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Item 1. Financial Statements

2021-07-30 compared with 2021-04-30 · 200 added, 190 removed, 858 unchanged (31% of the section changed)

40 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Six Months Ended March 31, 2021

For the Three and Nine Months Ended June 30, 2021

COMMON STOCK CAPITAL IN

22 unchanged sentences

Balance at March 31, 2021 84,427 $ 21,106 $ 591,966 $ 646,444 27,743 $ ( 416,402 ) $ ( 54,176 ) $ ( 24,507 ) $ 764,431

Net income — — — 16,707 — — — — 16,707

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

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

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

ESOP allocation of common stock — — 856 — — — — — 856

Stock-based compensation — — 4,544 — — — — — 4,544

Other comprehensive income, net of tax — — — — — — 2,739 — 2,739

Balance at June 30, 2021 84,420 $ 21,104 $ 597,368 $ 658,605 27,743 $ ( 416,402 ) $ ( 51,437 ) $ ( 23,897 ) $ 785,341

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Three and Six Months Ended March 31, 2020

For the Three and Nine Months Ended June 30, 2020

COMMON STOCK CAPITAL IN

25 unchanged sentences

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

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

2 unchanged sentences

(in thousands, except per share data)

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

Three Months Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

7 unchanged sentences

Interest income 50 140 399 711

Gain (adjustment) on sale of business ( 949 ) — 5,291 —

Gain on sale of business — — 5,291 —

Loss from debt extinguishment, net — ( 1,235 ) — ( 7,925 )

14 unchanged sentences

Change in cash flow hedges 351 ( 1,945 ) 1,454 ( 1,278 )

Total other comprehensive income (loss), net of taxes 4,775 ( 14,834 ) 17,916 ( 7,993 )

Change in available-for-sale securities ( 17 ) — ( 17 ) —

Total other comprehensive income, net of taxes 2,739 8,702 20,655 709

Comprehensive income, net $ 19,446 $ 30,533 $ 83,974 $ 34,047

3 unchanged sentences

(in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 63,319 $ 33,338

Adjustments to reconcile net income to net cash used in operating activities:

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

Depreciation and amortization 46,955 47,067

9 unchanged sentences

Increase in accounts receivable and contract assets, net ( 9,684 ) ( 81,718 )

Increase in inventories ( 74,186 ) ( 21,262 )

(Increase) decrease in prepaid and other assets 271 ( 6,005 )

Increase (decrease) in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities ( 1,470 ) ( 38,053 )

(Increase) decrease in inventories ( 100,536 ) 34,518

Increase in prepaid and other assets ( 2,449 ) ( 17,393 )

Increase in accounts payable, accrued liabilities, income taxes payable and operating lease liabilities 13,821 10,536

Other changes, net 1,611 600

Net cash used in operating activities ( 25,841 ) ( 60,843 )

Net cash provided by operating activities 42,019 55,944

CASH FLOWS FROM INVESTING ACTIVITIES:

13 unchanged sentences

Other, net ( 272 ) ( 31 )

Net cash provided by (used in) financing activities ( 5,916 ) 94,351

Net cash used in financing activities ( 14,327 ) ( 9,305 )

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

2 unchanged sentences

(in thousands)

Six Months Ended March 31,

Nine Months Ended June 30,

CASH FLOWS FROM DISCONTINUED OPERATIONS:

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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.

and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which has, and could continue, to impact our business and consolidated results of operations and financial condition.

As of the date of this filing, all of Griffon's facilities are fully operational.

We have implemented a variety of new policies and procedures, including additional cleaning, social distancing, staggered shifts and prohibiting or significantly restricting on-site visitors, to minimize the risk to our employees of contracting COVID-19.

In the United States, we manufacture a substantial majority of the products that we sell.

While this helps mitigate the effects of global supplier and transportation disruptions, we are still impacted and are unable to accurately predict the impact COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to our customers’ and suppliers’ businesses and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q.

We will continue to evaluate the nature and extent of the impact to our business, consolidated results of operations, and financial condition.

2 unchanged sentences

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

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

Basis of Presentation

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

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

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

The fair values of Griffon’s 2028 senior notes approximated $ 1,060,000 on March 31, 2021.

The fair values of Griffon’s 2028 senior notes approximated $ 1,061,250 on June 30, 2021.

Fair values were based upon quoted market prices (level 1 inputs).

Insurance contracts with values of $ 3,821 at March 31, 2021 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

Insurance contracts with values of $ 3,924 at June 30, 2021 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets.

Items Measured at Fair Value on a Recurring Basis

At March 31, 2021, trading securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $ 2,088 ($ 1,000 cost basis), were included in Prepaid and other current assets on the Consolidated Balance Sheets.

Realized and unrealized gains and losses on trading securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

At June 30, 2021, available-for-sale securities, measured at fair value based on quoted prices in active markets for the underlying assets (level 1 inputs), and trading securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $ 1,316 ($ 1,339 cost basis) and $ 2,196 ($ 1,000 cost basis), respectively, were included in Prepaid and other current assets on the Consolidated Balance Sheets.

Unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in our Consolidated Balance Sheets as a component of AOCI.

Realized and unrealized gains and losses on trading securities and realized gains and losses on available-for-sale securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates.

To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options.

As of March 31, 2021, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in US dollars.

At March 31, 2021, Griffon had $ 61,000 of Australian dollar contracts at a weighted average rate of $ 1.29 which qualified for hedge accounting (level 2 inputs).

