Griffon Corporation and Subsidiaries

Contents


			Page
PART I - FINANCIAL INFORMATION

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

Item 1 – Financial Statements

Condensed Consolidated Balance Sheets at June ~~30, 2020~~ 3 0 , 2021 (unaudited) and September 30, ~~2019~~2020			1

Condensed Consolidated Statement of Shareholders’ Equity for the Three and Nine Months Ended June ~~30,~~ 3 0 , 2021 and 2020 ~~and 2019~~ (unaudited)			2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and ~~Nine Months~~N ine Mo nths Ended June ~~30,~~ 3 0 , 2021 and 2020 ~~and 2019~~ (unaudited)			4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June ~~30,~~ 3 0 , 2021 and 2020 ~~and 2019~~ (unaudited)			5

Notes to Condensed Consolidated Financial Statements (unaudited)			7

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			4136

Item 3 - Quantitative and Qualitative Disclosures about Market Risk			5652

Item 4 - Controls & Procedures			5652

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings			5753

Item 1A – Risk Factors			5753

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			5753

Item 3 – Defaults Upon Senior Securities			5853

Item 4 – Mine Safety Disclosures			5853

Item 5 – Other Information			5853

Item 6 – Exhibits			5954

Signatures			6055

Part I – Financial Information

Item 1 – Financial Statements

GRIFFON CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


	(Unaudited)
	June 30, 2021		September 30, 2020
CURRENT ASSETS
Cash and equivalents	$	220,697	$	218,089
Accounts receivable, net of allowances of $9,542 and $8,505	363,046		340,546
Contract assets, net of progress payments of $20,821 and $24,175	74,341		84,426
Inventories	510,309		413,825
Prepaid and other current assets	57,770		46,897

Assets of discontinued operations	695		2,091
Total Current Assets	1,226,858		1,105,874
PROPERTY, PLANT AND EQUIPMENT, net	338,762		343,964
OPERATING LEASE RIGHT-OF-USE ASSETS	150,924		161,627
GOODWILL	445,749		442,643
INTANGIBLE ASSETS, net	355,488		355,028
OTHER ASSETS	27,275		32,897
ASSETS OF DISCONTINUED OPERATIONS	3,607		6,406
Total Assets	$	2,548,663	$	2,448,439

CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	13,024	$	9,922
Accounts payable	258,914		232,107
Accrued liabilities	160,002		163,994
Current portion of operating lease liabilities	30,896		31,848
Liabilities of discontinued operations	3,641		3,797
Total Current Liabilities	466,477		441,668
LONG-TERM DEBT, net	1,042,612		1,037,042
LONG-TERM OPERATING LEASE LIABILITIES	124,588		136,054
OTHER LIABILITIES	124,933		126,510
LIABILITIES OF DISCONTINUED OPERATIONS	4,712		7,014
Total Liabilities	1,763,322		1,748,288
COMMITMENTS AND CONTINGENCIES - See Note 22	0		0
SHAREHOLDERS’ EQUITY
Total Shareholders’ Equity	785,341		700,151
Total Liabilities and Shareholders’ Equity	$	2,548,663	$	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

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

Table of Contents

GRIFFON CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Nine Months Ended June 30, 2021

(Unaudited)


	COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE		RETAINED EARNINGS		TREASURY SHARES			ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)		DEFERRED COMPENSATION
(in thousands)	SHARES	PAR VALUE						SHARES	COST						TOTAL
Balance at September 30, 2020	83,739	$	20,935	$	583,008	$	607,518	27,610	$	(413,493)	$	(72,092)	$	(25,725)	$	700,151
Net income	—	—		—		29,500		—	—		—		—		29,500

Dividend	—	—		—		(4,469)		—	—		—		—		(4,469)
Shares withheld on employee taxes on vested equity awards	—	—		—		—		133	(2,909)		—		—		(2,909)
Amortization of deferred compensation	—	—		—		—		—	—		—		609		609


Equity awards granted, net	494	123		(123)		—		—	—		—		—		0



ESOP allocation of common stock	—	—		596		—		—	—		—		—		596
Stock-based compensation	—	—		3,428		—		—	—		—		—		3,428

Other comprehensive income, net of tax	—	—		—		—		—	—		13,141		—		13,141
Balance at December 31, 2020	84,233	$	21,058	$	586,909	$	632,549	27,743	$	(416,402)	$	(58,951)	$	(25,116)	740,047
Net income	—	—		—		17,112		—	—		—		—		17,112

Dividend	—	—		—		(3,217)		—	—		—		—		(3,217)

Amortization of deferred compensation	—	—		—		—		—	—		—		609		609


Equity awards granted, net	194	48		(48)		—		—	—		—		—		0



ESOP allocation of common stock	—	—		756		—		—	—		—		—		756
Stock-based compensation	—	—		4,349		—		—	—		—		—		4,349

Other comprehensive income, net of tax	—	—		—		—		—	—		4,775		—		4,775
Balance at March 31, 2021	84,427	$	21,106	$	591,966	$	646,444	27,743	$	(416,402)	$	(54,176)	$	(24,507)	$	764,431
Net income	—	—		—		16,707		—	—		—		—		16,707

Dividend	—	—				(4,546)		—	—		—		—		(4,546)

Amortization of deferred compensation	—	—		—		—		—	—		—		610		610


Equity awards granted, net	(7)	(2)		2		—		—	—		—		—		0



ESOP allocation of common stock	—	—		856		—		—	—		—		—		856
Stock-based compensation	—	—		4,544		—		—	—		—		—		4,544

Other comprehensive income, net of tax	—	—		—		—		—	—		2,739		—		2,739
Balance at June 30, 2021	84,420	$	21,104	$	597,368	$	658,605	27,743	$	(416,402)	$	(51,437)	$	(23,897)	$	785,341

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

Table of Contents

GRIFFON CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Nine Months Ended June 30, 2020 ~~and 2019~~

(Unaudited)

COMMON STOCK
CAPITAL IN
EXCESS OF
PAR VALUE

RETAINED
EARNINGS
TREASURY SHARES
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS)

DEFERRED
COMPENSATION

(in thousands) SHARES PAR VALUE SHARES COST TOTAL
Balance at September 30, 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


																													COMMON STOCK						CAPITAL IN EXCESS OF PAR VALUE				RETAINED EARNINGS				TREASURY SHARES						ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)			DEFERRED COMPENSATION
(in thousands)																											(in thousands)		SHARES				PAR VALUE								SHARES			COST							TOTAL
Balance at September 30, 2019																											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																											Net income		—				—		—				10,612				—		—				—			—		10,612

Dividend																											Dividend		—				—		—				(3,392)				—		—				—			—		(3,392)
Shares withheld on employee taxes on vested equity awards																											Shares withheld on employee taxes on vested equity awards		—				—		—				—				80		(1,758)				—			—		(1,758)
Amortization of deferred compensation																											Amortization of deferred compensation		—				—		—				—				—		—				—			629		629

Equity awards granted, net																											Equity awards granted, net		182				45		(45)				—				—		—				—			—		0

