GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About Griffon Corporation

Griffon Corporation (the “Company”, “Griffon”, "we" or "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).

Griffon currently conducts its operations through 3 reportable segments:

•Consumer and Professional Products ("CPP") conducts its operations through The AMES Companies, Inc. ("AMES"). Founded in 1774, AMES is the leading North American manufacturer and a global provider of branded consumer and professional tools and products for home storage and organization, landscaping, and enhancing outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including True Temper, AMES, and ClosetMaid.

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

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

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world. The impact from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which could impact our business and consolidated results of operations and financial condition in the future. While we have not incurred significant disruptions to our manufacturing or to our supply chain thus far from the COVID-19 outbreak, we are unable to accurately predict the impact COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information, and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. As such, they should be read together with Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2019,~~2020, which provides a more complete explanation of Griffon’s accounting policies, financial position, operating results, business, properties and other matters. In the opinion of management, these financial statements reflect all adjustments considered necessary for a fair statement of interim results. Griffon’s CPP operations are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year.

The condensed consolidated balance sheet information at September 30, ~~2019~~2020 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2019.~~2020.

The condensed consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with ~~US GAAP~~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 allowances for doubtful accounts receivable and returns, net realizable value of inventories, restructuring reserves, valuation of goodwill and intangible assets, ~~percentage of completion method of accounting,~~sales, profits and loss recognition for performance obligations satisfied over time, assumptions associated with pension ~~assumptions,~~benefit obligations and income or expenses, useful lives associated with depreciation and amortization of ~~fixed~~intangible and ~~intangible~~fixed assets, warranty reserves, sales incentive accruals, assumption associated with stock based compensation ~~assumptions,~~valuation, income taxes and tax valuation reserves, environmental reserves, legal reserves, insurance reserves, ~~and~~ the valuation of assets and liabilities of discontinued operations, ~~acquisition~~ assumptions ~~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.

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

NOTE 2 – FAIR VALUE MEASUREMENTS

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

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

•Level 1 inputs are measured and recorded at fair value based upon quoted prices in active markets for identical assets.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

•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 values of Griffon’s 2028 senior notes approximated ~~$980,000~~$1,057,500 on ~~June 30,~~December 31, 2020. Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with values of ~~$3,324~~$3,558 at ~~June 30,~~December 31, 2020 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

Items Measured at Fair Value on a Recurring Basis

At ~~June 30,~~December 31, 2020, trading securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of ~~$3,028~~$2,033 ($~~2,365~~1,000 cost basis), were included in Prepaid and other current assets on the Consolidated Balance Sheets. Realized and unrealized gains and losses on trading securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates. To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options. As of ~~June 30,~~December 31, 2020, 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 US dollars.

At ~~June 30,~~December 31, 2020, Griffon had ~~$43,500~~$40,000 of Australian dollar contracts at a weighted average rate of ~~$1.46~~$1.37 which qualified for hedge accounting (level 2 inputs). These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred losses of ~~$1,095~~$1,688 ($~~712,~~1,098, net of tax) at ~~June 30,~~December 31, 2020 and ~~gains~~losses of ~~$556 and $1,550~~$658 were recorded in COGS during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020 ~~respectively,~~ for all settled contracts. All contracts expire in 1529 to ~~209~~180 days.

At ~~June 30,~~December 31, 2020, Griffon had ~~$3,125 and $3,000 of~~$7,125 Canadian ~~and British Pound~~ dollar contracts ~~respectively,~~ at a weighted average rate of ~~$1.36 and $0.81, respectively.~~$1.35. The contracts, which protect Canadian ~~and United Kingdom~~ operations from currency fluctuations for US dollar based purchases, do not qualify for hedge accounting. For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020, fair value losses of ~~$222 and $23~~$276 were recorded to Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized ~~gains~~losses of ~~$115 and $202~~$59 were recorded in Other income during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020 ~~respectively,~~ for all settled contracts. All contracts expire in 229 to ~~328~~390 days.

At December 31, 2020, Griffon had $8,079 of British Pound dollar contracts at a weighted average rate of $0.77. The contracts, which protect United Kingdom operations from currency fluctuations for US dollar based purchases, do not qualify for hedge accounting. For the three months ended December 31, 2020, fair value losses of $245 were recorded to Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized losses of $70 were recorded in Other income during the three months ended December 31, 2020. All contracts expire in 7 to 145 days.

NOTE 3 – REVENUE

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

~~A contract's transaction price is allocated~~

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

(Unaudited)

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

~~Over 80%~~Approximately 86% of the Company’s performance obligations are recognized at a point in time ~~that relates~~related to the manufacture and sale of a broad range of products and components primarily within the CPP and HBP ~~segments,~~Segments, and revenue is recognized when title, and risk and rewards of ownership, have transferred to the ~~customer. A majority of CPP and HBP segment revenue~~customer, which 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. Less than 20%~~generally upon shipment.

Approximately 14% of the Company’s performance obligations are recognized over time ~~or under the percentage-of-completion method; these~~and relate to prime or subcontractors from contract awards with the U.S. Government, as well as foreign governments and other commercial customers within our DE ~~segment. These contracts are typically long-term in nature, usually greater than one year and do not include a material long-term financing component, either implicitly or explicitly.~~Segment. Revenue and profits from such contracts are recognized under the percentage-of-completion (over time) 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 date to the total estimated costs for each contract (cost-to-cost method).

~~Sales~~ recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. We believe that cumulative costs incurred to date as a percentage of estimated total contract costs at completion (cost-to-cost method) is an appropriate measure of progress towards satisfaction of performance obligations recognized over time, as it most accurately depicts the progress of our work and transfer of control to our customers.

Accounting for the sales and profits on performance obligations for which progress is measured using the cost-to-costmethod relies on the substantial use of estimates; these projections may be revised throughout the life of a contract.Adjustments to estimates for a contract's estimated costs at completion and estimated profit or loss are often required as experience is gained, more information is obtained (even though the scope of work required under the contract may or may not change) and contract modifications occur. The impact of such adjustments to estimates is made on a cumulative basis in the period when such information has become known. For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020 and 2019, income from operations included net unfavorable catch up adjustments approximating ~~$4,100~~$1,500 and ~~$9,344,~~$3,000, respectively. Gross profit is impacted by a variety of factors, including the mix of products, systems and services, production efficiencies, price competition and general economic conditions.

We believe that cumulative costs incurred to date as a percentage of estimated total contract costs at completion is an appropriate measure of progress towards satisfaction of performance obligations, as it most accurately depicts the progress of our work and transfer of control to our customers.

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, and is recorded as a reduction to gross margin on the Consolidated Statements of Operations and Comprehensive Income (Loss). These provisions had an immaterial impact on Griffon's Consolidated Financial Statements. The estimated remaining costs to complete loss contracts as of ~~June 30,~~December 31, 2020 and September 30, ~~2019~~2020 were approximately ~~$8,264~~$9,000 and ~~$9,790,~~$10,800, respectively.

For a complete explanation of Griffon’s revenue accounting policies, this note should be read in conjunction with Griffon’s Annual Report on Form 10-K for the year ended September 30, ~~2019.~~2020. See Note 1213 - Business Segments for revenue from contracts with customers disaggregated by end markets, segments and geographic location.

Transaction Price Allocated to the Remaining Performance Obligations

On ~~June 30,~~December 31, 2020, we had ~~$350,443~~$388,700 of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately ~~72%~~66% of our remaining performance obligations as revenue within one year, with the balance to be completed thereafter.

Backlog represents the dollar value of funded orders for which work has not been performed. Backlog generally increases with bookings, and converts into revenue as we incur costs related to contractual commitments or the shipment of product. Given the nature of our business and a larger dependency on international customers, our bookings, and therefore our backlog, is impacted by the longer maturation cycles resulting in delays in the timing and amounts of such awards, which are subject to numerous factors, including fiscal constraints placed on customer budgets; political uncertainty; the timing of customer negotiations; and the timing of governmental approvals.

Contract Balances

Contract assets were ~~$92,143~~$86,260 as of ~~June 30,~~December 31, 2020 compared to ~~$105,111~~$84,426 as of September 30, ~~2019.~~2020. The ~~$12,968 decrease~~$1,834 net increase in our contract assets balance was primarily due to the timing of billings and work performed on ~~various radar~~naval and ~~surveillance~~cyber programs. Contract assets primarily relate to the Company's right to consideration for work completed but not billed at the reporting date and are recorded in Contract costs and recognized income not yet billed, net of progress payments in the Consolidated Balance Sheets. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract costs and recognized income not yet billed consists of amounts accounted for under the percentage of completion method of accounting, and represent 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

specified milestones or product delivery, are met. At ~~June 30,~~December 31, 2020 and September 30, ~~2019,~~2020, approximately ~~$7,058~~$8,100 and ~~$13,100,~~$7,500, respectively, of contract costs and recognized income not yet billed were expected to be collected after one year. As of June 30, 2020, Contract costs and recognized income not yet billed included approximately $1,874 of reserves for contract risk. As of September 30, 2019, Contract costs and recognized income not yet billed included 0 reserves for contract risk.

Contract liabilities were ~~$20,719~~$25,237 as of ~~June 30,~~December 31, 2020 compared to ~~$26,259~~$24,386 as of September 30, ~~2019.~~2020. The ~~$5,540 decrease~~$851 increase in the contract liabilities balance was primarily due to billings in surveillance programs, partially offset by the recognition of revenue ~~primarily~~ from ~~surveillance~~naval and ~~airborne maritime surveillance radar~~cyber programs. Contract liabilities relate to advance consideration received from customers for which revenue has not been recognized. The Company often receives cash payments from customers in advance of the Company’s performance resulting in contract liabilities. These contract liabilities are classified as current on the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. Current contract liabilities are recorded in Accounts payable on the Consolidated Balance Sheets. Contract liabilities are reduced when the associated revenue from the contract is recognized.

NOTE 4 – ACQUISITIONS AND DISPOSITIONS

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 unless otherwise noted.

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, subject to customary final working capital adjustments. The purchase price is subject to additional contingent consideration of approximately AUD $1,000 (approximately $760) based on Quatro exceeding certain EBITDA performance targets in the first year. The preliminary acquired intangibles and goodwill allocated to this acquisition was AUD $1,600 (approximately $1,479) and AUD $2,381 (approximately $1,799), 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 UK market and increases its in-country operational footprint. 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. The purchase price was primarily allocated to goodwill of GBP ~~2,418,~~3,449, acquired intangible assets of GBP 3,454, inventory of GBP 2,914, accounts receivable and other assets of GBP 2,492 and accounts payable and other accrued liabilities of GBP ~~2,734.~~3,765, which was assigned to the CPP segment.

During ~~the nine months ended June 30, 2020, the Company incurred acquisition costs of $2,960. The Company did 0t incur acquisition costs in~~ the three months ended ~~June~~December 31, 2020 and 2019, acquisition costs were de minimis.

Dispositions

On December 18, 2020, Defense Electronics completed the sale of its Systems Engineering Group, Inc. (“SEG”) business for $15,000, subject to customary closing net working capital adjustments. SEG provides sophisticated, highly technical engineering and analytical support to the Missile Defense Agency and various U.S. military commands. SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $31,000 for the fiscal year ended September 30, 2020. We recorded a pre-tax gain of $6,240 ($6,017, net of tax, or $0.11 per share) during the first fiscal quarter ended December 31, 2020 related to the divestiture of SEG. The ~~Company did 0t incur acquisition costs~~sale does not represent a strategic shift that will have a major effect on operations and financial results.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(US dollars and non US currencies in ~~the three and nine months ended June 30, 2019.~~thousands, except per share data)

(Unaudited)

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

NOTE 5 – INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out or ~~average)~~average cost) or market.

The following table details the components of inventory:

At June 30, 2020 At September 30, 2019
Raw materials and supplies $ 131,021
$ 121,791
Work in process 90,343
93,830
Finished goods 189,664
226,500
Total $ 411,028
$ 442,121


	At December 31, 2020		At September 30, 2020
Raw materials and supplies	$	134,378	$	135,083
Work in process	79,209		81,624
Finished goods	231,435		197,118
Total	$	445,022	$	413,825

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

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


	At December 31, 2020		At September 30, 2020
Land, building and building improvements	$	168,557	$	167,005
Machinery and equipment	603,270		595,126
Leasehold improvements	53,841		53,386
	825,668		815,517
Accumulated depreciation and amortization	(482,962)		(471,553)
Total	$	342,706	$	343,964

At June 30, 2020 At September 30, 2019
Land, building and building improvements $ 159,225
$ 133,036
Machinery and equipment 585,298
580,698
Leasehold improvements 51,738
49,808

796,261
763,542
Accumulated depreciation and amortization (460,943 ) (426,216 )
Total $ 335,318
$ 337,326



	~~At June 30, 2020~~
Weighted-average remaining lease term (years)
Operating leases		~~8.3~~8.2
Finance Leases		~~2.3~~8.4

Weighted-average discount rate
Operating Leases		~~5.17~~4.46	%
Finance Leases		~~4.36~~5.52	%

NOTE 2122 — COMMITMENTS AND CONTINGENCIES

Legal and environmental

Peekskill Site. Lightron Corporation (“Lightron”), a wholly-owned subsidiary of Griffon, once conducted operations at a location in ~~Peekskill in~~ the Town of Cortlandt, New York, just outside the city of Peekskill, New York (the “Peekskill Site”) owned by ISC Properties, Inc. (“ISCP”), a wholly-owned subsidiary of Griffon. ISCP sold the Peekskill Site in November 1982.