As of June 30, 2021, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in US dollars.

At June 30, 2021, Griffon had $ 36,000 of Australian dollar contracts at a weighted average rate of $ 1.28 which qualified for hedge accounting (level 2 inputs).

These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement.

Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS").

AOCI included deferred losses of $ 831 ($ 582 , net of tax) at March 31, 2021.

Upon settlement, losses of $ 1,741 and $ 2,399 were recorded in COGS during the three and six months ended March 31, 2021, respectively.

AOCI included deferred losses of $ 1,317 ($ 922 , net of tax) at June 30, 2021.

Upon settlement, losses of $ 413 and $ 2,812 were recorded in COGS during the three and nine months ended June 30, 2021, respectively.

All contracts expire in 1 to 119 days.

At March 31, 2021, Griffon had $ 7,935 of Canadian dollar contracts at a weighted average rate of $ 1.30 .

At June 30, 2021, Griffon had $ 8,425 of Canadian dollar contracts at a weighted average rate of $ 1.27 .

The contracts, which protect Canadian operations from currency fluctuations for US dollar based purchases, do not qualify for hedge accounting.

For the three and six months ended March 31, 2021, fair value gains of $ 520 and $ 244 , respectively, were recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs).

Realized losses of $ 102 and $ 161 were recorded in Other income during the three and six months ended March 31, 2021, respectively, for all settled contracts.

For the three and nine months ended June 30, 2021, fair value (losses) gains of $( 106 ) and $ 138 , respectively, were recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs).

Realized losses of $ 124 and $ 285 were recorded in Other income during the three and nine months ended June 30, 2021, respectively, for all settled contracts.

All contracts expire in 30 to 420 days.

At March 31, 2021, Griffon had $ 5,200 of British Pound dollar contracts at a weighted average rate of $ 0.75 .

At June 30, 2021, Griffon had $ 950 of British Pound dollar contracts at a weighted average rate of $ 0.75 .

The contracts, which protect United Kingdom operations from currency fluctuations for US dollar based purchases, do not qualify for hedge accounting.

For the three and six months ended March 31, 2021, fair value gains of $ 386 and $ 141 , respectively, were recorded to Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs).

Realized losses of $ 211 and $ 281 were recorded in Other income during the three and six months ended March 31, 2021, respectively.

For the three and nine months ended June 30, 2021, fair value (losses) gains of $( 111 ) and $ 30 , respectively, were recorded to Other assets and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs).

Realized losses of $ 224 and $ 505 were recorded in Other income during the three and nine months ended June 30, 2021, respectively.

All contracts expire in 6 to 21 days.

2 unchanged sentences

A performance obligation is a promise in a contract to transfer a distinct good or service, or a bundle of goods or services, to the customer, and is the unit of accounting.

A contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and with respect to which payment terms are identified and collectability is probable.

Once the Company has entered into a contract or purchase order, it is evaluated to identify performance obligations.

A contract with a customer is an agreement which both parties have approved, that creates enforceable rights and obligations, has commercial substance and with respect to which payment terms

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price).

are identified and collectability is probable.

Once the Company has entered into a contract or purchase order, it is evaluated to identify performance obligations.

For each performance obligation, revenue is recognized when control of the promised products is transferred to the customer, or services are satisfied under the contract or purchase order, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price).

Approximately 86 % of the Company’s performance obligations are recognized at a point in time related to the manufacture and sale of a broad range of products and components primarily within the CPP and HBP Segments, and revenue is recognized when title, and risk and rewards of ownership, have transferred to the customer, which is generally upon shipment.

7 unchanged sentences

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 six months ended March 31, 2021, income from operations included net unfavorable catch up adjustments approximating $ 1,423 and $ 3,220 , respectively.

For the three and six months ended March 31, 2020, income from operations included net unfavorable catch up adjustments of $ 2,188 and $ 422 , respectively.

For the three and nine months ended June 30, 2021, income from operations included net unfavorable catch up adjustments approximating $ 1,131 and $ 4,351 , respectively.

For the three and nine months ended June 30, 2020, income from operations included net unfavorable catch up adjustments of $ 2,805 and $ 3,228 , respectively.

Gross profit is impacted by a variety of factors, including the mix of products, systems and services, production efficiencies, price competition and general economic conditions.

2 unchanged sentences

These provisions had an immaterial impact on Griffon's Consolidated Financial Statements.

The estimated remaining costs to complete loss contracts as of March 31, 2021 and September 30, 2020 were approximately $ 8,500 and $ 10,800 , respectively.

The estimated remaining costs to complete loss contracts as of June 30, 2021 and September 30, 2020 were approximately $ 12,500 and $ 10,800 , respectively.

For a complete explanation of Griffon’s revenue accounting policies, this note should be read in conjunction with Griffon’s Annual Report on Form 10-K for the year ended September 30, 2020.

1 unchanged sentence

Transaction Price Allocated to the Remaining Performance Obligations

On March 31, 2021, we had $ 353,870 of remaining performance obligations, which we also refer to as total backlog.

On June 30, 2021, we had $ 375,039 of remaining performance obligations, which we also refer to as total backlog.

We expect to recognize approximately 66 % of our remaining performance obligations as revenue within one year, with the balance to be completed thereafter.

6 unchanged sentences

Contract Balances

Contract assets were $ 75,000 as of March 31, 2021 compared to $ 84,426 as of September 30, 2020.

