Equity securities	59,190		—		—		59,190
Commingled funds	—		8,088		9,484		17,572
Limited partnerships and hedge fund investments	—		22,662		—		22,662
Other Securities	1,845		—		—		1,845
Subtotal	$	94,471	$	37,057	$	9,484	$	141,012
Accrued income and plan receivables							265
Fully benefit-responsive investment contract							2,814
Total							$	144,091


	Significant Unobservable Inputs (Level 3)

As of October 1, 2021	$	9,362

Gains and losses	1,924
As of September 30, 2021	11,286
Purchases, issuances and settlements	150
Gains and losses	(1,952)
As of September 30, 2022	$	9,484


Balance at September 30, 2020	$	4,180
Additions based on tax positions related to the current year	180
Additions based on tax positions related to prior years	24

Lapse of Statutes	(7)

Balance at September 30, 2021	$	4,377
Additions based on tax positions related to the current year	172
Additions based on tax positions related to prior years(1)	2,298

Lapse of Statutes	(39)
Settlements	—
Balance at September 30, 2022	$	6,808
(1) Relates to unrecognized tax benefits assumed with the acquisition of Hunter.



Balance at September 30, 2015	$	6,613
Additions based on tax positions related to the current year	263
Reductions based on tax positions related to prior years	(1,082		)
Lapse of Statutes	(1,085		)
Balance at September 30, 2016	4,709
Additions based on tax positions related to the current year	177
Additions based on tax positions related to prior years	69
Reductions based on tax positions related to prior years	(8		)
Lapse of Statutes	(122		)
Balance at Balance at September 30, 2017	$	4,825



	Options
	Shares		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregated Intrinsic Value
Outstanding and Exercisable at September 30, 2016	356,000		$	19.91
Exercised	(5,000	)	14.78
Forfeited/Expired	(1,000	)	14.78
Outstanding and Exercisable at September 30, 2017	350,000		20.00		1.0	$	770



	Options Outstanding & Exercisable
Range of Exercises Prices	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term (Years)
$20.00	350,000	20.00	1.0


	Shares	Weighted Average Grant- Date Fair Value
Unvested at September 30, 2021	3,866,053	$	15.32
Granted	1,004,755	21.35
Vested	(1,015,740)	25.46
Forfeited	(151,501)	17.63
Unvested at September 30, 2022	3,703,567	24.70



	Shares		Weighted Average Grant- Date Fair Value
Unvested at September 30, 2016	2,868,520		$	12.10
Granted	869,194		17.87
Vested	(1,259,561	)	23.42
Forfeited	(222,357	)	15.72
Unvested at September 30, 2017	2,255,796		13.65



Quarter ended	Revenue		Gross Profit		Net Income (loss)			Per Share - Basic			Per Share - Diluted
2017
December 31, 2016	$	352,277	$	96,745	$	12,264		$	0.31		$	0.29
March 31, 2017	383,807		97,981		5,045			0.12			0.12
June 30, 2017	358,114		98,870		9,553			0.23			0.22
September 30, 2017	430,799		114,520		(11,950		)	(0.29		)	(0.28		)
	$	1,524,997	$	408,116	$	14,912		$	0.36		$	0.35
2016
December 31, 2015	$	370,235	$	98,454	$	10,788		$	0.26		$	0.24
March 31, 2016	385,108		95,661		6,095			0.15			0.14
June 30, 2016	347,327		102,267		7,596			0.19			0.18
September 30, 2016	374,365		104,311		5,531			0.14			0.13
	$	1,477,035	$	400,693	$	30,010		$	0.73		$	0.68



	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 assets	21,131	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 Assets	24,371	738,945	355,091		(20,278	)	1,098,129
PROPERTY, PLANT AND EQUIPMENT, net	645	200,362	31,128		—		232,135
GOODWILL	—	280,797	38,342		—		319,139
INTANGIBLE ASSETS, net	93	143,415	61,619		—		205,127
INTERCOMPANY RECEIVABLE	552,017	757,608	915,551		(2,225,176	)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	863,149	877,641	1,613,891		(3,354,681	)	—
OTHER ASSETS	12,171	12,054	(1,002	)	(7,172	)	16,051
ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE	—	—	—		—		—
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 liabilities	14,683	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	—	—	8,342		—		8,342
Total Current Liabilities	17,537	248,681	98,230		6,631		371,079
LONG-TERM DEBT, net	903,609	6,044	58,427		—		968,080
INTERCOMPANY PAYABLES	84,068	1,259,413	854,518		(2,197,999	)	—
OTHER LIABILITIES	48,424	76,036	14,135		(6,058	)	132,537
LIABILITIES OF DISCONTINUED OPERATIONS HELD FOR SALE	—	—	—		—		—
LIABILITIES OF DISCONTINUED OPERATIONS NOT HELD FOR SALE	—	—	3,037		—		3,037
Total Liabilities	1,053,638	1,590,174	1,028,347		(2,197,426	)	1,474,733
SHAREHOLDERS’ EQUITY	398,808	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

~~Exhibit~~
~~No.~~

Amendment No. 2 to Third Amended and Restated Credit Agreement, dated October 2, 2017, among Griffon Corporation, JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc. and Wells Fargo Bank, National Association, as co-syndication agents, Bank of America, N.A., Capital One, N.A. and Citizens Bank, National Association, as co-documentation agents, and the other lenders party thereto (Exhibit 99.3 to Current Report on Form 8-K dated October 2, 2017 (Commission File No. 1-06620)).

Code of Business Conduct and Ethics (Exhibit 14.1 to Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 (Commission File No. 1-06620)).