GRIFFON CORP 10-Q

Item 1 – Financial Statements GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (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. 1 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 2 Table of Contents 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 ) Stock-based compensation — — 2,933 — — — — — 2,933 Stock-based consideration — — 250 — — — — — 250 Other comprehensive income, net of tax — — — — — — ( 5,450 ) — ( 5,450 ) 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 ) Dividend — — — ( 3,704 ) — — — — ( 3,704 ) Shares withheld on employee taxes on vested equity awards — — — — 3 ( 48 ) — — ( 48 ) Amortization of deferred compensation — — — — — — — 507 507 Common stock acquired — — — — 8 ( 82 ) — — ( 82 ) Equity awards granted, net 48 12 ( 12 ) — — — — — — ESOP allocation of common stock — — 601 — — — — — 601 Stock-based compensation — — 3,422 — — — — — 3,422 Stock-based consideration — — 303 — — — — — 303 Other comprehensive income, net of tax — — — — — — 2,880 — 2,880 Balance at March 31, 2019 82,769 $ 20,692 $ 510,585 $ 545,600 35,969 $ ( 536,308 ) $ ( 36,682 ) $ ( 29,603 ) $ 474,284 Net income — — — 13,595 — — — — 13,595 Dividend — — — ( 3,415 ) — — — — ( 3,415 ) Amortization of deferred compensation — — — — — — — 682 682 ESOP allocation of common stock — — 435 — — — — — 435 Stock-based compensation — — 3,332 — — — — — 3,332 Stock-based consideration — — 287 — — — — — 287 Other comprehensive income, net of tax — — — — — — ( 1,035 ) — ( 1,035 ) Balance at June 30, 2019 82,769 $ 20,692 $ 514,639 $ 555,780 35,969 $ ( 536,308 ) $ ( 37,717 ) $ ( 28,921 ) $ 488,165 (1) See Note 14 - Recent Accounting Pronouncements and Note 3 - Revenue for additional information. The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 3 Table of Contents GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) (Unaudited) Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Revenue $ 632,061 $ 574,970 $ 1,746,849 $ 1,635,125 Cost of goods and services 467,058 420,487 1,279,893 1,200,092 Gross profit 165,003 154,483 466,956 435,033 Selling, general and administrative expenses 113,509 117,989 357,774 343,526 Income from operations 51,494 36,494 109,182 91,507 Other income (expense) Interest expense ( 16,725 ) ( 17,288 ) ( 49,807 ) ( 51,334 ) Interest income 140 201 711 611 Loss from debt extinguishment, net ( 1,235 ) — ( 7,925 ) — Other, net 806 979 2,199 3,251 Total other expense, net ( 17,014 ) ( 16,108 ) ( 54,822 ) ( 47,472 ) Income before taxes from continuing operations 34,480 20,386 54,360 44,035 Provision for income taxes 12,649 6,258 21,022 14,664 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 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 weighted-average shares outstanding 41,712 40,967 41,483 40,888 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 weighted-average shares outstanding 43,774 43,164 43,818 42,649 Dividends paid per common share $ 0.0750 $ 0.0725 $ 0.2250 $ 0.2175 Net income $ 21,831 $ 13,595 $ 33,338 $ 21,192 Other comprehensive income (loss), net of taxes: Foreign currency translation adjustments 9,508 ( 1,092 ) ( 493 ) ( 3,943 ) Pension and other post retirement plans 1,139 184 2,480 552 Change in cash flow hedges ( 1,945 ) ( 127 ) ( 1,278 ) ( 214 ) Total other comprehensive income (loss), net of taxes 8,702 ( 1,035 ) 709 ( 3,605 ) Comprehensive income, net $ 30,533 $ 12,560 $ 34,047 $ 17,587 The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 4 Table of Contents GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Nine Months Ended June 30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 33,338 $ 21,192 Net loss from discontinued operations — 8,179 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 47,067 46,172 Stock-based compensation 12,809 11,547 Asset impairment charges - restructuring 4,388 — Provision for losses on accounts receivable 512 306 Amortization of debt discounts and issuance costs 2,871 4,133 Loss from debt extinguishment, net 7,925 — Deferred income taxes 448 ( 353 ) Gain on sale of assets and investments ( 261 ) ( 111 ) Non-cash lease expense 28,648 — Change in assets and liabilities, net of assets and liabilities acquired: Increase in accounts receivable and contract costs and recognized income not yet billed ( 81,718 ) ( 33,223 ) (Increase) decrease in inventories 34,822 ( 18,009 ) Increase in prepaid and other assets ( 17,393 ) ( 3,921 ) Decrease in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities ( 18,112 ) ( 22,688 ) Other changes, net 600 1,758 Net cash provided by operating activities 55,944 14,982 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment ( 34,751 ) ( 27,794 ) Acquired businesses, net of cash acquired ( 10,531 ) ( 9,219 ) Payments related to sale of business — ( 9,500 ) Insurance payments — ( 10,604 ) Proceeds from sale of assets 339 104 Investment purchase ( 130 ) ( 149 ) Net cash used in investing activities ( 45,073 ) ( 57,162 ) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid ( 10,639 ) ( 10,262 ) Purchase of shares for treasury ( 7,479 ) ( 1,478 ) Proceeds from long-term debt 1,230,618 156,800 Payments of long-term debt ( 1,205,231 ) ( 108,260 ) Financing costs ( 16,543 ) ( 1,012 ) Contingent consideration for acquired businesses — ( 1,686 ) Other, net ( 31 ) ( 197 ) Net cash provided by (used in) financing activities ( 9,305 ) 33,905 The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 5 Table of Contents GRIFFON CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Nine Months Ended June 30, 2020 2019 CASH FLOWS FROM DISCONTINUED OPERATIONS: Net cash used in operating activities ( 2,899 ) ( 3,874 ) Net cash provided by investing activities 418 — Net cash used in financing activities — — Net cash used in discontinued operations ( 2,481 ) ( 3,874 ) Effect of exchange rate changes on cash and equivalents 537 503 NET DECREASE IN CASH AND EQUIVALENTS ( 378 ) ( 11,646 ) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 72,377 69,758 CASH AND EQUIVALENTS AT END OF PERIOD $ 71,999 $ 58,112 The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 6 Table of Contents GRIFFON CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (US dollars and non US currencies in thousands, except per share data) (Unaudited) (Unless otherwise indicated, references to years or year-end refer to Griffon’s fiscal period ending September 30) NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION About Griffon Corporation Griffon Corporation (the “Company”, “Griffon”, "we" or "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 three reportable segments: • Consumer and Professional Products ("CPP") conducts its operations through The AMES Companies, Inc. ("AMES"). Founded in 1774, AMES is the leading North American manufacturer and a global provider of branded consumer and professional tools and products for home storage and organization, landscaping, and enhancing outdoor lifestyles. CPP sells products globally through a portfolio of leading brands including True Temper, AMES, and ClosetMaid. • Home and Building Products ("HBP") conducts its operations through Clopay Corporation ("Clopay"). Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America. Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes. Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the CornellCookson brand. • Defense Electronics ("DE") conducts its operations through Telephonics Corporation ("Telephonics"), founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world. The impact from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which could impact our business and consolidated results of operations and financial condition in the future. While we have not incurred significant disruptions to our manufacturing or to our supply chain thus far from the COVID-19 outbreak, we are unable to accurately predict the impact COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition. 