	COMMON STOCK			CAPITAL IN EXCESS OF PAR VALUE				RETAINED EARNINGS				TREASURY SHARES					ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)				DEFERRED COMPENSATION
(in thousands)	SHARES	PAR VALUE					SHARES					COST				TOTAL
Balance at September 30, 2018	81,520	$	20,380			$	503,396				$	550,523	35,846			$			(534,830	)				$	(34,112	)		$	(30,966	)	$	474,391
Net income	—	—		—				8,753				—	—				—				—			8,753
Cumulative catch-up adjustment related to adoption of ASC 606(1)	—	—		—				(5,673		)		—	—				—				—			(5,673		)
Dividend	—	—		—				(3,143		)		—	—				—				—			(3,143		)
Shares withheld on employee taxes on vested equity awards	—	—		—				—				83	(1,058		)		—				—			(1,058		)
Amortization of deferred compensation	—	—		—				—				—	—				—				856			856
Common stock acquired	—	—		—				—				29	(290		)		—				—			(290		)
Equity awards granted, net	1,201	300		(300		)		—				—	—				—				—			—
ESOP allocation of common stock	—	—		(8		)		—				—	—				—				—			(8		)	ESOP allocation of common stock		—				—		609				—				—		—				—			—		609
Stock-based compensation	—	—		2,933				—				—	—				—				—			2,933			Stock-based compensation		—				—		3,150				—				—		—				—			—		3,150
Stock-based consideration	—	—		250				—				—	—				—				—			250			Stock-based consideration		—				—		239				—				—		—				—			—		239
Other comprehensive income, net of tax	—	—		—				—				—	—				(5,450		)		—			(5,450		)	Other comprehensive income, net of tax		—				—		—				—				—		—				6,841			—		6,841
Balance at December 31, 2018	82,721	$	20,680	$	506,271			$	550,460			35,958	$	(536,178	)		$	(39,562	)		$	(30,110	)	$	471,561
Net loss	—	—		—				(1,156		)		—	—				—				—			(1,156		)
Balance at December 31, 2019																											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																											Net income		—				—		—				895				—		—				—			—		895

Dividend	—	—		—				(3,704		)		—	—				—				—			(3,704		)	Dividend		—				—		—				(3,422)				—		—				—			—		(3,422)
Shares withheld on employee taxes on vested equity awards	—	—		—				—				3	(48		)		—				—			(48		)	Shares withheld on employee taxes on vested equity awards		—				—		—				—				261		(5,721)				—			—		(5,721)
Amortization of deferred compensation	—	—		—				—				—	—				—				507			507			Amortization of deferred compensation		—				—		—				—				—		—				—			629		629
Common stock acquired	—	—		—				—				8	(82		)		—				—			(82		)

Equity awards granted, net	48	12		(12		)		—				—	—				—				—			—			Equity awards granted, net		784				196		(196)				—				—		—				—			—		0

ESOP allocation of common stock	—	—		601				—				—	—				—				—			601			ESOP allocation of common stock		—				—		435				—				—		—				—			—		435
Stock-based compensation	—	—		3,422				—				—	—				—				—			3,422			Stock-based compensation		—				—		3,662				—				—		—				—			—		3,662
Stock-based consideration	—	—		303				—				—	—				—				—			303			Stock-based consideration		—				—		117				—				—		—				—			—		117
Other comprehensive income, net of tax	—	—		—				—				—	—				2,880				—			2,880			Other comprehensive income, net of tax		—				—		—				—				—		—				(14,834)			—		(14,834)
Balance at March 31, 2019	82,769	$	20,692	$	510,585			$	545,600			35,969	$	(536,308	)		$	(36,682	)		$	(29,603	)	$	474,284
Balance at March 31, 2020																											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	—	—		—				13,595				—	—				—				—			13,595			Net income		—				—		—				21,831				—		—				—			—		21,831

Dividend	—	—		—				(3,415		)		—	—				—				—			(3,415		)	Dividend		—				—		—				(3,558)				—		—				—			—		(3,558)

Amortization of deferred compensation	—	—		—				—				—	—				—				682			682			Amortization of deferred compensation		—				—		—				—				—		—				—			628		628

Equity awards granted, net																											Equity awards granted, net		(6)				(1)		1				—				—		—				—			—		0

ESOP allocation of common stock	—	—		435				—				—	—				—				—			435			ESOP allocation of common stock		—				—		352				—				—		—				—			—		352
Stock-based compensation	—	—		3,332				—				—	—				—				—			3,332			Stock-based compensation		—				—		3,930				—				—		—				—			—		3,930
Stock-based consideration	—	—		287				—				—	—				—				—			287			Stock-based consideration		—				—		116				—				—		—				—			—		116
Other comprehensive income, net of tax	—	—		—				—				—	—				(1,035		)		—			(1,035		)	Other comprehensive income, net of tax		—				—		—				—				—		—				8,702			—		8,702
Balance at June 30, 2019	82,769	$	20,692	$	514,639			$	555,780			35,969	$	(536,308	)		$	(37,717	)		$	(28,921	)	$	488,165
Balance at June 30, 2020																											Balance at June 30, 2020		83,735				$	20,934	$	531,387			$	591,482			36,310		$	(543,787)			$	(65,207)		$	(26,354)	$	508,455

Table of Contents

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

About Griffon Corporation

Griffon Corporation (the “Company”, “Griffon”, "we" or "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 has, and could continue, to impact our business and consolidated results of operations and financial ~~condition in~~condition. As of the ~~future. While we~~date of this filing, all of Griffon's facilities are fully operational. We have ~~not incurred significant disruptions~~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 ~~manufacturing or to our supply chain thus far from~~employees of contracting COVID-19. In the ~~COVID-19 outbreak,~~United States, we manufacture a substantial majority of the products that we sell. While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted and are unable to accurately predict the impact COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

•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~~$1,061,250 on June 30, ~~2020.~~2021. Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with values of ~~$3,324~~$3,924 at June 30, ~~2020~~2021 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, ~~2020,~~2021, available-for-sale securities, measured at fair value based on quoted prices in active markets for the underlying assets (level 1 inputs), and 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~~$1,316 ($~~2,365~~1,339 cost basis) and $2,196 ($1,000 cost basis), respectively, were included in Prepaid and other current assets on the Consolidated Balance Sheets. Unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in our Consolidated Balance Sheets as a component of AOCI. Realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

In the normal course of business, Griffon’s operations are exposed to the 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, ~~2020,~~2021, 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, ~~2020,~~2021, Griffon had ~~$43,500~~$36,000 of Australian dollar contracts at a weighted average rate of ~~$1.46~~$1.28 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~~$1,317 ($~~712,~~922, net of tax) at June 30, ~~2020~~2021. Upon settlement, losses of $413 and ~~gains of $556 and $1,550~~$2,812 were recorded in COGS during the three and nine months ended June 30, ~~2020,~~2021, respectively. All contracts expire in 1 to 119 days.

At June 30, 2021, Griffon had $8,425 of Canadian dollar contracts at a weighted average rate of $1.27. The contracts, which protect Canadian operations from currency fluctuations for US dollar based purchases, do not qualify for hedge accounting. For the three and nine months ended June 30, 2021, fair value (losses) gains of $(106) and $138, respectively, were recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized losses of $124 and $285 were recorded in Other income during the three and nine months ended June 30, 2021, respectively, for all settled contracts. All contracts expire in 1530 to ~~209~~420 days.

At June 30, ~~2020,~~2021, Griffon had ~~$3,125 and $3,000~~$950 of ~~Canadian and~~ British Pound dollar contracts ~~respectively,~~ at a weighted average rate of ~~$1.36 and $0.81, respectively.~~$0.75. 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, ~~2020,~~2021, fair value ~~losses~~(losses) gains of ~~$222~~$(111) and ~~$23~~$30, respectively, 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~~$224 and ~~$202~~$505 were recorded in Other income during the three and nine months ended June 30, ~~2020, respectively, for all settled contracts.~~2021, respectively. All contracts expire in 26 to ~~328~~21 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

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

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 to each distinct performance obligation and recognized as revenue when each performance obligation is satisfied. A majority of the Company’s contracts have a single performance obligation which represents, in most cases, the product being sold to the customer. To a lesser extent, some contracts include multiple performance obligations such as a product, the related installation, and extended warranty services. These contracts require judgment in determining the number of performance obligations.