Subsequently, ISCP was advised by the Department of Environmental Conservation of New York State ~~("DEC"~~(the "DEC")that ~~random~~ sampling at the Peekskill Site and in a creek near the Peekskill Site indicated concentrations of solvents and other chemicals common to ~~Lightron’s~~ prior plating ~~operations.~~ operations by a Lightron subsidiary.In 1996, ISCP entered into a consent order with the DEC (the “Consent Order”), pursuant to which ISCP was required to perform a remedial investigation and prepare a feasibility study (the “Feasibility Study”).After completing the initial remedial investigation, ISCP conducted supplemental remedial investigations over the next several years, ~~supplemental remedial investigations,~~ including soil vapor investigations, as required by the Consent Order.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

In April 2009, the DEC advised ISCP that both the DEC and the New York State Department of Health had reviewed and accepted an August 2007 Remedial Investigation Report and an Additional Data Collection Summary Report dated January 30, 2009. ISCP submitted to the DEC a draft Feasibility Study which was accepted and approved by the DEC in February 2011.ISCP satisfied its obligations under the Consent Order when DEC approved the Remedial Investigation and Feasibility Study for the Peekskill Site.In June 2011 the DEC issued a Record of Decision that set forth a Remedial Action Plan for the Peekskill Site that ~~set forth~~identified the specific remedies selected and responded to public comments. The ~~approximate~~ cost of the remedy proposed by DEC in its Remedial Action Plan was approximately $10,000.

Following issuance of the Remedial Action Plan, the DEC implemented a portion of its plan, and also performed additional investigation for the presence of metals in soils and sediments downstream from the Peekskill Site. During this investigation ~~chromium was~~metals were found to be present in sediments further downstream offrom the Peekskill site than previously detected.

In August 2018, the DEC sent a letter to the United States Environmental Protection Agency (the “EPA”), in which the DEC requested that the Peekskill Site be nominated by the EPA for inclusion on the National Priorities List under CERCLA (the “NPL”). Based on the DEC’s request and on an analysis by a consultant retained by the EPA, on May 15, 2019 the EPA added the Peekskill Site to the

NPL ~~under the Comprehensive Environmental Response, Compensation,~~ and ~~Liability Act of 1980 (CERCLA) and~~has since announced that it is ~~now~~ performing a Remedial Investigation/Feasibility Study. On August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions regarding implementation of a Remedial Investigation/Feasibility Study (“RI/FS”). The EPA ~~estimates~~also sent a request for information to each party under Section 104(e) of CERCLA. Lightron and ISCP have informed the EPA that they are willing to participate in discussions regarding implementation of the RI/FS. Lightron and ISCP have also submitted responses to certain items contained in the Section 104(e) information request, with additional responses to follow. The current owner of the property, which acquired the Peekskill Site from ISCP in 1982 and has no relationship with Lightron or ISCP, has also informed the EPA that it ~~will select~~is willing to discuss implementation of the RI/FS, and has also received, and submitted certain information in response to, a ~~remedy in 2022.~~

~~It is uncertain what subsequent action the EPA will take.~~Section 104(e) information request. The EPA may decide to implement the RI/FS, on its own or through the use of consultants, may reach agreement with one or more parties to perform the RI/FS, or may offer to negotiate with one or more parties to accept a settlement addressing the potential liability of such parties for investigation and/or remediation at the Peekskill Site. Should the EPA implement the RI/FS, or perform further studies ~~of the site~~ and/or subsequently remediate the site, ~~and in such event,~~without first reaching agreement with one or more relevant parties, the EPA would likely seek reimbursement for the costs incurred from ~~potentially responsible parties (“PRPs”). Alternatively, the EPA could enter into negotiations with the PRPs to request that the PRPs perform further studies and/or remediate the site.~~such parties.

Lightron has not engaged in any operations in over three decades. ISCP functioned solely as a real estate holding company, and has not held any real property in over three decades. Griffon does not acknowledge any responsibility to perform any investigation or remediation at the Peekskill Site.

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

Union Fork and Hoe, Frankfort, NY site.The former Union Fork and Hoe property in Frankfort, NYNew York was acquired by AMES in 2006 as part of a larger acquisition, and has historic site contamination involving chlorinated solvents, petroleum hydrocarbons and metals. AMES ~~has~~ entered into an Order on Consent with the New York State Department of Environmental ~~Conservation.~~Conservation (“DEC”). While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, ~~AMES is~~the Order required Ames to perform a remedial investigation of certain portions of the property and to recommend a remediation option. In 2018, Ames submitted a Feasibility Study recommending excavation of shallow soils for lead, arsenic and hydrocarbons in addition to deeper excavation for lead. DEC approved the selection of this remedy in 2019 by issuing a Record of ~~Decision. Remediation activities to satisfy~~Decision (“ROD”). Beginning in late 2019 and through June 2020, Ames completed the ~~Record of Decision were completed in June 2020. The~~remediation required by the ROD and filed a Construction Completion Report, a Site Management Plan and an environmental easement with DEC. While Ames was implementing the remediation required by the ROD, DEC ~~has~~ requested additional investigation of ~~one additional~~a small area on the site and of an area adjacent to the site perimeter. Ames investigated the on-site area and has initiated limited remediation under a workplan approved by DEC. AMES expects to complete this limited remediation by February 2021. Ames has also submitted a workplan to ~~satisfy this request. The DEC has also requested that Ames develop and implement a workplan~~investigate the areas adjacent to ~~assess certain off-site areas adjoining the boundaries of~~ the site ~~which Ames expects to submit in August 2020.~~perimeter. AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between ~~the~~ DEC and a predecessor of AMES relating to the site. Ames’ insurer has accepted Ames’ claim for a substantial portion of the costs incurred and to be incurred ~~with respect to~~for both the on-site and off-site activities.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

U.S. Government investigations and claims

Defense contracts and subcontracts, including Griffon’s contracts and subcontracts, are subject to audit and review by various agencies and instrumentalities of the United States government, including among others, the Defense Contract Audit Agency, the Defense Criminal Investigative Service, and the Department of Justice which has responsibility for asserting claims on behalf of the U.S. Government.

In general, departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of Griffon, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. Government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on Telephonics because of its reliance on government contracts.

General legal

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

~~NOTE 22 — CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION~~

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally by Clopay Corporation, Telephonics Corporation, The AMES Companies, Inc., ATT Southern LLC, Clopay Ames Holding Corp., ClosetMaid LLC, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are condensed consolidating financial information as of June 30, 2020 and September 30, 2019 and for the three and nine months ended June 30, 2020 and 2019. The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities. The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly-owned subsidiaries accounted for under the equity method.

The indentures relating to the Senior Notes (the “Indentures”) contain terms providing that, under certain limited circumstances, a guarantor will be released from its obligations to guarantee the Senior Notes. These circumstances include (i) a sale of at least a majority of the stock, or all or substantially all the assets, of the subsidiary guarantor as permitted by the Indentures; (ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the 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 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 of the Indentures; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indentures, in each case in accordance with the terms of the Indentures; and (v) upon obtaining the requisite consent of the holders of the Senior Notes.

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~At June 30, 2020~~Table of Contents

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CURRENT ASSETS

Cash and equivalents $ 4,727
$ 19,697
$ 47,575
$ —
$ 71,999
Accounts receivable, net of allowances —
307,625
217,590
(165,751 ) 359,464
Contract costs and recognized income not yet billed, net of progress payments —
89,526
2,617
—
92,143
Inventories, net —
347,703
63,903
(578 ) 411,028
Prepaid and other current assets 19,519
24,144
5,068
2,634
51,365
Assets of discontinued operations —
—
1,951
—
1,951
Total Current Assets 24,246
788,695
338,704
(163,695 ) 987,950
PROPERTY, PLANT AND EQUIPMENT, net 1,232
289,224
44,862
—
335,318
OPERATING LEASE RIGHT-OF-USE ASSETS 9,633
124,566
20,756
—
154,955
GOODWILL —
375,734
63,933
—
439,667
INTANGIBLE ASSETS, net 93
219,056
135,235
—
354,384
INTERCOMPANY RECEIVABLE 16,555
679,666
84,671
(780,892 ) —
EQUITY INVESTMENTS IN SUBSIDIARIES 1,702,746
766,863
3,154,553
(5,624,162 ) —
OTHER ASSETS 12,228
39,491
(5,638 ) (14,221 ) 31,860
ASSETS OF DISCONTINUED OPERATIONS —
—
6,086
—
6,086
Total Assets $ 1,766,733
$ 3,283,295
$ 3,843,162
$ (6,582,970 ) $ 2,310,220
CURRENT LIABILITIES

Notes payable and current portion of long-term debt $ —
$ 2,973
$ 6,262
$ —
$ 9,235
Accounts payable and accrued liabilities 58,619
426,260
72,451
(163,142 ) 394,188
Current portion of operating lease liabilities 1,842
22,229
4,947
—
29,018
Liabilities of discontinued operations —
—
3,730
—
3,730
Total Current Liabilities 60,461
451,462
87,390
(163,142 ) 436,171

LONG-TERM DEBT, net 1,087,135
10,258
25,972
—
1,123,365
LONG-TERM OPERATING LEASE LIABILITIES 8,886
106,552
16,212
—
131,650
INTERCOMPANY PAYABLES 77,139
254,479
467,463
(799,081 ) —
OTHER LIABILITIES 24,657
77,228
10,242
(7,829 ) 104,298
LIABILITIES OF DISCONTINUED OPERATIONS —
—
6,281
—
6,281
Total Liabilities 1,258,278
899,979
613,560
(970,052 ) 1,801,765
SHAREHOLDERS’ EQUITY 508,455
2,383,316
3,229,602
(5,612,918 ) 508,455
Total Liabilities and Shareholders’ Equity $ 1,766,733
$ 3,283,295
$ 3,843,162
$ (6,582,970 ) $ 2,310,220

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~At September 30, 2019~~

($ in thousands) Parent
Company Guarantor
Companies Non-Guarantor
Companies Elimination Consolidation
CURRENT ASSETS

Cash and equivalents $ 1,649
$ 25,217
$ 45,511
$ —
$ 72,377
Accounts receivable, net of allowances —
227,069
38,580
(1,199 ) 264,450
Contract costs and recognized income not yet billed, net of progress payments —
104,109
1,002
—
105,111
Inventories, net —
372,839
69,540
(258 ) 442,121
Prepaid and other current assets 8,238
25,754
6,951
(144 ) 40,799
Assets of discontinued operations —
—
321
—
321
Total Current Assets 9,887
754,988
161,905
(1,601 ) 925,179

PROPERTY, PLANT AND EQUIPMENT, net 1,184
289,282
46,860
—
337,326
GOODWILL —
375,734
61,333
—
437,067
INTANGIBLE ASSETS, net 93
224,275
132,271
—
356,639
INTERCOMPANY RECEIVABLE 5,834
864,884
75,684
(946,402 ) —
EQUITY INVESTMENTS IN SUBSIDIARIES 1,628,031
581,438
3,233,038
(5,442,507 ) —
OTHER ASSETS 8,182
24,635
(2,352 ) (14,625 ) 15,840
ASSETS OF DISCONTINUED OPERATIONS —
—
2,888
—
2,888
Total Assets $ 1,653,211
$ 3,115,236
$ 3,711,627
$ (6,405,135 ) $ 2,074,939
CURRENT LIABILITIES

Notes payable and current portion of long-term debt $ —
$ 3,075
$ 7,450
$ —
$ 10,525
Accounts payable and accrued liabilities 41,796
266,411
68,390
(1,356 ) 375,241
Liabilities of discontinued operations —
—
4,333
—
4,333
Total Current Liabilities 41,796
269,486
80,173
(1,356 ) 390,099
LONG-TERM DEBT, net 1,040,449
3,119
50,181
—
1,093,749
INTERCOMPANY PAYABLES 71,634
457,265
444,557
(973,456 ) —
OTHER LIABILITIES 21,569
81,582
15,017
(8,171 ) 109,997
LIABILITIES OF DISCONTINUED OPERATIONS —
—
3,331
—
3,331
Total Liabilities 1,175,448
811,452
593,259
(982,983 ) 1,597,176
SHAREHOLDERS’ EQUITY 477,763
2,303,784
3,118,368
(5,422,152 ) 477,763
Total Liabilities and Shareholders’ Equity $ 1,653,211
$ 3,115,236
$ 3,711,627
$ (6,405,135 ) $ 2,074,939

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Three Months Ended June 30, 2020~~

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 515,083
$ 126,847
$ (9,869 ) $ 632,061
Cost of goods and services —
385,717
91,541
(10,200 ) 467,058
Gross profit —
129,366
35,306
331
165,003
Selling, general and administrative expenses 5,229
85,512
22,913
(145 ) 113,509

Income (loss) from operations (5,229 ) 43,854
12,393
476
51,494
Other income (expense)

Interest income (expense), net (7,013 ) (9,537 ) (35 ) —
(16,585 )
Loss from debt extinguishment, net (1,235 ) —
—
—
(1,235 )
Other, net 126
(2,852 ) 4,004
(472 ) 806
Total other income (expense) (8,122 ) (12,389 ) 3,969
(472 ) (17,014 )
Income (loss) before taxes (13,351 ) 31,465
16,362
4
34,480
Provision (benefit) for income taxes (3,533 ) 10,843
5,335
4
12,649
Income (loss) before equity in net income of subsidiaries (9,818 ) 20,622
11,027
—
21,831
Equity in net income (loss) of subsidiaries 31,649
10,920
20,622
(63,191 ) —

Net Income (loss) $ 21,831
$ 31,542
$ 31,649
$ (63,191 ) $ 21,831
Comprehensive income (loss) $ 30,533
$ 36,940
$ 26,251
$ (63,191 ) $ 30,533

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Three Months Ended June 30, 2019~~

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 470,228
$ 118,694
$ (13,952 ) $ 574,970
Cost of goods and services —
350,197
84,568
(14,278 ) 420,487
Gross profit —
120,031
34,126
326
154,483
Selling, general and administrative expenses 5,342
85,885
27,252
(490 ) 117,989
Income (loss) from operations (5,342 ) 34,146
6,874
816
36,494
Other income (expense)