The $ 9,426 net decrease in our contract assets balance was primarily due to the timing of billings and work performed in Surveillance programs and decrease associated with the sale of Systems Engineering Group, Inc.

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

Contract assets were $ 74,341 as of June 30, 2021 compared to $ 84,426 as of September 30, 2020.

The $ 10,085 net decrease in our contract assets balance was primarily due to the timing of billings and work performed in Communications and Surveillance

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

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.

programs and decrease associated with the sale of Systems Engineering Group, Inc.

("SEG"), partially offset by timing of work performed on Naval & Cyber Systems.

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 March 31, 2021 and September 30, 2020, approximately $ 7,700 and $ 7,500 , respectively, of contract costs and recognized income not yet billed were expected to be collected after one year.

Contract liabilities were $ 22,964 as of March 31, 2021 compared to $ 24,386 as of September 30, 2020.

At June 30, 2021 and September 30, 2020, approximately $ 9,600 and $ 7,500 , respectively, of contract costs and recognized income not yet billed were expected to be collected after one year.

Contract liabilities were $ 23,757 as of June 30, 2021 compared to $ 24,386 as of September 30, 2020.

The $ 629 decrease in the contract liabilities balance was primarily due to recognition of revenue in Naval & Cyber systems, partially offset by billings in Surveillance and Communications programs.

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The purchase price is subject to additional contingent consideration of approximately AUD $ 1,000 (approximately $ 760 ) based on Quatro exceeding certain EBITDA performance targets in the first year.

The preliminary acquired intangibles and goodwill allocated to this acquisition was AUD $ 2,755 (approximately $ 2,082 ) and AUD $ 1,648 (approximately $ 1,246 ), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

The preliminary goodwill and acquired intangibles allocated to this acquisition was AUD $ 1,038 (approximately $ 784 ) and AUD $ 2,755 (approximately $ 2,082 ), respectively, which was assigned to the CPP segment, and is not deductible for income tax purposes.

On November 29, 2019, AMES acquired 100 % of the outstanding stock of Vatre Group Limited ("Apta"), a leading United Kingdom supplier of innovative garden pottery and associated products sold to leading UK and Ireland garden centers for approximately $ 10,500 (GBP 8,750 ), inclusive of a post-closing working capital adjustment, net of cash acquired.

2 unchanged sentences

The purchase price allocation was finalized and allocated to goodwill of GBP 3,449 , acquired intangible assets of GBP 3,454 , inventory of GBP 2,914 , accounts receivable and other assets of GBP 2,492 and accounts payable and other accrued liabilities of GBP 3,765 , which was assigned to the CPP segment.

During the three and six months ended March 31, 2021, acquisition costs were de minimis.

During both the three and six months ended March 31, 2020, the Company incurred acquisition costs of $ 2,960 .

During the three and nine months ended June 30, 2021, acquisition costs were de minimis.

During the nine months ended June 30, 2020, the Company incurred acquisition costs of $ 2,960 .

The Company did no t incur acquisition costs in the three months ended June 30, 2020.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

On December 18, 2020, Defense Electronics completed the sale of its SEG business for $ 15,000 .

4 unchanged sentences

The sale does not represent a strategic shift that will have a major effect on operations and financial results.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

NOTE 5 – INVENTORIES

1 unchanged sentence

The following table details the components of inventory:

At March 31, 2021 At September 30, 2020

At June 30, 2021 At September 30, 2020

Raw materials and supplies $ 163,639 $ 146,351

4 unchanged sentences

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

At March 31, 2021 At September 30, 2020

At June 30, 2021 At September 30, 2020

Land, building and building improvements $ 169,588 $ 167,005

4 unchanged sentences

Total $ 338,762 $ 343,964

Depreciation and amortization expense for property, plant and equipment was $ 13,450 and $ 13,316 for the quarters ended March 31, 2021 and 2020, respectively, and $ 26,338 and $ 26,748 for the six months ended March 31, 2021 and 2020, respectively.

Depreciation included in Selling, general and administrative ("SG&A") expenses was $ 5,014 and $ 4,910 for the quarters ended March 31, 2021 and 2020, respectively, and $ 9,720 and $ 9,861 for the six months ended March 31, 2021 and 2020, respectively.

Depreciation and amortization expense for property, plant and equipment was $ 13,371 and $ 13,142 for the quarters ended June 30, 2021 and 2020, respectively, and $ 39,709 and $ 39,890 for the nine months ended June 30, 2021 and 2020, respectively.

Depreciation included in Selling, general and administrative ("SG&A") expenses was $ 5,044 and $ 4,852 for the quarters ended June 30, 2021 and 2020, respectively, and $ 14,764 and $ 14,713 for the nine months ended June 30, 2021 and 2020, respectively.

Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services.

2 unchanged sentences

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

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

NOTE 7 – CREDIT LOSSES

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Other, primarily foreign currency translation 20

Ending Balance, March 31, 2021 $ 9,594

Ending Balance, June 30, 2021 $ 9,542

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

NOTE 8 – GOODWILL AND OTHER INTANGIBLES

The following table provides changes in the carrying value of goodwill by segment during the six months ended March 31, 2021:

The following table provides changes in the carrying value of goodwill by segment during the nine months ended June 30, 2021:

At September 30, 2020 Business Acquisitions (a) Business Divestitures (b) Foreign

translations adjustments At March 31, 2021

translations adjustments At June 30, 2021

Consumer and Professional Products $ 232,845 $ 784 $ — $ 3,133 $ 236,762

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

At March 31, 2021 At September 30, 2020

At June 30, 2021 At September 30, 2020

Gross Carrying Amount Accumulated

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The gross carrying amount of intangible assets was impacted by approximately $ 5,832 related to foreign currency translation.