~~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, 2021, income from operations included net unfavorable catch up adjustments approximating $1,131 and $4,351, respectively. For the three and nine months ended June 30, 2020, income from operations included net unfavorable catch up adjustments ~~approximating $4,100~~of $2,805 and ~~$9,344,~~$3,228, 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, ~~2020~~2021 and September 30, ~~2019~~2020 were approximately ~~$8,264~~$12,500 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, ~~2020,~~2021, we had ~~$350,443~~$375,039 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~~$74,341 as of June 30, ~~2020~~2021 compared to ~~$105,111~~$84,426 as of September 30, ~~2019.~~2020. The ~~$12,968~~$10,085 net decrease in our contract assets balance was primarily due to the timing of billings and work performed in Communications and Surveillance

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

programs and decrease associated with the sale of Systems Engineering Group, Inc. ("SEG"), partially offset by timing of work performed on ~~various radar and surveillance programs.~~Naval & Cyber Systems. 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 specified milestones or product delivery, are met. At June 30, ~~2020~~2021 and September 30, ~~2019,~~2020, approximately ~~$7,058~~$9,600 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~~$23,757 as of June 30, ~~2020~~2021 compared to ~~$26,259~~$24,386 as of September 30, ~~2019.~~2020. The ~~$5,540~~$629 decrease in the contract liabilities balance was primarily due to ~~the~~ recognition of revenue ~~primarily from surveillance~~in Naval & Cyber systems, partially offset by billings in Surveillance and ~~airborne maritime surveillance radar~~Communications 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. 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 goodwill and acquired intangibles allocated to this acquisition was AUD $1,038 (approximately $784) and AUD $2,755 (approximately $2,082), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

On November 29, 2019, AMES acquired 100% of the outstanding stock of Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $10,500 (GBP 8,750), inclusive of a post-closing working capital adjustment, net of cash acquired. This acquisition broadens AMES' product offerings in the 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 ~~primarily~~recorded as goodwill and is deductible for tax purposes. The purchase price allocation was finalized and 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 three and nine months ended June 30, 2021, acquisition costs were de minimis. 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 30, 2020.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

Dispositions

On December 18, 2020, Defense Electronics completed the sale of its SEG business for $15,000. 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. DE recorded a pre-tax gain of $5,291 ($5,251, net of tax, or $0.10 per share) related to the divestiture of SEG. The ~~Company did 0t incur acquisition costs in the three~~sale does not represent a strategic shift that will have a major effect on operations and ~~nine months ended June 30, 2019.~~financial results.

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 June 30, 2021		At September 30, 2020
Raw materials and supplies	$	163,639	$	146,351
Work in process	87,109		83,697
Finished goods	259,561		183,777
Total	$	510,309	$	413,825

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

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


	At June 30, 2021		At September 30, 2020
Land, building and building improvements	$	169,588	$	167,005
Machinery and equipment	615,780		595,126
Leasehold improvements	55,507		53,386
	840,875		815,517
Accumulated depreciation and amortization	(502,113)		(471,553)
Total	$	338,762	$	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~~8.0
Finance Leases		~~2.3~~8.1

Weighted-average discount rate
Operating Leases		~~5.17~~4.46	%
Finance Leases		~~4.36~~5.48	%

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”) which was owned by ISC Properties, Inc. (“ISCP”), a wholly-owned subsidiary of ~~Griffon.~~Griffon, for approximately three years. 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~~

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

(Unaudited)

“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.

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~~On May 15, 2019 the United States Environmental Protection Agency ~~(the “EPA”~~("EPA"), in which the DEC requested that the Peekskill Site be nominated by the EPA for inclusion on the National Priorities List (the “NPL”). Based on 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~~ National Priorities List under ~~the Comprehensive Environmental Response, Compensation,~~CERCLA and ~~Liability Act of 1980 (CERCLA) and~~has since announced that it is ~~now~~ performing a Remedial Investigation/Feasibility ~~Study.~~Study ("RI/FS"). On August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions regarding implementation of the RI/FS. The EPA ~~estimates~~also sent a request for information under Section 104(e) of CERCLA to each party. 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, the Order required AMES ~~is required~~ to perform a remedial investigation of certain portions of the property and to recommend a remediation option. In 2011, remediation of chlorinated solvents in the groundwater was completed to the satisfaction of DEC. In 2018, ~~Ames~~AMES submitted a Feasibility Study recommending ~~excavation of shallow soils for lead, arsenic~~that the remaining soil contamination involving metals and ~~hydrocarbons in addition~~petroleum be covered, excavated and removed to ~~deeper excavation for lead.~~a licensed off-site location or placed under a cover on-site. DEC approved the selection of this remedy in 2019 by issuing a Record of ~~Decision. Remediation activities to satisfy~~Decision (“ROD”). In 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 ~~Ames~~ has completed remediation of that small area under a workplan approved by DEC. At the request of DEC, AMES has also submitted (and DEC has approved) 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~~perimeter. The workplan is expected to ~~submit in August 2020.~~be completed by October 1, 2021. 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’~~AMES’ insurer has accepted ~~Ames’~~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)

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~~

($ 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

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~~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~~ In the ~~end~~United States, we manufacture a substantial majority of the ~~second quarter~~products that we sell. While this helps mitigate the effects of ~~fiscal 2020~~global supplier and transportation disruptions, we are still impacted.

During the nine months ended June 30, 2021 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. Our supply chains have generally not experienced significant disruption, and at this time we do not anticipate any such material disruption in the near term. Manyyear. Most U.S. states ~~have~~ lifted initial executive orders issued during the 2020 calendar year requiring all workers to remain at home unless their work is critical, essential, or life-sustaining.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. 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,

Table of Contents

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~~$362,218 was available at June 30, ~~2020)~~2021), 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 June 30, 2021, 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.~~ $220,697.

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~~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

Table of ~~wood and wire closet organization, general living storage and wire garage storage products, and sells to some~~Contents

the Clopay network 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). 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 December 18, 2020, Defense Electronics completed the sale of its Systems Engineering Group, Inc. (“SEG”) business for $15,000. 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.

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 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

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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.

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OVERVIEW

Revenue for the quarter ended June 30, ~~2020~~2021 was ~~$632,061~~$646,792 compared to ~~$574,970~~$632,061 in the prior year comparable quarter, an increase of ~~approximately 10%~~2% (4% excluding the prior year revenue of $7,931 related to the Systems Engineering Group (SEG) disposition), primarily driven by increased revenue at HBP of 18%, partially offset by reduced revenue at CPP and DE of ~~20%~~1% and 5%25%, ~~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~~$16,707 or ~~$0.50~~$0.31 per share, compared to ~~$14,128,~~$21,831, or ~~$0.33~~$0.50 per share, in the prior year quarter.

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

– Restructuring charges of $4,082 ($3,129, net of tax, or $0.06 per share);

– Discrete and certain other tax provisions, net, of $2,979 or $0.06 per share.