Interest income (expense), net (7,171 ) (9,048 ) (868 ) —
(17,087 )
Other, net 4,963
(15,918 ) 12,762
(828 ) 979
Total other income (expense) (2,208 ) (24,966 ) 11,894
(828 ) (16,108 )
Income (loss) before taxes (7,550 ) 9,180
18,768
(12 ) 20,386
Provision (benefit) for income taxes (4,815 ) 9,124
1,961
(12 ) 6,258
Income (loss) before equity in net income of subsidiaries (2,735 ) 56
16,807
—
14,128
Equity in net income (loss) of subsidiaries 16,330
15,641
56
(32,027 ) —
Income (loss) from continuing operations 13,595
15,697
16,863
(32,027 ) 14,128
Income (loss) from operation of discontinued businesses —
—
—
—
—
Provision (benefit) from income taxes —
—
533
—
533
Income (loss) from discontinued operations —
—
(533 ) —
(533 )
Net Income (loss) $ 13,595
$ 15,697
$ 16,330
$ (32,027 ) $ 13,595

Comprehensive income (loss) $ 12,560
$ (597 ) $ 32,624
$ (32,027 ) $ 12,560

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Nine Months Ended June 30, 2020~~

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 1,418,975
$ 357,812
$ (29,938 ) $ 1,746,849
Cost of goods and services —
1,058,556
252,331
(30,994 ) 1,279,893
Gross profit —
360,419
105,481
1,056
466,956

Selling, general and administrative expenses 19,169
264,698
74,237
(330 ) 357,774
Income (loss) from operations (19,169 ) 95,721
31,244
1,386
109,182
Other income (expense)

Interest income (expense), net (20,217 ) (28,916 ) 37
—
(49,096 )
Loss from debt extinguishment, net (7,925 ) —
—
—
(7,925 )
Other, net (389 ) (6,870 ) 10,844
(1,386 ) 2,199
Total other income (expense) (28,531 ) (35,786 ) 10,881
(1,386 ) (54,822 )
Income (loss) before taxes (47,700 ) 59,935
42,125
—
54,360
Provision (benefit) for income taxes (17,355 ) 22,648
15,729
—
21,022
Income (loss) before equity in net income of subsidiaries (30,345 ) 37,287
26,396
—
33,338
Equity in net income (loss) of subsidiaries 63,683
26,457
37,287
(127,427 ) —

Net income (loss) $ 33,338
$ 63,744
$ 63,683
$ (127,427 ) $ 33,338

Comprehensive income (loss) $ 34,047
$ 63,744
$ 63,683
$ (127,427 ) $ 34,047

~~CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)~~

~~For the Nine Months Ended June 30, 2019~~

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
Revenue $ —
$ 1,352,211
$ 311,219
$ (28,305 ) $ 1,635,125
Cost of goods and services —
1,013,676
215,786
(29,370 ) 1,200,092
Gross profit —
338,535
95,433
1,065
435,033

Selling, general and administrative expenses 15,651
255,674
72,478
(277 ) 343,526
Income (loss) from operations (15,651 ) 82,861
22,955
1,342
91,507

Other income (expense)

Interest income (expense), net (20,806 ) (27,306 ) (2,611 ) —
(50,723 )
Other, net 4,228
(14,102 ) 14,479
(1,354 ) 3,251
Total other income (expense) (16,578 ) (41,408 ) 11,868
(1,354 ) (47,472 )
Income (loss) before taxes (32,229 ) 41,453
34,823
(12 ) 44,035
Provision (benefit) for income taxes (12,592 ) 20,390
6,878
(12 ) 14,664
Income (loss) before equity in net income of subsidiaries (19,637 ) 21,063
27,945
—
29,371
Equity in net income (loss) of subsidiaries 40,829
33,337
21,063
(95,229 ) —
Income (loss) from continuing operations $ 21,192
$ 54,400
$ 49,008
$ (95,229 ) $ 29,371
Income (loss) from operations of discontinued businesses —
—
(11,000 ) —
(11,000 )
Provision (benefit) from income taxes —
—
(2,821 ) —
(2,821 )
Income (loss) from discontinued operations —
—
(8,179 ) —
(8,179 )
Net income (loss) $ 21,192
$ 54,400
$ 40,829
$ (95,229 ) $ 21,192

Comprehensive income (loss) $ 17,587
$ 58,450
$ 36,779
$ (95,229 ) $ 17,587

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~For the Nine Months Ended June 30, 2020~~

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 33,338
$ 63,744
$ 63,683
$ (127,427 ) $ 33,338
Net cash provided by (used in) operating activities: (10,683 ) 35,520
31,107
—
55,944
CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property, plant and equipment (306 ) (30,497 ) (3,948 ) —
(34,751 )
Acquired businesses, net of cash acquired —
—
(10,531 ) —
(10,531 )
Investment purchases (130 ) —
—
—
(130 )
Proceeds from sale of assets —
341
(2 ) —
339
Net cash provided by (used in) investing activities (436 ) (30,156 ) (14,481 ) —
(45,073 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of shares for treasury (7,479 ) —
—
—
(7,479 )
Proceeds from long-term debt 1,224,722
—
5,896
—
1,230,618
Payments of long-term debt (1,171,365 ) (2,647 ) (31,219 ) —
(1,205,231 )
Financing costs (16,543 ) —
—
—
(16,543 )
Dividends paid (10,639 ) —
—
—
(10,639 )
Other, net (4,499 ) (7,723 ) 12,191
—
(31 )
Net cash provided by (used in) financing activities 14,197
(10,370 ) (13,132 ) —
(9,305 )
CASH FLOWS FROM DISCONTINUED OPERATIONS:

Net cash provided by (used) in discontinued operations —
—
(2,481 ) —
(2,481 )
Effect of exchange rate changes on cash and equivalents —
(514 ) 1,051
—
537
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 3,078
(5,520 ) 2,064
—
(378 )
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,649
25,217
45,511
—
72,377
CASH AND EQUIVALENTS AT END OF PERIOD $ 4,727
$ 19,697
$ 47,575
$ —
$ 71,999

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~For the Nine Months Ended June 30, 2019~~

($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 21,192
$ 54,400
$ 40,829
$ (95,229 ) $ 21,192
Net (income) loss from discontinued operations —
—
8,179
—
8,179
Net cash provided by (used in) operating activities: (20,805 ) 24,179
11,608
—
14,982
CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property, plant and equipment (247 ) (23,221 ) (4,326 ) —
(27,794 )
Acquired businesses, net of cash acquired (9,219 ) —
—
—
(9,219 )
Investment purchases (149 ) —
—
—
(149 )
Proceeds from sale of business (9,500 ) —
—
—
(9,500 )
Insurance payments (10,604 ) —
—
—
(10,604 )
Proceeds from sale of assets —
79
25
—
104
Net cash provided by (used in) investing activities (29,719 ) (23,142 ) (4,301 ) —
(57,162 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of shares for treasury (1,478 ) —
—
—
(1,478 )
Proceeds from long-term debt 138,541
116
18,143
—
156,800
Payments of long-term debt (75,694 ) (2,605 ) (29,961 ) —
(108,260 )
Contingent consideration for acquired businesses —
—
(1,686 ) —
(1,686 )
Financing costs (1,012 ) —
—
—
(1,012 )
Dividends paid (10,262 ) —
—
—
(10,262 )
Other, net (197 ) 5,694
(5,694 ) —
(197 )
Net cash provided by (used in) financing activities 49,898
3,205
(19,198 ) —
33,905
CASH FLOWS FROM DISCONTINUED OPERATIONS:

Net cash provided by (used in) discontinued operations —
—
(3,874 ) —
(3,874 )
Effect of exchange rate changes on cash and equivalents —
(118 ) 621
—
503
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (626 ) 4,124
(15,144 ) —
(11,646 )
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 15,976
16,353
37,429
—
69,758
CASH AND EQUIVALENTS AT END OF PERIOD $ 15,350
$ 20,477
$ 22,285
$ —
$ 58,112

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

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

BUSINESS

Overview

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

Business Strategy

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

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

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

Over the past three years, we have undertaken a series of transformative transactions. We ~~integrated~~divested our ~~most significant acquisitions into~~specialty plastics business in 2018 to focus on our ~~wholly owned subsidiaries,~~core markets and improve our free cash flow conversion. Also in 2018, we expanded the scope of The AMES Companies, Inc. ("AMES") and Clopay Corporation ("Clopay") through the acquisitions of ClosetMaid, LLC ("ClosetMaid") and CornellCookson, Inc. ("CornellCookson"), ~~expanding the scope of both AMES and Clopay. In particular,~~respectively. CornellCookson has been integrated into Clopay, so that our leading company in residential garage doors and sectional commercial doors now includes a leading manufacturer of rolling steel doors and grille products. ClosetMaid was combined with AMES, and we established an integrated headquarters for AMES in Orlando, Florida. AMES is now positioned to fulfill its mission of Bringing Brands Together™ with the leading brands in home and garage organization, outdoor décor, and lawn, garden and cleaning tools. As a result of the expanded scope of the AMES and Clopay businesses, ~~effective with our 2019 10-K filing on November 22,~~in 2019 we ~~now report~~began reporting each as a separate segment. Griffon now reports its operations through three segments. Clopay remains in the Home and Building Products ("HBP") segment, ~~and~~ AMES now constitutes our new Consumer and Professional Products ("CPP") ~~segment.~~segment and our Defense Electronics segment which continues to consist of Telephonics Corporation.

~~Impact~~Update of COVID-19 on Our Business

~~Our first priority is the~~The health and safety of our employees, our customers and their ~~families.~~families is a high priority for Griffon. As of the date of this filing, all of Griffon's facilities are fully operational. ~~All of Griffon’s facilities~~We have implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19.

~~Since the end~~We manufacture a substantial majority of the ~~second~~products that we sell, with the majority of our manufacturing activities conducted in the United States. As a result, we have been able to mitigate the adverse impact of the COVID-19 pandemic on the global supply chain.

During the quarter ~~of fiscal 2020~~ and through the date of this filing, all of our businesses ~~are experiencing~~have experienced normal or better order patterns compared with the same time period last year, with the exception of HBP's residential sectional garage door business, which experienced an 18% decline in orders in April; however, the quarter ended with volume in line with prior year driven by strong May and June orders. year.Our supply chains have ~~generally~~ not experienced significant disruption, and at this time we do not anticipate any such ~~material~~significant disruption in the near term. ~~Many~~Although many U.S. states ~~have~~ lifted initial executive orders issued earlier in the 2020 calendar year requiring all workers to remain at home unless their work is critical, essential, or ~~life-sustaining.~~ life-sustaining, some states and localities have recently put in place new restrictions regarding the operation of many types of businesses, or have tightened up restrictions already in place, in response to the recent worsening of the COVID-19 outbreak.Regardless, we believe that, based on the various standards published to date, the work our employees are performing are either critical, essential and/or life-sustaining for the following reasons: 1) DEOur Defense Electronics segment ("DE") is a defense and national security-related operation supporting the U.S. Government, with a portion of its business being directly with the U.S.

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Government; 2) HBP residential and commercial garage doors, rolling steel doors and related products that (a) provide protection and support for the efficient and safe movement of people, goods, and equipment in and out of residential and commercial facilities, (b) help prevent fires from spreading from one location to another, and (c) protect warehouses and homes, and their contents, from damage caused by strong weather events such as hurricanes and tornadoes; and

3) CPP tools and storage products provide critical support for the national infrastructure including construction, maintenance, manufacturing and ~~manufacturing~~natural disaster recovery, and is part of the essential supply base to many of its largest customers including Home Depot, Lowe's and Menards. Our AMES international facilities are currently fully operational, as they meet the applicable standards in their respective countries.

Griffon believes it has adequate liquidity to invest in its existing businesses and execute its business plan, while managing its capital structure on both a short-term and long-term basis. In January 2020, Griffon increased total borrowing capacity under its revolving credit facility ("Credit Agreement") by $50,000, to $400,000 (of which ~~$274,202~~$369,807 was available at ~~June 30,~~December 31, 2020), and extended maturity of the facility to 2025. In addition, the Credit Agreement has a $100,000 accordion feature (subject to lender consent). In February 2020, Griffon refinanced $850,000 of its $1,000,000 of senior notes due 2022 with new 5.75% senior notes with a maturity of 2028, and in June 2020 refinanced the remaining $150,000 under the same terms and indenture as the $850,000 senior notes due 2028. ~~While the first half~~In August 2020, we completed a public offering of ~~Griffon’s fiscal year is typically~~8,700,000 shares of our common stock for total net proceeds of $178,165 (the "Public Offering"); a portion of these net proceeds were used to repay outstanding borrowing under our Credit Agreement.At December 31, 2020 Griffon had cash ~~usage period, April typically begins Griffon’s period~~and equivalents of ~~strong cash generation, which usually continues through the end of the fiscal year.~~ $233,807.

We will continue to actively monitor the situation and may take further actions that impact our ~~business~~ operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders. While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our ~~business,~~businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses. ~~Please see Part II, item 1A "Risk Factors" in this Form 10-Q.~~

Business Highlights

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

On February 19, 2020, Griffon issued, at par, $850,000 of 5.75% Senior Notes due in 2028 (the “2028 Senior Notes”) and on June 8, 2020 Griffon issued an additional $150,000 of 2028 Senior Notes at 100.25% of par ~~of notes~~ under the same indenture. Proceeds from the 2028 Senior Notes were used to redeem the $1,000,000 of 5.25% Senior Notes due 2022.

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

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. ~~operations.~~operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES UK and Australia businesses, and a manufacturing facility in China.

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

~~The~~Expanding the roll-out of the new business platform from our AMES U.S. operations to include AMES’ global operations will ~~occur over approximately a three-year period,~~extend the duration of the project by one year, with completion now expected by the end of calendar ~~2022.~~ year 2023.When fully implemented, these actions will result in an annual cash savings of ~~$15,000~~$30,000 to ~~$20,000,~~$35,000 and a ~~$20,000 to $25,000~~ reduction in inventory of $30,000 to $35,000, both based on fiscal 2020 operating ~~levels at the beginning of the initiative.~~levels.