7 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 , 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 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2019 . 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 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, pension assumptions, useful lives associated with depreciation and amortization of fixed and intangible assets, warranty reserves, sales incentive accruals, stock based compensation assumptions, 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 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. • 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 on June 30, 2020 . Fair values were based upon quoted market prices (level 1 inputs). 8 Insurance contracts with values of $ 3,324 at June 30, 2020 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets. Items Measured at Fair Value on a Recurring Basis At June 30, 2020 , trading securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $ 3,028 ( $ 2,365 cost basis), were included in Prepaid and other current assets on the Consolidated Balance Sheets. Realized and unrealized gains and losses on trading securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss). In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates. To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options. As of June 30, 2020 , Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in US dollars. At June 30, 2020 , Griffon had $ 43,500 of Australian dollar contracts at a weighted average rate of $ 1.46 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 ( $ 712 , net of tax) at June 30, 2020 and gains of $ 556 and $ 1,550 were recorded in COGS during the three and nine months ended June 30, 2020 , respectively, for all settled contracts. All contracts expire in 15 to 209 days. At June 30, 2020 , Griffon had $ 3,125 and $ 3,000 of Canadian and British Pound dollar contracts, respectively, at a weighted average rate of $ 1.36 and $ 0.81 , respectively. 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 , fair value losses of $ 222 and $ 23 were recorded to Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized gains of $ 115 and $ 202 were recorded in Other income during the three and nine months ended June 30, 2020 , respectively, for all settled contracts. All contracts expire in 2 to 328 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. A contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and with respect to which payment terms are identified and collectability is probable. Once the Company has entered 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 % of the Company’s performance obligations are recognized at a point in time that relates to the manufacture and sale of a broad range of products and components within the CPP and HBP 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 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 % of the Company’s performance obligations are recognized over time or under the percentage-of-completion method; these 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. 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). 9 Sales recognized over time are generally accounted for using an input measure to determine progress completed at the end of the period. 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, 2020 , income from operations included net unfavorable catch up adjustments approximating $ 4,100 and $ 9,344 , 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 and September 30, 2019 were approximately $ 8,264 and $ 9,790 , 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 . See Note 12 - 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 , we had $ 350,443 of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 72 % 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 as of June 30, 2020 compared to $ 105,111 as of September 30, 2019. The $ 12,968 decrease in our contract assets balance was primarily due to the timing of billings and work performed on various radar and surveillance programs. Contract assets primarily relate to the Company's right to consideration for work completed but not billed at the reporting date and are recorded in Contract costs and recognized income not yet billed, net of progress payments in the Consolidated Balance Sheets. Contract assets are transferred to receivables when the right to consideration becomes unconditional. Contract costs and recognized income not yet billed consists of amounts accounted for under the percentage of completion method of accounting, and represent recoverable costs and accrued profit that cannot yet be invoiced under the terms of certain long-term contracts. Amounts will be invoiced when applicable contract terms, such as the achievement of specified milestones or product delivery, are met. At June 30, 2020 and September 30, 2019, approximately $ 7,058 and $ 13,100 , 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 no reserves for contract risk. Contract liabilities were $ 20,719 as of June 30, 2020 compared to $ 26,259 as of September 30, 2019. The $ 5,540 decrease in the contract liabilities balance was due to the recognition of revenue primarily from surveillance and airborne maritime surveillance radar 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. 10 NOTE 4 – 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 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 purchase price was primarily allocated to goodwill of GBP 2,418 , 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 . During the nine months ended June 30, 2020 , the Company incurred acquisition costs of $ 2,960 . The Company did no t incur acquisition costs in the three months ended June 30, 2020. The Company did no t incur acquisition costs in the three and nine months ended June 30, 2019. NOTE 5 – INVENTORIES Inventories are stated at the lower of cost (first-in, first-out or average) 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 NOTE 6 – PROPERTY, PLANT AND EQUIPMENT The following table details the components of property, plant and equipment, net: 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 Depreciation and amortization expense for property, plant and equipment was $ 13,142 and $ 13,089 for the quarters ended June 30, 2020 and 2019 , respectively, and $ 39,890 and $ 38,736 for the nine months ended June 30, 2020 and 2019, respectively. Depreciation included in SG&A expenses was $ 4,852 and $ 4,822 for the quarters ended June 30, 2020 and 2019, respectively, and $ 14,713 and $ 14,264 for the nine months ended June 30, 2020 and 2019, respectively. Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services. Except as described in Note 16, Restructuring Charges, no event or indicator of impairment occurred during the nine months ended June 30, 2020 which would require additional impairment testing of property, plant and equipment. 11 NOTE 7 – GOODWILL AND OTHER INTANGIBLES The following table provides changes in the carrying value of goodwill by segment during the nine months ended June 30, 2020 : 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 The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets: At June 30, 2020 At September 30, 2019 Gross Carrying Amount Accumulated Amortization Average Life (Years) Gross Carrying Amount Accumulated Amortization Customer relationships & other $ 184,445 $ 64,018 23 $ 183,515 $ 57,783 Technology and patents 19,348 8,075 13 19,167 7,329 Total amortizable intangible assets 203,793 72,093 202,682 65,112 Trademarks 222,684 — 219,069 — Total intangible assets $ 426,477 $ 72,093 $ 421,751 $ 65,112 Amortization expense for intangible assets was $ 2,381 and $ 2,506 for the quarters ended June 30, 2020 and 2019, respectively, and $ 7,177 and $ 7,436 for the nine months ended June 30, 2020 and 2019. Amortization expense for the remainder of 2020 and the next five fiscal years and thereafter, based on current intangible balances and classifications, is estimated as follows: 2020 - $ 2,416 ; 2021 - $ 9,387 ; 2022 - $ 9,387 ; 2023 - $ 9,234 ; 2024 - $ 9,208 ; 2025 - $ 9,208 ; thereafter $ 82,860 . Griffon performs its annual goodwill impairment testing in the fourth quarter of each year. The 2019 impairment testing resulted in all three reporting units having fair values substantially in excess of their carrying values. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. Given the general deterioration in economic and market conditions surrounding the COVID-19 pandemic, the Company considered the impact that the COVID-19 pandemic may have on its near and long-term forecasts and completed an interim impairment test as of March 31, 2020. The company determined that there is no impairment to either its goodwill or indefinite-lived intangible assets at March 31, 2020. During the quarter ended June 30, 2020, the Company determined there were no triggering events. NOTE 8 – INCOME TAXES During the quarter ended June 30, 2020 , the Company recognized 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 included restructuring charges of $ 1,633 ( $ 1,224 , net of tax), loss from debt extinguishment of $ 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 of $ 669 that affect comparability. Excluding these items, the effective tax rates for the quarters ended June 30, 2020 and 2019 were 30.8 % and 34.0 % , respectively. During the nine months ended June 30, 2020 , the Company recognized a tax provision of $ 21,022 on Income before taxes from continuing operations of $ 54,360 , compared to a tax provision of $ 14,664 on Income before taxes from continuing operations of $ 44,035 in the comparable prior year period. The nine month period ended June 30, 2020 included restructuring charges of $ 11,171 ( $ 8,377 , net of tax), acquisition costs of $ 2,960 ( $ 2,321 , net of tax), loss from debt extinguishment of $ 7,925 ( $ 6,214 , net of tax) and net discrete tax provisions of $ 1,248 . The nine month period ended June 30, 2019 included net discrete tax benefits of $ 299 . Excluding these items, the effective tax rates for the nine months ended June 30, 2020 and 2019 were 32.6 % and 34.0 % , respectively. 12 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. 13 NOTE 9 – LONG-TERM DEBT At June 30, 2020 At September 30, 2019 Outstanding Balance Original Issuer Premium Capitalized Fees & Expenses Balance Sheet Coupon Interest Rate Outstanding Balance Original Issuer Premium Capitalized Fees & Expenses Balance Sheet Coupon Interest Rate Senior notes due 2028 (a) $ 1,000,000 $ 375 ( 14,877 ) $ 985,498 5.75 % $ — $ — $ — $ — — % Senior notes due 2022 (a) — — — — 5.25 % 1,000,000 867 ( 9,175 ) 991,692 5.25 % Revolver due 2025 (b) 104,181 — ( 2,544 ) 101,637 Variable 50,000 — ( 1,243 ) 48,757 Variable Capital lease - real estate (d) 11,564 — ( 36 ) 11,528 5.00 % 4,388 — ( 55 ) 4,333 5.00 % Non US lines of credit (e) — — ( 33 ) ( 33 ) Variable 17,576 — ( 45 ) 17,531 Variable Non US term loans (e) 30,736 — ( 172 ) 30,564 Variable 36,977 — ( 188 ) 36,789 Variable Other long term debt (f) 3,422 — ( 16 ) 3,406 Variable 5,190 — ( 18 ) 5,172 Variable Totals 1,149,903 375 ( 17,678 ) 1,132,600 1,114,131 867 ( 10,724 ) 1,104,274 less: Current portion ( 9,235 ) — — ( 9,235 ) ( 10,525 ) — — ( 10,525 ) Long-term debt $ 1,140,668 $ 375 $ ( 17,678 ) $ 1,123,365 $ 1,103,606 $ 867 $ ( 10,724 ) $ 1,093,749 Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Effective Interest Rate (1) Cash Interest Amort. Debt Discount Amort. Debt Issuance Costs & Other Fees Total Interest Expense Effective Interest Rate (1) Cash Interest Amort. Debt Premium Amort. Debt Issuance Costs & Other Fees Total Interest Expense Senior notes due 2028 (a) 5.8 % $ 12,219 $ — $ 277 $ 12,496 n/a $ — $ — $ — $ — Senior notes due 2022 (a) 6.2 % 1,960 11 155 2,126 5.7 % 13,125 68 950 14,143 Revolver due 2025 (b) Variable 1,597 — 134 1,731 Variable 2,282 — 220 2,502 ESOP Loans (c) n/a — — — — 7.2 % — — — — Capital lease - real estate (d) 6.3 % 33 — 6 39 5.6 % 78 — 7 85 Non US lines of credit (e) Variable 4 — ( 1 ) 3 Variable 4 — 3 7 Non US term loans (e) Variable 222 — 21 243 Variable 376 — 44 420 Other long term debt (f) Variable 102 — 1 103 Variable 149 — — 149 Capitalized interest ( 16 ) — — ( 16 ) ( 18 ) — — ( 18 ) Totals $ 16,121 $ 11 $ 593 $ 16,725 $ 15,996 $ 68 $ 1,224 $ 17,288 (1) n/a = not applicable 14 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 15 (a) On June 22, 2020, Griffon completed the add-on offering through a private placement $ 150,000 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 due 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 (the “2022 Senior Notes"). As of June 30, 2020 , outstanding Senior Notes due totaled $ 1,000,000 ; interest is payable semi-annually on March 1 and September 1. The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On April 22, 2020, Griffon exchanged substantially all of the $ 850,000 Senior Notes for substantially identical Senior Notes registered under the Securities Act of 1933, as amended (the "Securities Act"), via an exchange offer. Griffon intends to complete an offer to exchange the remaining $ 150,000 Senior Notes for substantially identical Senior Notes registered under the Securities Act during the fourth quarter of fiscal 2020. The fair value of the 2028 Senior Notes approximated $ 980,000 on June 30, 2020 based upon quoted market prices (level 1 inputs). In connection with these transactions, Griffon capitalized $ 15,289 of underwriting fees and other expenses incurred related to the issuance and exchange of the Senior Notes, which will amortize over the term of such terms. Furthermore, all of the obligations associated with the 2022 Senior Notes were discharged. Additionally, Griffon recognized a $ 7,925 loss on the early extinguishment of debt of the 5.25 % $ 1,000,000 2022 Senior Notes, comprised primarily of the write-off of $ 6,725 of remaining deferred financing fees, $ 607 of tender offer net premium expense and $ 593 of redemption interest expense. (b) On January 30, 2020, Griffon amended its revolving credit facility (as amended, the "Credit Agreement") to increase the maximum borrowing availability from $ 350,000 to $ 400,000 and extend its maturity date from March 22, 2021 to March 22, 2025. The amended agreement also modified certain other provisions of the facility. The facility includes a letter of credit sub-facility with a limit of $ 100,000 (increased from $ 50,000 ); a multi-currency sub-facility of $ 200,000 (increased from $ 100,000 ); and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $ 100,000 (increased from $ 50,000 ). Borrowings under the Credit Agreement may be repaid and re-borrowed at any time. Interest is payable on borrowings at either a LIBOR or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance. Current margins are 1.25 % for base rate loans and 2.25 % for LIBOR loans. The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants, and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65 % of the equity interest in Griffon’s material, first-tier foreign subsidiaries. At June 30, 2020 , there were $ 104,181 of outstanding borrowings under the Credit Agreement; outstanding standby letters of credit were $ 21,617 ; and $ 274,202 was available, subject to certain loan covenants, for borrowing at that date. (c) In August 2016 and as amended on June 30, 2017, Griffon’s ESOP entered into a Term Loan with a bank (the "ESOP