The prior year quarter results from operations included the following:

– Restructuring charges of $1,633 ($1,224, net of tax, or $0.03 per share);

–Loss from debt extinguishment $1,235 ($969, net of tax, or $0.02 per share);

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

~~The prior year quarter results from continuing operations included discrete and certain other tax benefits, net, of $669 or $0.02 per share.~~

Excluding these items from the respective quarterly results, ~~Income from continuing operations~~Net income would have been ~~$25,852,~~$22,815, or ~~$0.59~~$0.43 per share, in the current year quarter compared to ~~$13,459,~~$25,852, or ~~$0.31~~$0.59 per share in the prior year quarter.

Revenue for the nine months ended June 30, ~~2020~~2021 was ~~$1,746,849~~$1,890,915 compared to ~~$1,635,125~~$1,746,849 in the prior year period, an increase of 7%8% (9% excluding the current year and prior year revenue of $6,713 and 21,939, respectively, related to the SEG disposition), primarily driven by increased revenue at CPP and HBP ~~driven~~of 12% each, partially offset by ~~strong customer demand in the home improvement space. Organic growth~~reduced revenue at DE of 18%. Net income 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~~$63,319 or ~~$0.76~~$1.19 per share, compared to ~~$29,371,~~$33,338, or ~~$0.69~~$0.76 per share, in the prior year period.

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

– Restructuring charges of $22,444 ($17,080, net of tax, or $0.32 per share);

– Gain on sale of Systems Engineering Group ("SEG") business $5,291 ($5,251, net of tax, or $0.10 per share);

– Discrete and certain other tax provisions, net, of $2,864 or $0.05 per share.

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

–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,~~provisions, 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~~Net income would have been ~~$51,498,~~$78,012, or ~~$1.18~~$1.46 per share in the current year period ended June 30, ~~2020~~2021 compared to ~~$29,072,~~$51,498, or ~~$0.68~~$1.18 per share, in the comparable prior year period.

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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 June 30,				For the Nine Months Ended June 30,
	For the Three Months Ended June 30,						For the Nine Months Ended June 30,							2021		2020		2021		2020
	2020			2019			2020			2019				(Unaudited)
Income from continuing operations	$	21,831		$	14,128		$	33,338		$	29,371

Net income													Net income	$	16,707	$	21,831	$	63,319	$	33,338

Adjusting items:													Adjusting items:
Restructuring charges	1,633			—			11,171			—			Restructuring charges	4,082		1,633		22,444		11,171
Gain on sale of SEG business													Gain on sale of SEG business	—		—		(5,291)		—
Loss from debt extinguishment	1,235			—			7,925			—			Loss from debt extinguishment	—		1,235		—		7,925
Acquisition costs	—			—			2,960			—			Acquisition costs	—		—		—		2,960

Tax impact of above items	(675		)	—			(5,144		)	—			Tax impact of above items	(953)		(675)		(5,324)		(5,144)
Discrete and certain other tax provisions (benefits), net	1,828			(669		)	1,248			(299		)
Discrete and certain other tax provisions, net													Discrete and certain other tax provisions, net	2,979		1,828		2,864		1,248

Adjusted income from continuing operations	$	25,852		$	13,459		$	51,498		$	29,072
Adjusted net income													Adjusted net income	$	22,815	$	25,852	$	78,012	$	51,498

Diluted earnings per common share	$	0.50		$	0.33		$	0.76		$	0.69		Diluted earnings per common share	$	0.31	$	0.50	$	1.19	$	0.76

Adjusting items, net of tax:													Adjusting items, net of tax:
Restructuring charges	0.03			—			0.19			—			Restructuring charges	0.06		0.03		0.32		0.19
Gain on sale of SEG business													Gain on sale of SEG business	—		—		(0.10)		—
Loss from debt extinguishment	0.02			—			0.14			—			Loss from debt extinguishment	—		0.02		—		0.14
Acquisition costs	—			—			0.05			—			Acquisition costs	—		—		—		0.05
Discrete and certain other tax provisions (benefits), net	0.04			(0.02		)	0.03			(0.01		)

Discrete and certain other tax provisions, net													Discrete and certain other tax provisions, net	0.06		0.04		0.05		0.03

Adjusted earnings per common share	$	0.59		$	0.31		$	1.18		$	0.68		Adjusted earnings per common share	$	0.43	$	0.59	$	1.46	$	1.18

Weighted-average shares outstanding (in thousands)	43,774			43,164			43,818			42,649			Weighted-average shares outstanding (in thousands)	53,504		43,774		53,306		43,818

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, ~~2020~~2021 and ~~2019~~2020

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.

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 June 30,								For the Nine Months Ended June 30,
	2021				2020				2021				2020
Revenue	$	324,826			$	328,929			$	947,739			$	844,917
Adjusted EBITDA	29,388		9.0	%	37,115		11.3	%	99,524		10.5	%	84,068		9.9	%
Depreciation and amortization	8,781				8,197				25,600				24,650

For the quarter ended June 30, ~~2020~~2021, revenue decreased $4,103, or 1%, compared to the prior year period, due to reduced volume of 9%, primarily in the U.S., due to shipping delays related to availability of transportation, partially offset by favorable mix of 3% and a favorable foreign currency impact of 5%.

For the quarter ended June 30, 2021, Adjusted EBITDA decreased 21% to $29,388 compared to $37,115 in the prior year quarter, primarily due to the decreased revenue noted above, increased distribution and material costs coupled with the lag in realization of price increases, and COVID-19 related inefficiencies. The current quarter included a favorable foreign currency impact of 4%.

For the nine months ended June 30, 2021, revenue increased ~~$55,219~~$102,822, or ~~20%~~12%, compared to the prior year period, primarily due to increased volume of ~~19%~~8%, driven by increased consumer demand ~~for home improvement initiatives in North America~~across all geographies, and ~~Australia resulting from COVID-19 stay at home orders,~~a favorable ~~price and mix of 1% and incremental revenue from the Apta acquisition of 2%, partially offset by an unfavorable~~foreign currency impact of ~~foreign exchange of 2%~~4%. ~~Organic growth was 18%.~~

For the ~~quarter~~nine months ended June 30, ~~2020,~~2021, Adjusted EBITDA increased ~~55%~~18% to ~~$37,115~~$99,524 compared to ~~$23,970~~$84,068 in the prior year period. The favorable variance resulted primarily from the increased revenue noted above partially offset by increased ~~tariffs~~distribution and material costs and COVID-19 related ~~inefficiencies and direct costs.~~ inefficiencies. The current year-to-date period included a favorable currency impact of 6%,

For the quarter ~~ended June 30, 2020, EBITDA reflects an unfavorable foreign exchange impact of 2%.~~

~~For the~~and nine months ended June 30, ~~2020, revenue~~2021, segment depreciation and amortization increased ~~$67,001 or 9%,~~$584 and $950, respectively, 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~~comparable periods, 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 and increased $502 from the year-to-date comparable period primarily due to the onset of depreciation for new assets placed in service.

Strategic Initiative and Restructuring Charges

~~This~~

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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.