The cost to implement this new business platform, over the ~~three-year~~ duration of the project, will include ~~approximately $35,000 of~~ one-time charges of approximately $65,000 and capital investments of approximately ~~$40,000 in capital investments.~~$65,000. The one-time charges are comprised of ~~$16,000~~$46,000 of cash charges, which includes ~~$12,000~~$26,000 of personnel-related costs such as training, severance, and duplicate personnel costs ~~and $4,000~~as well as $20,000 of facility and lease exit costs. The remaining $19,000 of charges are non-cash and are primarily related to asset write-downs.

~~On November 29, 2019, AMES~~

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In June 2018, Clopay acquired ~~Vatre Group Limited ("Apta"),~~CornellCookson, a leading ~~United Kingdom supplier~~provider of ~~innovative garden pottery~~rolling steel service doors, fire doors, 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.

On September 5, 2017, Griffon announced the acquisition of ClosetMaid LLC ("ClosetMaid") and the commencement of the strategic alternatives process for Clopay Plastic Products ("Plastics"), beginning the transformation of Griffon.

~~In October 2017, we acquired ClosetMaid from Emerson Electric Co. (NYSE:EMR)~~grilles, for an effective purchase price of approximately ~~$165,000. ClosetMaid, founded~~$170,000. This transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products to complement Clopay's sectional door offerings in ~~1965, is a leading North American manufacturer~~the commercial sector, and ~~marketer~~expands the Clopay network of ~~wood and wire closet organization, general living storage and wire garage storage products, and sells to some of~~professional dealers focused on the ~~largest home center retail chains, mass merchandisers, and direct-to-builder professional installers~~commercial market. CornellCookson generated over $200,000 in ~~North America. We believe that ClosetMaid is the leading brand~~revenue in its ~~category, with excellent consumer recognition.~~first full year of operations.

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

In March 2018, we announced the combination of the ClosetMaid operations with those of AMES. ClosetMaid generated over $300,000 in revenue in the first twelve months after the acquisition, and we anticipate the integration with AMES will unlock additional value given the complementary products, customers, warehousing and distribution, manufacturing, and sourcing capabilities of the two businesses.

In ~~June~~February 2018, we closed on the sale of our Clopay ~~acquired CornellCookson,~~Plastics Products ("Plastics") business to Berry Global, Inc. ("~~CornellCookson"~~Berry")~~, a leading provider~~ for approximately $465,000, net of ~~rolling steel service doors, fire doors,~~certain post-closing adjustments, thus exiting the specialty plastics industry that the Company had entered when it acquired Clopay Corporation in 1986. This transaction provided immediate liquidity and ~~grilles,~~positions the Company to improve its cash flow conversion given the historically higher capital needs of the Plastics operations as compared to Griffon’s remaining businesses.

In October 2017, we acquired ClosetMaid from Emerson Electric Co. (NYSE:EMR) for an effective purchase price of approximately ~~$170,000.~~ $165,000.ClosetMaid, founded in 1965, is a leading North American manufacturer and marketer of wood and wire closet organization, general living storage and wire garage storage products, and sells to some of the largest home center retail chains, mass merchandisers, and direct-to-builder professional installers in North America.We believe that ClosetMaid is the leading brand in its category, with excellent consumer recognition.

We believe these actions have established a solid foundation for continuing organic growth in sales, profit, and cash generation and bolsters Griffon’s platforms for opportunistic strategic acquisitions.

Other Acquisitions and Dispositions

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and supplier of 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, subject to customary final working capital adjustments. The purchase price is subject to additional contingent consideration of approximately AUD $1,000 (approximately $760) based on Quatro exceeding certain EBITDA performance targets in the first year. Quatro is expected to contribute approximately $5,000 in annualized revenue in the first twelve months after the acquisition.

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 ~~transaction strengthened Clopay's strategic portfolio with a line of commercial rolling steel door products to complement Clopay's sectional door~~acquisition broadens AMES' product offerings in the ~~commercial industry,~~UK market and ~~expands the Clopay network of professional dealers focused on the commercial market. CornellCookson generated over $200,000~~increases its in-country operational footprint. Apta contributed approximately $20,000 in revenue in ~~its~~the first ~~full year of operations following~~twelve months after the acquisition.

~~During fiscal 2017 and~~On February 13, 2018, ~~Griffon also completed~~AMES acquired Kelkay, a ~~number of other acquisitions to expand and enhance AMES' global footprint. In the~~leading United Kingdom ~~Griffon acquired La Hacienda, an outdoor living brand of unique heating and garden décor products, in July 2017, and Kelkay, a~~ manufacturer and distributor of decorative outdoor landscaping ~~in February 2018. These two businesses provided AMES with additional brands and a platform for growth in the UK market and access~~products sold to ~~leading~~ garden centers, retailers and grocers in the UK and Ireland.

In Australia, Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) in December 2016. In September 2017, Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products. These acquisitions This acquisition broadened AMES' ~~outdoor living~~product offerings in the market and ~~lawn and garden business, strengthening AMES’ portfolio of brands and~~increased its ~~market position in Australia and New Zealand.~~in-country operational footprint.

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

~~We believe these actions have established~~During fiscal 2017, Griffon also completed a ~~solid foundation~~number of other acquisitions to expand and enhance AMES' global footprint. In the United Kingdom, Griffon acquired La Hacienda, an outdoor living brand of unique heating and garden décor products, in July 2017. The acquisition of La Hacienda, together with the February 2018 acquisition of Kelkay and November 2020

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acquisition of Apta, provides AMES with additional brands and a platform for ~~continuing organic~~ growth in ~~sales, profit,~~the UK market and ~~cash generation~~access to leading garden centers, retailers, and ~~bolsters Griffon’s platforms for opportunistic strategic acquisitions.~~grocers in the UK and Ireland.In Australia, Griffon acquired Hills Home Living, the iconic brand of clotheslines and home products, from Hills Limited (ASX:HIL) in December 2016 and in September 2017, Griffon acquired Tuscan Path, an Australian provider of pots, planters, pavers, decorative stone, and garden décor products. The Hills and Tuscan Path acquisitions broadened AMES' outdoor living and lawn and garden business, strengthening AMES’ portfolio of brands and its market position in Australia and New Zealand.

Further Information

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

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

Reportable Segments:

Griffon currently conducts its operations through three reportable segments:

•CPP conducts its operations through AMES. Founded in 1774, AMES is the leading North American manufacturer and a global provider of branded consumer and professional tools and products for home storage and organization, landscaping, and enhancing outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including True Temper, AMES, and ClosetMaid.

•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 throughout North America under the brands Clopay, Ideal, and

Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand.

•DE conducts its operations through Telephonics Corporation, founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers.

OVERVIEW

Revenue for the quarter ended ~~June 30,~~December 31, 2020 was ~~$632,061~~$609,291 compared to ~~$574,970~~$548,438 in the prior year comparable quarter, an increase of approximately ~~10%~~11%, driven by increased revenue at CPP, HBP and DE of ~~20%~~21%, 4% and 5%3%, ~~respectively, partially offset by decreased revenue at HBP of 1%. Organic revenue growth~~respectively. Net income was ~~9%. Income from continuing operations was $21,831~~$29,500 or ~~$0.50~~$0.55 per share, compared to ~~$14,128,~~$10,612, or ~~$0.33~~$0.24 per share, in the prior year quarter. The current year quarter results from ~~continuing~~ operations included the following:

– Restructuring charges of ~~$1,633~~$10,800 ($~~1,224,~~8,300, net of tax, or ~~$0.03~~$0.16 per share);

– ~~Loss from debt extinguishment $1,235~~Gain on sale of Systems Engineering Group ("SEG") business $6,240 ($~~969,~~6,017, net of tax, or ~~$0.02~~$0.11 per share);

– Discrete and certain other tax ~~provision,~~benefits, net, of ~~$1,828~~$2,028 or $0.04 per share.

The prior ~~year~~ quarter results ~~from continuing operations~~ included restructuring charges of $6,434 ($4,148, net of tax, or $0.09 per share) and discrete and certain other tax ~~benefits,~~provisions, net, of ~~$669~~$833 or $0.02 per share.

Excluding these items from the respective quarterly results, ~~Income from continuing operations~~net income would have been ~~$25,852,~~$29,755, or ~~$0.59~~$0.56 per share, in the current year quarter compared to ~~$13,459,~~$15,593, or ~~$0.31~~$0.36 per share in the prior year quarter.

~~Revenue for the nine months ended June 30, 2020 was $1,746,849 compared to $1,635,125 in the prior year period, an increase~~

Table of 7%, driven by increased revenue at CPP and HBP driven by strong customer demand in the home improvement space. Organic growth was 6%. CPP revenue increased by 9%, 7% organically. HBP revenue increased by 6% and DE revenue increased by 3%. Income from continuing operations was $33,338 or $0.76 per share, compared to $29,371, or $0.69 per share, in the prior year period. The current year-to-date results from continuing operations included the following:Contents

~~– Restructuring charges of $11,171 ($8,377, net of tax, or $0.19 per share);~~

~~– Loss from debt extinguishment $7,925 ($6,214, net of tax, or $0.14 per share);~~

~~– Acquisition costs of $2,960 ($2,321, net of tax, or $0.05 per share); and~~

~~– Discrete and certain other tax provision, net, of $1,248 or $0.03 per share.~~

~~The prior year-to-date results from continuing operations included discrete and certain other tax benefits, net, of $299 or $0.01 per share.~~

Excluding these items from the respective periods, Income from continuing operations would have been $51,498, or $1.18 per share in the current year period ended June 30, 2020 compared to $29,072, or $0.68 per share, in the comparable prior year period.

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

~~GRIFFON CORPORATION AND SUBSIDIARIES~~

~~RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS~~

~~TO ADJUSTED INCOME FROM CONTINUING OPERATIONS~~share:

~~(Unaudited)~~


														For the Three Months Ended December 31,
	For the Three Months Ended June 30,						For the Nine Months Ended June 30,								2020		2019
	2020			2019			2020			2019					(Unaudited)
Income from continuing operations	$	21,831		$	14,128		$	33,338		$	29,371

Net income													Net income		$	29,500	$	10,612

Adjusting items:													Adjusting items:
Restructuring charges	1,633			—			11,171			—			Restructuring charges		10,800		6,434
Loss from debt extinguishment	1,235			—			7,925			—
Acquisition costs	—			—			2,960			—
Gain on sale of SEG business													Gain on sale of SEG business		(6,240)		—

Tax impact of above items	(675		)	—			(5,144		)	—			Tax impact of above items		(2,277)		(2,286)
Discrete and certain other tax provisions (benefits), net	1,828			(669		)	1,248			(299		)	Discrete and certain other tax provisions (benefits), net		(2,028)		833

Adjusted income from continuing operations	$	25,852		$	13,459		$	51,498		$	29,072
Adjusted net income													Adjusted net income		$	29,755	$	15,593

Diluted earnings per common share	$	0.50		$	0.33		$	0.76		$	0.69		Diluted earnings per common share		$	0.55	$	0.24

Adjusting items, net of tax:													Adjusting items, net of tax:
Restructuring charges	0.03			—			0.19			—			Restructuring charges		0.16		0.09
Loss from debt extinguishment	0.02			—			0.14			—
Acquisition costs	—			—			0.05			—
Gain on sale of SEG business													Gain on sale of SEG business		(0.11)		—

Discrete and certain other tax provisions (benefits), net	0.04			(0.02		)	0.03			(0.01		)	Discrete and certain other tax provisions (benefits), net		(0.04)		0.02

Adjusted earnings per common share	$	0.59		$	0.31		$	1.18		$	0.68		Adjusted earnings per common share		$	0.56	$	0.36

Weighted-average shares outstanding (in thousands)	43,774			43,164			43,818			42,649			Weighted-average shares outstanding (in thousands)		53,192		43,895

Note: Due to rounding, the sum of earnings per common share and adjusting items, net of tax, may not equal adjusted earnings per common share.

The tax impact for the above reconciling adjustments from GAAP to non-GAAP Net income and EPS is determined by comparing the Company's tax provision, including the reconciling adjustments, to the tax provision excluding such adjustments.

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RESULTS OF ~~CONTINUING~~ OPERATIONS

Three ~~and Nine~~ months ended ~~June 30,~~December 31, 2020 and 2019

In the fourth quarter of fiscal 2019, Griffon modified its reportable segment structure to provide investors with improved visibility after a series of portfolio repositioning actions which included the divestiture of the Plastics business, the acquisition of ClosetMaid and its subsequent integration into AMES, and the acquisition of CornellCookson by Clopay. Griffon now reports its operations through three reportable segments: the newly formed CPP segment, which consists of AMES; HBP, which consists of Clopay; and DE, which consists of Telephonics.

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

See table provided in Note 1213 - Business Segments for a reconciliation of Segment Adjusted EBITDA to Income before ~~taxes from continuing operations.~~taxes.

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Consumer and Professional Products

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2020 2019 2020 2019
Revenue $ 328,929

$ 273,710

$ 844,917

$ 777,916

Adjusted EBITDA 37,115
11.3 % 23,970
8.8 % 84,068
9.9 % 73,151
9.4 %
Depreciation and amortization 8,197

8,158

24,650

24,148


	For the Three Months Ended December 31,
	2020				2019
Revenue	$	291,042			$	241,076
Adjusted EBITDA	32,713		11.2	%	21,926		9.1	%
Depreciation and amortization	8,199				8,231

For the quarter ended ~~June 30,~~December 31, 2020,, revenue increased ~~$55,219~~$49,966 or ~~20%~~21%, compared to the prior year period, primarily due to increased volume of ~~19%~~18%, driven by ~~increased~~continued consumer demand for home improvement initiatives ~~in North America~~across all geographies, early U.S. spring orders and ~~Australia resulting from COVID-19 stay at~~expansion of the home ~~orders, favorable price and mix of 1% and~~organization product line. Improved revenue also reflected incremental revenue from the Apta acquisition of ~~2%, partially offset by an unfavorable impact of~~1% and a favorable foreign exchange impact of 2%. Organic growth was ~~18%~~20% (revenue growth adjusted to exclude acquisitions).