Amortization expense for intangible assets was $ 2,433 and $ 2,403 for the quarters ended March 31, 2021 and 2020, respectively, and $ 4,811 and $ 4,796 for the six months ended March 31, 2021 and 2020.

Amortization expense for intangible assets was $ 2,435 and $ 2,381 for the quarters ended June 30, 2021 and 2020, respectively, and $ 7,246 and $ 7,177 for the nine months ended June 30, 2021 and 2020.

Amortization expense for the remainder of 2021 and the next five fiscal years and thereafter, based on current intangible balances and classifications, is estimated as follows:

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The assessment determined that the fair value of the DE reporting unit substantially exceeded its carrying value and no impairment existed.

During the six months ended March 31, 2021, the Company determined that there were no other triggering events and, as a result, there was no impairment to either its goodwill or indefinite-lived intangible assets at March 31, 2021.

During the nine months ended June 30, 2021, the Company determined that there were no other triggering events and, as a result, there was no impairment to either its goodwill or indefinite-lived intangible assets at June 30, 2021.

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

NOTE 9 – INCOME TAXES

During the quarter ended March 31, 2021, the Company recognized a tax provision of $ 10,748 on income before taxes of $ 27,860 , compared to a tax provision of $ 2,034 on income before taxes of $ 2,929 in the comparable prior year quarter.

The current year quarter results included restructuring charges of $ 7,562 ($ 5,651 , net of tax), reduction to gain on sale of the SEG business of $ 949 ($ 766 , net of tax) and discrete and certain other tax provisions, net, that affect comparability of $ 1,913 .

The prior year quarter results included restructuring charges of $ 3,104 ($ 3,005 , net of tax), acquisition costs of $ 2,960 ($ 2,321 , net of tax), loss from debt extinguishment of $ 6,690 ($ 5,245 , net of tax) and discrete tax and certain other tax benefits, net, that affect comparability of $ 1,413 .

Excluding these items, the effective tax rates for the quarters ended March 31, 2021 and 2020 were 30.0 % and 35.9 %, respectively.

During the six months ended March 31, 2021, the Company recognized a tax provision of $ 20,417 on Income before taxes of $ 67,029 , compared to a tax provision of $ 8,373 on income before taxes of $ 19,880 in the comparable prior year period.

The six month period ended March 31, 2021 included restructuring charges of $ 18,362 ($ 13,951 , net of tax), gain on sale of the SEG business of $ 5,291 ($ 5,251 , net of tax) and discrete and certain other tax benefits, net, that affect comparability of $ 115 .

The six month period ended March 31, 2020 included restructuring charges of $ 9,538 ($ 7,153 , net of tax), acquisition costs of $ 2,960 ($ 2,321 , net of tax), loss from debt extinguishment of $ 6,690 ($ 5,245 , net of tax) and discrete tax and certain other tax benefits, net, that affect comparability of $ 580 .

Excluding these items, the effective tax rates for the six months ended March 31, 2021 and 2020 were 31.1 % and 34.4 %, respectively.

During the quarter ended June 30, 2021, the Company recognized a tax provision of $ 12,366 on Income before taxes of $ 29,073 , compared to a tax provision of $ 12,649 on Income before taxes of $ 34,480 in the comparable prior year quarter.

The current year quarter results included restructuring charges of $ 4,082 ($ 3,129 , net of tax) and discrete and certain other tax provisions, net, that affect comparability of $ 2,979 , primarily due to the impact of UK tax rate changes on deferred liabilities.

The prior year quarter results included restructuring charges of $ 1,633 ($ 1,224 , net of tax), loss from debt extinguishment of $ 1,235 ($ 969 , net of tax) and discrete tax and certain other tax provisions, net, that affect comparability of $ 1,828 .

Excluding these items, the effective tax rates for the quarters ended June 30, 2021 and 2020 were 31.2 % and 30.8 %, respectively.

During the nine months ended June 30, 2021, the Company recognized a tax provision of $ 32,783 on Income before taxes of $ 96,102 , compared to a tax provision of $ 21,022 on Income before taxes of $ 54,360 in the comparable prior year period.

The nine month period ended June 30, 2021 included restructuring charges of $ 22,444 ($ 17,080 , net of tax), gain on sale of the SEG business of $ 5,291 ($ 5,251 , net of tax) and discrete and certain other tax provisions, net, that affect comparability of $ 2,864 , primarily due to the impact of UK tax rate changes on deferred liabilities.

The nine month period ended June 30, 2020 included restructuring charges of $ 11,171 ($ 8,377 , net of tax), acquisition costs of $ 2,960 ($ 2,321 , net of tax), loss from debt extinguishment of $ 7,925 ($ 6,214 , net of tax) and discrete tax and certain other tax provisions, net, that affect comparability of $ 1,248 .