Agreement"). The Term Loan interest rate was LIBOR plus 3.00 % . The Term Loan required quarterly principal payments of $ 569 with a balloon payment due at maturity. The Term Loan was secured by shares purchased with the proceeds of the loan and with a lien on a specific amount of Griffon assets (which ranked pari passu with the lien granted on such assets under the Credit Agreement) and was guaranteed by Griffon. On March 13, 2019, the ESOP Term Loan was refinanced with an internal loan from Griffon which was funded with cash and a draw under its Credit Agreement. The internal loan interest rate is fixed at 2.91 % , matures in June 2033 and requires quarterly payments of principal, currently $ 635 , and interest. The internal loan is secured by shares purchased with the proceeds of the loan. The amount outstanding on the internal loan at June 30, 2020 was $ 30,513 . (d) Two Griffon subsidiaries have finance leases outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases mature in 2021 and 2025 , respectively, and bear interest at fixed rates of approximately 5.0 % and 2.9 % , respectively. The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon. The Ocala, Florida lease contains one five -year renewal option. At June 30, 2020 , $ 11,528 was outstanding, net of issuance costs. (e) In November 2012, Garant G.P. (“Garant”) entered into a CAD 15,000 ( $ 10,974 as of June 30, 2020 ) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 1.46 % LIBOR USD and 1.56 % Bankers Acceptance Rate CDN as of June 30, 2020 ). The revolving facility matures in October 2022. Garant is required to maintain a certain minimum equity. At June 30, 2020 , there were no borrowings under the revolving credit facility with CAD 15,000 ( $ 10,974 as of June 30, 2020 ) available for borrowing. 16 In July 2016 and as amended in March 2019, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") entered into an AUD 29,625 term loan, AUD 20,000 revolver and AUD 10,000 receivable purchase facility agreement. The term loan requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment of AUD 9,625 due upon maturity in March 2022, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 1.95 % per annum ( 2.09 % at June 30, 2020 ). During the quarter ended June 30, 2020 , the term loan balance was reduced by AUD 5,000 , from AUD 23,375 to AUD 18,375 with proceeds from an AUD 5,000 increase in the commitment of the receivables purchase line from AUD 10,000 to AUD 15,000 . The term loan had an outstanding balance of AUD 17,125 ( $ 11,761 as of June 30, 2020 ). The revolving facility and receivable purchase facility mature in March 2022, but are renewable upon mutual agreement with the lender. The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.9 % and 1.35 % , respectively, per annum ( 2.05 % and 1.49 % , respectively, at June 30, 2020 ). At June 30, 2020 , there were no borrowings under the revolver and the receivable purchase facility. The revolver, receivable purchase facility and the term loan are all secured by substantially all of the assets of Griffon Australia and its subsidiaries. Griffon Australia is required to maintain a certain minimum equity level and is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. In July 2018, the AMES Companies UK Ltd and its subsidiaries (collectively, "AMES UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 350 and GBP 83 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,700 and GBP 2,500 , respectively. The Term Loan and Mortgage Loans accrue interest at the GBP LIBOR Rate plus 2.25 % and 1.8 % , respectively ( 2.33 % and 1.88 % at June 30, 2020 , respectively). The revolving facility matures in June 2021, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 1.75 % ( 1.85 % as of June 30, 2020 ). As of June 30, 2020 , the revolver had no outstanding balance while the term and mortgage loan balances amounted to GBP 15,398 ( $ 18,975 as of June 30, 2020). The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries. AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. An invoice discounting arrangement was canceled and replaced by the above loan facilities. (f) Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases. At June 30, 2020 , Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements. NOTE 10 — SHAREHOLDERS’ EQUITY During 2020, the Company paid a quarterly cash dividend of $ 0.075 per share in each quarter, totaling $ 0.225 per share for the nine months ended June 30, 2020. During 2019, the Company paid a quarterly cash dividend of $ 0.0725 per share, totaling $ 0.29 per share for the year. A dividend payable was established for the holders of restricted shares; such dividends will be released upon vesting of the underlying restricted shares. In March 2019, the ESOP Term Loan was refinanced with a loan from Griffon which was funded with cash and a draw on its credit facility; dividends paid on allocated shares in the ESOP are allocated to participant accounts in the form of additional shares. 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. Compensation expense for restricted stock and restricted stock units is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on the date of grant and, for performance shares, the likelihood of achieving the performance criteria. Compensation expense for restricted stock granted to two senior executives is calculated as the maximum number of shares granted, upon achieving certain performance criteria, multiplied by the stock price as valued by a Monte Carlo Simulation Model. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the straight-line attribution method and recorded within SG&A expenses. On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan ("Incentive Plan") under which awards of performance shares, performance units, stock options, stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted. On January 31, 2018, shareholders approved Amendment No. 1 to the Incentive Plan pursuant to which, among other things, 1,000,000 shares were added to the Incentive Plan; and on January 30, 2020, shareholders approved Amendment No. 2 to the Incentive Plan, pursuant to which 1,700,000 shares were added to the 17 Incentive Plan. Options granted under the Incentive Plan may be either “incentive stock options” or nonqualified stock options, generally expire ten years after the date of grant and are granted at an exercise price of not less than 100% of the fair market value at the date of grant. The maximum number of shares of common stock available for award under the Incentive Plan is 5,050,000 ( 600,000 of which may be issued as incentive stock options), plus (i) any shares reserved for issuance under the 2011 Equity Incentive Plan as of the effective date of the Incentive Plan, and (ii) any shares underlying awards outstanding on such effective date under the 2011 Incentive Plan that are canceled or forfeited. As of June 30, 2020 , there were 1,063,148 shares available for grant. All grants outstanding under former equity plans will continue under their terms; no additional awards will be granted under such plans. During the first quarter of 2020, Griffon granted 216,523 shares of restricted stock and restricted stock units, subject to certain performance conditions, with vesting periods of three years , with a total fair value of $ 4,705 , or a weighted average fair value of $ 21.73 per share. During the second quarter of 2020, Griffon granted 804,674 shares of restricted stock. This included 99,772 shares of restricted stock to seven executives, subject to certain performance conditions, with vesting period of 34 months , with a total fair value of $ 2,200 , or weighted average fair value of $ 22.05 per share. Griffon also granted 44,902 restricted shares to the non-employee directors of Griffon with a vesting period of three years and a fair value of $ 990 , or a weighted average fair value of $ 22.05 per share. This also included 660,000 shares of restricted stock granted to two senior executives with a vesting period of four years and a two year post-vesting holding period, subject to the achievement of certain absolute and relative performance conditions relating to the price of Griffon's common stock. So long as the minimum performance condition is attained, the amount of shares that can vest will range from 480,000 to 660,000 . The total fair value of these restricted shares using the Monte Carlo Simulation model is approximately $ 9,534 , or a weighted average fair value of $ 14.45 per share. During the third quarter of 2020, Griffon granted 7,599 shares of restricted stock, subject to certain performance conditions, with vesting periods of three years , with a total fair value of $ 125 , or a weighted average fair value of $ 16.45 per share. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans: For the Three Months Ended June 30, For the Nine Months Ended June 30, 2020 2019 2020 2019 Restricted stock $ 3,930 $ 3,332 $ 10,742 $ 9,687 ESOP 577 715 2,067 1,860 Total stock based compensation $ 4,507 $ 4,047 $ 12,809 $ 11,547 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 this share repurchase program, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. 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 , an aggregate of $ 57,955 remains under Griffon's Board authorized repurchase programs. During the quarter ended June 30, 2020, there were no shares withheld to settle employee taxes due upon the vesting of restricted stock. During the nine months ended June 30, 2020 , 340,775 shares, with a market value of $ 7,409 , or $ 21.74 per share, respectively, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock. Furthermore, during the nine months ended June 30, 2020 , an additional 3,307 shares, with a market value of $ 70 , or $ 21.22 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting. 18 NOTE 11 – EARNINGS PER SHARE (EPS) Basic EPS (and diluted EPS in periods when a loss exists) was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with stock based compensation. The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share: Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Common shares outstanding 47,425 46,801 47,425 46,801 Unallocated ESOP shares ( 2,108 ) ( 2,314 ) ( 2,108 ) ( 2,314 ) Non-vested restricted stock ( 3,555 ) ( 3,426 ) ( 3,555 ) ( 3,426 ) Impact of weighted average shares ( 50 ) ( 94 ) ( 279 ) ( 173 ) Weighted average shares outstanding - basic 41,712 40,967 41,483 40,888 Incremental shares from stock based compensation 2,062 2,197 2,335 1,761 Weighted average shares outstanding - diluted 43,774 43,164 43,818 42,649 NOTE 12 – BUSINESS SEGMENTS In 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. The prior year amounts have been recast to reflect the recent change in Griffon's reporting segment structure. Griffon now reports its operations through three reportable segments from continuing operations, as follows: • 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, founded in 1933, a globally recognized leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers. Information on Griffon’s reportable segments from continuing operations is as follows: For the Three Months Ended June 30, For the Nine Months Ended June 30, REVENUE 2020 2019 2020 2019 Consumer and Professional Products $ 328,929 $ 273,710 $ 844,917 $ 777,916 Home and Building Products 219,164 221,521 670,374 631,615 Defense Electronics 83,968 79,739 231,558 225,594 Total consolidated net sales $ 632,061 $ 574,970 $ 1,746,849 $ 1,635,125 19 Disaggregation of Revenue Revenue from contracts with customers is disaggregated by end markets, segments and geographic location, as it more accurately depicts the nature and amount of the Company’s revenue. The following table presents revenue disaggregated by end market and segment: For the Three Months Ended June 30, For the Nine Months Ended June 30, 2020 2019 2020 2019 Residential repair and remodel $ 50,709 $ 35,416 $ 126,304 $ 101,015 Retail 177,271 148,596 441,795 424,537 Residential new construction 14,487 15,345 44,344 43,162 Industrial 9,303 12,880 30,461 34,054 International excluding North America 77,159 61,473 202,013 175,148 Total Consumer and Professional Products 328,929 273,710 844,917 777,916 Residential repair and remodel 109,876 112,730 332,681 316,368 Commercial construction 84,521 83,382 262,708 243,939 Residential new construction 24,767 25,409 74,985 71,308 Total Home and Building Products 219,164 221,521 670,374 631,615 U.S. Government 54,802 46,579 151,126 138,515 International 24,779 30,120 68,333 75,348 Commercial 4,387 3,040 12,099 11,731 Total Defense Electronics 83,968 79,739 231,558 225,594 Total Consolidated Revenue $ 632,061 $ 574,970 $ 1,746,849 $ 1,635,125 The following table presents revenue disaggregated by geography based on the location of the Company's customer: 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 20 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 Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead), restructuring charges, loss from debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes from continuing operations: For the Three Months Ended June 30, For the Nine Months Ended June 30, 2020 2019 2020 2019 Segment adjusted EBITDA: Consumer and Professional Products $ 37,115 $ 23,970 $ 84,068 $ 73,151 Home and Building Products 39,299 33,851 110,635 85,283 Defense Electronics 4,122 7,280 12,845 17,001 Segment adjusted EBITDA 80,536 65,101 207,548 175,435 Unallocated amounts, excluding depreciation ( 11,080 ) ( 12,033 ) ( 34,969 ) ( 34,505 ) Adjusted EBITDA 69,456 53,068 172,579 140,930 Net interest expense ( 16,585 ) ( 17,087 ) ( 49,096 ) ( 50,723 ) Depreciation and amortization ( 15,523 ) ( 15,595 ) ( 47,067 ) ( 46,172 ) Loss from debt extinguishment ( 1,235 ) — ( 7,925 ) — Restructuring charges ( 1,633 ) — ( 11,171 ) — Acquisition costs — — ( 2,960 ) — Income before taxes from continuing operations $ 34,480 $ 20,386 $ 54,360 $ 44,035 21 Unallocated amounts typically include general corporate expenses not attributable to a reportable segment. For the Three Months Ended June 30, For the Nine Months Ended June 30, DEPRECIATION and AMORTIZATION 2020 2019 2020 2019 Segment: Consumer and Professional Products $ 8,197 $ 8,158 $ 24,650 $ 24,148 Home and Building Products 4,507 4,626 13,975 13,683 Defense Electronics 2,666 2,669 7,986 7,926 Total segment depreciation and amortization 15,370 15,453 46,611 45,757 Corporate 153 142 456 415 Total consolidated depreciation and amortization $ 15,523 $ 15,595 $ 47,067 $ 46,172 CAPITAL EXPENDITURES Segment: Consumer and Professional Products $ 7,029 $ 3,187 $ 14,561 $ 11,327 Home and Building Products 3,640 5,088 15,135 10,423 Defense Electronics 1,538 2,064 4,748 5,797 Total segment 12,207 10,339 34,444 27,547 Corporate 25 37 307 247 Total consolidated capital expenditures $ 12,232 $ 10,376 $ 34,751 $ 27,794 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 NOTE 13 – EMPLOYEE BENEFIT PLANS Defined benefit pension expense (income) included in Other Income (Expense), net was as follows: Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Interest cost $ 1,148 $ 1,570 $ 3,450 $ 4,711 Expected return on plan assets ( 2,585 ) ( 2,583 ) ( 7,757 ) ( 7,749 ) Amortization: Prior service cost 3 4 11 11 Recognized actuarial loss 1,042 222 3,126 666 Net periodic expense (income) $ ( 392 ) $ ( 787 ) $ ( 1,170 ) $ ( 2,361 ) 22 NOTE 14 – RECENT ACCOUNTING PRONOUNCEMENTS New Accounting Standards Implemented In March 2020, the Financial Accounting Standards Board ("FASB") issued optional