In connection with this initiative, during the year ended September 30, 2020 and during the nine months ended June 30, ~~2020,~~2021, CPP incurred pre-tax restructuring and related exit costs approximating ~~$11,171,~~$13,669 and $14,663, respectively. Since inception of this initiative in fiscal 2020, total cumulative charges totaled $28,332, comprised of cash charges of ~~$6,479~~$19,758 and non-cash, asset-related charges of ~~$4,692;~~$8,574; the cash charges

included ~~$4,842~~$7,404 for one-time termination benefits and other personnel-related costs and ~~$1,637~~$12,354 for facility exit costs. During the ~~quarter~~year ended September, 30, 2020 and during the nine ~~month period~~months ended June 30, ~~2020,~~2021, capital expenditures of ~~$3,371~~6,733 and ~~$3,671,~~$8,145, 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)
Q2 FY2021 Activity	(722)		(4,283)		(2,497)		(7,502)		$	(3,209)
Q3 FY2021 Activity	(700)		(2,190)		(1,192)		(4,082)		(2,700)
Total 2021 restructuring charges	(1,784)		(8,997)		(3,882)		(14,663)		(8,145)
Total cumulative charges	(7,404)		(12,354)		(8,574)		(28,332)		(14,878)
Estimate to Complete	$	18,596	$	7,646	$	10,426	$	36,668	$	50,122

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 June 30,								For the Nine Months Ended June 30,
	2021				2020				2021				2020
Revenue	$	259,392			$	219,164			$	752,684			$	670,374
Adjusted EBITDA	42,156		16.3	%	39,299		17.9	%	130,585		17.3	%	110,635		16.5	%
Depreciation and amortization	4,375				4,507				13,095				13,975

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, 2020,~~2021, revenue increased ~~$38,759~~$40,228 or 6%18%, compared to the prior year period, driven by increased volume of 4%5%, and favorable mix and pricing of 2%13%.

For the quarter ended June 30, 2021, Adjusted EBITDA increased 7% to $42,156 compared to $39,299 in the prior year period. EBITDA benefited from increased revenue noted above, partially offset by increased material costs coupled with the lag in realization of price increases, and COVID-19 related inefficiencies.

For the nine months ended June 30, ~~2020,~~2021, revenue increased $82,310 or 12%, compared to the prior year period, driven by increased volume of 8%, and favorable mix and pricing of 4%.

For the nine months ended June 30, 2021, Adjusted EBITDA increased ~~30%~~18% to ~~$110,635~~$130,585 compared to ~~$85,283~~$110,635 in the prior year period. The favorable variance resulted from the increased revenue noted above, ~~and general operational efficiency improvements,~~ partially offset by increased material costs coupled with the lag in realization of price increases, and COVID-19 related ~~inefficiencies and direct costs.~~inefficiencies.

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

~~Segment~~nine months ended June 30, 2021, segment depreciation and amortization decreased ~~$119 from~~$132 and $880, respectively, compared to the prior year ~~quarter~~comparable periods, 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 June 30,								For the Nine Months Ended June 30,
	2020				2019				2020				2019				2021				2020				2021				2020
Revenue	$	83,968			$	79,739			$	231,558			$	225,594		Revenue	$	62,574			$	83,968			$	190,492			$	231,558
Adjusted EBITDA	4,122		4.9	%	7,280		9.1	%	12,845		5.5	%	17,001		7.5%	Adjusted EBITDA	4,140		6.6	%	4,122		4.9	%	11,945		6.3	%	12,845		5.5%
Depreciation and amortization	2,666				2,669				7,986				7,926			Depreciation and amortization	2,501				2,666				7,911				7,986

For the quarter ended June 30, ~~2020,~~2021, revenue ~~increased $4,229,~~decreased $21,394, or 5%25%, compared to the prior year ~~period, primarily~~quarter. The prior year results include revenue from the SEG business of $7,931. Excluding the divestiture of SEG from prior year results, revenue decreased $13,463, or 18%. The decrease was driven by reduced volume due to ~~increased~~the timing of deliveries on Communications and ~~volume of radar and communication~~Radar systems, partially offset by ~~reduced~~ volume ~~of airborne surveillance systems.~~increases on Naval & Cyber Systems.

For the quarter ended June 30, ~~2020,~~2021, Adjusted EBITDA ~~decreased $3,158, or 43%, compared to~~of $4,140 remained consistent with the prior year comparable ~~period, driven~~period. Excluding the divestiture of SEG from the prior year results, Adjusted EBITDA increased 9% primarily due to reduced operating expenses, including the benefit from the first quarter reduction in force, and improved Naval & Cyber Systems program performance, partially offset by ~~unfavorable program mix, and program inefficiencies on radar and communications~~cost growth for Radar systems.

For the nine months ended June 30, ~~2020,~~2021, revenue ~~increased $5,964,~~decreased $41,066, or 3%18%, compared to the prior year ~~period, primarily due~~period. The current and prior year results include revenue from the SEG business of $6,713 and $21,939, respectively. Excluding the divestiture of SEG from current and prior year results, revenue decreased $25,840, or 12%. The decline in revenue was driven by reduced volume related to ~~increased~~the timing of work performed and deliveries on Communications, Surveillance and ~~volume of radar and communication systems revenue,~~Radar programs, partially offset by ~~reduced multi-mode radar and maritime surveillance radar revenue.~~increased Naval & Cyber Systems volume.

For the nine months ended June 30, ~~2020,~~2021, Adjusted EBITDA decreased ~~$4,156,~~$900, or ~~24%~~7%, compared to the prior year comparable ~~period due to unfavorable~~period. Excluding the divestiture of SEG from current and prior year results, Adjusted EBITDA decreased 6% primarily driven by the reduced revenue noted above and cost growth on Radar systems, partially offset by improved Naval & Cyber Systems program ~~mix, program inefficiencies~~performance and ~~increased~~reduced operating expenses, ~~primarily due to bid and proposal activities.~~including the benefit from the first quarter reduction in force.

~~Direct COVID-19 related expenses totaled approximately $600 and $700 for~~

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For the quarter and ~~year-to-date periods, respectively.~~

~~Segment~~nine months ended June 30, 2021, segment depreciation and amortization ~~remained consistent with both~~decreased $165 and $75, respectively, compared to the prior year comparable periods, related to the sale of SEG.

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 ~~year-to-date period.~~$31,000 for the fiscal year ended September 30, 2020.

During the nine months ended June 30, ~~2020,~~2021, DE was awarded several new contracts and received incremental funding on existing contracts approximating ~~$192,700.~~$189,000 (excludes $5,500 of SEG awards). Contract backlog was ~~$350,443~~$375,039 at June 30, 2021 compared to $341,003 at June 30, 2020 ~~an $18,703 increase from the second quarter,~~(excludes $9,440 of SEG related backlog) with ~~72%~~66% expected to be fulfilled in the next 12 months. Backlog was ~~$389,300~~approximately $370,000 at September 30, ~~2019.~~2020 (excludes approximately $10,000 of SEG related backlog). 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 $2,180, recorded in the first quarter, during the nine months ended June 30, 2021.These actions reduced headcount by approximately 90 people.

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

DE recorded a pre-tax gain of $5,291 ($5,251, net of tax) during the nine months ended June 30, 2021 related to the divestiture of SEG.

Unallocated

For the quarter ended June 30, ~~2020,~~2021, unallocated amounts, excluding depreciation, consisted primarily of corporate overhead costs totaling ~~$11,080~~$10,924 compared to ~~$12,033~~$11,080 in the prior year ~~quarter. For~~quarter; for the nine months ended June 30, ~~2020,~~2021, unallocated amounts ~~excluding depreciation, consisted primarily of corporate overhead costs totaling $34,969~~totaled $34,873 compared to ~~$34,505~~$34,969 in the prior year ~~quarter.~~period. The decrease in both the current quarter and nine month periods, compared to ~~the~~their respective comparable prior year ~~quarter~~periods, primarily relates to decreases in ~~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~~increased $287 for the quarter ended June 30, 2021 compared to the comparable prior year quarter, primarily due to depreciation and ~~increased $854~~amortization on new assets placed in service. Segment depreciation and amortization for the nine months ended June 30, ~~2020 compared to~~2021 remained consistent with the comparable prior year ~~period, primarily due to the onset of depreciation for new assets placed in service.~~period.