Excluding these items, the effective tax rates for the nine months ended June 30, 2021 and 2020 were 31.1 % and 32.6 %, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

NOTE 10 – LONG-TERM DEBT

At March 31, 2021 At September 30, 2020

At June 30, 2021 At September 30, 2020

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

8 unchanged sentences

Long-term debt $ 1,058,097 $ 327 $ ( 15,812 ) $ 1,042,612 $ 1,054,500 $ 363 $ ( 17,821 ) $ 1,037,042

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020

Effective Interest Rate Cash Interest Amort.

17 unchanged sentences

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

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

Six Months Ended March 31, 2021 Six Months Ended March 31, 2020

Nine Months Ended June 30, 2021 Nine Months Ended June 30, 2020

Effective Interest Rate Cash Interest Amort.

15 unchanged sentences

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

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

(a) On June 22, 2020, in an unregistered offering through a private placement, Griffon completed the add-on offering of $ 150,000 principal amount of its 5.75 % Senior Notes, at 100.25 % of par, to Griffon's previously issued $ 850,000 principal amount of its 5.75 % Senior Notes, 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 % 2022 senior notes.

As of March 31, 2021, outstanding Senior Notes due totaled $ 1,000,000 ;

As of June 30, 2021, outstanding Senior Notes due totaled $ 1,000,000 ;

interest is payable semi-annually on March 1 and September 1.

1 unchanged sentence

On April 22, 2020 and August 3, 2020, Griffon exchanged substantially all of the Senior Notes for substantially identical Senior Notes registered under the Securities Act of 1933, as amended (the "Securities Act"), via an exchange offer.

The fair value of the Senior Notes approximated $ 1,060,000 on March 31, 2021 based upon quoted market prices (level 1 inputs).

The fair value of the Senior Notes approximated $ 1,061,250 on June 30, 2021 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $ 16,448 of underwriting fees and other expenses incurred related to the issuance and exchange of the 2028 Senior Notes, which is being amortized over the term of the 2028 Senior Notes.

11 unchanged sentences

Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65 % of the equity interest in Griffon’s material, first-tier foreign subsidiaries.

At March 31, 2021, there were $ 20,622 of outstanding borrowings under the Credit Agreement;

At June 30, 2021, there were $ 20,775 of outstanding borrowings under the Credit Agreement;

outstanding standby letters of credit were $ 17,007 ;

1 unchanged sentence

The leases mature in 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0 % and 5.6 %, respectively.

The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon.

The leases mature in November 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0 % and 5.6 %, respectively.

The Troy, Ohio lease is secured by a mortgage on the real estate, which is guaranteed by Griffon, and has a one dollar buyout at the end of the lease.

The Ocala, Florida lease contains two five -year renewal options.

At March 31, 2021, $ 15,907 was outstanding, net of issuance costs.

At June 30, 2021, $ 15,254 was outstanding, net of issuance costs.

Refer to Note 21- Leases for further details.

(d) In November 2012, Garant G.P.

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($ 11,894 as of March 31, 2021) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 1.41 % LIBOR USD and 1.47 % Bankers Acceptance Rate CDN as of March 31, 2021).

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($ 12,126 as of June 30, 2021) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 1.40 % LIBOR USD and 1.48 % Bankers Acceptance Rate CDN as of June 30, 2021).

The revolving facility matures in October 2022.

Garant is required to maintain a certain minimum equity.

At March 31, 2021, there were no borrowings under the revolving credit facility with CAD 15,000 ($ 11,894 as of March 31, 2021) available for borrowing.

At June 30, 2021, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($ 12,126 as of June 30, 2021) available.

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

In July 2016, 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 ( 2.01 % at March 31, 2021).

During fiscal 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 .

As of March 31, 2021, the term loan had an outstanding balance of AUD 13,375 ($ 10,192 as of March 31, 2021).

As of June 30, 2021, the term loan had an outstanding balance of AUD 12,125 ($ 9,131 as of June 30, 2021).

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 ( 1.98 % and 1.41 %, respectively, at March 31, 2021).

At March 31, 2021, there were no balances outstanding under the revolver and the receivable purchase facility.

The revolving facility and receivable purchase facility accrue interest at BBSY plus 1.9 % and 1.35 %, respectively, per annum ( 1.98 % and 1.41 %, respectively, at June 30, 2021).

At June 30, 2021, there were no balances outstanding 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.

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The term loan and mortgage loan require quarterly principal payments of GBP 438 and GBP 105 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,088 and GBP 2,349 , respectively.

The Term Loan and Mortgage Loans each accrue interest at the GBP LIBOR Rate plus 1.8 % ( 1.85 % at March 31, 2021).

The revolving facility matures in May 2021, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 1.5 % ( 1.60 % as of March 31, 2021).

As of March 31, 2021, the revolver had an outstanding balance of GBP $ 3,204 ($ 4,405 as of March 31, 2021) while the term and mortgage loan balances amounted to GBP 14,313 ($ 19,678 as of March 31, 2021).

The Term Loan and Mortgage Loans each accrue interest at the GBP LIBOR Rate plus 1.8 % ( 1.86 % at June 30, 2021).

The revolving facility accrues interest at the Bank of England Base Rate plus 1.8 % ( 1.90 % as of June 30, 2021) and was renewed in June 2021.

The revolving credit facility matures in April 2022, but it is renewable upon mutual agreement with the lender.

As of June 30, 2021, the revolver had an outstanding balance of GBP $ 2,073 ($ 2,871 as of June 30, 2021) while the term and mortgage loan balances amounted to GBP 13,771 ($ 19,073 as of June 30, 2021).