For the quarter ended ~~June 30,~~December 31, 2020, Adjusted EBITDA increased ~~55%~~49% to ~~$37,115~~$32,713 compared to ~~$23,970~~$21,926 in the prior year period. The favorable variance resulted primarily from the increased revenue noted above, partially offset by increased ~~tariffs and~~ COVID-19 related ~~inefficiencies and direct costs.~~inefficiencies. For the quarter ended ~~June 30,~~December 31, 2020, EBITDA reflects ~~an unfavorable~~a favorable foreign exchange impact of 2%5%.

For the nine months ended June 30, 2020, revenue increased $67,001 or 9%, compared to the prior year period, driven by increased volume of 6% for reasons noted above, favorable price and mix of 2% and incremental revenue from the Apta acquisition of 2%, partially offset by a 1% unfavorable impact due to foreign exchange. Organic growth was 7%.

For the nine months ended June 30, 2020, Adjusted EBITDA increased 15% to $84,068 compared to $73,151 in the prior year period. The favorable variance primarily resulted increased revenue noted above, partially offset by tariffs and COVID-19 related inefficiencies and direct costs. For the nine months ended June 30, 2020, EBITDA reflects an unfavorable foreign exchange impact of 2%.

~~Direct COVID-19 related expenses totaled approximately $2,207 and $2,471 for the quarter and year to date periods, respectively.~~

Segment depreciation and amortization remained consistent with the prior year comparable ~~quarter~~quarter.

On December 22, 2020, AMES acquired Quatro Design Pty Ltd (“Quatro”), a leading Australian manufacturer and ~~increased $502 from~~supplier of glass fiber reinforced concrete landscaping products for residential, commercial, and public sector projects. Quatro is expected to contribute approximately $5,000 in annualized revenue in the ~~year-to-date comparable period primarily due to the onset of depreciation for new assets placed in service.~~first twelve months under AMES' ownership.

Strategic Initiative and Restructuring Charges

~~The~~Expanding the roll-out of the new business platform from our AMES U.S. operations to include AMES’ global operations will ~~occur over approximately a three-year period,~~extend the duration of the project by one year, with completion now expected by the end of calendar ~~2022.~~ year 2023.When fully implemented, these actions will result in an annual cash savings of ~~$15,000~~$30,000 to ~~$20,000,~~$35,000 and a ~~$20,000 to $25,000~~ reduction in inventory of $30,000 to $35,000 both based on fiscal 2020 operating ~~levels at the beginning of the initiative.~~levels.

In connection with this initiative, during the ~~nine~~year ended September 30, 2020 and during the three months ended ~~June 30,~~December 31, 2020, CPP incurred pre-tax restructuring and related exit costs approximating ~~$11,171,~~$13,669 and $3,079, respectively. Since inception of this initiative, total cumulative charges totaled $16,748, comprised of cash charges of ~~$6,479~~$11,863 and non-cash, asset-related charges of ~~$4,692;~~$4,885; the cash charges

included ~~$4,842~~$5,982 for one-time termination benefits and other personnel-related costs

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and ~~$1,637~~$5,881 for facility exit costs. During the year ended September, 30, 2020 and during the quarter ~~and nine month period~~ ended ~~June 30,~~December 31, 2020, capital expenditures of ~~$3,371~~6,733 and ~~$3,671,~~$2,236, 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
Total Anticipated Charges	26,000		20,000		19,000		65,000		65,000




Total 2020 restructuring charges	(5,620)		(3,357)		(4,692)		(13,669)		(6,733)
Q1 FY2021 Activity	(362)		(2,524)		(193)		(3,079)		(2,236)
Total cumulative charges	(5,982)		(5,881)		(4,885)		(16,748)		(8,969)
Estimate to Complete	$	20,018	$	14,119	$	14,115	$	48,252	$	56,031

Cash Charges Non-Cash Charges
Personnel related costs Facilities, exit costs and other Facility and other Total Capital Investments
Anticipated Charges $ 12,000
$ 4,000
$ 19,000
$ 35,000
$ 40,000
Q1 FY2020 Activity (2,134 ) (140 ) (4,160 ) (6,434 ) —
Q2 FY2020 Activity (1,658 ) (914 ) (532 ) (3,104 ) (300 )
Q3 FY2020 Activity (1,050 ) (583 ) —
(1,633 ) (3,371 )
Total charges (4,842 ) (1,637 ) (4,692 ) (11,171 ) (3,671 )
Estimate to Complete $ 7,158
$ 2,363
$ 14,308
$ 23,829
$ 36,329

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Home and Building Products


	For the Three Months Ended December 31,
		2020	2019
Revenue			$	250,481			$	241,381
Adjusted EBITDA			48,369		19.3	%	40,701		16.9	%
Depreciation and amortization			4,341				4,800

For the Three Months Ended June 30, For the Nine Months Ended June 30,
2020 2019 2020 2019
Revenue $ 219,164

$ 221,521

$ 670,374

$ 631,615

Adjusted EBITDA 39,299
17.9 % 33,851
15.3 % 110,635
16.5 % 85,283
13.5 %
Depreciation and amortization 4,507

4,626

13,975

13,683

For the quarter ended June 30, 2020, revenue decreased $2,357 or 1%, compared to the prior year period, due to decreased volume driven by reduced residential sectional garage door orders in April of approximately18% and a subsequent recovery in May and June.

For the quarter ended June 30, 2020, Adjusted EBITDA increased 16% to $39,299 compared to $33,851 in the prior year period. EBITDA benefited from general operational efficiency improvements, partially offset by the decrease in revenue and COVID-19 related inefficiencies and direct costs.

~~For the nine months ended June 30,~~December 31, 2020, revenue increased ~~$38,759~~$9,100 or 6%4%, compared to the prior year period, driven by increased volume of 4%5%, ~~and favorable~~partially offset by unfavorable mix ~~and pricing~~ of 2%1%.

For the ~~nine months~~quarter ended ~~June 30,~~December 31, 2020, Adjusted EBITDA increased ~~30%~~19% to ~~$110,635~~$48,369 compared to ~~$85,283~~$40,701 in the prior year period. ~~The favorable variance resulted~~EBITDA benefited from ~~the~~ increased revenue noted above including volume related benefits on absorption and ~~general~~ operational efficiency improvements, partially offset by COVID-19 related ~~inefficiencies and direct costs.~~inefficiencies.

~~Direct COVID-19 related expenses totaled approximately $1,700 for the quarter and year-to-date periods.~~

Segment depreciation and amortization decreased ~~$119~~$459 from the prior year quarter due to fully depreciated ~~assets, and increased $292 from the prior year-to-date period primarily due to the onset of depreciation for new assets placed in service.~~

On January 31, 2019, HBP announced a $14,000 investment in facilities infrastructure and equipment at its CornellCookson location in Mountain Top, Pennsylvania. This project includes a 90,000 square foot expansion to the already existing 184,000 square foot facility, along with the addition of state of the art manufacturing equipment. Through this expansion, the CornellCookson Mountain Top location will improve its manufacturing efficiency and shipping operations, as well as increase manufacturing capacity to support full-rate production of new and core products. The project was substantially completed by the end of calendar 2019.

assets.

Defense Electronics


	For the Three Months Ended June 30,								For the Nine Months Ended June 30,								For the Three Months Ended December 31,
	2020				2019				2020				2019					2020	2019
Revenue	$	83,968			$	79,739			$	231,558			$	225,594		Revenue			$	67,768			$	65,981
Adjusted EBITDA	4,122		4.9	%	7,280		9.1	%	12,845		5.5	%	17,001		7.5%	Adjusted EBITDA			5,585		8.2	%	4,475		6.8%
Depreciation and amortization	2,666				2,669				7,986				7,926			Depreciation and amortization			2,676				2,644

For the quarter ended ~~June 30,~~December 31, 2020, revenue increased ~~$4,229,~~$1,787, or 5%3%, compared to the prior year ~~period, primarily~~quarter. The increase was due to increased ~~deliveries~~volume for Naval and ~~volume of radar and communication~~Cyber systems driven by multi-mode airborne maritime surveillance systems, partially offset by ~~reduced volume~~timing of ~~airborne surveillance systems.~~work performed on Communication systems and commercial custom integrated circuits.

For the quarter ended ~~June 30,~~December 31, 2020, Adjusted EBITDA ~~decreased $3,158,~~increased $1,110, or ~~43%~~25%, compared to the prior year comparable period, driven by ~~unfavorable program mix,~~the increase in revenue and ~~program inefficiencies on radar and communications systems.~~

~~For the nine months ended June 30, 2020, revenue increased $5,964, or 3%, compared~~reduced headcount related to the ~~prior year period, primarily due to increased deliveries and volume of radar and communication systems revenue,~~reduction in force during the current quarter, partially offset by ~~reduced multi-mode radar~~the timing of research and ~~maritime surveillance radar revenue.~~development expenses.

For the nine months ended June 30, 2020, Adjusted EBITDA decreased $4,156, or 24%, compared to the prior year comparable period due to unfavorable program mix, program inefficiencies and increased operating expenses primarily due to bid and proposal activities.

~~Direct COVID-19 related expenses totaled approximately $600 and $700 for the quarter and year-to-date periods, respectively.~~

Segment depreciation and amortization remained consistent with ~~both~~ the prior year comparable ~~quarter and year-to-date~~quarter-to-date period.

On December 18, 2020, DE completed the sale of its SEG business. SEG provides sophisticated, highly technical engineering and analytical support to the Missile Defense Agency and various U.S. military commands. SEG had sales of approximately $7,000 for the first fiscal quarter ended December 31, 2020 and $31,000 for the fiscal year ended September 30, 2020.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2020, DE was awarded several new contracts and received incremental funding on existing contracts approximating ~~$192,700.~~$85,000. Contract backlog was ~~$350,443~~$388,700 at ~~June 30,~~December 31, 2020 ~~an $18,703 increase from the second quarter,~~ with ~~72%~~66% expected to be fulfilled in the next 12 months. Backlog was ~~$389,300~~$380,000 at September 30, ~~2019.~~2020, of which approximately $8,500 was related to the SEG business which was sold in December 2020. Backlog is defined as unfilled firm orders for products and services for which funding has been both authorized and appropriated by the customer, or by Congress, in the case of US government agencies.

Restructuring Charges and Divestiture

In September 2020, a Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities.The reduction in force initiative resulted in severance charges of $2,120 during current quarter.These actions reduced headcount by approximately 90 people.

In addition, charges of $5,601 were recorded during the quarter ended December 31, 2020, primarily related to exiting our older weather radar product lines.

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We recorded a pre-tax gain of $6,240 ($6,017, net of tax) during the first fiscal quarter ended December 31, 2020 related to the divestiture of SEG.

Unallocated

For the quarter ended ~~June 30,~~December 31, 2020, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling ~~$11,080~~$12,027 compared to $12,033 in the prior year quarter. For the nine months ended June 30, 2020, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling $34,969 compared to $34,505$11,942 in the prior year quarter. The ~~decrease~~increase in the current quarter compared to the respective prior year quarter primarily relates to ~~decreases~~increases in compensation and incentive costs, partially offset by consulting fees, travel and administrative office ~~costs; and the increase for nine months ended June 30, 2020 compared to the respective prior year period primarily relates to compensation and incentive~~ costs.

Segment Depreciation and Amortization

Segment depreciation and amortization ~~remained consistent with the prior year quarter and increased $854~~decreased $459 for ~~the nine~~three months ended ~~June 30,~~December 31, 2020 compared to the comparable prior year period primarily due to ~~the onset of depreciation for new assets placed in service.~~fully depreciated assets.

Other Income (Expense)

For the quarters ended ~~June 30,~~December 31, 2020 and 2019, Other income (expense) of $(41) and $778, respectively, includes ~~$72~~$(699) and ~~$150,~~($376), respectively, of net 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, net periodic benefit plan income of ~~$392~~$227 and ~~$787,~~$389, respectively, as well as ~~$294~~$330 and ~~$(14),~~$81, respectively, of net investment ~~(loss) income.~~

For the nine months ended June 30, 2020 and 2019, Other income (expense) includes $441 and $535, respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $1,170 and 2,361, respectively, as well as $145 and $18, respectively, of net investment (loss) income. ~~During the nine months ended June 30, 2020,~~Additionally, Other income (expense) also includes a one-time ~~contract~~technology recognition award ~~of $700.~~for $700 in the quarter ended December 31, 2019.

Provision for income taxes

During the quarter ended ~~June 30,~~December 31, 2020, the Company recognized a tax provision of ~~$12,649~~$9,669 on income before taxes from ~~continuing~~ operations of ~~$34,480,~~$39,169, compared to a tax provision of ~~$6,258~~$6,339 on income before taxes from ~~continuing~~ operations of ~~$20,386~~$16,951 in the comparable prior year quarter. The current year quarter results included restructuring charges of ~~$1,633~~$10,800 ($~~1,224,~~8,300, net of tax), ~~loss from debt extinguishment~~gain on sale of ~~$1,235~~SEG business $6,240 ($~~969,~~6,017, net of tax) and discrete and certain other tax benefits, net, that affect comparability of $2,028. The prior year quarter results included restructuring charges of $6,434 ($4,148, net of tax) and discrete ~~tax~~ and certain other tax provisions, net, ~~of $1,828,~~ that affect ~~comparability. The prior year quarter included net discrete tax and certain other tax benefits~~comparability of ~~$669 that affect comparability.~~$833. Excluding these items, the effective tax rates for the quarters ended ~~June 30,~~December 31, 2020 and 2019 were ~~30.8%~~32.0% and ~~34.0%~~33.3%, respectively.