Other Income (Expense)

For the quarters ended June 30, ~~2020~~2021 and ~~2019,~~2020, Other income (expense) of $386 and $806, respectively, includes ~~$72~~$77 and ~~$150,~~$72, 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 ~~$392~~$226 and ~~$787,~~$392, respectively, as well as ~~$294~~$249 and ~~$(14),~~$499, respectively, of net investment income (loss) ~~income.~~.

For the nine months ended June 30, ~~2020~~2021 and ~~2019,~~2020, Other income (expense) of $1,192 and 2,199 includes ~~$441~~$(302) and ~~$535,~~$441, 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 ~~$1,170~~$680 and ~~2,361,~~$1,170, respectively, as well as ~~$145~~$877 and ~~$18,~~$216, respectively, of net investment income (loss) ~~income. During~~. Additionally, in the ~~nine months ended June 30, 2020,~~prior year period, Other income (expense) also includes a one-time ~~contract~~technology recognition award offor $700.

Provision for income taxes

During the quarter ended June 30, ~~2020,~~2021, the Company recognized a tax provision of $12,366 on income before taxes of $29,073, compared to a tax provision of $12,649 on income before taxes ~~from continuing operations~~ of $34,480 ~~compared to a tax provision of $6,258 on income before taxes from continuing operations of $20,386~~ in the comparable prior year quarter. The current year quarter results included restructuring charges of $4,082 ($3,129, net of tax) and discrete and certain other tax provisions, net, that affect comparability of $2,979, primarily due to the impact of UK tax rate changes on deferred liabilities.The prior year quarter results included restructuring charges of $1,633 ($1,224, net of tax), loss from debt extinguishment of ~~$1,235~~

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$1,235 ($969, net of tax) and ~~net~~ 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.~~$1,828. Excluding these items, the effective tax rates for the quarters ended June 30, 2021 and 2020 were 31.2% and ~~2019 were~~ 30.8% ~~and 34.0%~~, respectively.

During the nine months ended June 30, ~~2020,~~2021, the Company recognized a tax provision of ~~$21,022~~$32,783 on Income before taxes ~~from continuing operations~~ of ~~$54,360,~~$96,102, compared to a tax provision of ~~$14,664~~$21,022 on ~~Income~~income before taxes ~~from continuing operations~~ of ~~$44,035~~$54,360 in the comparable prior year period. The nine month period ended June 30, 2021 included restructuring charges of $22,444 ($17,080, net of tax), gain on sale of the SEG business of $5,291 ($5,251, net of tax) and discrete and certain other tax provisions, net, that affect comparability of $2,864 primarily due to the impact of UK tax rate changes on deferred liabilities. 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,~~($6,214, net of tax) and ~~net~~ discrete tax and certain other tax provisions, net, that affect comparability 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, 2021 and 2020 were 31.1% 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, ~~2020~~2021 and ~~2019,~~2020, stock based compensation expense, which includes expenses for both restricted stock grants and the ESOP, totaled ~~$4,507~~$5,591 and ~~$4,047,~~$4,507, respectively. For the nine months ended June 30, ~~2020~~2021 and ~~2019,~~2020, stock based compensation expense ~~which includes expenses for both restricted stock grants~~totaled $15,092 and ~~the ESOP totaled~~ $12,809, ~~and $11,547,~~ respectively.

Comprehensive income (loss)

For the quarter ended June 30, 2021, total other comprehensive income, net of taxes, of $2,739 included a gain of $1,160 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound and Canadian Dollar, partially offset by the weakening of the Australian Dollar, all in comparison to the US Dollar; a $1,245 benefit from pension amortization; and a $351 gain on cash flow hedges.

For the nine months ended June 30, 2021, total other comprehensive income, net of taxes, of $20,655 included a gain of $15,022 from foreign currency translation adjustments primarily due to the strengthening of the Euro, British Pound, Canadian and Australian Dollars, all in comparison to the US Dollar; a $4,196 benefit from pension amortization of actuarial losses; and a $1,454 gain on cash flow hedges.

For the quarter ended June 30, 2020, total other comprehensive income, net of taxes, of $8,702 included income of $9,508 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 benefit from pension amortization of actuarial losses; and a $1,945 loss on cash flow hedges.

For the quarter ended June 30, 2019, total other comprehensive loss, net of taxes, of $1,035 included a loss of $1,092 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 Dollar 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 benefit from pension amortization of actuarial losses; and a $214 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, ~~2020,~~2021, 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 Nine months ended June 30,
	2021		2020
Net Cash Flows Provided by (Used In):
Operating activities	$	42,019	$	55,944
Investing activities	(26,300)		(45,073)
Financing activities	(14,327)		(9,305)

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 months ended June 30, ~~2020~~2021 was ~~$55,944~~$42,019 compared to ~~$14,982~~$55,944 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~~primarily related to a net ~~increases~~increase in ~~accounts receivable and prepaid and other assets, a decrease in accounts payable due to the timing of payments, partially offset by a decrease 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.

During the nine months ended June 30, ~~2020, Griffon used $45,073~~2021, Griffon's use of cash infrom investing activities ~~from continuing operations~~was $26,300 compared to ~~$57,162 used~~$45,073 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 $14,345. 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~~We had an increase in ~~the prior year consisted solely~~investments 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.$4,658. Capital expenditures, net of proceeds from the sale of assets, for the nine months ended June 30, ~~2020~~2021 totaled ~~$34,412, an increase~~$33,773, a decrease of ~~$6,722~~$639 from the prior year period.

During the nine months ended June 30, ~~2020,~~2021, cash used by financing activities from ~~continuing~~ operations totaled ~~$9,305 as~~$14,327 compared to ~~$33,905 provided by~~$9,305 in the ~~comparable~~ prior year comparable 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 of $16,543~~consisted primarily ~~associated with the redemption~~ of the ~~$1,000,000~~payment of ~~5.25% Senior Notes due 2022 with the proceeds from the issuance~~dividends and purchase of ~~$850,000~~treasury shares to satisfy vesting of ~~5.75% Senior Notes due 2028; and the amendment and extension~~restricted stock, partially offset by net borrowings 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. At June 30, 2020, there were $104,181 in outstanding borrowings under the Credit Agreement, compared to $122,806 in outstanding borrowings at the same date in the prior year.long-term debt.

During the nine months ended June 30, 2020, the Board 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~~2021, 133,027 shares, with a market value of ~~$7,409,~~$2,774, or ~~$21.74~~$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 nine months ended June 30, ~~2020,~~2021, an additional ~~3,307~~6,507 shares, with a market value of ~~$70,~~$135, or ~~$21.22~~$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 $0.075 per share each quarter. During the nine months ended June 30, 2021, the Board of Directors approved and paid three quarterly cash dividend of $0.08 per share each. The Company currently intends to pay dividends each quarter; however, payment of dividends is determined by the Board of Directors at its discretion based on various factors, and no assurance can be provided as to the payment of future dividends. On July 29, 2021, the Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on September 16, 2021 to shareholders of record as of the close of business on August 19, 2021.

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of ~~up to~~ $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may, 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, ~~2020,~~2021, an aggregate of $57,955 remains under Griffon's Board authorized repurchase programs.

~~Through~~ No shares were repurchased during the nine months ended June 30, ~~2020,~~2021 under these share repurchase programs.

During the nine months ended June 30, 2021, 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.