The revolver and the term loan are both secured by substantially all of the assets of AMES UK and its subsidiaries.

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The internal loan is secured by shares purchased with the proceeds of the loan.

The amount outstanding on the internal loan at March 31, 2021 was $ 28,608 .

At March 31, 2021, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

The amount outstanding on the internal loan at June 30, 2021 was $ 27,988 .

At June 30, 2021, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

NOTE 11 — SHAREHOLDERS’ EQUITY

During 2021, the Company paid a quarterly cash dividend of $ 0.08 per share in each quarter, totaling $ 0.16 per share for the six months ended March 31, 2021.

During 2021, the Company paid a quarterly cash dividend of $ 0.08 per share in each quarter, totaling $ 0.24 per share for the nine months ended June 30, 2021.

During 2020, the Company paid a quarterly cash dividend of $ 0.075 per share, totaling $ 0.30 per share for the year.

1 unchanged sentence

such dividends will be released upon vesting of the underlying restricted shares.

On April 29, 2021, the Board of Directors declared a quarterly cash dividend of $ 0.08 per share, payable on June 17, 2021 to shareholders of record as of the close of business on May 20, 2021.

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

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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 July 29, 2021, the Board of Directors declared a quarterly cash dividend of $ 0.08 per share, payable on September 16, 2021 to shareholders of record as of the close of business on August 19, 2021.

On 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.

2 unchanged sentences

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 Incentive Plan.

2 to the Incentive Plan, pursuant to which 1,700,000

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

shares were added to the 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 March 31, 2021, there were 437,276 shares available for grant.

As of June 30, 2021, there were 443,820 shares available for grant.

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.

During the first quarter of 2021, Griffon granted 511,624 shares of restricted stock and restricted stock units.

7 unchanged sentences

Additionally, Griffon granted 44,424 restricted shares to the non-employee directors of Griffon with a vesting period of three years and a fair value of $ 1,080 , or a weighted average fair value of $ 24.31 per share.

During the third quarter of 2021, no grants were issued.

The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

4 unchanged sentences

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 six months ended March 31, 2021, Griffon did not purchase any shares of common stock under these repurchase programs.

As of March 31, 2021, an aggregate of $ 57,955 remains under Griffon's Board authorized repurchase programs.

During the second quarter ended March 31, 2021, no shares were withheld to settle employee taxes due upon the vesting of restricted stock.

During the six months ended March 31, 2021, 133,027 shares, with a market value of $ 2,774 , or $ 20.85 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 six months ended March 31, 2021, an additional 6,507 shares, with a market value of $ 135 , or

During the nine months ended June 30, 2021, Griffon did not purchase any shares of common stock under these repurchase programs.

As of June 30, 2021, an aggregate of $ 57,955 remains under Griffon's Board authorized repurchase programs.

During the third quarter ended June 30, 2021, no shares were withheld to settle employee taxes due upon the vesting of restricted stock.

During the nine months ended June 30, 2021, 133,027 shares, with a market value of $ 2,774 , or $ 20.85 per

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

$ 20.75 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

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, 2021, an additional 6,507 shares, with a market value of $ 135 , or $ 20.75 per share, were withheld from common stock issued upon the vesting of restricted stock units to settle employee taxes due upon vesting.

NOTE 12 – EARNINGS PER SHARE (EPS)

2 unchanged sentences

The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:

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

Three Months Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

19 unchanged sentences

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

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

Information on Griffon’s reportable segments is as follows:

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

REVENUE 2021 2020 2021 2020

6 unchanged sentences

The following table presents revenue disaggregated by end market and segment:

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

17 unchanged sentences

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

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

The following table presents revenue disaggregated by geography based on the location of the Company's customer:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

CPP HBP DE Total CPP HBP DE Total

5 unchanged sentences

Consolidated revenue $ 324,826 $ 259,392 $ 62,574 $ 646,792 $ 328,929 $ 219,164 $ 83,968 $ 632,061

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

CPP HBP DE Total CPP HBP DE Total

11 unchanged sentences

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

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

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

11 unchanged sentences

Acquisition costs — — — ( 2,960 )

Gain (adjustment) on sale of SEG business ( 949 ) — 5,291 —

Gain on sale of SEG business — — 5,291 —

Income before taxes $ 29,073 $ 34,480 $ 96,102 $ 54,360

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

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

DEPRECIATION and AMORTIZATION 2021 2020 2021 2020

15 unchanged sentences

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

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

ASSETS At March 31, 2021 At September 30, 2020

ASSETS At June 30, 2021 At September 30, 2020

Segment assets:

9 unchanged sentences

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

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

Three Months Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

9 unchanged sentences

The guidance is effective for fiscal years beginning after December 15, 2020, with early adoption permitted, and is effective for the Company in our fiscal year beginning in October 1, 2021.

We are currently evaluating the effects that the adoption of this guidance will have on our the related pension disclosures.

We are currently evaluating the effects that the adoption of this guidance will have on our related pension disclosures.

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.

10 unchanged sentences

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

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

primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss).

9 unchanged sentences

The following amounts summarize the total assets and liabilities related to 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 March 31, 2021 At September 30, 2020

At June 30, 2021 At September 30, 2020

Assets of discontinued operations:

6 unchanged sentences

Total liabilities of discontinued operations $ 8,353 $ 10,811

At March 31, 2021, Griffon's assets and liabilities consist primarily of insurance claims, income tax, product liability, and warranty and environmental reserves.