During the nine months ended June 30, 2020, the Company recognized a tax provision of $21,022 on Income before taxes from continuing operations of $54,360, compared to a tax provision of $14,664 on Income before taxes from continuing operations of $44,035 in the comparable prior year period. The nine month period ended June 30, 2020 included restructuring charges of $11,171 ($8,377, net of tax), acquisition costs of $2,960 ($2,321, net of tax), loss from debt extinguishment of $7,925 ( $6,214, net of tax) and net discrete tax provisions of $1,248. The nine month period ended June 30, 2019 included net discrete tax benefits of $299. Excluding these items, the effective tax rates for the nine months ended June 30, 2020 and 2019 were 32.6% and 34.0%, respectively.

In response to the COVID-19 outbreak, the U.S. Congress approved certain changes to the federal tax laws in March 2020. While we are still assessing the impact of the legislation, we do not expect there to be a material impact to our consolidated financial statements at this time.

Stock based compensation

For the quarters ended ~~June 30,~~December 31, 2020 and 2019, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled ~~$4,507~~$4,208 and $4,047, respectively. For the nine months ended June 30, 2020 and 2019, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP totaled $12,809 and $11,547,$3,982, respectively.

Comprehensive income (loss)

For the quarter ended ~~June 30,~~December 31, 2020, total other comprehensive income, net of taxes, of ~~$8,702~~$13,141 included ~~income~~a gain of ~~$9,508~~$12,123 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, and Canadian and Australian Dollars all in comparison to the US Dollar; a ~~$1,139~~$1,706 benefit from pension ~~amortization of actuarial losses;~~amortization; and a ~~$1,945~~$688 loss on cash flow hedges.

For the quarter ended ~~June 30,~~December 31, 2019, total other comprehensive ~~loss,~~income, net of taxes, of ~~$1,035~~$6,841 included a ~~loss~~gain of ~~$1,092~~$6,470 from foreign currency translation adjustments primarily due to the ~~weakening of the Euro, British Pound and Australian Dollar, partially offset by the~~ strengthening ~~of the Canadian Dollar, all in comparison to the US Dollar; a $184 benefit from pension amortization of actuarial losses; and a $127 loss on cash flow hedges.~~

For the nine months ended June 30, 2020, total other comprehensive income, net of taxes, of $709, included a loss of $493 from foreign currency translation adjustments primarily due to the weakening of the Canadian Dollar, partially offset by the strengthening of the Euro, British Pound and Australian currencies, all in comparison to the US Dollar, a $2,480 benefit from pension amortization of actuarial losses and a $1,278 loss on cash flow hedges.

~~For the nine months ended June 30, 2019, total other comprehensive loss, net of taxes, of $3,605 included a loss of $3,943 from foreign currency translation adjustments primarily due to the weakening~~ of the Euro, British Pound, and Canadian and Australian Dollars all in comparison to the US Dollar; a ~~$552~~$672 benefit from pension ~~amortization of actuarial losses;~~amortization; and a ~~$214~~$301 loss on cash flow hedges.

Discontinued operations

During the quarter ended March 31, 2019, Griffon recorded an $11,000 charge ($7,646, net of tax) to discontinued operations. The charge consisted primarily of a purchase price adjustment to resolve a claim related to the $475,000 PPC divestiture and included an additional reserve for a legacy environmental matter.

At ~~June 30,~~December 31, 2020, Griffon's assets and liabilities are primarily for the Installations Services and other discontinued operations primarily related to insurance claims, income tax and product liability, warranty reserves and environmental reserves. See Note ~~15,~~16, Discontinued Operations.

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LIQUIDITY AND CAPITAL RESOURCES

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: cash flows from operating activities, capital expenditures, acquisitions, dispositions, bank lines of credit and the ability to attract long-term capital under satisfactory terms. Griffon believes it has sufficient liquidity available to invest in its existing businesses and execute strategic acquisitions, while managing its capital structure on both a short-term and long-term basis.

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


Cash Flows from Operations	For the Three Months Ended December 31,
	2020		2019
Net Cash Flows Provided by (Used In):
Operating activities	$	20,829	$	(18,169)
Investing activities	1,491		(23,519)
Financing activities	(9,297)		34,701

Cash Flows from Continuing Operations For the Nine months ended June 30,
(in thousands) 2020 2019
Net Cash Flows Provided by (Used In):

Operating activities $ 55,944
$ 14,982
Investing activities (45,073 ) (57,162 )
Financing activities (9,305 ) 33,905

Cash provided by operating activities ~~from continuing operations~~ for the ~~nine~~three months ended ~~June 30,~~December 31, 2020 was ~~$55,944~~$20,829 compared to ~~$14,982~~cash used of $18,169 in the comparable prior year period. Cash provided by income from ~~continuing~~ operations, adjusted for non-cash expenditures, was partially offset by a net increase in working capital predominately consisting of ~~net increases in accounts receivable and prepaid and other assets, a decrease in accounts payable due~~increased inventory primarily to ~~the timing of payments,~~meet seasonal demands, partially offset by a ~~decrease~~reduction in inventory. The working capital variances in the cash flow in the current year excludes a $28,648 benefit due to the October 1, 2019 prospective adoption of lease accounting guidance, which was in working capital in the prior year.accounts receivable.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2020, ~~Griffon used $45,073~~Griffon's source of cash infrom investing activities ~~from continuing operations~~was $1,491 compared to ~~$57,162~~$23,519 used in the prior year comparable period. On December 18, 2020, DE completed the sale of its SEG business and received net proceeds from the sale of $15,580. Payments for acquired businesses totaled ~~$10,531~~$2,242 compared to ~~$9,219~~$10,531 in the prior year comparable period. 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 November 29, 2019, AMES acquired 100% of the outstanding stock of 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. Payments for acquired businesses in the prior year consisted solely of a final purchase price adjustment for CornellCookson. Payments in the prior year comparable period also included $9,500 related to a purchase price adjustment to resolve a claim related to the $475,000 PPC divestiture and an insurance payment of $10,604 pertaining to the settlement of a certain life insurance benefit. Capital expenditures, net of proceeds from the sale of assets, for the ~~nine~~three months ended ~~June 30,~~December 31, 2020 totaled ~~$34,412, an increase~~$11,873, a decrease of ~~$6,722~~$1,115 from the prior year period.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2020, cash used by financing activities from ~~continuing~~ operations totaled ~~$9,305~~$9,297 as compared to ~~$33,905~~$34,701 provided by in the comparable prior year period. On June 22, 2020, Griffon completed an add-on offering through a private placement of $150,000 aggregate principal amount of its 5.75% senior notes due 2028, at 100.25% of par, to Griffon's previously issued $850,000 principal amount of its 5.75% senior notes dueCash used in ~~2028, at par, completed on February 19, 2020 (collectively the “Senior Notes”). Proceeds from the Senior Notes were used to redeem the $1,000,000 of 5.25% Senior Notes due 2022. Cash provided by~~ financing activities in the current period ~~also included financing payments~~consisted primarily of ~~$16,543 primarily associated with the redemption~~net borrowings of ~~the $1,000,000~~long-term debt and payment of 5.25% Senior Notes due 2022 with the proceeds from the issuance of $850,000 of 5.75% Senior Notes due 2028; and the amendment and extension of the Company's revolving credit facility increasing the maximum borrowing availability from $350,000 to $400,000 and extending its maturity date from March 22, 2021 to March 22, 2025.dividends. At ~~June 30,~~December 31, 2020, there were ~~$104,181~~$13,493 in outstanding borrowings under the Credit Agreement, compared to ~~$122,806~~$100,117 in outstanding borrowings at the same date in the prior year.

~~During the nine months ended June 30, 2020, the Board~~On each of Directors approved three quarterly cash dividends of $0.075 per share each. On July 29, 2020, the Board of Directors declared a quarterly cash dividend of $0.075 per share, payable on September 17, 2020 to shareholders of record as of the close of business on August 20, 2020.

During the nine months ended June 30, 2020, 340,775 shares, with a market value of $7,409, or $21.74 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during the nine months ended June 30, 2020, an additional 3,307 shares, with a market value of $70, or $21.22 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

On August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of ~~up to~~ $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. ~~During the quarter and nine months ended June 30, 2020, Griffon did not purchase any shares of common stock under these repurchase programs.~~ As of ~~June 30,~~December 31, 2020, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs. No shares were repurchased during the quarter ended December 31, 2020 under these share repurchase programs.

~~Through June 30,~~During the three months ended December 31, 2020, 133,027 shares, with a market value of $2,774, or $20.85 per share were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during the three months ended December 31, 2020, an additional 6,507 shares, with a market value of $135, or $20.75 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

During 2020, the Company declared and paid regular cash dividends totaling $0.30 per share, or $0.07 per share each quarter. During the three months ended December 31, 2020, the Board of Directors approved and paid a quarterly cash dividend of $0.08 per share. 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.

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On January 27, 2021, the Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on March 18, 2021 to shareholders of record as of the close of business on February 18, 2021.

During the three months ended December 31, 2020, COVID-19 has not had a material impact on our operations, and we anticipate our current cash balances, cash flows from operations and sources of liquidity will be sufficient to meet our cash requirements.

Payments related to Telephonics revenue are received in accordance with the terms of development and production subcontracts; certain of such receipts are progress or ~~performance based~~performance-based payments. With respect to CPP and HBP, there have been no material adverse impacts on payment for sales.

A small number of customers account for, and are expected to continue to account for, a substantial portion of Griffon’s consolidated revenue. For the ~~nine~~three months ended ~~June 30,~~December 31, 2020:

•The United States Government and its agencies, through either prime or subcontractor relationships, represented 9%8% of Griffon’s consolidated revenue and ~~65%~~70% of Telephonics’ revenue.

•The Home Depot represented ~~18%~~17% of Griffon’s consolidated revenue, ~~28%~~24% of CPP's revenue and 12% of HBP’s revenue.

No other customer exceeded 10% of consolidated revenue. Future operating results will continue to depend substantially on the success of Griffon’s largest customers and our ongoing relationships with them. Orders from these customers are subject to change and may fluctuate materially. The loss of all or a portion of the volume from any one of these customers could have a material adverse impact on Griffon’s liquidity and results of operations.


Cash and Equivalents and Debt	June 30,		September 30,		Cash and Equivalents and Debt	December 31,		September 30,
(in thousands)	2020		2019
						2020		2020
Cash and equivalents	$	71,999	$	72,377	Cash and equivalents	$	233,807	$	218,089
Notes payables and current portion of long-term debt	9,235		10,525		Notes payables and current portion of long-term debt	11,158		9,922
Long-term debt, net of current maturities	1,123,365		1,093,749		Long-term debt, net of current maturities	1,037,413		1,037,042
Debt discount/premium and issuance costs	17,303		9,857		Debt discount/premium and issuance costs	16,799		17,458
Total debt	1,149,903		1,114,131		Total debt	1,065,370		1,064,422
Debt, net of cash and equivalents	$	1,077,904	$	1,041,754	Debt, net of cash and equivalents	$	831,563	$	846,333



Delaware			11-1893410
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification No.)

712 Fifth Ave, 18th Floor	New York	New York	10019
(Address of principal executive offices)			(Zip Code)


			Page
PART I - FINANCIAL INFORMATION

			~~Page~~
~~PART I - FINANCIAL INFORMATION~~

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets at ~~June 30,~~ December 31,2020 (unaudited) and ~~September~~Septe mber 30, ~~2019~~2020			1

Condensed Consolidated Statement of Shareholders’ Equity for the Three ~~and Nine~~ Months Ended ~~June 30,~~December 3 1 , 2020 and 2019 (unaudited)			2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three ~~and Nine~~ Months Ended ~~June 30,~~Decem ber 3 1 , 2020 and 2019 (unaudited)			43

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~June 30,~~ December 31, 2020 and 2019 (unaudited)			54

Notes to Condensed Consolidated Financial Statements (unaudited)			76

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			4131

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			5646

Item 4 - Controls & Procedures			5646

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings			5747

Item 1A – Risk Factors			5747

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			5747

Item 3 – Defaults Upon Senior Securities			5847

Item 4 – Mine Safety Disclosures			5847

Item 5 – Other Information			5847

Item 6 – Exhibits			5948

Signatures			6049


	Three Months Ended December 31,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	29,500	$	10,612

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization	15,266		15,825
Stock-based compensation	4,208		3,982
Asset impairment charges - restructuring	5,794		4,160
Provision for losses on accounts receivable	93		35
Amortization of debt discounts and issuance costs	680		1,273


Deferred income taxes	442		198
Gain (loss) on sale of assets and investments	174		(186)
Gain on sale of business	(6,240)		0
Change in assets and liabilities, net of assets and liabilities acquired:
Decrease in accounts receivable and contract assets, net	10,494		2,942
Increase in inventories	(31,924)		(19,480)
Increase in prepaid and other assets	(3,517)		(2,269)
Decrease in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities	(5,425)		(36,445)
Other changes, net	1,284		1,184
Net cash provided by (used in) operating activities	20,829		(18,169)

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(11,926)		(13,172)
Acquired businesses, net of cash acquired	(2,242)		(10,531)

Proceeds from sale of business, net	15,580		0


Proceeds from the sale of property, plant and equipment	53		184
Other, net	26		0
Net cash provided by (used in) investing activities	1,491		(23,519)

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid	(4,422)		(3,392)
Purchase of shares for treasury	(2,909)		(1,758)
Proceeds from long-term debt	40,791		71,957
Payments of long-term debt	(42,120)		(32,045)


Financing costs	(569)		(21)


Other, net	(68)		(40)
Net cash provided by (used in) financing activities	(9,297)		34,701


Beginning Balance, October 1, 2020	$	8,505
Provision for expected credit losses	496
Amounts written off charged against the allowance	(42)
Other, primarily foreign currency translation	63
Ending Balance, December 31, 2020	$	9,022


	At September 30, 2020		Business Acquisitions (a)		Business Divestitures (b)		Foreign currency translations adjustments		At December 31, 2020
Consumer and Professional Products	$	232,845	$	1,799	$	0	$	2,865	$	237,509
Home and Building Products	191,253		0		0		0		191,253
Defense Electronics	18,545		0		(851)		0		17,694

Total	$	442,643	$	1,799	$	(851)	$	2,865	$	446,456



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	(Unaudited)
	December 31, 2020		September 30, 2020
CURRENT ASSETS
Cash and equivalents	$	233,807	$	218,089
Accounts receivable, net of allowances of $9,022 and $8,505	318,535		340,546
Contract assets, net of progress payments of $21,472 and $24,175	86,260		84,426
Inventories	445,022		413,825
Prepaid and other current assets	59,116		46,897

Assets of discontinued operations	1,591		2,091
Total Current Assets	1,144,331		1,105,874
PROPERTY, PLANT AND EQUIPMENT, net	342,706		343,964
OPERATING LEASE RIGHT-OF-USE ASSETS	157,860		161,627
GOODWILL	446,456		442,643
INTANGIBLE ASSETS, net	357,832		355,028
OTHER ASSETS	29,861		32,897
ASSETS OF DISCONTINUED OPERATIONS	5,397		6,406
Total Assets	$	2,484,443	$	2,448,439

CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	11,158	$	9,922
Accounts payable	237,900		232,107
Accrued liabilities	161,594		163,994
Current portion of operating lease liabilities	31,304		31,848
Liabilities of discontinued operations	4,842		3,797
Total Current Liabilities	446,798		441,668
LONG-TERM DEBT, net	1,037,413		1,037,042
LONG-TERM OPERATING LEASE LIABILITIES	132,634		136,054
OTHER LIABILITIES	122,047		126,510
LIABILITIES OF DISCONTINUED OPERATIONS	5,504		7,014
Total Liabilities	1,744,396		1,748,288
COMMITMENTS AND CONTINGENCIES - See Note 22	0		0
SHAREHOLDERS’ EQUITY
Total Shareholders’ Equity	740,047		700,151
Total Liabilities and Shareholders’ Equity	$	2,484,443	$	2,448,439



	(Unaudited)
	June 30, 2020		September 30, 2019
CURRENT ASSETS
Cash and equivalents	$	71,999	$	72,377
Accounts receivable, net of allowances of $13,901 and $7,881	359,464		264,450
Contract costs and recognized income not yet billed, net of progress payments of $28,981 and $13,861	92,143		105,111
Inventories	411,028		442,121
Prepaid and other current assets	51,365		40,799
Assets of discontinued operations	1,951		321
Total Current Assets	987,950		925,179
PROPERTY, PLANT AND EQUIPMENT, net	335,318		337,326
OPERATING LEASE RIGHT-OF-USE ASSETS	154,955		—
GOODWILL	439,667		437,067
INTANGIBLE ASSETS, net	354,384		356,639
OTHER ASSETS	31,860		15,840
ASSETS OF DISCONTINUED OPERATIONS	6,086		2,888
Total Assets	$	2,310,220	$	2,074,939

CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	9,235	$	10,525
Accounts payable	218,024		250,576
Accrued liabilities	176,164		124,665
Current portion of operating lease liabilities	29,018		—
Liabilities of discontinued operations	3,730		4,333
Total Current Liabilities	436,171		390,099
LONG-TERM DEBT, net	1,123,365		1,093,749
LONG-TERM OPERATING LEASE LIABILITIES	131,650		—
OTHER LIABILITIES	104,298		109,997
LIABILITIES OF DISCONTINUED OPERATIONS	6,281		3,331
Total Liabilities	1,801,765		1,597,176
COMMITMENTS AND CONTINGENCIES - See Note 21
SHAREHOLDERS’ EQUITY
Total Shareholders’ Equity	508,455		477,763
Total Liabilities and Shareholders’ Equity	$	2,310,220	$	2,074,939



	COMMON STOCK					CAPITAL IN EXCESS OF PAR VALUE			RETAINED EARNINGS			TREASURY SHARES				ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			DEFERRED COMPENSATION
(in thousands)	SHARES		PAR VALUE			CAPITAL IN EXCESS OF PAR VALUE			RETAINED EARNINGS			SHARES	COST			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			DEFERRED COMPENSATION			TOTAL
Balance at September 30, 2019	82,775		$	20,694		$	519,017		$	568,516		35,969	$	(536,308	)	$	(65,916	)	$	(28,240	)	$	477,763
Net income	—		—			—			10,612			—	—			—			—			10,612
Dividend	—		—			—			(3,392		)	—	—			—			—			(3,392		)
Shares withheld on employee taxes on vested equity awards	—		—			—			—			80	(1,758		)	—			—			(1,758		)
Amortization of deferred compensation	—		—			—			—			—	—			—			629			629
Equity awards granted, net	182		45			(45		)	—			—	—			—			—			—
ESOP allocation of common stock	—		—			609			—			—	—			—			—			609
Stock-based compensation	—		—			3,150			—			—	—			—			—			3,150
Stock-based consideration	—		—			239			—			—	—			—			—			239
Other comprehensive income, net of tax	—		—			—			—			—	—			6,841			—			6,841
Balance at December 31, 2019	82,957		$	20,739		$	522,970		$	575,736		36,049	$	(538,066	)	$	(59,075	)	$	(27,611	)	$	494,693
Net income	—		—			—			895			—	—			—			—			895
Dividend	—		—			—			(3,422		)	—	—			—			—			(3,422		)
Shares withheld on employee taxes on vested equity awards	—		—			—			—			261	(5,721		)	—			—			(5,721		)
Amortization of deferred compensation	—		—			—			—			—	—			—			629			629
Equity awards granted, net	784		196			(196		)	—			—	—			—			—			—
ESOP allocation of common stock	—		—			435			—			—	—			—			—			435
Stock-based compensation	—		—			3,662			—			—	—			—			—			3,662
Stock-based consideration	—		—			117			—			—	—			—			—			117
Other comprehensive income, net of tax	—		—			—			—			—	—			(14,834		)	—			(14,834		)
Balance at March 31, 2020	83,741		$	20,935		$	526,988		$	573,209		36,310	$	(543,787	)	$	(73,909	)	$	(26,982	)	$	476,454
Net income	—		—			—			21,831			—	—			—			—			21,831
Dividend	—		—			—			(3,558		)	—	—			—			—			(3,558		)
Amortization of deferred compensation	—		—			—			—			—	—			—			628			628
Equity awards granted, net	(6	)	(1		)	1			—			—	—			—			—			—
ESOP allocation of common stock	—		—			352			—			—	—			—			—			352
Stock-based compensation	—		—			3,930			—			—	—			—			—			3,930
Stock-based consideration	—		—			116			—			—	—			—			—			116
Other comprehensive income, net of tax	—		—			—			—			—	—			8,702			—			8,702
Balance at June 30, 2020	83,735		$	20,934		$	531,387		$	591,482		36,310	$	(543,787	)	$	(65,207	)	$	(26,354	)	$	508,455


	Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended December 31,
	2020			2019			2020			2019					2020		2019
Revenue	$	632,061		$	574,970		$	1,746,849		$	1,635,125		Revenue		$	609,291	$	548,438
Cost of goods and services	467,058			420,487			1,279,893			1,200,092			Cost of goods and services		439,119		398,517
Gross profit	165,003			154,483			466,956			435,033			Gross profit		170,172		149,921

Selling, general and administrative expenses	113,509			117,989			357,774			343,526			Selling, general and administrative expenses		121,557		117,798


Income from operations	51,494			36,494			109,182			91,507			Income from operations		48,615		32,123

Other income (expense)													Other income (expense)
Interest expense	(16,725		)	(17,288		)	(49,807		)	(51,334		)	Interest expense		(15,690)		(16,211)
Interest income	140			201			711			611			Interest income		45		261
Loss from debt extinguishment, net	(1,235		)	—			(7,925		)	—
Gain on sale of business													Gain on sale of business		6,240		0

Other, net	806			979			2,199			3,251			Other, net		(41)		778
Total other expense, net	(17,014		)	(16,108		)	(54,822		)	(47,472		)	Total other expense, net		(9,446)		(15,172)

Income before taxes from continuing operations	34,480			20,386			54,360			44,035
Income before taxes													Income before taxes		39,169		16,951
Provision for income taxes	12,649			6,258			21,022			14,664			Provision for income taxes		9,669		6,339
Income from continuing operations	$	21,831		$	14,128		$	33,338		$	29,371

Discontinued operations:
Loss from operations of discontinued operations	—			—			—			(11,000		)
Provision (benefit) for income taxes	—			533			—			(2,821		)
Loss from discontinued operations	—			(533		)	—			(8,179		)

Net income	$	21,831		$	13,595		$	33,338		$	21,192		Net income		$	29,500	$	10,612

Income from continuing operations	$	0.52		$	0.34		$	0.80		$	0.72
Loss from discontinued operations	—			(0.01		)	—			(0.20		)

Basic earnings per common share	$	0.52		$	0.33		$	0.80		$	0.52		Basic earnings per common share		$	0.58	$	0.26

Basic weighted-average shares outstanding	41,712			40,967			41,483			40,888			Basic weighted-average shares outstanding		50,596		41,173

Income from continuing operations	$	0.50		$	0.33		$	0.76		$	0.69
Income (loss) from discontinued operations	—			(0.01		)	—			(0.19		)

Diluted earnings per common share	$	0.50		$	0.31		$	0.76		$	0.50		Diluted earnings per common share		$	0.55	$	0.24

Diluted weighted-average shares outstanding	43,774			43,164			43,818			42,649			Diluted weighted-average shares outstanding		53,192		43,895

Dividends paid per common share	$	0.0750		$	0.0725		$	0.2250		$	0.2175		Dividends paid per common share		$	0.08	$	0.075

Net income	$	21,831		$	13,595		$	33,338		$	21,192		Net income		$	29,500	$	10,612
Other comprehensive income (loss), net of taxes:													Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments	9,508			(1,092		)	(493		)	(3,943		)	Foreign currency translation adjustments		12,123		6,470
Pension and other post retirement plans	1,139			184			2,480			552			Pension and other post retirement plans		1,706		672
Change in cash flow hedges	(1,945		)	(127		)	(1,278		)	(214		)	Change in cash flow hedges		(688)		(301)

Total other comprehensive income (loss), net of taxes	8,702			(1,035		)	709			(3,605		)	Total other comprehensive income (loss), net of taxes		13,141		6,841
Comprehensive income, net	$	30,533		$	12,560		$	34,047		$	17,587		Comprehensive income, net		$	42,641	$	17,453



	At June 30, 2020		At September 30, 2019
Raw materials and supplies	$	131,021	$	121,791
Work in process	90,343		93,830
Finished goods	189,664		226,500
Total	$	411,028	$	442,121



	At September 30, 2019		Goodwill from acquisitions		Other adjustments including currency translations			At June 30, 2020
Consumer and Professional Products	$	227,269	$	3,125	$	(525	)	$	229,869
Home and Building Products	191,253		—		—			191,253
Defense Electronics	18,545		—		—			18,545
Total	$	437,067	$	3,125	$	(525	)	$	439,667


	At December 31, 2020					At September 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Customer relationships & other	$	188,030	$	69,354	23	$	185,940	$	66,656
Technology and patents	19,654		8,007		13	19,464		8,360
Total amortizable intangible assets	207,684		77,361			205,404		75,016
Trademarks	227,509		—			224,640		—
Total intangible assets	$	435,193	$	77,361		$	430,044	$	75,016



		Three Months Ended June 30, 2020													Three Months Ended June 30, 2019
		Effective Interest Rate ⁽¹⁾		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees			Total Interest Expense			Effective Interest Rate⁽¹⁾		Cash Interest			Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.8	%	$	12,219		$	—	$	277		$	12,496		n/a		$	—		$	—	$	—	$	—
Senior notes due 2022	(a)	6.2	%	1,960			11		155			2,126			5.7	%	13,125			68		950		14,143
Revolver due 2025	(b)	Variable		1,597			—		134			1,731			Variable		2,282			—		220		2,502
ESOP Loans	(c)	n/a		—			—		—			—			7.2	%	—			—		—		—
Capital lease - real estate	(d)	6.3	%	33			—		6			39			5.6	%	78			—		7		85
Non US lines of credit	(e)	Variable		4			—		(1		)	3			Variable		4			—		3		7
Non US term loans	(e)	Variable		222			—		21			243			Variable		376			—		44		420
Other long term debt	(f)	Variable		102			—		1			103			Variable		149			—		—		149
Capitalized interest				(16		)	—		—			(16		)			(18		)	—		—		(18		)
Totals				$	16,121		$	11	$	593		$	16,725				$	15,996		$	68	$	1,224	$	17,288


		Three Months Ended December 31, 2020								Three Months Ended December 31, 2019
		Effective Interest Rate (1)		Cash Interest		Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees			Total Interest Expense		Effective Interest Rate (1)		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.4	%	$	14,375	$	0	$	530		$	14,905	n/a		$	0	$	0	$	0	$	0
Senior notes due 2022	(a)	n/a		0		0		0			0		5.7	%	13,125		67		951		14,143
Revolver due 2025	(b)	Variable		129		0		123			252		Variable		1,382		0		232		1,614



Finance lease - real estate	(d)	Variable		232		0		6			238		5.6	%	61		0		6		67
Non US lines of credit	(e)	Variable		3		0		4			7		Variable		4		0		4		8
Non US term loans	(e)	Variable		171		0		17			188		Variable		272		0		12		284
Other long term debt	(f)	Variable		107		0		0			107		Variable		160		0		0		160
Capitalized interest				(7)		—		—			(7)				(65)		—		—		(65)
Totals				$	15,010	$	0	$	680		$	15,690			$	14,939	$	67	$	1,205	$	16,211



		Nine Months Ended June 30, 2020												Nine Months Ended June 30, 2019
		Effective Interest Rate (1)		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense			Effective Interest Rate ⁽¹⁾		Cash Interest			Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	5.9	%	$	17,785		$	—	$	412	$	18,197		—	%	$	—		$	—	$	—	$	—
Senior notes due 2022	(a)	5.7	%	23,125			123		1,734		24,982			5.7	%	39,375			202		2,852		42,429
Revolver due 2025	(b)	Variable		4,798			—		531		5,329			Variable		4,846			—		761		5,607
ESOP Loans	(c)	n/a		—			—		—		—			6.6	%	937			—		186		1,123
Capital lease - real estate	(d)	6.1	%	146			—		19		165			5.5	%	294			—		19		313
Non US lines of credit	(e)	Variable		11			—		11		22			Variable		15			—		11		26
Non US term loans	(e)	Variable		786			—		40		826			Variable		1,273			—		97		1,370
Other long term debt	(f)	Variable		394			—		1		395			Variable		478			—		6		484
Capitalized interest				(109		)	—		—		(109		)			(18		)	—		—		(18		)
Totals				$	46,936		$	123	$	2,748	$	49,807				$	47,200		$	202	$	3,932	$	51,334


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



REVENUE BY GEOGRAPHIC AREA - DESTINATION	For the Three Months Ended June 30, 2020								For the Nine Months Ended June 30, 2020
	CPP		HBP		Defense Electronics		Total		CPP		HBP		Defense Electronics		Total
United States	$	232,544	$	209,222	$	56,294	$	498,060	$	584,114	$	635,232	$	157,508	$	1,376,854
Europe	29,267		81		8,636		37,984		60,609		109		24,501		85,219
Canada	18,231		7,729		3,012		28,972		53,527		26,849		9,795		90,171
Australia	47,614		—		1,012		48,626		140,874		—		1,807		142,681
All other countries	1,273		2,132		15,014		18,419		5,793		8,184		37,947		51,924
Consolidated revenue	$	328,929	$	219,164	$	83,968	$	632,061	$	844,917	$	670,374	$	231,558	$	1,746,849



REVENUE BY GEOGRAPHIC AREA - DESTINATION	For the Three Months Ended June 30, 2019								For the Nine Months Ended June 30, 2019
	CPP		HBP		Defense Electronics		Total		CPP		HBP		Defense Electronics		Total
United States	$	193,948	$	206,489	$	49,379	$	449,816	$	541,309	$	592,261	$	148,853	$	1,282,423
Europe	25,663		31		8,387		34,081		53,871		77		27,188		81,136
Canada	16,246		9,867		2,855		28,968		54,456		27,832		8,542		90,830
Australia	35,829		163		838		36,830		121,617		613		2,426		124,656
All other countries	2,024		4,971		18,280		25,275		6,663		10,832		38,585		56,080
Consolidated revenue	$	273,710	$	221,521	$	79,739	$	574,970	$	777,916	$	631,615	$	225,594	$	1,635,125



ASSETS	At June 30, 2020		At September 30, 2019
Segment assets:
Consumer and Professional Products	$	1,269,540	$	1,070,510
Home and Building Products	592,038		571,216
Defense Electronics	335,262		347,575
Total segment assets	2,196,840		1,989,301
Corporate	105,343		82,429
Total continuing assets	2,302,183		2,071,730
Assets of discontinued operations	8,037		3,209
Consolidated total	$	2,310,220	$	2,074,939


	At December 31, 2020		At September 30, 2020
Assets of discontinued operations:
Prepaid and other current assets	$	1,591	$	2,091
Other long-term assets	5,397		6,406
Total assets of discontinued operations	$	6,988	$	8,497

Liabilities of discontinued operations:
Accrued liabilities, current	$	4,842	$	3,797
Other long-term liabilities	5,504		7,014
Total liabilities of discontinued operations	$	10,346	$	10,811


	Cash Charges				Non-Cash
	Personnel related costs		Facilities & Exit Costs		Facility and Other Costs		Total
Accrued liability at September 30, 2020	$	2,701	$	264	$	0	$	2,965
Q1 restructuring charges	2,482		2,524		5,794		10,800
Cash payments	(1,598)		(2,534)		0		(4,132)
Non-cash charges	0		0		(5,794)		(5,794)
Accrued liability at December 31, 2020	$	3,585	$	254	$	0	$	3,839



	Three Months Ended June 30, 2020									Three Months Ended June 30, 2019
	Pre-tax			Tax			Net of tax			Pre-tax			Tax			Net of tax
Foreign currency translation adjustments	$	9,508		$	—		$	9,508		$	(1,092	)	$	—		$	(1,092	)
Pension and other defined benefit plans	1,443			(304		)	1,139			236			(52		)	184
Cash flow hedges	(2,779		)	834			(1,945		)	(199		)	72			(127		)
Total other comprehensive income (loss)	$	8,172		$	530		$	8,702		$	(1,055	)	$	20		$	(1,035	)



	Nine Months Ended June 30, 2020									Nine Months Ended June 31, 2019
	Pre-tax			Tax			Net of tax			Pre-tax			Tax			Net of tax
Foreign currency translation adjustments	$	(493	)	$	—		$	(493	)	$	(3,943	)	$	—		$	(3,943	)
Pension and other defined benefit plans	3,137			(657		)	2,480			708			(156		)	552
Cash flow hedges	(1,826		)	548			(1,278		)	(306		)	92			(214		)
Total other comprehensive income (loss)	$	818		$	(109	)	$	709		$	(3,541	)	$	(64	)	$	(3,605	)


	For the Three Months Ended December 31,
Gain (Loss)		2020		2019


Pension amortization		$	(1,573)	$	(1,046)
Cash flow hedges		(658)		(56)

Total gain (loss)		(2,231)		(1,102)
Tax benefit (expense)		469		231
Total		$	(1,762)	$	(871)



	For the Nine Months ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	32,882
Financing cash flows from finance leases	3,202
Total	$	36,084


	At June 30, 2020			At December 31, 2020		September 30, 2020
Operating Leases:			Operating Leases:
Right of use assets:			Right of use assets:
Operating right-of-use assets	$	154,955	Operating right-of-use assets	$	157,860	$	161,627

Lease Liabilities:			Lease Liabilities:
Current portion of operating lease liabilities	$	29,018	Current portion of operating lease liabilities	$	31,304	$	31,848
Long-term operating lease liabilities	131,650		Long-term operating lease liabilities	132,634		136,054
Total operating lease liabilities	$	160,668	Total operating lease liabilities	$	163,938	$	167,902

Finance Leases:			Finance Leases:
Property, plant and equipment, net⁽¹⁾	$	13,318	Property, plant and equipment, net(1)	$	17,975	$	18,774

Lease Liabilities:			Lease Liabilities:
Notes payable and current portion of long-term debt	$	3,427	Notes payable and current portion of long-term debt	$	3,146	$	3,352
Long-term debt, net	9,725		Long-term debt, net	14,885		15,339
Total financing lease liabilities	$	13,152	Total financing lease liabilities	$	18,031	$	18,691



	At September 30, 2019
2020	$	35,176
2021	30,730
2022	26,119
2023	20,008
2024	14,198
Thereafter	78,105
Total	$	204,336



($ in thousands)	Parent Company		Guarantor Companies		Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	4,727	$	19,697	$	47,575		$	—		$	71,999
Accounts receivable, net of allowances	—		307,625		217,590			(165,751		)	359,464
Contract costs and recognized income not yet billed, net of progress payments	—		89,526		2,617			—			92,143
Inventories, net	—		347,703		63,903			(578		)	411,028
Prepaid and other current assets	19,519		24,144		5,068			2,634			51,365
Assets of discontinued operations	—		—		1,951			—			1,951
Total Current Assets	24,246		788,695		338,704			(163,695		)	987,950
PROPERTY, PLANT AND EQUIPMENT, net	1,232		289,224		44,862			—			335,318
OPERATING LEASE RIGHT-OF-USE ASSETS	9,633		124,566		20,756			—			154,955
GOODWILL	—		375,734		63,933			—			439,667
INTANGIBLE ASSETS, net	93		219,056		135,235			—			354,384
INTERCOMPANY RECEIVABLE	16,555		679,666		84,671			(780,892		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,702,746		766,863		3,154,553			(5,624,162		)	—
OTHER ASSETS	12,228		39,491		(5,638		)	(14,221		)	31,860
ASSETS OF DISCONTINUED OPERATIONS	—		—		6,086			—			6,086
Total Assets	$	1,766,733	$	3,283,295	$	3,843,162		$	(6,582,970	)	$	2,310,220
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	—	$	2,973	$	6,262		$	—		$	9,235
Accounts payable and accrued liabilities	58,619		426,260		72,451			(163,142		)	394,188
Current portion of operating lease liabilities	1,842		22,229		4,947			—			29,018
Liabilities of discontinued operations	—		—		3,730			—			3,730
Total Current Liabilities	60,461		451,462		87,390			(163,142		)	436,171

LONG-TERM DEBT, net	1,087,135		10,258		25,972			—			1,123,365
LONG-TERM OPERATING LEASE LIABILITIES	8,886		106,552		16,212			—			131,650
INTERCOMPANY PAYABLES	77,139		254,479		467,463			(799,081		)	—
OTHER LIABILITIES	24,657		77,228		10,242			(7,829		)	104,298
LIABILITIES OF DISCONTINUED OPERATIONS	—		—		6,281			—			6,281
Total Liabilities	1,258,278		899,979		613,560			(970,052		)	1,801,765
SHAREHOLDERS’ EQUITY	508,455		2,383,316		3,229,602			(5,612,918		)	508,455
Total Liabilities and Shareholders’ Equity	$	1,766,733	$	3,283,295	$	3,843,162		$	(6,582,970	)	$	2,310,220



($ in thousands)	Parent Company		Guarantor Companies		Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	1,649	$	25,217	$	45,511		$	—		$	72,377
Accounts receivable, net of allowances	—		227,069		38,580			(1,199		)	264,450
Contract costs and recognized income not yet billed, net of progress payments	—		104,109		1,002			—			105,111
Inventories, net	—		372,839		69,540			(258		)	442,121
Prepaid and other current assets	8,238		25,754		6,951			(144		)	40,799
Assets of discontinued operations	—		—		321			—			321
Total Current Assets	9,887		754,988		161,905			(1,601		)	925,179

PROPERTY, PLANT AND EQUIPMENT, net	1,184		289,282		46,860			—			337,326
GOODWILL	—		375,734		61,333			—			437,067
INTANGIBLE ASSETS, net	93		224,275		132,271			—			356,639
INTERCOMPANY RECEIVABLE	5,834		864,884		75,684			(946,402		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,628,031		581,438		3,233,038			(5,442,507		)	—
OTHER ASSETS	8,182		24,635		(2,352		)	(14,625		)	15,840
ASSETS OF DISCONTINUED OPERATIONS	—		—		2,888			—			2,888
Total Assets	$	1,653,211	$	3,115,236	$	3,711,627		$	(6,405,135	)	$	2,074,939
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	—	$	3,075	$	7,450		$	—		$	10,525
Accounts payable and accrued liabilities	41,796		266,411		68,390			(1,356		)	375,241
Liabilities of discontinued operations	—		—		4,333			—			4,333
Total Current Liabilities	41,796		269,486		80,173			(1,356		)	390,099
LONG-TERM DEBT, net	1,040,449		3,119		50,181			—			1,093,749
INTERCOMPANY PAYABLES	71,634		457,265		444,557			(973,456		)	—
OTHER LIABILITIES	21,569		81,582		15,017			(8,171		)	109,997
LIABILITIES OF DISCONTINUED OPERATIONS	—		—		3,331			—			3,331
Total Liabilities	1,175,448		811,452		593,259			(982,983		)	1,597,176
SHAREHOLDERS’ EQUITY	477,763		2,303,784		3,118,368			(5,422,152		)	477,763
Total Liabilities and Shareholders’ Equity	$	1,653,211	$	3,115,236	$	3,711,627		$	(6,405,135	)	$	2,074,939



Cash Flows from Continuing Operations	For the Nine months ended June 30,
(in thousands)	2020			2019
Net Cash Flows Provided by (Used In):
Operating activities	$	55,944		$	14,982
Investing activities	(45,073		)	(57,162		)
Financing activities	(9,305		)	33,905


	For the Three Months Ended				For the Year Ended
	December 31, 2020				September 30, 2020
	Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Net sales	$	—	$	471,282	$	—	$	1,938,972
Gross profit	$	—	$	121,238	$	—	$	488,048
Income (loss) from operations	$	(6,424)	$	33,946	$	(24,876)	$	130,147
Equity in earnings of Guarantor subsidiaries	$	23,160	$	—	$	58,455	$	—
Net income (loss)	$	(6,799)	$	23,160	$	(48,546)	$	58,455



Period	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid Per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (1)
April 1 - 30, 2020	—	$	—	—
May 1 - 31, 2020	—	—		—
June 1 - 30, 2020	—	—		—
Total	—	$	—	—	$	57,955


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 ~~On each~~Plans or Programs (1)	(d) Maximum Number (or Approximate Dollar Value) of ~~August 3, 2016 and August 1, 2018,~~Shares (or Units) That May Yet Be Purchased Under the ~~Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of June 30, 2020,~~ Plans or Programs ~~an aggregate of~~ $57,955 remained available for the purchase of Griffon common stock under these repurchase programs. Amount consists of shares purchased by the Company in open market purchases pursuant to such Board authorized stock repurchase program.(1)
October 1 - 31, 2020	—	$	—	—
November 1 - 30, 2020	—	—		—
December 1 - 31, 2020	—	—		—
Total	—	$	—	—	$	57,955