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Payments related to ~~Telephonics~~DE 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 months ended June 30, ~~2020:~~2021:

•The United States Government and its agencies, through either prime or subcontractor relationships, represented 9%7% of Griffon’s consolidated revenue and ~~65%~~67% of ~~Telephonics’~~DE revenue.

•The Home Depot represented ~~18%~~17% of Griffon’s consolidated revenue, ~~28%~~25% of CPP's revenue and ~~12%~~11% 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	June 30,		September 30,
(in thousands)	2020		2019
						2021		2020
Cash and equivalents	$	71,999	$	72,377	Cash and equivalents	$	220,697	$	218,089
Notes payables and current portion of long-term debt	9,235		10,525		Notes payables and current portion of long-term debt	13,024		9,922
Long-term debt, net of current maturities	1,123,365		1,093,749		Long-term debt, net of current maturities	1,042,612		1,037,042
Debt discount/premium and issuance costs	17,303		9,857		Debt discount/premium and issuance costs	15,485		17,458
Total debt	1,149,903		1,114,131		Total debt	1,071,121		1,064,422
Debt, net of cash and equivalents	$	1,077,904	$	1,041,754	Debt, net of cash and equivalents	$	850,424	$	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)


	Nine Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	63,319	$	33,338

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	46,955		47,067
Stock-based compensation	15,092		12,809
Asset impairment charges - restructuring	9,483		4,692
Provision for losses on accounts receivable	173		512
Amortization of debt discounts and issuance costs	2,019		2,871
Loss from debt extinguishment, net	0		7,925

Deferred income taxes	7,351		448
Loss (gain) on sale of assets and investments	155		(261)
Gain on sale of business	(5,291)		0
Change in assets and liabilities, net of assets and liabilities acquired:
Increase in accounts receivable and contract assets, net	(9,684)		(81,718)
(Increase) decrease in inventories	(100,536)		34,518
Increase in prepaid and other assets	(2,449)		(17,393)
Increase in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities	13,821		10,536
Other changes, net	1,611		600
Net cash provided by operating activities	42,019		55,944

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(33,889)		(34,751)
Acquired businesses, net of cash acquired	(2,242)		(10,531)

Proceeds from sale of business, net	14,345		0

Investment purchases	(4,658)		0
Proceeds from the sale of property, plant and equipment	116		339
Other, net	28		(130)
Net cash used in investing activities	(26,300)		(45,073)

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid	(12,907)		(10,639)
Purchase of shares for treasury	(2,909)		(7,479)
Proceeds from long-term debt	20,587		1,230,618
Payments of long-term debt	(18,255)		(1,205,231)


Financing costs	(571)		(16,543)


Other, net	(272)		(31)
Net cash used in financing activities	(14,327)		(9,305)


Beginning Balance, October 1, 2020	$	8,505
Provision for expected credit losses	1,254
Amounts written off charged against the allowance	(237)
Other, primarily foreign currency translation	20
Ending Balance, June 30, 2021	$	9,542


	At September 30, 2020		Business Acquisitions (a)		Business Divestitures (b)		Foreign currency translations adjustments		At June 30, 2021
Consumer and Professional Products	$	232,845	$	784	$	0	$	3,133	$	236,762
Home and Building Products	191,253		0		0		0		191,253
Defense Electronics	18,545		0		(811)		0		17,734

Total	$	442,643	$	784	$	(811)	$	3,133	$	445,749


	At June 30, 2021					At September 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Average Life (Years)	Gross Carrying Amount		Accumulated Amortization
Customer relationships & other	$	189,511	$	74,233	23	$	185,940	$	66,656
Technology and patents	19,568		8,237		13	19,464		8,360
Total amortizable intangible assets	209,079		82,470			205,404		75,016
Trademarks	228,879		—			224,640		—
Total intangible assets	$	437,958	$	82,470		$	430,044	$	75,016



☒			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)
	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


	Three Months Ended June 30,						Nine Months Ended June 30,							Three Months Ended June 30,				Nine Months Ended June 30,
	2020			2019			2020			2019				2021		2020		2021		2020
Revenue	$	632,061		$	574,970		$	1,746,849		$	1,635,125		Revenue	$	646,792	$	632,061	$	1,890,915	$	1,746,849
Cost of goods and services	467,058			420,487			1,279,893			1,200,092			Cost of goods and services	476,727		467,058		1,380,362		1,279,893
Gross profit	165,003			154,483			466,956			435,033			Gross profit	170,065		165,003		510,553		466,956

Selling, general and administrative expenses	113,509			117,989			357,774			343,526			Selling, general and administrative expenses	125,579		113,509		373,963		357,774


Income from operations	51,494			36,494			109,182			91,507			Income from operations	44,486		51,494		136,590		109,182

Other income (expense)													Other income (expense)
Interest expense	(16,725		)	(17,288		)	(49,807		)	(51,334		)	Interest expense	(15,849)		(16,725)		(47,370)		(49,807)
Interest income	140			201			711			611			Interest income	50		140		399		711
Gain on sale of business													Gain on sale of business	0		0		5,291		0
Loss from debt extinguishment, net	(1,235		)	—			(7,925		)	—			Loss from debt extinguishment, net	0		(1,235)		0		(7,925)
Other, net	806			979			2,199			3,251			Other, net	386		806		1,192		2,199
Total other expense, net	(17,014		)	(16,108		)	(54,822		)	(47,472		)	Total other expense, net	(15,413)		(17,014)		(40,488)		(54,822)

Income before taxes from continuing operations	34,480			20,386			54,360			44,035
Income before taxes													Income before taxes	29,073		34,480		96,102		54,360
Provision for income taxes	12,649			6,258			21,022			14,664			Provision for income taxes	12,366		12,649		32,783		21,022
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	$	16,707	$	21,831	$	63,319	$	33,338

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	$	0.33	$	0.52	$	1.25	$	0.80

Basic weighted-average shares outstanding	41,712			40,967			41,483			40,888			Basic weighted-average shares outstanding	50,903		41,712		50,779		41,483

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	$	0.31	$	0.50	$	1.19	$	0.76

Diluted weighted-average shares outstanding	43,774			43,164			43,818			42,649			Diluted weighted-average shares outstanding	53,504		43,774		53,306		43,818

Dividends paid per common share	$	0.0750		$	0.0725		$	0.2250		$	0.2175		Dividends paid per common share	$	0.08	$	0.075	$	0.24	$	0.225

Net income	$	21,831		$	13,595		$	33,338		$	21,192		Net income	$	16,707	$	21,831	$	63,319	$	33,338
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	1,160		9,508		15,022		(493)
Pension and other post retirement plans	1,139			184			2,480			552			Pension and other post retirement plans	1,245		1,139		4,196		2,480
Change in cash flow hedges	(1,945		)	(127		)	(1,278		)	(214		)	Change in cash flow hedges	351		(1,945)		1,454		(1,278)
Total other comprehensive income (loss), net of taxes	8,702			(1,035		)	709			(3,605		)
Change in available-for-sale securities													Change in available-for-sale securities	(17)		0		(17)		0
Total other comprehensive income, net of taxes													Total other comprehensive income, net of taxes	2,739		8,702		20,655		709
Comprehensive income, net	$	30,533		$	12,560		$	34,047		$	17,587		Comprehensive income, net	$	19,446	$	30,533	$	83,974	$	34,047