At June 30, 2021, Griffon's assets and liabilities consist primarily of insurance claims, income tax, product liability, and warranty and environmental reserves.

NOTE 17 – RESTRUCTURING CHARGES

8 unchanged sentences

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

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

Expanding the roll-out of the new business platform from our AMES U.S.

4 unchanged sentences

The remaining $ 19,000 of charges are non-cash and are primarily related to asset write-downs.

In the quarter and six months ended March 31, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $ 7,502 and $ 10,581 , respectively.

During the six months ended March 31, 2021, cash charges totaled $ 7,891 and non-cash, asset-related charges totaled $ 2,690 ;

In the quarter and nine months ended June 30, 2021, CPP incurred pre-tax restructuring and related exit costs approximating $ 4,082 and $ 14,663 , respectively.

During the nine months ended June 30, 2021, cash charges totaled $ 10,781 and non-cash, asset-related charges totaled $ 3,882 ;

the cash charges included $ 1,784 for one-time termination benefits and other personnel-related costs and $ 8,997 for facility and lease exit costs primarily driven by the consolidation of distribution facilities.

Non-cash charges of $ 3,882 predominantly related to inventory that have no recoverable value.

During the six months ended March 31, 2021, headcount was reduced by 65 .

In the quarter and six months ended March 31, 2020, CPP incurred pre-tax restructuring and related exit costs approximating $ 3,104 and $ 9,538 , respectively.

During the six months ended March 31, 2020, cash charges totaled $ 4,846 and non-cash, asset-related charges totaled $ 4,692 ;

During the nine months ended June 30, 2021, headcount was reduced by 65 .

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.

During the nine months 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.

1 unchanged sentence

In September 2020, the DE Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities.

The combined actions resulted in severance charges of approximately $ 4,300 , with $ 2,120 recognized in the fourth quarter of fiscal 2020, and the remaining $ 2,180 was recognized during the six months ended March 31, 2021.

These actions reduced headcount by approximately 90 people.

1 unchanged sentence

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

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

5 unchanged sentences

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

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

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

16 unchanged sentences

Accrued liability at March 31, 2021 $ 527 $ 264 $ — $ 791

Q3 Restructuring charges 700 2,190 1,192 4,082

Q3 Cash payments ( 799 ) ( 2,190 ) — ( 2,989 )

Q3 Non-cash charges — — ( 1,192 ) ( 1,192 )

Accrued liability at June 30, 2021 $ 428 $ 264 $ — $ 692

NOTE 18 – OTHER INCOME (EXPENSE)

For the quarters ended March 31, 2021 and 2020, Other income (expense) of $ 847 and $ 615 , respectively, includes $ 320 and $ 745 , respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 227 and $ 389 , respectively, as well as $ 55 and $( 230 ), respectively, of net investment income (loss).

For the six months ended March 31, 2021 and 2020, Other income (expense) of $ 806 and 1,393 includes $( 379 ) and $ 369 , 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 $ 454 and $ 778 , respectively, as well as $ 386 and $( 149 ), respectively, of net investment income (loss).

Additionally, Other income (expense) also includes a one-time technology recognition award for $ 700 .

For the quarters ended June 30, 2021 and 2020, Other income (expense) of $ 386 and $ 806 , respectively, includes $ 77 and $ 72 , respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 226 and $ 392 , respectively, as well as $ 249 and $ 499 , respectively, of net investment income (loss).

For the nine months ended June 30, 2021 and 2020, Other income (expense) of $ 1,192 and 2,199 includes $( 302 ) and $ 441 , respectively, of net currency exchange gains (losses) in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries, net periodic benefit plan income of $ 680 and $ 1,170 , respectively, as well as $ 877 and $ 216 , respectively, of net investment income (loss).

Additionally, in the prior year period, Other income (expense) also included a one-time technology recognition award for $ 700 .

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 19 – WARRANTY LIABILITY

4 unchanged sentences

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.

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

Three Months Ended June 30, Nine Months Ended June 30,

2021 2020 2021 2020

3 unchanged sentences

Balance, end of period $ 13,180 $ 9,901 $ 13,180 $ 9,901

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 20 – OTHER COMPREHENSIVE INCOME (LOSS)

The amounts recognized in other comprehensive income (loss) were as follows:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Pre-tax Tax Net of tax Pre-tax Tax Net of tax

2 unchanged sentences

Cash flow hedges 501 ( 150 ) 351 ( 2,779 ) 834 ( 1,945 )

Available-for-sale securities ( 23 ) 6 ( 17 ) — — —

Total other comprehensive income (loss) $ 3,214 $ ( 475 ) $ 2,739 $ 8,172 $ 530 $ 8,702

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Pre-tax Tax Net of tax Pre-tax Tax Net of tax

2 unchanged sentences

Cash flow hedges 2,077 ( 623 ) 1,454 ( 1,826 ) 548 ( 1,278 )

Available-for-sale securities ( 23 ) $ 6 ( 17 ) — — —

Total other comprehensive income (loss) $ 22,387 $ ( 1,732 ) $ 20,655 $ 818 $ ( 109 ) $ 709

The components of Accumulated other comprehensive income (loss) are as follows:

At March 31, 2021 At September 30, 2020

At June 30, 2021 At September 30, 2020

Foreign currency translation adjustments $ ( 10,661 ) $ ( 25,683 )