guidance for a limited time relating to accounting for the discontinuation of the LIBOR rate also known as reference rate reform. The amendments in this update provide optional practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are applicable to contract modifications that replace a reference LIBOR rate beginning on March 12, 2020 through December 31, 2022. The optional expedients primarily apply to the Griffon’s Credit Agreement and Non-U.S. Term Loans. The optional expedients allow the Company to account for modifications due to reference rate reform by prospectively adjusting the effective interest rate on these agreements. The Company expects to apply the optional practical expedients and exceptions to modifications of its agreements affected by reference rate reform. As of June 30, 2020, the Company has not modified its agreements subject to reference rate reform. In February 2016, FASB issued guidance on lease accounting requiring lessees to recognize a right-of-use asset and a lease liability for long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. During 2019, the Company developed a project plan to guide the implementation of this guidance. The Company completed this plan including surveying the Company’s businesses, assessing the Company’s portfolio of leases and compiling a central repository of active leases. The Company also implemented a lease accounting software solution to support the new reporting requirements and established a future lease process to keep the lease accounting portfolio up to date. The Company evaluated key policy elections and considerations under the standard and completed an internal policy as well as training to address the new standard requirements. The Company has elected the package of practical expedients and will not apply the recognition requirements to short-term leases. The Company adopted the requirements of the new standard as of October 1, 2019 and applied the modified retrospective approach, whereby the cumulative effect of adoption is recognized as of the date of adoption and comparative prior periods are not retrospectively adjusted. As a result, upon adoption, we have recognized right-of-use assets of $ 163,552 and lease liabilities of $ 163,676 associated with our operating leases. The standard had no material impact to retained earnings or on our Condensed Consolidated Statements of Income or Condensed Consolidated Statements of Cash Flows. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) which supersedes nearly all existing revenue recognition guidance. Subsequent to the issuance of Topic 606, the FASB clarified the guidance through several ASUs; hereinafter the collection of revenue guidance is referred to as “ASC 606”. The core principle of ASC 606 is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On October 1, 2018, the Company adopted ASC 606 using the modified retrospective method for all contracts. Results for reporting periods beginning October 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605, Revenue Recognition. Under the modified retrospective method, the Company recognized the cumulative effect of initially applying this accounting standard as an adjustment to the opening balance in retained earnings of approximately $ 5,673 as of October 1, 2018. The impact to beginning retained earnings primarily related to certain contracts in the Defense Electronics Segment containing provisions for radar and communication products that have an alternative use and/or no right to payment. The adoption of ASC 606 did not have a material impact on the Company’s Consolidated Condensed Financial Statements as of and for the year ended September 30, 2019. See Note 2 - Revenue for additional disclosures required by ASC 606. In February 2018, the FASB issued guidance that allows companies to reclassify stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act, from accumulated other comprehensive income to retained earnings. This guidance is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted, and is effective for the Company in fiscal 2020. Upon adoption of this guidance as of October 1, 2019, based on our evaluation, we elected not to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income to retained earnings. The adoption of this standard did not have an impact on the Company's financial condition, results of operations, or cash flow. Issued but not yet effective accounting pronouncements In December 2019, the FASB issued guidance on simplifying the accounting for income taxes by clarifying and amending existing guidance related to the recognition of franchise tax, the evaluation of a step up in the tax basis of goodwill, and the effects of enacted changes in tax laws or rates in the effective tax rate computation, among other clarifications. Our effective date for adoption of this ASU is our fiscal year beginning October 1, 2021 with early adoption permitted. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. 23 In April 2019, the FASB issued guidance relating to accounting for credit losses on financial instruments, including trade receivables and derivatives and hedging. This guidance is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted, and will be effective for the Company beginning in fiscal year 2021. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued guidance which modifies the disclosures on fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This guidance expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). This guidance is effective for fiscal years beginning after December 15, 2019, with early adoption permitted, and will be effective for the Company beginning in fiscal year 2021. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In August 2018, the FASB issued guidance to clarify disclosure requirements related to defined benefit pension and other post-retirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and will be effective for the Company beginning in 2022. We are currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and the related disclosures. In January 2017, the FASB issued guidance that simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. This guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those periods and is effective for the Company beginning October 1, 2020. The Company does not expect this guidance to have a material impact on the Company's financial condition, results of operations or related disclosures. The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements, and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. NOTE 15 – DISCONTINUED OPERATIONS On November 16, 2017, Griffon announced it entered into a definitive agreement to sell Clopay Plastics Products ("Plastics") and on February 6, 2018, completed the sale to Berry for $ 465,000 , net of certain post-closing adjustments. During the second quarter of 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 $ 465,000 Plastics divestiture and included an additional reserve for a legacy environmental matter. During the third quarter of 2019, $ 9,500 of this charge was paid. In 2008, as a result of the downturn in the residential housing market, Griffon exited substantially all operating activities of its Installation Services segment which sold, installed and serviced garage doors and openers, fireplaces, floor coverings, cabinetry and a range of related building products, primarily for the new residential housing market. Griffon substantially concluded its remaining disposal activities in 2009. Installation Services operating results have been reported as discontinued operations in the Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented; Installation Services is excluded from segment reporting. There was no Installation Services revenue or income for the three and nine months ended June 30, 2020 and 2019. In 2017, Griffon recorded $ 5,700 of reserves in discontinued operations related to historical environmental remediation efforts and to increase the reserve for homeowner association (HOA) claims related to the Clopay Services Corporation discontinued operations in 2008. 24 The following amounts summarize the total assets and liabilities are primarily for the Installation Services and other discontinued activities which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets: At June 30, 2020 At September 30, 2019 Assets of discontinued operations: Prepaid and other current assets $ 1,951 $ 321 Other long-term assets 6,086 2,888 Total assets of discontinued operations $ 8,037 $ 3,209 Liabilities of discontinued operations: Accrued liabilities, current $ 3,730 $ 4,333 Other long-term liabilities 6,281 3,331 Total liabilities of discontinued operations $ 10,011 $ 7,664 At June 30, 2020 , Griffon's assets and liabilities for Installations Services and other discontinued operations primarily related to insurance claims, income tax, and product liability, and warranty and environmental reserves. NOTE 16 – RESTRUCTURING CHARGES In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S. operations. This initiative includes three key development areas. 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. operations will be consolidated to optimize facilities footprint and talent. Third, 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. The expected costs to implement this new business platform, over the three-year duration of the project, will include approximately $ 35,000 of one-time charges and approximately $ 40,000 in capital investments. The one-time charges are comprised of $ 16,000 of cash charges, which includes $ 12,000 personnel-related costs such as training, severance, and duplicate personnel costs and $ 4,000 of facility and lease exit costs. The remaining $ 19,000 of charges are non-cash and are primarily related to asset write-downs. In the quarter and nine months ended June 30, 2020, CPP incurred pre-tax restructuring and related exit costs approximating $ 1,633 and $ 11,171 , respectively. For the nine month period ended June 30, 2020, cash charges totaled $ 6,479 and non-cash, asset-related charges totaled $ 4,692 ; the cash charges included $ 4,842 for one-time termination benefits and other personnel-related costs and $ 1,637 for facility exit costs. Non-cash charges included a $ 1,968 impairment charge related to a facility’s operating lease as well as $ 671 of leasehold improvements made to the leased facility and $ 304 of inventory that have no recoverable value, and a $ 1,749 impairment charge related to machinery and equipment that have no recoverable value at one of the Company's owned manufacturing locations. As a result of these transactions, headcount was reduced by 179 . A summary of the restructuring and other related charges included in Cost of goods and services and Selling, general and administrative expenses in the Company's Condensed Consolidated Statements of Operations were as follows: For the Three Months Ended June 30, 2020 For the Nine Months Ended June 30, 2020 Cost of goods and services $ 20 $ 4,096 Selling, general and administrative expenses 1,613 7,075 Total restructuring charges $ 1,633 $ 11,171 25 For the Three Months Ended June 30, 2020 For the Nine Months Ended June 30, 2020 Personnel related costs $ 1,050 $ 4,842 Facilities, exit costs and other 583 1,637 Non-cash facility and other — 4,692 Total $ 1,633 $ 11,171 The following table summarizes the accrued liabilities of the Company's restructuring actions: Cash Charges Non-Cash Personnel related costs Facilities & Exit Costs Facility and Other Costs Total Accrued liability at September 30, 2019 $ — $ — $ — $ — Q1 restructuring charges 2,134 140 4,160 6,434 Cash payments ( 621 ) ( 140 ) — ( 761 ) Non-cash charges (1) — — ( 4,160 ) ( 4,160 ) Accrued liability at December 31, 2019 $ 1,513 $ — $ — $ 1,513 Q2 restructuring charges 1,658 914 532 3,104 Cash payments ( 1,041 ) ( 914 ) — ( 1,955 ) Non-cash charges (1) — — ( 532 ) ( 532 ) Accrued liability at March 31, 2020 $ 2,130 $ — $ — $ 2,130 Q3 restructuring charges 1,050 583 — 1,633 Cash payments ( 828 ) ( 380 ) — ( 1,208 ) Accrued liability at June 30, 2020 $ 2,352 $ 203 $ — $ 2,555 (1) Non-cash charges in Facility and Other Costs primarily represent the non-cash write-off of certain long-lived assets in connection with certain facility closures. NOTE 17 – OTHER INCOME (EXPENSE) For the quarters ended June 30, 2020 and 2019 , Other income (expense) includes $ 72 and $ 150 , respectively, of net currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 392 and $ 787 , respectively, as well as $ 294 and $( 14 ) , respectively, of net investment (loss) income. For the nine months ended June 30, 2020 and 2019, Other income (expense) includes $ 441 and $ 535 , respectively, of net currency exchange gains (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 and $ 2,361 , respectively, as well as $ 145 and $ 18 , respectively, of net investment (loss) income. During the nine months ended June 30, 2020, Other income (expense) also includes a one-time contract award of $ 700 . NOTE 18 – WARRANTY LIABILITY DE offers warranties against product defects for periods generally ranging from one to two years, depending on the specific product and terms of the customer purchase agreement. HBP also offers warranties against product defects for periods generally ranging from one to ten years, with limited lifetime warranties on certain door models. Typical warranties require CPP, HBP and DE to repair or replace the defective products during the warranty period at no cost to the customer. At the time revenue is recognized, Griffon records a liability for warranty costs, estimated based on historical experience, and periodically assesses its warranty obligations and adjusts the liability as necessary. CPP offers an express limited warranty for a period of ninety days on all products from the date of original purchase unless otherwise stated on the product or packaging from the date of original purchase. 26 Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows: Three Months Ended June 30, Nine Months Ended June 30, 2020 2019 2020 2019 Balance, beginning of period $ 7,789 $ 8,011 $ 7,894 $ 8,174 Warranties issued and changes in estimated pre-existing warranties 5,773 3,780 14,000 12,541 Actual warranty costs incurred ( 3,661 ) ( 4,063 ) ( 11,993 ) ( 12,987 ) Balance, end of period $ 9,901 $ 7,728 $ 9,901 $ 7,728 NOTE 19 – OTHER COMPREHENSIVE INCOME (LOSS) The amounts recognized in other comprehensive income (loss) were as follows: 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 ) The components of Accumulated other comprehensive income (loss) are as follows: At June 30, 2020 At September 30, 2019 Foreign currency translation adjustments $ ( 31,777 ) $ ( 31,284 ) Pension and other defined benefit plans ( 32,334 ) ( 34,814 ) Change in Cash flow hedges ( 1,096 ) 182 $ ( 65,207 ) $ ( 65,916 ) Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows: For the Three Months Ended June 30, For the Nine Months Ended June 30, Gain (Loss) 2020 2019 2020 2019 Pension amortization $ ( 1,045 ) $ ( 226 ) $ ( 3,137 ) $ ( 677 ) Cash flow hedges 556 663 1,550 1,597 Total gain (loss) $ ( 489 ) $ 437 ( 1,587 ) 920 Tax benefit (expense) 102 ( 92 ) 333 ( 193 ) Total $ ( 387 ) $ 345 $ ( 1,254 ) $ 727 27 NOTE 20 — LEASES In February 2016, the FASB issued an Accounting Standards Update (ASU 2016-02) related to the accounting and financial statement presentation for leases. This new guidance requires a lessee to recognize right-of-use ("ROU") assets and lease liabilities on the balance sheet, with an election to exempt leases with a term of twelve months or less. The Company adopted the requirements of the new standard as of October 1, 2019 and applied the modified retrospective approach, whereby the cumulative effect of adoption is recognized as of the date of adoption and comparative prior periods are not retrospectively adjusted. As a result, upon adoption, we have recognized ROU assets of $ 163,552 and lease liabilities of $ 163,676 associated with our operating leases. The standard had no material impact to retained earnings or on our Condensed Consolidated Statements of Income or Condensed Consolidated Statements of Cash Flows. The Company determines if an arrangement is a lease at inception. The ROU assets and short and long-term liabilities associated with our Operating leases are shown as separate line items on our Condensed Consolidated Balance Sheets. Finance leases are included in property, plant, and equipment, net, other accrued liabilities, and other non-current liabilities. The Company's finance leases are immaterial. ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment. In connection with the Company's restructuring activities, during the nine months ended June 30, 2020, a $ 1,968 impairment charge was recorded related to a facility’s operating lease as well as $ 671 and of leasehold improvements made to the leased facility that have no recoverable value. See Note 16, Restructuring Charges. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. For leases existing as of October 1, 2019, we have elected to use the remaining lease term as of the adoption date in determining the incremental borrowing rate. Our determination of the lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. The Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification. We also elected a practical expedient to determine the reasonably certain lease term. For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less (a "Short-term" lease), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred. The Company has lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance). Components of operating lease costs are as follows: For the Three Months Ended June 30, 2020 For the Nine Months Ended June 30, 2020 Fixed $ 9,909 $ 28,648 Variable (a), (b) 2,032 5,608 Short-term (b) 1,280 4,103 Total* $ 13,221 $ 38,359 (a) Primarily related to common-area maintenance and property taxes. (b) Not recorded on the balance sheet. Supplemental cash flow information were as follows: 28 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 Supplemental Condensed Consolidated Balance Sheet information related to leases were as follows: At June 30, 2020 Operating Leases: Right of use assets: Operating right-of-use assets $ 154,955 Lease Liabilities: Current portion of operating lease liabilities $ 29,018 Long-term operating lease liabilities 131,650 Total operating lease liabilities $ 160,668 Finance Leases: Property, plant and equipment, net (1) $ 13,318 Lease Liabilities: Notes payable and current portion of long-term debt $ 3,427 Long-term debt, net 9,725 Total financing lease liabilities $ 13,152 (1) Finance lease assets are recorded net of accumulated depreciation of $ 1,464 . The aggregate future maturities of lease payments for operating leases and finance leases as of June 30, 2020 are as follows (in thousands): Operating Leases Finance Leases 2020 (a) $ 8,794 $ 1,259 2021 34,624 4,252 2022 29,658 2,673 2023 23,123 2,361 2024 16,904 2,101 2025 14,773 1,382 Thereafter 70,304 — Total lease payments 198,180 14,028 Less: Imputed Interest ( 37,512 ) ( 876 ) Present value of lease liabilities $ 160,668 $ 13,152 (a) Excluding the nine months ended June 30, 2020 The aggregate minimum lease payments for operating leases, as calculated prior to the adoption of ASU 2016-02, were as follows: 29 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 Average lease terms and discount rates were as follows: At June 30, 2020 Weighted-average remaining lease term (years) Operating leases 8.3 Finance Leases 2.3 Weighted-average discount rate Operating Leases 5.17 % Finance Leases 4.36 % NOTE 21 — 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 (the “Peekskill Site”) owned by ISC Properties, Inc. (“ISCP”), a wholly-owned subsidiary of Griffon. ISCP sold the Peekskill Site in November 1982. Subsequently, ISCP was advised by the Department of Environmental Conservation of New York State ("DEC") 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. In 1996, ISCP entered into a consent order with the DEC (the “Consent Order”), pursuant to which ISCP was required to perform a remedial investigation and prepare a feasibility study (the “Feasibility Study”). After completing the initial remedial investigation, ISCP conducted, 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 Remedial Action Plan for the Peekskill Site that set forth 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 found to be present in sediments further downstream of the Peekskill site than previously detected. In August 2018, the DEC sent a letter to the United States Environmental Protection Agency (the “EPA”), in which the DEC requested that the Peekskill Site be nominated by the EPA for inclusion on the National Priorities List (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 30 NPL under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and is now performing a Remedial Investigation/Feasibility Study. The EPA estimates that it will select a remedy in 2022. It is uncertain what subsequent action the EPA will take. The EPA may, on its own or through the use of consultants, perform further studies of the site and/or subsequently remediate the site, and in such event, 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. Griffon does not acknowledge any responsibility to perform any 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, NY 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. While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, AMES is required to perform a remedial investigation of certain portions of the property and to recommend a remediation option. In 2018, Ames submitted a Feasibility Study recommending excavation of shallow soils for lead, arsenic and hydrocarbons in addition to deeper excavation for lead. DEC approved the selection of this remedy in 2019 by issuing a Record of Decision. Remediation activities to satisfy the Record of Decision were completed in June 2020. The DEC has requested investigation of one additional on-site area and Ames has submitted a workplan to satisfy this request. The DEC has also requested that Ames develop and implement a workplan to assess certain off-site areas adjoining the boundaries of the site, which Ames expects to submit in August 2020. AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between the DEC and a predecessor of AMES relating to the site. Ames’ insurer has accepted Ames’ claim for a substantial portion of the costs incurred and to be incurred with respect to both the on-site and off-site activities. 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. 31 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. 32 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 33 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 34 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 35 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 36 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 37 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 38 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 39 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 40 Table of Contents (Unless otherwise indicated, US dollars and non US currencies are in thousands, except per share data)