	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


		Three Months Ended June 30, 2020													Three Months Ended June 30, 2019														Three Months Ended June 30, 2021								Three Months Ended June 30, 2020
		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					Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees			Total Interest Expense		Effective Interest Rate		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 2028	(a)	6.0	%	$	14,375	$	(12)	$	496		$	14,859	5.8	%	$	12,219	$	0	$	277	$	12,496
Senior notes due 2022	(a)	6.2	%	1,960			11		155			2,126			5.7	%	13,125			68		950		14,143			Senior notes due 2022	(a)	—		0		0		0			0		5.7	%	1,960		11		155		2,126
Revolver due 2025	(b)	Variable		1,597			—		134			1,731			Variable		2,282			—		220		2,502			Revolver due 2025	(b)	Variable		344		0		123			467		Variable		1,597		0		134		1,731
ESOP Loans	(c)	n/a		—			—		—			—			7.2	%	—			—		—		—
Capital lease - real estate	(d)	6.3	%	33			—		6			39			5.6	%	78			—		7		85

Finance lease - real estate																											Finance lease - real estate	(c)	5.8	%	215		0		6			221		6.3	%	33		0		6		39
Non US lines of credit	(e)	Variable		4			—		(1		)	3			Variable		4			—		3		7			Non US lines of credit	(d)	Variable		4		0		4			8		Variable		4		0		(1)		3
Non US term loans	(e)	Variable		222			—		21			243			Variable		376			—		44		420			Non US term loans	(d)	Variable		169		0		18			187		Variable		222		0		21		243
Other long term debt	(f)	Variable		102			—		1			103			Variable		149			—		—		149			Other long term debt	(e)	Variable		107		0		0			107		Variable		102		0		1		103
Capitalized interest				(16		)	—		—			(16		)			(18		)	—		—		(18		)	Capitalized interest				0		—		—			0				(16)		—		—		(16)
Totals				$	16,121		$	11	$	593		$	16,725				$	15,996		$	68	$	1,224	$	17,288		Totals				$	15,214	$	(12)	$	647		$	15,849			$	16,121	$	11	$	593	$	16,725



		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


		Nine Months Ended June 30, 2021								Nine Months Ended June 30, 2020
		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees			Total Interest Expense		Effective Interest Rate		Cash Interest		Amort. Debt Premium		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2028	(a)	6.0	%	$	43,125	$	(35)	$	1,566		$	44,656	5.9	%	$	17,785	$	0	$	412	$	18,197
Senior notes due 2022	(a)	—		0		0		0			0		5.7	%	23,125		123		1,734		24,982
Revolver due 2025	(b)	Variable		760		0		368			1,128		Variable		4,798		0		531		5,329



Finance lease - real estate	(c)	5.8	%	671		0		19			690		6.1	%	146		0		19		165
Non US lines of credit	(d)	Variable		11		0		12			23		Variable		11		0		11		22
Non US term loans	(d)	Variable		503		0		53			556		Variable		786		0		40		826
Other long term debt	(e)	Variable		329		0		1			330		Variable		394		0		1		395
Capitalized interest				(13)		—		—			(13)				(109)		—		—		(109)
Totals				$	45,386	$	(35)	$	2,019		$	47,370			$	46,936	$	123	$	2,748	$	49,807


~~(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 June 30, 2021		At September 30, 2020
Assets of discontinued operations:
Prepaid and other current assets	$	695	$	2,091
Other long-term assets	3,607		6,406
Total assets of discontinued operations	$	4,302	$	8,497

Liabilities of discontinued operations:
Accrued liabilities, current	$	3,641	$	3,797
Other long-term liabilities	4,712		7,014
Total liabilities of discontinued operations	$	8,353	$	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
Q1 Cash payments	(1,598)		(2,534)		0		(4,132)
Q1 Non-cash charges	0		0		(5,794)		(5,794)
Accrued liability at December 31, 2020	$	3,585	$	254	$	0	$	3,839
Q2 Restructuring charges	782		4,283		2,497		7,562
Q2 Cash payments	(3,840)		(4,273)		0		(8,113)
Q2 Non-cash charges	0		0		(2,497)		(2,497)
Accrued liability at March 31, 2021	$	527	$	264	$	0	$	791
Q3 Restructuring charges	700		2,190		1,192		4,082
Q3 Cash payments	(799)		(2,190)		0		(2,989)
Q3 Non-cash charges	0		0		(1,192)		(1,192)
Accrued liability at June 30, 2021	$	428	$	264	$	0	$	692



	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 June 30,				For the Nine Months Ended June 30,
Gain (Loss)	2021		2020		2021		2020


Pension amortization	$	(1,573)	$	(1,045)	$	(4,719)	$	(3,137)
Cash flow hedges	(413)		556		(2,812)		1,550

Total gain (loss)	$	(1,986)	$	(489)	(7,531)		(1,587)
Tax benefit (expense)	417		102		1,582		333
Total	$	(1,569)	$	(387)	$	(5,949)	$	(1,254)



	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			June 30, 2021		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	$	150,924	$	161,627

Lease Liabilities:			Lease Liabilities:
Current portion of operating lease liabilities	$	29,018	Current portion of operating lease liabilities	$	30,896	$	31,848
Long-term operating lease liabilities	131,650		Long-term operating lease liabilities	124,588		136,054
Total operating lease liabilities	$	160,668	Total operating lease liabilities	$	155,484	$	167,902

Finance Leases:			Finance Leases:
Property, plant and equipment, net⁽¹⁾	$	13,318	Property, plant and equipment, net(1)	$	17,326	$	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	$	2,782	$	3,352
Long-term debt, net	9,725		Long-term debt, net	14,564		15,339
Total financing lease liabilities	$	13,152	Total financing lease liabilities	$	17,346	$	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 Nine Months Ended				For the Year Ended
	June 30, 2021				September 30, 2020
	Parent Company		Guarantor Companies		Parent Company		Guarantor Companies
Net sales	$	—	$	1,473,169	$	—	$	1,938,972
Gross profit	$	—	$	372,389	$	—	$	488,048
Income (loss) from operations	$	(15,953)	$	102,339	$	(24,876)	$	130,147
Equity in earnings of Guarantor subsidiaries	$	57,490	$	—	$	58,455	$	—
Net income (loss)	$	(29,487)	$	38,021	$	(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)
April 1 - 30, 2021	—	$	—	—
May 1 - 31, 2021	—	—		—
June 1 - 30, 2021	—	—		—
Total	—	$	—	—	$	57,955


Item 6		Exhibits


~~Item 6~~		~~Exhibits~~

~~4.1~~31.1	Registration Rights Agreement, dated as of June 22, 2020, by and among Griffon Corporation, the Guarantors party thereto and BofA Securities, Inc., as the Representative of the several Initial Purchasers ~~(Exhibit 4.1 to the Current Report on Form 8-K filed June 22, 2020 (Commission File No. 1-06620)).~~

~~31.1~~	Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~99.1~~		Purchase Agreement, dated as of June 8, 2020, by and among Griffon Corporation, the Guarantors named therein and BofA Securities, Inc., as Representative of the several Initial Purchasers named therein (Exhibit 99.1 to the Current Report on Form 8-K filed June 9, 2020 (Commission File No. 1-06620)).
101.INS
~~101.INS~~	XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Document

101.DEF		XBRL Taxonomy Extension Definitions Document

101.LAB		XBRL Taxonomy Extension Labels Document

101.PRE		XBRL Taxonomy Extension Presentations Document



			GRIFFON CORPORATION

			/s/ Brian G. Harris
			Brian G. Harris
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

			/s/ W. Christopher Durborow
			W. Christopher Durborow
			Vice President and Chief Accounting Officer
			(Principal Accounting Officer)