1 unchanged sentence

Change in Cash flow hedges 1,643 189

Available-for-sale securities ( 17 ) —

$ ( 51,437 ) $ ( 72,092 )

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

Gain (Loss) 2021 2020 2021 2020

4 unchanged sentences

Total $ ( 1,569 ) $ ( 387 ) $ ( 5,949 ) $ ( 1,254 )

GRIFFON CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 21 — LEASES

17 unchanged sentences

Components of operating lease costs are as follows:

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2021 2020 2021 2020

10 unchanged sentences

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

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

Supplemental cash flow information were as follows:

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

Supplemental Condensed Consolidated Balance Sheet information related to leases were as follows:

March 31, 2021 September 30, 2020

June 30, 2021 September 30, 2020

Operating Leases:

12 unchanged sentences

Total financing lease liabilities $ 17,346 $ 18,691

(1) Finance lease assets are recorded net of accumulated depreciation of $ 4,296 and $ 2,383 as of March 31, 2021 and September 30, 2020, respectively.

(1) Finance lease assets are recorded net of accumulated depreciation of $ 5,258 and $ 2,383 as of June 30, 2021 and September 30, 2020, respectively.

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

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 5.6 %, respectively.

The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon.

The leases mature in November 2021 and 2025, respectively, and bear interest at fixed rates of approximately 5.0 % and 5.6 %, respectively.

The Troy, Ohio lease is secured by a mortgage on the real estate, which is guaranteed by Griffon, and has a one dollar buyout at the end of the lease.

The Ocala, Florida lease contains two five -year renewal options.

As of March 31, 2021 and September 30, 2020, $ 15,907 and $ 17,188 , respectively, was outstanding, net of issuance costs.

As of June 30, 2021 and September 30, 2020, $ 15,254 and $ 17,188 , respectively, was outstanding, net of issuance costs.

The remaining lease liability balance relates to finance equipment leases.

The aggregate future maturities of lease payments for operating leases and finance leases as of March 31, 2021 are as follows (in thousands):

The aggregate future maturities of lease payments for operating leases and finance leases as of June 30, 2021 are as follows (in thousands):

Operating Leases Finance Leases

9 unchanged sentences

Present value of lease liabilities $ 155,484 $ 17,346

(a) Excluding the six months ended March 31, 2021.

Average lease terms and discount rates at March 31, 2021 were as follows:

(a) Excluding the nine months ended June 30, 2021.

Average lease terms and discount rates at June 30, 2021 were as follows:

Weighted-average remaining lease term (years)

7 unchanged sentences

Peekskill Site.

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

(“ISCP”), a wholly-owned subsidiary of Griffon.

(“ISCP”), a wholly-owned subsidiary of Griffon, for approximately three years .

ISCP sold the Peekskill Site in November 1982.

Subsequently, ISCP was advised by the Department of Environmental Conservation of New York State (the "DEC") that sampling at the Peekskill Site and in a creek near the Peekskill Site indicated concentrations of solvents and other chemicals common to prior plating operations by a Lightron subsidiary.

In 1996, ISCP entered into a consent order with the DEC (the “Consent Order”), pursuant to which ISCP was required to perform a remedial investigation and prepare a feasibility study (the “Feasibility Study”).

After completing the initial remedial investigation, ISCP conducted supplemental remedial investigations over the next several years, including soil vapor investigations, as required by the Consent Order.

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

GRIFFON CORPORATION AND SUBSIDIARIES

1 unchanged sentence

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

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

“Feasibility Study”).

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.

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The 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.

Following issuance of the Remedial Action Plan, the DEC implemented a portion of its plan, and performed additional investigation for the presence of metals in soils and sediments downstream from the Peekskill Site.

During this investigation metals were found to be present in sediments further downstream from the Peekskill site than previously detected.

In August 2018, the DEC sent a letter to the United States Environmental Protection Agency (the “EPA”), in which the DEC requested that the Peekskill Site be nominated by the EPA for inclusion on the National Priorities List under CERCLA (the “NPL”).

Based on the DEC’s request and an analysis by a consultant retained by the EPA, on May 15, 2019 the EPA added the Peekskill Site to the NPL and has since announced that it is performing a Remedial Investigation/Feasibility Study.

On August 25, 2020, the EPA sent a letter to several parties, including Lightron and ISCP, requesting that each such party inform the EPA as to whether it would be willing to enter into discussions regarding implementation of a Remedial Investigation/Feasibility Study (“RI/FS”).

The EPA also sent a request for information to each party under Section 104(e) of CERCLA.

On May 15, 2019 the United States Environmental Protection Agency ("EPA") added the Peekskill Site to the National Priorities List under CERCLA and has since announced that it is performing a Remedial Investigation/Feasibility Study ("RI/FS").

The EPA also sent a request for information under Section 104(e) of CERCLA to each party.

Lightron and ISCP have informed the EPA that they are willing to participate in discussions regarding implementation of the RI/FS.

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AMES investigated the on-site area and has completed remediation of that small area under a workplan approved by DEC.

At the request of DEC, Ames has also submitted a workplan to investigate the areas adjacent to the site perimeter.

At the request of DEC, AMES has also submitted (and DEC has approved) a workplan to investigate the areas adjacent to the site perimeter.

The workplan is expected to be completed by October 1, 2021.

AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between DEC and a predecessor of AMES relating to the site.

3 unchanged sentences

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

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

Government investigations and claims

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements