What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-11-16 compared with 2022-11-18 · 412 added, 465 removed, 1387 unchanged (39% of the section changed)

29 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

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

As indicated in Management’s Report, Hunter Fan Company was acquired during 2022.

Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Hunter Fan Company.

Definition and limitations of internal control over financial reporting

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Annual Goodwill and Indefinite-Lived Intangible Assets Impairment Testing

As described further in notes 1 and 7 to the consolidated financial statements, the Company tests goodwill and indefinite-lived intangible assets at least annually at the reporting unit level.

The Company performed its annual impairment testing of goodwill as of September 30, 2022, comparing the fair value of the Company’s reporting units to the respective reporting unit’s carrying value, including goodwill.

For the Consumer Professional Products (“CPP”) and Hunter reporting units and associated indefinite-lived intangible assets, indicators of impairment were present, and as such, the Company performed a quantitative assessment.

The fair value of CPP and Hunter were determined using a combination of the income and market-based valuation approach methodologies, which include the present value of expected future cash flows and the use of market assumptions specific to each reporting unit.

CPP Goodwill and Indefinite-Lived Intangible Assets Impairment Testing

As described further in notes 1 and 7 to the consolidated financial statements, the Company tests goodwill at the reporting unit level and indefinite-lived intangible assets at least annually for impairment.

The Company performed its annual impairment testing of goodwill as of September 30, 2023 for the CPP reporting units and associated indefinite-lived intangible assets.

Additionally, due to a decrease in forecasted sales and operating results due to elevated customer inventory levels and reduced customer demand, the Company completed an interim impairment test as of March 31, 2023 for the CPP reporting units and certain associated indefinite-lived intangible assets.

The Company performed the interim and annual impairment testing of goodwill by comparing the fair value of the Company’s reporting units to their respective carrying values.

The fair value of the CPP reporting units was determined using a combination of the income and market-based valuation approach methodologies, which include the present value of expected future cash flows and the use of market assumptions specific to the reporting unit.

The Company used prospective financial information to which discount rates were applied to calculate the fair value.

Similarly to goodwill, the Company tested indefinite-lived intangibles for impairment as of September 30, 2022.

The Company utilized a relief from royalty method to calculate and compare the fair value of the indefinite-lived intangible assets to their book value, which includes the use of market assumptions specific to each reporting unit.

As a result of the impairment tests, the Company recorded goodwill and intangible asset impairment as of September 30, 2022.

We identified the Company’s impairment testing of goodwill and indefinite-lived intangible assets for CPP and Hunter as a critical audit matter.

The principal considerations for our determination that the impairment testing is a critical audit matter are as follows:

The determination of the fair value of reporting units and indefinite-lived intangibles require management to make significant estimates and assumptions related to forecasts of future cash flows and discount rates.

Similarly to goodwill, the Company tested indefinite-lived intangibles for impairment as of March 31, 2023 and September 30, 2023.

The Company utilized a relief from royalty method to calculate and compare the fair value of the indefinite-lived intangible assets to their carrying value.

As a result of the impairment tests, the Company recorded indefinite-lived intangible asset impairment as of March 31, 2023, and September 30, 2023.

We identified the Company’s interim and annual impairment testing of the CPP reporting units’ goodwill and certain indefinite-lived intangible assets as a critical audit matter.

The principal considerations for our determination that the interim and annual impairment testing is a critical audit matter are as follows:

This requires management to evaluate historical results and expectations of future operating performance based on relevant information available to them regarding expectations of industry performance, as well as expectations for entity-specific performance.

In addition, determining the discount rate requires management to evaluate the appropriate risk premium based on their judgment of industry and entity-specific risks.

Management also used a selection of comparable companies that correspond to each reporting unit to derive a market-based multiple.

Management also used a selection of comparable companies that correspond to each reporting unit to derive a market-based multiple for the CPP reporting units.

As disclosed by management, changes in these assumptions could have a significant impact on the fair value of the reporting units and indefinite-lived assets.

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Our audit procedures related to the quantitative impairment testing included the following:

We tested the design and operating effectiveness of controls relating to the impairment testing, including the Company’s ability to develop the estimates utilized in calculating the fair value of the CPP and Hunter reporting units and indefinite-lived intangible assets.

Such estimates included prospective financial information, long-term growth rates, discount rates and weighted average cost of capital.

We tested the design and operating effectiveness of controls relating to the impairment testing, including the Company’s ability to develop the estimates utilized in calculating the fair value of the CPP reporting units and certain indefinite-lived intangible assets.

Such estimates included prospective financial information, long-term growth rates, discount rates, weighted average cost of capital and specifically for indefinite-lived intangibles, royalty rates.

With the assistance of valuation specialists, we evaluated the appropriateness of the valuation methodology utilized and assessed the appropriateness of inputs utilized.

We evaluated the qualifications of those responsible for preparing the calculations of fair values.

We tested the inputs, significant judgments and estimates utilized in performing the annual impairment test, which included comparing management’s judgments and estimates to industry and market data.

We tested the inputs, significant judgments and estimates utilized in performing the annual and interim impairment tests, which included comparing management’s judgments and estimates to industry and market data.

We tested the inputs, significant judgments and estimates, as follows:

a) tested prospective financial information and long-term growth rates by comparing to historical trends and industry expectations, performed a sensitivity analysis over growth rates and assessed management’s historical ability to accurately forecast;

b) tested discount and royalty rates by comparing to historical rates and industry expectations, compared rates to market comparable companies, including comparable licensing agreements and independently calculated discount rates for comparison to those used by management;

and c) tested weighted average cost of capital by analyzing the implied discount rate and independently calculated a weighted-average discount rate using individual discount rates and compared to the rate utilized by management.

b) tested discount rates by comparing to historical rates and industry expectations, compared rates to market comparable companies and independently calculated discount rates for comparison to those used by management;

c) for indefinite-lived intangibles, tested royalty rates by comparing to comparable licensing agreements;

and d) tested weighted average cost of capital by analyzing the implied discount rate and independently calculated a weighted-average discount rate using individual discount rates and compared to the rate utilized by management.

/s/ GRANT THORNTON LLP

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Prepaid and other current assets 57,139 62,453

Assets of discontinued operations held for sale — 275,814

Assets of discontinued operations not held for sale 1,189 605

Assets of discontinued operations 1,001 1,189

Total Current Assets 980,591 1,214,672

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Current portion of operating lease liabilities 32,632 31,680

Liabilities of discontinued operations held for sale — 81,023

Liabilities of discontinued operations 7,148 12,656

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Preferred stock, par value $ 0.25 per share, authorized 3,000 shares, no shares issued

Common stock, par value $ 0.25 per share, authorized 85,000 shares, issued shares of 84,746 and 84,375 , respectively.

Common stock, par value $ 0.25 per share, authorized 85,000 shares, issued shares of 84,746 in both 2023 and 2022.

21,187 21,187

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Interest income 2,094 215 440

Gain on sale of buildings 12,655 — —

Debt extinguishment, net ( 437 ) ( 4,529 ) —

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Income (loss) from continuing operations $ 1.49 $ ( 5.57 ) $ 1.38

Income (loss) from discontinued operations 1.86 0.18 0.28

Income from discontinued operations — 1.86 0.18

Basic earnings (loss) per common share $ 1.49 $ ( 3.71 ) $ 1.56

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Income (loss) from continuing operations $ 1.42 $ ( 5.57 ) $ 1.32

Income (loss) from discontinued operations 1.86 0.17 0.27

Income from discontinued operations — 1.86 0.17

Diluted earnings (loss) per common share $ 1.42 $ ( 3.71 ) $ 1.48

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Net income from discontinued operations — ( 96,157 ) ( 8,909 )

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:

Income (loss) from continuing operations $ 77,617 $ ( 287,715 ) $ 70,302

Adjustments to reconcile net income (loss) to net cash provided by operating activities of continuing operations:

Depreciation and amortization 65,445 64,658 52,302

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Debt extinguishment, net 437 4,529 —

Deferred income tax ( 56,706 ) 13,763 2,122

Deferred income tax provision (benefit) ( 37,795 ) ( 56,706 ) 13,763

(Gain)/ loss on sale/disposal of assets and investments ( 12,960 ) ( 469 ) 231

Change in assets and liabilities, net of assets and liabilities acquired:

Increase in accounts receivable ( 20,662 ) ( 7,002 ) ( 72,463 )

Increase in inventories ( 106,753 ) ( 154,515 ) 23,262

Increase in prepaid and other assets ( 20,005 ) ( 9,598 ) ( 15,878 )

(Increase) decrease in accounts receivable 50,793 ( 20,662 ) ( 7,002 )

(Increase) decrease in inventories

129,209 ( 106,753 ) ( 154,515 )

(Increase) decrease in prepaid and other assets 621 ( 20,005 ) ( 9,598 )

Increase (decrease) in accounts payable, accrued liabilities and income taxes payable ( 67,843 ) ( 96,372 ) 72,773

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Proceeds (payments) from investments — 14,923 ( 17,211 )

Proceeds from sale of business 295,712 — —

Proceeds (payments) from sale of business, net ( 2,568 ) 295,712 —

Proceeds from sale of property, plant and equipment 20,961 90 237

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CASH FLOWS FROM FINANCING ACTIVITIES - CONTINUING OPERATIONS:

Proceeds from issuance of common stock — — 178,165

Dividends paid ( 133,814 ) ( 126,677 ) ( 17,139 )

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Financing costs ( 3,025 ) ( 17,065 ) ( 571 )

Contingent consideration for acquired businesses — — ( 1,733 )

Other, net ( 130 ) 258 ( 257 )

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CASH FLOWS FROM DISCONTINUED OPERATIONS:

Net cash provided by operating activities 10,198 41,961 27,121

Net cash provided by (used in) operating activities ( 2,994 ) 10,198 41,961

Net cash provided by (used in) investing activities — ( 2,627 ) 6,751

Net cash provided by discontinued operations 7,571 48,712 19,734

Net cash provided by (used in) discontinued operations ( 2,994 ) 7,571 48,712

Effect of exchange rate changes on cash and equivalents ( 693 ) ( 5,398 ) ( 3,544 )

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Amortization of deferred compensation — — — — — — — 2,437 2,437

Common stock issued, net of issuance costs — — 46,900 — ( 8,700 ) 130,294 — — 177,194

Equity awards granted, net 636 159 ( 159 ) — — — — — —

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Stock-based compensation — — 16,410 — — — — — 16,410

Stock-based consideration — — 645 — — — — — 645

Other comprehensive loss, net of tax — — — — — — ( 6,176 ) — ( 6,176 )

Balance at 9/30/2020 83,739 $ 20,935 $ 583,008 $ 607,518 27,610 $ ( 413,493 ) $ ( 72,092 ) $ ( 25,725 ) $ 700,151

Net income — — — 79,211 — — — — 79,211

Dividends — — — ( 16,731 ) — — — — ( 16,731 )

Shares withheld on employee taxes on vested equity awards — — — — 152 ( 3,357 ) — — ( 3,357 )

Amortization of deferred compensation — — — — — — — 2,437 2,437

Equity awards granted, net 636 159 ( 159 ) — — — — — —

ESOP allocation of common stock — — 2,922 — — — — — 2,922

Stock-based compensation — — 16,410 — — — — — 16,410

Other comprehensive income, net of tax — — — — — — 26,115 — 26,115

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Balance at 9/30/2022 84,746 $ 21,187 $ 627,982 $ 344,060 27,682 $ ( 420,116 ) $ ( 82,738 ) $ ( 12,805 ) $ 477,570

Net income (loss) — — — 77,617 — — — — 77,617

Dividends — — — ( 140,161 ) — — — — ( 140,161 )

Shares withheld on employee taxes on vested equity awards — — — — 366 ( 12,990 ) — — ( 12,990 )

Amortization of deferred compensation — — — — — — — 10,362 10,362

Common stock acquired — — — — 4,143 ( 152,279 ) — — ( 152,279 )

Equity awards granted, net — — ( 7,699 ) — ( 507 ) 7,699 — — —

ESOP allocation of common stock — — 21,868 — — — — — 21,868

Stock-based compensation — — 20,529 — — — — — 20,529

Other comprehensive income, net of tax — — — — — — 12,728 — 12,728

Balance at 9/30/2023 84,746 21,187 662,680 281,516 31,684 ( 577,686 ) ( 70,010 ) ( 2,443 ) 315,244

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

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and is listed on the New York Stock Exchange (NYSE:GFF).

On May 3, 2023, in response to changing market conditions, Griffon announced that its CPP segment will expand its global sourcing strategy to include long handled tools, material handling, and wood storage and organization product lines.

By transitioning these product lines to an asset-light structure, CPP’s operations will be better positioned to serve customers with a more flexible and cost-effective sourcing model that leverages supplier relationships around the world, while improving its competitive positioning in a post-pandemic marketplace.

These actions will be essential to CPP achieving 15 % EBITDA margins, while enhancing free cash flow through improved working capital and significantly lower capital expenditures.

The global sourcing strategy expansion is expected to be complete by the end of calendar 2024.

Over that period, CPP expects to reduce its facility footprint by approximately 1.2 million square feet, or approximately 15 %, and its headcount by approximately 600 .

The affected U.S.

locations will include Camp Hill and Harrisburg, Pennsylvania;

Grantsville, Maryland;

Fairfield, Iowa;

and four wood mills.

Implementation of this strategy over the duration of the project will result in charges of $ 120,000 to $ 130,000 , including $ 50,000 to $ 55,000 of cash charges for employee retention and severance, operational transition, and facility and lease exit costs, and $ 70,000 to $ 75,000 of non-cash charges primarily related to asset write-downs.

Capital investment in the range of $ 3,000 to $ 5,000 will also be required.

These costs exclude cash proceeds from the sale of real estate and equipment, which are expected to largely offset the cash charges, and also exclude inefficiencies due to duplicative labor costs and absorption impacts during transition.

On May 16, 2022, Griffon announced that its Board of Directors initiated a process to review a comprehensive range of strategic alternatives to maximize shareholder value including a sale, merger, divestiture, recapitalization or other strategic transaction.

This process is active and discussions with potential counterparties are ongoing with respect to a number of these options.

The Committee on Strategic Considerations, a committee comprised of independent directors who serve on Griffon's Board, is overseeing the process and working with Griffon's management and Goldman Sachs & Co, LLC.

the Company's financial advisor.

There is no assurance that the process will result in any transaction being entered into or consummated.

On April 20, 2023, Griffon announced that its Board of Directors, after extensive evaluation and deliberation, determined that the ongoing execution of the Company’s strategic plan was the best way to maximize value for shareholders and unanimously decided to conclude its review.

On December 17, 2021, Griffon entered into a definitive agreement to acquire Hunter Fan Company (“Hunter”), a market leader in residential ceiling, commercial, and industrial fans, from MidOcean Partners (“MidOcean”) for a contractual purchase price of $ 845,000 and completed the acquisition on January 24, 2022.

The acquisition of Hunter was financed primarily with a new $ 800,000 seven year Term Loan B facility;

a combination of cash on hand and revolver borrowings was used to fund the balance of the purchase price and related acquisition and debt expenditures.

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its Defense Electronics segment, which consisted of Telephonics Corporation ("Telephonics"), and on June 27, 2022, Griffon completed the sale of Telephonics to TTM for $ 330,000 , excluding customary post-closing adjustments, primarily related to working capital.

As a result, Griffon classified the results of operations of the Telephonics business as a discontinued operation in the Consolidated Statements of Operations for all periods presented and classified the related assets and liabilities associated with the discontinued operation as held for sale in the consolidated balance sheets.

All references made to results and information in this Annual Report on Form 10-K are to Griffon's continuing operations unless noted otherwise.

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

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

In August 2020 Griffon Corporation completed the public offering of 8,700,000 shares of our common stock for total net proceeds of $ 178,165 (the "Public Offering").

The Company used a portion of the net proceeds to repay outstanding borrowings under its Credit Agreement.

The Company used the remainder of the proceeds for working capital and general corporate purposes.

During 2020, Griffon issued $ 1,000,000 of 5.75 % Senior Notes due in 2028 (the “2028 Senior Notes”) at par.

Proceeds from the 2028 Senior Notes were used to redeem the $ 1,000,000 of 5.25 % Senior Notes due 2022 (the "2022 Senior Notes").

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

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its Defense Electronics segment, which consisted of Telephonics Corporation ("Telephonics"), and on June 27, 2022, Griffon completed the sale of Telephonics for $ 330,000 , excluding customary post-closing adjustments, primarily related to working capital.

GRIFFON CORPORATION

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

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S.

operations, and on November 12, 2020, Griffon announced that CPP is broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China.

On April 28, 2022, Griffon announced a reduced scope and an accelerated timeline for the initiative, which was completed in fiscal 2022.

These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and equipment costs.

Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business.

Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative included three key development areas.

First, certain AMES U.S.

and global operations were consolidated to optimize facilities footprint and talent.

Second, strategic investments in automation and facilities expansion were made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth.

Third, multiple independent information systems were unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

The cost to implement this new business platform, over the duration of the project, included one-time charges of approximately $ 51,869 and capital investments of approximately $ 15,000 , net of future proceeds from the sale of exited facilities.

Total cumulative charges of $ 51,869 consisted of cash charges totaling $ 35,691 and non-cash, asset-related charges totaling $ 16,178 ;

the cash charges included $ 12,934 for one-time termination benefits and other personnel-related costs and $ 22,757 for facility exit costs.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic.

The health and safety of our employees, our customers and their families is always a high priority for Griffon.

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

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

While many of these precautions have been relaxed or eliminated as the health risk of COVID-19 has decreased, we would not hesitate to reinstitute and/or modify these policies and procedures as necessary should the health risk return to an unacceptable level.

In such event, our suppliers could be required by government authorities to temporarily cease operations;

might be limited in their production capacity due to complying with restrictions relating to the operation of businesses to mitigate the impacts of COVID-19;

or could suffer their own supply chain disruptions, impacting their ability to continue to supply us with the quantity of materials required by us.

While we are unable to determine or predict the nature, duration or scope of the overall impact COVID-19 will have on our businesses, results of operations, liquidity or capital resources, we believe it is important to discuss where our company stands today, how we have responded (and will continue to respond) to COVID 19 and how our operations and financial condition may change as COVID-19 evolves.

See information provided in Part 1, Item 1A, “Risk Factors” in this Form 10-K

sale in the consolidated balance sheets.

All references made to results and information in the Consolidated Financial Statements on Form 10-K are to Griffon's continuing operations unless noted otherwise.

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

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

Griffon currently conducts its operations through two reportable segments:

• Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a global provider of branded consumer and professional tools;

• 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 Cornell and Cookson brands.

• Consumer and Professional Products (“CPP”) is a leading global provider of branded consumer and professional tools;

residential, industrial and commercial fans;

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CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

• Home and Building Products ("HBP") conducts its operations through Clopay.

Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America.

Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes.

Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the Cornell and Cookson brands.

Consolidation

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The results of operations of acquired businesses are included from the dates of acquisitions.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Earnings per share

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Actual results may ultimately differ from these estimates.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Cash and equivalents

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Treasury securities and U.S.

Agency securities, as well as insured bank deposits.

Agency securities.

Griffon had cash in non-U.S.

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Fair value of financial instruments

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

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

The fair value hierarchy, as outlined in the applicable accounting guidance, establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.

• Level 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 value of Griffon’s 2028 Senior Notes approximated $ 833,433 , on September 30, 2022.

The fair values of Griffon’s 2028 Senior Notes and Term Loan B facility approximated $ 882,171 and $ 461,843 , respectively, on September 30, 2023.

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

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Items Measured at Fair Value on a Recurring Basis

At September 30, 2022 and 2021, marketable debt and equity securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $ 62 ($ 83 cost basis) and $ 16,044 ($ 15,050 cost basis), respectively, were included in Prepaid and other current assets on the Consolidated Balance Sheets.

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

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At September 30, 2023 and 2022, Griffon had $ 11,000 and $ 25,000 of Australian dollar contracts at a weighted average rate of $ 1.45 and $ 1.42 , respectively, which qualified for hedge accounting.

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

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

Accumulated Other Comprehensive Income (AOCI) included deferred gains of $ 2,017 ($ 1,412 , net of tax) and deferred gains of $ 1,710 ($ 1,197 , net of tax) at September 30, 2022 and 2021, respectively.

Accumulated Other Comprehensive Income (AOCI) included deferred gains of $ 765 ($ 536 , net of tax) and $ 2,017 ($ 1,412 , net of tax) at September 30, 2023 and 2022, respectively.

Upon settlement gains (losses) of $ 3,991 , $ 5,477 and $( 2,204 ) were recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS") during 2023, 2022 and 2021, respectively.

All contracts expire in 30 to 90 days .

At September 30, 2022, Griffon had $ 74,250 of Chinese Yuan contracts at a weighted average rate of $ 6.79 , which qualified for hedge accounting (level 2 inputs).

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

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

AOCI included deferred losses of $ 3,179 ($ 2,320 , net of tax) at September 30, 2022.

Upon settlement, losses of $ 736 were recorded in COGS during 2022.

All contracts expire in 30 days .

At September 30, 2023 and 2022, Griffon had $ 52,000 and $ 74,250 of Chinese Yuan contracts at a weighted average rate of $ 7.00 and $ 6.79 , respectively, which qualified for hedge accounting.

These hedges were all deemed effective as cash flow

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

hedges with gains and losses related to changes in fair value deferred and recorded in AOCI and Prepaid and other current assets, or Accrued liabilities, until settlement (level 2 inputs).

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

AOCI included deferred losses of $ 1,721 ($ 1,257 , net of tax) and $ 3,179 ($ 2,320 , net of tax) at September 30, 2023 and 2022, respectively.

Upon settlement, losses of $ 2,313 and $ 736 were recorded in COGS during 2023 and 2022, respectively.

All contracts expire in 10 to 335 days.

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Pension plan assets with a fair value of $ 146,997 at September 30, 2023, are measured and recorded at fair value based upon quoted prices in active markets for identical assets (level 1 inputs), quoted market prices for similar assets (level 2 inputs) and fair value assumptions for unobservable inputs in which little or no market data exists (level 3).

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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

methodology (level 3 inputs).

The operating results of the acquired companies are included in Griffon’s consolidated financial statements from the date of acquisition in each instance.

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Adjustments resulting from currency translation are recorded in AOCI as cumulative translation adjustments.

The Company recognized cumulative translation losses of $ 37,920 during 2022 and gains of $ 6,433 during 2021.

The Company recognized cumulative translation gains of $ 8,447 during 2023 and losses of $ 37,920 during 2022.

As of September 30, 2023 and 2022, the cumulative foreign currency translation recorded in AOCI was a loss of $ 48,723 and $ 57,170 , respectively.

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Refer to Note 2 - Revenue for more detail.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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

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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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

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The original cost of fully-depreciated property, plant and equipment remaining in use at September 30, 2023 was approximately $ 208,037 .

Long-lived assets, including customer relationships and software, and tangible assets, primarily property, plant and equipment, are amortized over their expected useful lives, which involve significant assumptions and estimates.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Long-lived assets, including customer relationships and software, and tangible assets, primarily property, plant and equipment, are amortized over their expected useful lives, generally eight to 25 years, and involves significant assumptions and estimates.

We assess the recoverability of the carrying amount of our long-lived assets, including amortizable intangible assets, whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable.

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If the sum of the expected future undiscounted cash flows are less than the carrying amount of the asset group, a loss would be recognized for the difference between the fair value and the carrying amount.

For the fiscal year ended September 30, 2022, we tested long-lived intangible and tangible assets for impairment by comparing estimated future undiscounted cash flows of each CPP asset group to the carrying amount of the asset group and determined that an impairment did not exist.

For the fiscal years ended September 30, 2023 and 2022, we tested long-lived intangible and tangible assets for impairment by comparing estimated future undiscounted cash flows of each CPP asset group to the carrying amount of the asset group and determined that an impairment did not exist.

No event or indicator of impairment existed for the HBP assets groups.

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To test goodwill and indefinite-lived intangible assets for impairment, we may perform both a qualitative assessment and quantitative assessment.

If we elect to perform a

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

qualitative assessment, we consider operating results as well as circumstances impacting the operations or cash flows of the reporting unit or indefinite-lived intangible assets, including macroeconomic conditions, industry and market conditions and reporting unit events and circumstances.

If we elect to perform a qualitative assessment, we consider operating results as well as circumstances impacting the operations or cash flows of the reporting unit or indefinite-lived intangible assets, including macroeconomic conditions, industry and market conditions and reporting unit events and circumstances.

For the quantitative test, the assessment is based on both an income-based and market-based valuation approach.

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Any changes in key assumptions or management judgment with respect to a reporting unit or its prospects, which may result from a decline in Griffon’s stock price, a change in market conditions, market trends, interest rates or other factors outside of Griffon’s control, or significant underperformance relative to historical or projected future operating results, could result in a significantly different estimate of the fair value of Griffon’s reporting units, which could result in an impairment charge in the future.

For the fiscal year ended September 30, 2022, we performed a qualitative assessment of the HBP reporting unit and determined that indicators that the fair value was less than the carrying amount were not present.

During the fiscal year ended September 30, 2023, the Company performed a qualitative assessment of the HBP reporting unit goodwill and determined that indicators that the fair value was less than the carrying amount were not present.

With respect to CPP's reporting units goodwill, the Company performed a quantitative assessment using both an income based and market based approach, which did not result in an impairment.

Additionally, the Company compared the estimated fair values of the CPP indefinite-lived intangibles, using the relief from royalty method, to their carrying amounts.

The impairment tests resulted in pre-tax noncash impairment charges of $ 109,200 to the gross carrying amount of our trademarks, of which $ 9,200 was recognized in the fourth quarter and $ 100,000 was recognized in the second quarter.

Indicators of impairment were not present for the HBP indefinite-lived intangibles during 2023.

For fiscal year ended September 30, 2022, we performed a qualitative assessment of the HBP reporting unit and determined that indicators that the fair value was less than the carrying amount were not present.

However, indicators of impairment were present for our CPP reporting units driven by a decrease in comparable company market multiples and an increase in interest rates and the related impact on weighted average cost of capital rates.

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The impairment tests resulted in a pre-tax, non-cash goodwill impairment charge of $ 342,027 .

Further, we compared the estimated fair values of the CPP indefinite lived intangibles to their carrying values which resulted in a pre-tax, non-cash impairment charge of $ 175,000 .

On October 1, 2019, the Company adopted the Accounting Standards Codifications ("ASC") Topic 842, Leases, which requires the recording of operating lease Right-of-Use ("ROU") assets and operating lease liabilities.

Finance leases were not impacted by the adoption of ASC Topic 842, as finance lease liabilities and the corresponding assets were already recorded in the balance sheet under the previous guidance, ASC Topic 840.

The Company has elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows us to carry forward the historical lease classification.

We also elected a practical expedient to determine the reasonably certain lease term.

The Company applied the modified retrospective approach, whereby the cumulative effect of adoption is recognized as of the date of adoption and comparative prior periods are not retrospectively adjusted.

As a result, upon adoption, we recognized ROU assets of $ 163,552 and lease liabilities of $ 163,676 associated with our operating leases.

The standard had no material impact to retained earnings or on our Consolidated Statements of Income or Consolidated Statements of Cash Flows.

Further, we compared the estimated fair values of the CPP indefinite lived intangibles, using the relief from royalty method, to their carrying values which resulted in a pre-tax, non-cash impairment charge of $ 175,000 .

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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.

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We use the implicit rate when readily determinable.

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

Our determination of the lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The Company determines if an arrangement is a lease at inception.

The ROU assets and short and long-term liabilities associated with our operating leases are shown as separate line items on our Condensed Consolidated Balance Sheets.

The ROU assets and short and long-term liabilities associated with our operating leases are shown as separate line items on our Consolidated Balance Sheets.

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

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term.

For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability.

For leases with a lease term of 12 months or less (a "Short-term" lease), any 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.

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For real estate leases, we account for lease components together with non-lease components (e.g., common-area maintenance).

Definite-lived long-lived assets

Amortizable intangible assets are carried at cost less accumulated amortization.

For financial reporting purposes, definite-lived intangible assets are amortized on a straight-line basis over their useful lives, generally eight to twenty-five years .

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.

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

We are subject to Federal, state and local income taxes in the U.S.

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To the extent that our assessment of such tax positions changes, the change in estimate is recorded in the period in which the determination is made.

Interest and penalties recognized on the liability for unrecognized tax benefits is recorded as income tax expense.

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

Research and development costs are charged to SG&A expense as incurred and amounted to approximately $ 18,000 in 2023, $ 16,000 in 2022 and $ 7,000 in 2021.

Total shipping and handling costs were $ 130,830 in 2022, $ 113,700 in 2021 and $ 100,135 in 2020, of which $ 69,000 in 2022, $ 58,100 in 2021 and $ 54,500 in 2020 were included in SG&A.

Total shipping and handling costs included in both COGS and SG&A were $ 123,100 in 2023, $ 130,830 in 2022 and $ 113,700 in 2021, of which $ 67,300 in 2023, $ 69,000 in 2022 and $ 58,100 in 2021 were included in SG&A.

Advertising costs, which are expensed as incurred in SG&A, was $ 28,000 in 2023, $ 27,000 in 2022 and $ 19,000 in 2021.

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

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

The Company’s non-service cost components of net periodic benefit plan cost was an expense (benefit) of $ 866 , $( 4,256 ) and $( 907 ) during 2023, 2022, and 2021 respectively.

Issued but not yet effective accounting pronouncements

In October 2023, the Financial Accounting Standards Board ("FASB") issued ASU No.

2023-06, Disclosure Improvements:

Amendments - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative.

The FASB issued the standard to introduce changes to US GAAP that originate in either SEC Regulation S-X or S-K, which are rules about the form and content of financial reports.

The provisions of the standard are contingent when the SEC removes the related disclosure provisions from Regulation S-X and S-K.

The company does not expect the provisions of the standard to have a material impact on the Company's financial statements and related disclosures.

New Accounting Standards Implemented

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805);

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GAAP, contract assets and contract liabilities acquired in a business combination are recorded by the acquirer at fair value.

This update is effective for the Company beginning in fiscal 2023.

Early adoption is permitted.

The Company is currently evaluating the effects that the adoption of this guidance will have on our consolidated financial statements and related disclosures.

New Accounting Standards Implemented

In December 2019, the FASB issued guidance on simplifying the 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.

This guidance became effective for the Company beginning in fiscal 2022.

We adopted the recognition of non-income taxes on the modified retrospective basis.

Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

In August 2018, the FASB issued guidance to clarify disclosure requirements related to defined benefit pension and other post-retirement plans.

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

Adoption of this standard did not have a material impact on our consolidated financial statements and the related disclosures.

This update was effective for the Company beginning in fiscal 2023.

Adoption of this standard did not have an impact on our consolidated financial statements and the 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.

GRIFFON CORPORATION

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

NOTE 2 – REVENUE

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These contracts require judgment in determining the number of performance obligations.

For contracts with multiple performance obligations, judgment is required to determine whether performance obligations specified in these contacts are distinct and should be accounted for as separate revenue transactions for recognition purposes.

For contracts with multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes.

In these types of contracts, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.

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The Company recognizes revenue from product sales when all factors are met, including when control of a product transfers to the customer upon its shipment, completion of installation, testing, certification or other substantive acceptance required under the contract.

Other than standard product warranty provisions, sales arrangements provide for no other significant post-shipment obligations on the Company.

Other than standard product warranty provisions, sales arrangements provide for no significant post-shipment obligations on the Company.

From time-to-time and for certain customers, rebates and other sales incentives, promotional allowances or discounts are offered, typically related to customer purchase volumes, all of which are fixed or determinable and are classified as a reduction of revenue and recorded at the time of sale.

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Generally, the period between the time revenue is recognized and the time payment is due is not significant.

Shipping and handling charges

Shipping and handling charges are not considered a separate performance obligation.

Additionally, all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer (e.g., sales, use, value added, and some excise taxes) are excluded from revenue.

GRIFFON CORPORATION

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

are not considered a separate performance obligation.

NOTE 3 — ACQUISITIONS

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The operating results of the business acquisitions are included in Griffon’s consolidated financial statements from the date of acquisition.

On December 17, 2021, Griffon entered into a definitive agreement to acquire Hunter, a market leader in residential ceiling, commercial, and industrial fans, from MidOcean for a contractual purchase price of $ 845,000 and completed the acquisition on January 24, 2022.

The acquisition was primarily financed with a new $ 800,000 seven year Term Loan B facility;

we used a combination of cash on hand and revolver borrowings to fund the balance of the purchase price and related acquisition and debt expenditures.

On January 24, 2022, Griffon acquired Hunter, a market leader in residential ceiling, commercial, and industrial fans, from MidOcean for a contractual purchase price of $ 845,000 .

The acquisition was primarily financed with a Term Loan B facility and a combination of cash on hand and revolver borrowings.

Hunter complements and diversifies Griffon's portfolio of leading consumer brands and products.

Since the date of acquisition through September 30, 2022, Hunter's revenue and Segment Adjusted EBITDA was $ 246,474 and $ 43,579 , respectively.

The goodwill recognized was $ 258,536 , which was assigned to the CPP segment, and is not expected to be deductible for income tax purposes.

The final purchase price allocation, which is expected to be completed in the first quarter of fiscal 2023, will be based on final appraisals and other analysis of fair values of acquired assets and liabilities.

Based on the final purchase price allocation, the goodwill recognized was $ 250,711 , which was assigned to the CPP segment, and is not deductible for income tax purposes.

The following unaudited proforma summary from continuing operations presents consolidated information as if the Company acquired Hunter on October 1, 2020:

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These proforma amounts have been compiled by adding the historical results from continuing operations of Griffon, restated for classifying the results of operations of the Telephonics business as a discontinued operation, to the historical results of Hunter after applying Griffon’s accounting policies and the following proforma adjustments:

• Depreciation and amortization that would have been charged assuming the preliminary fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2021.

• Depreciation and amortization that would have been charged assuming the fair value adjustments to property, plant, and equipment, and intangible assets had been applied from October 1, 2020.

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

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

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

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

Accounts receivable (1)

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Total net assets acquired $ 851,454

____________________________

(1) Includes $ 67,201 of gross accounts receivable of which $ 2,599 was not expected to be collected.

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(2) Includes $ 113,287 of gross inventory of which $ 2,988 was reserved for obsolete items.

(3) Deferred tax liability recorded on intangibles assets.

(3) Deferred tax liability recorded on primarily intangibles assets.

The amounts assigned to goodwill and major intangible asset classifications for the Hunter acquisition are as follows:

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

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

This acquisition broadens AMES' product offerings in the U.K.

market and increases its in-country operational footprint.

The purchase price was finalized and goodwill of GBP 3,449 and acquired intangible assets of GBP 3,454 , was assigned to the CPP segment and is deductible for tax purposes.

The purchase price was also allocated to inventory of GBP 2,914 , accounts receivable and other assets of GBP 2,492 and accounts payable and other accrued liabilities of GBP 3,765 ,

During the year ended September 30, 2022, SG&A included acquisition costs of $ 9,303 .

During the year ended September 30, 2021, acquisition related costs were de minimis.

During the years ended September 30, 2023 and 2021, acquisition related costs were de minimis.

During the year ended September 30, 2022, SG&A included acquisition costs of $ 9,303 .

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Total $ 507,130 $ 669,193

In connection with the Company's restructuring activities described in Note 10, Restructuring Charges, during the year ended September 30, 2023, CPP recorded an inventory impairment charge of $ 37,100 to adjust to net realizable value.

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT

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NOTE 6 – CREDIT LOSSES

Effective October 1, 2020, the Company adopted accounting guidance related to accounting for credit losses on financial instruments, including trade receivables (ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments).

The guidance requires companies to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance.

The Company is exposed to credit losses primarily through sales of products and services.

Trade receivables are recorded at their stated amount, less allowances for discounts, doubtful accounts and returns.

Trade receivables are recorded at their stated amount, less allowances for credit losses.

The Company’s expected loss allowance methodology for trade receivables is primarily based on the aging method of the accounts receivables balances and the financial condition of its customers.

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The allowance for doubtful accounts includes amounts for certain customers in which a risk of default has been specifically identified, as well as an amount for customer defaults, based on a formula, when it is determined the risk of some default is probable and estimable, but cannot yet be associated with specific customers.

Allowance for discounts and returns are recorded as a reduction of revenue and the provision related to the allowance for doubtful accounts is recorded in SG&A expenses.

Credit losses are recorded as a reduction of revenue and the provision related to the allowance for doubtful accounts is recorded in SG&A expenses.

The Company also considers current and expected future economic and market conditions, such as the COVID-19 pandemic, when determining any estimate of credit losses.

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Beginning Balance, October 1, 2021 $ 8,787

Allowance for credit losses acquired 2,598

Provision for expected credit losses 1,172

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Ending Balance, September 30, 2022 $ 12,137

Allowance for credit losses acquired 2,598

Provision for expected credit losses 971

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NOTE 7 — GOODWILL AND INTANGIBLES

Goodwill at September 30, 2023 and 2022 was $ 327,864 and $ 335,790 , respectively.

For the fiscal year ended September 30, 2023, the Company performed a quantitative assessment of the CPP reporting units using both an income-based and market-based approach, which did not result in a goodwill impairment.

For the HBP reporting unit, we performed a qualitative assessment and determined that indicators that fair value was less than the carrying amount were not present.

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The impairment tests resulted in a pre-tax, non-cash goodwill impairment charge of $ 342,027 to the CPP reporting units.

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

The following table provides a summary of the carrying value of goodwill by segment as of September 30, 2023, 2022 and 2021.

At September 30,

2020 Goodwill from acquisitions (a) Foreign currency translation adjustments At September 30,

2021 Goodwill from acquisitions (a) Accumulated Impairment Charges Foreign currency translation adjustments At September 30,

2022 Goodwill from acquisitions (a) Foreign currency translation adjustments At September 30,

Consumer and Professional Products $ 234,895 $ 258,536 $ ( 342,027 ) $ ( 6,867 ) $ 144,537 $ ( 7,926 ) $ — $ 136,611

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Total $ 426,148 $ 258,536 $ ( 342,027 ) $ ( 6,867 ) $ 335,790 $ ( 7,926 ) $ — $ 327,864

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

(a) The change in the CPP segment was due to the acquisitions of Hunter in 2022.

During the fiscal year ended September 30, 2023, the Company compared the estimated fair values of its CPP indefinite-lived intangibles to their carrying amounts using a relief from royalty method, which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it.

The Company then compared the estimated fair values of each trademark to their carrying amounts.

Indicators of impairment were not present for the HBP indefinite-lived intangibles during 2023.

GRIFFON CORPORATION

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

In connection with the preparation of our financial statements for the fiscal year ended September 30, 2022, indicators of impairment were present for our CPP indefinite-lived intangible assets.

As such, we determined the fair values of the indefinite-lived intangible assets by using the relief from royalty method, which estimates the value of a trademark by discounting to present value the hypothetical royalty payments that are saved by owning the asset rather than licensing it.

We compared the estimated fair values to their carrying amounts.

The impairment tests resulted in a pre-tax, non-cash impairment charge of $ 175,000 to the gross carrying amount of our Trademarks.

For the fiscal year ended September 30, 2022, we determined the fair values of CPP's indefinite-lived intangible assets by using the relief from royalty method, as described above.

We then compared the estimated fair values to their carrying amounts.

The impairment tests resulted in a pre-tax, non-cash impairment charge of $ 175,000 to the gross carrying amount of our CPP trademarks.

Indicators of impairment were not present for the HBP indefinite-lived intangibles during 2022.

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

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Total intangible assets $ 752,115 $ 116,872 $ 856,079 $ 94,165

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

In 2023, the gross carrying amount of intangible assets was impacted by $ 5,236 related to foreign currency translation.

Amortization expense for intangible assets subject to amortization was $ 22,389 , $ 18,215 and $ 9,561 in 2023, 2022 and 2021, respectively.

The increase in amortization expense in 2022 compared to the prior year was related to Intangible assets acquired in connection with the Hunter acquisition.

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

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On September 27, 2021, Griffon announced it was exploring strategic alternatives for its DE segment, which consisted of its Telephonics subsidiary.

On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $ 330,000 in cash, excluding customary post-closing adjustments, primarily related to working capital.

On June 27, 2022, Griffon completed the sale of Telephonics for $ 330,000 in cash, excluding customary post-closing adjustments, primarily related to working capital.

In connection with the sale of Telephonics, the Company recorded a gain of $ 107,517 ($ 89,241 , net of tax) for the year ended September 30, 2022.

The gain and related tax for the sale of Telephonics is preliminary and is subject to finalization.

In accordance with ASC 205-20 Presentation of Financial Statements:

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At the same time, the results of all discontinued operations , less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.

Defense Electronics (DE or Telephonics)

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

GRIFFON CORPORATION

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

Defense Electronics (DE or Telephonics)

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

For the Year Ended September 30,

2022 2021 2020

Revenue $ 161,061 $ 271,060

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Depreciation and amortization for fiscal 2022 would have been approximately $ 7,442 through the date of disposition on June 27, 2022.

As noted above, the Company completed the sale of Telephonics on June 27, 2022.

The following amounts related to Telephonics were classified as assets and liabilities of discontinued operations held for sale in the consolidated balance sheet as of September 30, 2021:

At September 30,

CURRENT ASSETS

Accounts receivable, net 42,020

Contract assets, net of progress payments 72,983

Inventories 83,970

Prepaid and other current assets 4,409

PROPERTY, PLANT AND EQUIPMENT, net 45,371

OPERATING LEASE RIGHT-OF-USE ASSETS 1,167

GOODWILL 17,734

INTANGIBLE ASSETS, net 131

OTHER ASSETS 5,629

Total Assets Held for Sale $ 273,414

CURRENT LIABILITIES

Accounts payable 60,486

Accrued liabilities 15,153

Current portion of operating lease liabilities 287

LONG-TERM OPERATING LEASE LIABILITIES 867

OTHER LIABILITIES 3,955

Total Liabilities Held for Sale $ 80,748

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

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

At September 30,

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Total liabilities of discontinued operations $ 11,798 $ 16,918

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

Accrued liabilities as of September 30, 2023 and 2022 includes the Company's obligation of $ 4,596 and $ 8,846 in connection with the sale of Telephonics primarily related to certain customary post-closing adjustments, primarily working capital and stay bonuses.

At September 30, 2023 and 2022, Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $ 7,202 and $ 8,072 , respectively.

The increase in assets and liabilities for Installations Services and other discontinued operations was primarily associated with insurance claims receivable and payable.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Except for revenue from the Telephonics business, as noted above, there was no reported revenue in 2023, 2022 and 2021 for Installations Services and other discontinued operations.

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NOTE 10 – RESTRUCTURING CHARGES

The global sourcing strategy expansion is expected to be complete by the end of calendar 2024.

Over that period, CPP expects to reduce its facility footprint by approximately 1.2 million square feet, or approximately 15 %, and its headcount by approximately 600 .

The affected U.S.

locations will include Camp Hill and Harrisburg, PA;

Grantsville, MD;

Fairfield, IA;

and four wood mills.

Capital investment in the range of $ 3,000 to $ 5,000 will also be required.

In November 2019, Griffon announced the development of a next-generation business platform for CPP to enhance the growth, efficiency, and competitiveness of its U.S.

operations, and on November 12, 2020, Griffon announced that CPP was broadening this strategic initiative to include additional North American facilities, the AMES United Kingdom (U.K.) and Australia businesses, and a manufacturing facility in China.

On April 28, 2022, Griffon announced a reduced scope and an accelerated timeline for the initiative, which was completed in fiscal 2022.

These changes reflect the rapid progress made with the initiative, and reduced investment in facilities expansion and equipment given recent significant increases in construction and

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

equipment costs.

Any remaining expenditures, after the end of fiscal 2022, including those related to the deployment of AMES' global information systems, will be included in the continuing operations of the business.

Future investments in equipment, particularly for automation, will be part of normal-course annual capital expenditures.

This initiative included three key development areas.

First, certain AMES U.S.

and global operations were consolidated to optimize facilities footprint and talent.

Second, strategic investments in automation and facilities expansion were made to increase the efficiency of our manufacturing and fulfillment operations, and support e-commerce growth.

Third, multiple independent information systems were unified into a single data and analytics platform, which will serve the whole AMES global enterprise.

On April 28, 2022, Griffon announced a reduced scope and accelerated timeline for the initiative, which was completed in fiscal 2022.

The cost to implement this new business platform included one-time charges of approximately $ 51,869 and capital investments of approximately $ 13,000 , net of future proceeds from the sale of exited facilities.

Total cumulative charges of $ 51,869 consisted of cash charges totaling $ 35,691 and non-cash, asset-related charges totaling $ 16,178 ;

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the cash charges included $ 16,772 for one-time termination benefits and other personnel related costs and $ 16,764 for facility exit costs.

Non-cash charges included a $ 21,832

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

impairment charge related to certain fixed assets at several manufacturing locations and $ 37,100 to adjust inventory to net realizable value.

In the year ended September 30, 2022, CPP incurred pre-tax restructuring and related exit costs approximating $ 16,782 .

Cash charges totaled $ 11,951 and non-cash, asset-related charges totaled $ 4,831 ;

the cash charges included $ 4,124 for one-time termination benefits and other personnel-related costs and $ 7,827 for facility exit costs.

Non-cash charges included a $ 3,805 of inventory that have no recoverable value and $ 1,026 primarily related to disposal of fixed assets at several manufacturing locations.

3 unchanged sentences

Non-cash charges of $ 6,655 predominantly related to inventory of $ 4,158 that have no recoverable value, and a $ 1,882 impairment charge related to machinery and equipment that have no recoverable value at one of the Company's owned manufacturing locations.

In the year ended September 30, 2020, CPP incurred pre-tax restructuring and related exit costs approximating $ 13,669 .

Cash charges totaled $ 8,977 and non-cash, asset-related charges totaled $ 4,692 ;

the cash charges included $ 5,620 for one-time termination benefits and other personnel-related costs and $ 3,357 for facility exit costs.

Non-cash charges included a $ 1,968 impairment charge related to a facility’s operating lease as 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.

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 Consolidated Statements of Operations were as follows:

For the Year Ended September 30,

2022 2021 2020

Cost of goods and services $ 82,028 $ 7,964 $ 7,923

2 unchanged sentences

For the Year Ended September 30,

2022 2021 2020

Personnel related costs $ 16,772 $ 4,124 $ 3,190

31 unchanged sentences

CPP offers an express limited warranty for a period of ninety days on all products from the date of the original purchase unless otherwise stated on the product or packaging from the date of original purchase.

Warranty costs expected to be incurred in the next 12 months are classified in accrued liabilities.

Warranty costs expected to be incurred beyond one year are classified in other long-term liabilities.

The short-term warranty liability was $ 20,781 as of September 30, 2023 and 16,786 as of September 30, 2022.

The long-term warranty liability was $ 1,239 at both September 30, 2023 and 2022.

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

17 unchanged sentences

Revolver due 2028 (b) 50,445 — ( 3,606 ) 46,839 Variable

Finance lease - real estate (c) 13,091 — — 13,091 Variable

lines of credit (d) — — ( 3 ) ( 3 ) Variable

term and mortgage loans (d) 12,090 — ( 27 ) 12,063 Variable

Other long term debt (e) 2,276 — ( 13 ) 2,263 Variable

Other debt (e) 1,592 — ( 11 ) 1,581 Variable

Totals 1,489,812 ( 704 ) ( 19,579 ) 1,469,529

3 unchanged sentences

Balance Original

Premium Capitalized

Expenses Balance

1 unchanged sentence

Senior notes due 2028 (a) $ 974,775 $ 266 $ ( 10,939 ) $ 964,102 5.75 %

Term Loan B due 2029 (b) 496,000 ( 1,144 ) ( 8,823 ) 486,033 Variable

Revolver due 2025 (b) 97,328 — ( 1,227 ) 96,101 Variable

2 unchanged sentences

term and mortgage loans (d) 12,090 — ( 27 ) 12,063 Variable

Other long term debt (e) 3,733 — ( 15 ) 3,718 Variable

Other debt (e) 2,276 — ( 13 ) 2,263 Variable

Totals 1,595,560 ( 878 ) ( 21,031 ) 1,573,651

7 unchanged sentences

Interest Rate Cash Interest Amort.

(Premium) Discount Amort.

(Premium) Discount

Deferred Cost

1 unchanged sentence

Senior notes due 2028 (a) 5.95 % $ 56,050 $ ( 48 ) $ 2,020 $ 58,022

Term Loan B due 2029 (b) Variable 18,116 135 1,068 19,319

Term Loan B due 2029 (b) 7.49 % 35,321 172 1,398 36,891

Revolver due 2025 (b) Variable 4,282 — 646 4,928

1 unchanged sentence

lines of credit (d) Variable 630 — 42 672

term and mortgage loans (d) Variable 610 — 53 663

Other long term debt (e) Variable 544 — 1 545

Other debt (e) Variable 392 — 2 394

Capitalized interest ( 142 ) — — ( 142 )

2 unchanged sentences

Interest Rate Cash Interest Amort.

Debt Premium Amort.

(Premium) Discount Amort.

Deferred Cost

1 unchanged sentence

Senior notes due 2028 (a) 5.95 % $ 57,105 $ ( 48 ) $ 2,056 $ 59,113

Term Loan B due 2029 (b) 4.14 % 18,116 135 1,068 19,319

Revolver due 2025 (b) Variable 3,762 — 491 4,253

2 unchanged sentences

term and mortgage loans (d) Variable 610 — 53 663

Other long term debt (e) Variable 443 — 2 445

Other debt (e) Variable 544 — 1 545

Capitalized interest ( 309 ) — — ( 309 )

Totals $ 80,604 $ 87 $ 3,688 $ 84,379

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Year Ended September 30, 2021

Interest Rate Cash Interest Amort.

Debt Discount Amort.

Debt Premium Amort.

Deferred Cost

1 unchanged sentence

Senior notes due 2028 (a) 5.95 % $ 57,500 $ ( 48 ) $ 2,084 $ 59,536

Senior notes due 2022 (a) 5.67 % $ 22,816 122 $ 1,735 $ 24,673

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

2 unchanged sentences

term and mortgage loans (d) Variable 655 — 71 726

Other long term debt (e) Variable 445 — 2 447

Other debt (e) Variable 443 — 2 445

Capitalized interest ( 31 ) — — ( 31 )

Totals $ 60,535 $ ( 48 ) $ 2,688 $ 63,175

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Minimum payments under debt agreements for the next five years are as follows:

1 unchanged sentence

(a) During 2020, Griffon issued, at par $ 1,000,000 of 5.75 % Senior Notes due 2028 (the "2028 Senior Notes").

Proceeds from the 2028 Senior Notes were used to redeem the $ 1,000,000 of 5.25 % Senior Notes due 2022 (the "2022 Senior Notes").

In connection with the issuance and exchange of the 2028 Senior Notes, Griffon capitalized $ 16,448 of underwriting fees and other expenses incurred, which will amortize over the term of such notes.

Additionally, during 2020 Griffon recognized a $ 7,925 loss on the early extinguishment of debt of the 2022 Senior Notes, comprised primarily of the write-off of $ 6,725 of remaining deferred financing fees, $ 607 of tender offer net premium expense and $ 593 of redemption interest expense.

Furthermore, all of the obligations associated with the 2022 Senior Notes were discharged.

During the year ended September 30, 2022, Griffon purchased $ 25,225 of 2028 Senior Notes in the open market at a weighted average discount of 91.82 % of par, or $ 23,161 .

Proceeds from the 2028 Senior Notes were used to redeem $ 1,000,000 of 5.25 % Senior Notes due 2022.

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

During 2022, Griffon purchased $ 25,225 of Senior Notes in the open market at a weighted average discount of 91.82 % of par, or $ 23,161 .

In connection with these purchases, Griffon recognized a $ 1,767 net gain on the early extinguishment of debt comprised of $ 2,064 of face value in excess of purchase price, offset by $ 297 related to the write-off of underwriting fees and other expenses.

5 unchanged sentences

At September 30, 2023, $ 8,920 of underwriting fees and other expenses incurred remained to be amortized.

(b) On January 24, 2022, Griffon amended and restated its Revolving Credit Facility (as amended, "Credit Agreement") to provide for a new $ 800,000 Term Loan B facility, due January 24, 2029, in addition to its current $ 400,000 revolving credit facility ("Revolver"), and replaced LIBOR with SOFR (Secured Overnight Financing Rate).

The Term Loan B contains a SOFR floor of 0.50 % and a current spread of 2.50 %.

Additionally, there are two interest rate step-downs tied to achieving decreased secured leverage ratio thresholds, the first of which was achieved during the year ended September 30, 2022.

(b) On August 1, 2023, Griffon amended and restated its revolving credit agreement (as amended, "Credit Agreement").

The amendment increased the maximum borrowing availability on its revolving credit facility from $ 400,000 to $ 500,000 (the "Revolver") and extended the maturity date of the Revolver from March 22, 2025 to August 1, 2028.

In the event the 2028 Senior Notes are not repaid, refinanced, or replaced prior to December 1, 2027, the Revolver will mature on December 1, 2027.

The amendment also modified certain other provisions of the Credit Agreement, including increasing the letter of credit sub-facility from $ 100,000 to $ 125,000 and increasing the customary accordion feature from a minimum of $ 375,000 to a minimum of $ 500,000 .

Additionally, the Revolver includes a multi-currency sub-facility of $ 200,000 .

Borrowings under the Revolver may be repaid and re-borrowed at any time.

Interest is payable on borrowings at either a Secured Overnight Financing Rate ("SOFR"), Sterling Overnight Index Average ("SONIA") or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance.

Griffon's SOFR loans accrue interest at Term SOFR plus a credit adjustment spread and a margin of 2.00 % ( 7.42 % at September 30, 2023), SONIA loans accrue interest at SONIA Base Rate plus a credit adjustment spread and a margin of 2.00 % ( 7.22 % at September 30, 2023) and base rate loans accrue interest at prime rate plus a margin of 1.00 % ( 9.50 % at September 30, 2023).

At September 30, 2023, under the Credit Agreement, there were $ 50,445 in outstanding borrowings;

outstanding standby letters of credit were $ 12,962 ;

and $ 436,593 was available, subject to certain loan covenants, for borrowing at that date.

On January 24, 2022, Griffon amended and restated its Credit Agreement to provide for a new $ 800,000 Term Loan B facility, due January 24, 2029, in addition to the Revolver, and replaced the London Interbank Offer Rate (LIBOR) with SOFR.

The Term Loan B accrues interest at the Term SOFR rate plus a credit adjustment spread with a floor of 0.50 %, and a spread of 2.25 % ( 7.79 % as of September 30, 2023).

The Original Issue Discount for the Term Loan B was 99.75 %.

In connection with this amendment, Griffon capitalized $ 15,466 of underwriting fees and other expenses incurred, which are being amortized over the term of the loan.

The Term Loan B facility requires nominal quarterly principal payments of $ 2,000 , which began with the quarter ended June 30, 2022;

potential additional annual principal payments based on a percentage of excess cash flow and certain secured leverage thresholds starting with the fiscal year ending September 30, 2023;

The Term Loan B facility requires nominal quarterly principal payments of $ 2,000 , potential additional annual principal payments based on a percentage of excess cash flow and secured leverage thresholds starting with the fiscal year ended September 30, 2023;

and a final balloon payment due at maturity.

At September 30, 2023, Griffon's secured leverage remained below the threshold set forth in the Credit Agreement that would, if exceeded, require Griffon to make an additional payment, and therefore no additional annual principal payment was required.

Term Loan B borrowings may generally be repaid without penalty but may not be re-borrowed.

During the year ended September 30, 2022, Griffon prepaid $ 300,000 aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance.

In connection with the prepayment of the Term Loan B Griffon recognized a $ 6,296 charge on the prepayment of debt, $ 5,575 related to the write-off of underwriting fees and other expenses and $ 721 of the

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

original issue discount.

During 2023 and 2022, Griffon prepaid $ 25,000 and $ 300,000 , respectively, of the aggregate principal amount of the Term Loan B, which permanently reduced the outstanding balance, and recognized a $ 437 and $ 6,296 charge on the prepayment of debt in 2023 and 2022, respectively.

The charges were comprised of write-offs of underwriting fees and other expenses of $ 386 and $ 5,575 for 2023 and 2022, respectively, and the original issue discount of $ 51 and $ 721 for 2023 and 2022, respectively.

The Term Loan B facility is subject to the same affirmative and negative covenants that apply to the Revolver, but is not subject to any financial maintenance covenants.

1 unchanged sentence

The fair value of the Term Loan B facility approximated $ 461,843 on September 30, 2023 based upon quoted market prices (level 1 inputs).

At September 30, 2022, $ 8,823 of underwriting fees and other expenses incurred, remained to be amortized.

The Revolver's maximum borrowing availability is $ 400,000 and it matures on March 22, 2025.

The Revolver includes a letter of credit sub-facility with a limit of $ 100,000 ;

a multi-currency sub-facility of $ 200,000 ;

and contains a customary accordion feature that permits us to request, subject to each lender's consent, an increase in the maximum aggregate amount that can be borrowed by up to an additional $ 100,000 .

In addition, on December 9, 2021, Griffon replaced the Revolver GBP LIBOR benchmark rate with a Sterling Overnight Index Average ("SONIA").

Borrowings under the Revolver may be repaid and re-borrowed at any time.

Interest is payable on borrowings at either a SOFR, SONIA or base rate benchmark rate, plus an applicable margin, which adjusts based on financial performance.

Current margins are 0.50 % for base rate loans, 1.50 % for SOFR loans and 1.50 % for SONIA loans.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

September 30, 2023, $ 7,039 of underwriting fees and other expenses incurred, remained to be amortized.

At September 30, 2023, $ 463,000 of the Term Loan B was outstanding.

The Revolver has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants and events of default.

1 unchanged sentence

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

At September 30, 2022, under the Credit Agreement, there were $ 97,328 in outstanding borrowings;

outstanding standby letters of credit were $ 12,287 ;

and $ 290,385 was available, subject to certain loan covenants, for borrowing at that date.

The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6 %.

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

At September 30, 2022, $ 13,091 was outstanding.

During the year ended September 30, 2022, the financing lease on the Troy, Ohio location expired.

The lease bore interest at a rate of approximately 5.0 %, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease.

(c) On September 28, 2023, the Company closed on the exercise of its lease purchase option, as permitted under the lease agreement, to acquire ownership of the manufacturing facility located in Ocala, Florida for a cash purchase price of $ 23,207 .

The Ocala lease had a maturity date in 2025 and bore interest at a fixed rate of approximately 5.6 %.

As a result of exercising the purchase option, the Company no longer has any future lease obligations related to this real estate.

During 2022, the financing lease on the Troy, Ohio location expired.

The Troy lease bore interest at a rate of approximately 5.0 %, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease.

Griffon exercised the one dollar buyout option in November 2021.

2 unchanged sentences

(“Garant”), a Griffon wholly owned subsidiary, entered into a CAD 15,000 ($ 11,117 as of September 30, 2023) revolving credit facility.

The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 4.44 % LIBOR USD and 4.76 % Bankers Acceptance Rate CDN as of September 30, 2022).

In October 2022 the revolving facility was amended and matures in October 2024 and is renewable upon mutual agreement with the lender.

Effective in December 2022, the facility was amended to replace LIBOR (USD) with the Canadian Dollar Offer Rate ("CDOR").

The facility accrues interest at CDOR or the Bankers Acceptance Rate (CDN) plus 1.3 % per annum ( 6.69 % using CDOR and 6.43 % using Bankers Acceptance Rate CDN as of September 30, 2023).

The revolving facility matures in December 2023, but is renewable upon mutual agreement with the lender.

Garant is required to maintain a certain minimum equity.

As of September 30, 2022, there were no borrowings under this revolving credit facility with CAD 15,000 ($ 10,956 as of September 30, 2022) available for borrowing.

In March 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into in July 2016 and further amended in fiscal 2020.

At September 30, 2023, there were no outstanding borrowings under the revolving credit facility with CAD 15,000 ($ 11,117 as of September 30, 2023) available.

During 2022, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries (collectively, "Griffon Australia") amended its AUD 18,375 term loan, AUD 20,000 revolver and AUD 15,000 receivable purchase facility agreement that was entered into in July 2016 and further amended in fiscal 2020.

Griffon Australia paid off the term loan in the amount of AUD 9,625 and canceled the AUD 20,000 revolver.

The amendment refinanced the existing AUD 15,000 receivable purchase facility.

The receivable purchase facility matures in March 2023 and is renewable upon mutual agreement with the lender.

In March 2023 the existing receivable purchase facility was renewed and increased from AUD 15,000 to AUD 30,000 ($ 19,188 as of September 30, 2023).

The receivable purchase facility matures in March 2024, but is renewable upon mutual agreement with the lender.

The receivable purchase facility accrues interest at BBSY (Bank Bill Swap Rate) plus 1.25 % per annum ( 5.33 % at September 30, 2023).

2 unchanged sentences

Griffon Australia is required to maintain a certain minimum equity level.

In July 2018, the AMES Companies UK Ltd and its subsidiaries (collectively, "Ames UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver.

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

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, which matured in July 2023.

Prior to maturity, on June 30, 2023, AMES UK paid off and cancelled the GBP 14,000 term loan and GBP 4,000 mortgage loan.

The payoff amounts were GBP 7,525 ($ 9,543 ) and GBP 2,451 ($ 3,108 ), respectively.

Upon maturity in July 2023, the GBP 5,000 revolver had no balance and was not renewed.

(e) Other debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of finance leases.

At September 30, 2023, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

GRIFFON CORPORATION

1 unchanged sentence

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

of GBP 7,088 and GBP 2,349 , respectively.

Effective in January 2022, the Term Loan and Mortgage Loan were amended to replace GBP LIBOR with SONIA.

The term loan and mortgage loan each accrue interest at the SONIA Rate plus 1.80 % ( 3.99 % as of September 30, 2022).

The revolver accrues interest at the Bank of England Base Rate plus 3.25 % ( 5.50 % as of September 30, 2022).

The revolver matures in July 2023, and is renewable upon mutual agreement with the lender.

As of September 30, 2022, the revolver had no outstanding balance, and the term and mortgage loan balances were GBP 11,060 ($ 12,090 as of September 30, 2022).

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

The mortgage loan is secured by the underlying property.

AMES UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

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

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

NOTE 13 – EMPLOYEE BENEFIT PLANS

8 unchanged sentences

Over time, these amounts will be recognized as part of net periodic pension costs in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Griffon is responsible for overseeing the management of the investments of two qualified defined benefit plan and uses the services of an investment manager to manage the plans' assets based on agreed upon risk profiles.

Griffon is responsible for overseeing the management of the investments of two qualified defined benefit plans and uses the services of an investment manager to manage the plans' assets based on agreed upon risk profiles.

The primary objective of the qualified defined benefit plan is to secure participant retirement benefits.

5 unchanged sentences

The Clopay AMES Pension Plan, the Hunter Fan Pension Plan and the AMES supplemental executive retirement plan are frozen to new entrants and participants in the plans no longer accrue benefits.

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

The Company’s non-service cost components of net periodic benefit plan cost was an expense (benefit) of $ 866 , $( 4,256 ) and $( 907 ) during 2023, 2022, and 2021 respectively.

Griffon uses judgment to establish the assumptions used in determining the future liability of the plan, as well as the investment returns on the plan assets.

3 unchanged sentences

The discount rate assumption is determined by developing a yield curve based on high quality bonds with maturities matching the plans’ expected benefit payment stream.

The plans’ expected cash flows are then discounted by the resulting year-by-year spot rates.

A 10 % change in the discount rate or return on assets would not have a material effect on the financial statements of Griffon.

GRIFFON CORPORATION

1 unchanged sentence

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

plans’ expected cash flows are then discounted by the resulting year-by-year spot rates.

A 10 % change in the discount rate or return on assets would not have a material effect on the financial statements of Griffon.

Net periodic costs (benefits) were as follows:

42 unchanged sentences

Amounts recognized in the statement of financial position consist of:

Non-Current Assets $ 7,773 $ 1,108 $ — $ —

Accrued liabilities — — ( 1,834 ) $ ( 1,866 )

11 unchanged sentences

Fair value of plan assets 146,997 144,091 — —

Actuarial gains as of September 30, 2022 were primarily the result of the increase in the discount rate.

Actuarial gains as of September 30, 2021 were primarily the result of the actual return on assets versus the expected return on assets.

Actuarial gains also resulted from the increase in the discount rate and the change in the mortality assumption for valuing the Projected Benefit Obligation.

Actuarial gains as of September 30, 2023 and 2022 were primarily the result of the increase in the discount rate.

The weighted-average assumptions used in determining the benefit obligations were as follows:

16 unchanged sentences

2028 through 2031 56,659 4,231

During 2023, Griffon expects to contribute $ 300 to the Defined Benefit plan and $ 1,866 to Supplemental Benefits that will be funded from the general assets of Griffon.

During 2024, Griffon is not required to and does not expect to contribute to the Defined Benefit plans and expects to contribute $ 1,853 to Supplemental Benefits that will be funded from the general assets of Griffon.

The Clopay AMES Pension Plan and the Hunter Fan Pension Plan are covered by the Pension Protection Act of 2006.

22 unchanged sentences

These investments are classified within Level 2 of the valuation hierarchy.

Fully benefit-responsive investment contracts - The Plan holds fully benefit-responsive investment contracts that are reported at contract value, which is the value of principal and interest under the terms of the annuity contract.

GRIFFON CORPORATION

1 unchanged sentence

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

The following table presents the fair values of Griffon’s pension and post-retirement plan assets by asset category:

33 unchanged sentences

Accrued income and plan receivables 265

Fully benefit-responsive investment contract 2,814

Total $ 144,091

4 unchanged sentences

As of October 1, 2021 $ 11,286

Purchases, issuances and settlements 150

Gains and losses ( 1,952 )

69 unchanged sentences

Insurance reserve 2,823 2,660

Restructuring reserve 4,224 —

Warranty reserve 6,912 3,402

2 unchanged sentences

Tax credits 5,933 5,933

Capital loss carryback — 2,533

Research & Development 5,281 —

Other reserves and accruals 5,312 5,553

6 unchanged sentences

Right-of-use assets ( 44,499 ) ( 47,949 )

Unremitted Foreign Earnings ( 1,894 ) —

Other ( 1,179 ) ( 1,224 )

7 unchanged sentences

Net deferred liability $ ( 95,691 ) $ ( 137,101 )

In 2022, the net increase in the valuation allowance of $ 3,065 is the result of a determination that certain state and foreign net operating losses will not be realized, partially offset by tax rate changes impacting the value of the deferred tax assets and the reversal of a valuation allowance related to certain state credits for the Telephonics business, which was sold on June 27, 2022 .

In 2021, the increase in the valuation allowance of $ 601 is primarily the result of foreign net operating losses and generation of state tax credits which will not be recognized, partially offset by the expiration of foreign tax credits during the year.

At both September 30, 2022 and 2021, Griffon has a policy election to indefinitely reinvest the undistributed earnings of foreign subsidiaries with operations outside the U.S.

As of September 30, 2022, we have approximately $ 178,233 of unremitted earnings of non-U.S.

In 2023, the net increase in the valuation allowance of $ 4,502 is the result of a determination that certain state and foreign net operating losses will not be realized.

In 2022, the increase in the valuation allowance of $ 3,065 is the result of a determination that certain state and foreign net operating losses will not be realized, partially offset by tax rate changes impacting the value of the deferred tax assets and the reversal of a valuation allowance related to certain state credits for the Telephonics business, which was sold on June 27, 2022.

Prior to fiscal year 2023, Griffon did not provide deferred U.S.

income taxes of undistributed earnings on non-U.S.

subsidiaries as such earnings were intended to be reinvested indefinitely.

At September 30, 2023 , Griffon has a policy election to indefinitely reinvest the undistributed earnings of certain non-U.S.

subsidiaries.

As of September 30, 2023, we have approximately $ 117,886 of undistributed earnings of non-U.S.

subsidiaries.

Of these undistributed earnings, $ 65,018 were previously subjected to U.S.

federal income tax.

As of September 30, 2023, we recognized a deferred tax liability of $ 1,894 for estimated non-U.S.

withholding taxes on the non-U.S.

earnings that are not indefinitely reinvested.

The Company has not

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

provided deferred taxes on any other outside basis differences in its investments in the non-U.S.

subsidiaries as these other outside basis differences are currently considered indefinitely reinvested.

The Company generates substantial cash flow in the U.S.

1 unchanged sentence

from the foreign entities.

The Company continues to reinvest the undistributed earnings of its foreign subsidiaries and may be subject to additional foreign withholding taxes and U.S.

The Company may repatriate non-indefinitely reinvested earnings of its non-U.S.

subsidiaries where excess cash has accumulated and the Company determines that it is appropriate and tax efficient.

Accordingly, the Company continues to reinvest all other undistributed earnings of its non-U.S.

subsidiaries and may be subject to additional non-U.S.

withholding taxes and U.S.

state income taxes if it reverses its indefinite reinvestment assertion in the future.

Outside basis differences were impractical to account for at this time and are currently considered as being permanent in duration.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

At September 30, 2022, Griffon had $ 44,521 loss carryforwards for U.S.

At September 30, 2023, Griffon had no loss carryforwards for U.S.

tax purposes and $ 27,585 for non-U.S.

tax purposes.

At September 30, 2021, Griffon had no loss carryforwards for U.S.

At September 30, 2022, Griffon had $ 44,521 loss carryforwards for U.S.

tax purposes and $ 8,798 for non-U.S.

4 unchanged sentences

At September 30, 2023 and 2022, Griffon had federal tax credit carryforwards of $ 5,933 and $ 5,933 , respectively, which expire in varying amounts through 2035.

At September 30, 2022 and 2021, Griffon had capital loss carryovers for U.S.

tax purposes of $ 0 and $ 10,327 , respectively, which expire in varying amounts through 2026.

The losses were generated in September 30, 2021 and September 30, 2019 tax years.

The carryovers are available for three-year carryback or five-year carryforward periods.

We believe it is more likely than not that the benefit from certain federal and state tax attributes will not be realized.

At September 30, 2023 and 2022, Griffon had no capital loss carryovers for U.S.

tax purposes.

Capital loss carryovers are available for three-year carryback or five-year carryforward periods.

We believe it is more likely than not that the benefit from certain federal, state, and non-U.S.

tax attributes will not be realized.

In recognition of this risk, we have provided a valuation allowance as of September 30, 2023 and 2022 of $ 17,992 and $ 13,490 , respectively, on the deferred tax assets.

19 unchanged sentences

Additions based on tax positions related to prior years

Reductions based on tax positions related to prior years ( 16 )

Lapse of Statutes ( 740 )

2 unchanged sentences

(1) Relates to unrecognized tax benefits assumed with the acquisition of Hunter.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

If recognized, the amount of potential unrecognized tax benefits that would impact Griffon’s effective tax rate is $ 3,021 .

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At September 30, 2023 and 2022, the combined amount of accrued interest and penalties related to tax positions taken or to be taken on Griffon’s tax returns and recorded as part of the reserves for uncertain tax positions was $ 651 and $ 521 , respectively.

Griffon cannot reasonably estimate the extent to which existing liabilities for uncertain tax positions may increase or decrease within the next twelve months as a result of the progression of ongoing tax audits or other events.

The Company may experience a decrease of $ 1,679 in unrecognized tax benefits over the next twelve months due to the potential resolution of unrecognized tax benefits involving several taxing jurisdictions accepting previously filed amended returns or lapse of the applicable statute.

Griffon cannot reasonably estimate the extent to which other existing liabilities for uncertain tax positions may increase or decrease within the next twelve months as a result of the progression of ongoing tax audits or other events.

Griffon believes that it has adequately provided for all open tax years by tax jurisdiction.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

On August 16, 2022, the U.S.

Government enacted the Inflation Reduction Act ("IRA") into law.

Included in the IRA was a provision to implement a 15% corporate alternative minimum tax on “adjusted financial statement income” for applicable corporations and a 1% excise tax on repurchases of stock.

These provisions are effective for tax years beginning after December 31, 2022.

We are in the process of evaluating the provisions of the IRA.

Included in the IRA was a provision to implement a 15% corporate alternative minimum tax ("CAMT") on “adjusted financial statement income” for applicable corporations and a 1% excise tax on repurchases of stock.

The stock buyback excise tax went into effect January 1, 2023 and Griffon records the excise tax on its stock repurchases, net of reissuances, against treasury stock.

The CAMT is effective for tax years beginning after December 31, 2022.

Based on current levels of income we do not expect to be subject to the CAMT.

NOTE 15 – STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION

During 2022, 2021 and 2020, the Company declared and paid, in quarterly increments, cash dividends totaling $ 0.36 per share, $ 0.32 per share and $ 0.30 per share, respectively.

In addition, on June 27, 2022, the Board of Directors declared a special cash dividend of $ 2.00 per share, paid on July 20, 2022 to shareholders of record as of the close of business on July 8, 2022.

During 2023, 2022 and 2021, the Company declared and paid, in quarterly increments, cash dividends totaling $ 0.45 per share (two quarterly dividends of $ 0.10 and two quarterly dividends of $ 0.125 ), $ 0.36 per share and $ 0.32 per share, respectively.

Furthermore, on April 19, 2023, the Board of Directors declared a special cash dividend of $ 2.00 per share, paid on May 19, 2023 to shareholders of record as of the close of business on May 9, 2023.

On June 27, 2022, the Board of Directors declared a special cash dividend of $ 2.00 per share, paid on July 20, 2022.

The Company currently intends to pay dividends each quarter;

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Dividends paid on shares in the ESOP were used to offset ESOP loan payments and recorded as a reduction of debt service payments and compensation expense.

A dividend payable was established for the holders of restricted shares;

For all dividends, a dividend payable was established for the holders of restricted shares;

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

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On November 14, 2023, the Board of Directors declared a cash dividend of $ 0.15 per share, payable on December 14, 2023 to shareholders of record as of the close of business on November 28, 2023.

On August 18, 2020, the Company sold 8,000,000 shares of our common stock at a price of $ 21.50 per share through a public equity offering, for a total net proceeds of $ 163,830 , net of underwriting discounts, commissions and offering expenses.

In addition, on August 21, 2020, pursuant to the exercise by the underwriters of their overallotment option, the underwriters purchased an additional 700,000 shares of common stock from the Company at a price of $ 21.50 , resulting in additional net proceeds to the Company of $ 14,335 .

In total, the Company sold 8,700,000 shares of common stock at a price of $ 21.50 for a total net proceeds of $ 178,165 .

The Company used a portion of the net proceeds to temporarily repay outstanding borrowings under its Credit Agreement.

The Company used the remainder of the proceeds for working capital and general corporate purposes.

On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan (the "Original Incentive Plan") pursuant to which, among other things, 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.

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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 Selling, general and administrative expenses.

Compensation cost related to stock-based awards with graded vesting, generally over a

GRIFFON CORPORATION

1 unchanged sentence

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

period of three to four years , is recognized using the straight-line attribution method and recorded within Selling, general and administrative expenses.

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

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Restricted stock $ 20,529 $ 18,810 $ 16,410

ESOP 14,325 3,678 2,878

20,583 14,325 3,678

Total stock-based compensation $ 41,112 $ 33,135 $ 20,088

________________________

(1) During the year ended September 30, 2023 and 2022, special dividend ESOP charges included in compensation expense were $ 15,494 and $ 10,538 , respectively.

A summary of restricted stock activity, inclusive of restricted stock units, for 2023 is as follows:

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During 2023, Griffon granted 466,677 shares of restricted stock and restricted stock units to its employees.

This included 218,162 restricted stock and restricted stock units, subject to certain performance conditions, with vesting periods of 34 months with a total fair value of $ 6,285 , or a weighted average fair value of $ 28.81 per share.

Furthermore, this included 274,063 restricted stock awards granted to seventeen executives, with a vesting period of three years and a total fair value of $ 6,240 , or a weighted average fair value of $ 22.77 per share.

This also included 454,146 shares of restricted stock granted to two senior executives with a vesting period of thirty-four months and a two-year post-vesting holding period, subject to the achievement of certain performance conditions relating to required levels of return on invested capital and the relative total shareholder return of Griffon's common stock as compared to a market index.

So long as the minimum performance condition is attained, the amount of shares that can vest will range from 113,538 to 454,146 .

The total fair value of these restricted shares using the Monte Carlo Simulation model is approximately $ 5,456 , or a weighted average fair value of $ 24.03 per share.

This included 249,480 shares of restricted stock and 11,901 restricted stock units granted to forty-four executives and key employees, subject to certain performance conditions, with a vesting period of 36 months with a total fair value of $ 8,385 , or a weighted average fair value of $ 33.61 per share.

This also included 205,296 shares of restricted stock granted to two senior executives with a vesting period of thirty-six months and a two-year post-vesting holding period, subject to the achievement of certain performance conditions relating to required levels of return on invested capital and the relative total shareholder return of Griffon's common stock as compared to a market index.

So long as the minimum performance conditions are attained, the amount of shares that can vest will range from 51,324 to 205,296 , with the target number of shares being 102,648 .

The total fair value of these restricted shares using the Monte Carlo Simulation model, assuming achievement of the performance conditions at target, is approximately $ 3,648 , or a weighted average fair value of $ 35.54 per share.

Additionally, Griffon granted 39,972 restricted shares to the non-employee directors of Griffon with a vesting period of one year and a fair value of $ 1,211 , or a weighted average fair value of $ 30.29 per share.

During the year ended September 30, 2023, 494,748 shares granted were issued out of treasury stock.

On November 16, 2022, Griffon granted 466,677 shares of restricted stock.

This includes 261,381 shares of restricted stock granted to 44 executives and key employees, subject to certain performance conditions, with a vesting period of thirty-six months , with a total fair value of $ 8,785 , or a weighted average fair value of $ 33.61 per share.

In addition, Griffon also granted 205,296 shares of restricted stock granted to two senior executives with a vesting period of thirty-six months and a two-year post-vesting holding period, subject to the achievement of certain performance conditions relating to required levels of return on invested capital and the relative total shareholder return of Griffon's common stock as compared to a market index.

So long as the minimum performance conditions are attained, the amount of shares that can vest will range from a minimum of 51,324 to a maximum of 205,296 , with the target number of shares being 102,648 .

The total estimated fair value of these restricted shares, assuming achievement of the performance conditions at target, is $ 3,555 , or a weighted average fair value of $ 34.63 per share.

On November 14, 2023, Griffon granted 174,104 shares of restricted stock and restricted stock units to 43 executives and key employees, subject to certain performance conditions, with a vesting period of thirty-six months , with a total fair value of $ 8,225 , or a weighted average fair value of $ 47.24 per share.

GRIFFON CORPORATION

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

On each of August 3, 2016 and August 1, 2018, Griffon’s Board of Directors authorized the repurchase of up to $ 50,000 of Griffon’s outstanding common stock.

Under these share repurchase programs, the Company may purchase shares of its common stock, depending upon market conditions, in open market or privately negotiated transactions, including pursuant to a 10b5-1 plan.

Shares repurchased are recorded at cost.

During 2020, Griffon did no t purchase shares of common stock under these repurchase programs.

At September 30, 2022 an aggregate of $ 57,955 remains under Griffon's Board authorized repurchase authorizations.

On April 19, 2023, the Company's Board of Directors approved a $ 200,000 increase to Griffon's share repurchase program to $ 257,955 from the prior unused authorization of $ 57,955 .

Under the authorized share repurchase program, the Company may, from time to time, purchase shares of its common stock in the open market, including pursuant to a 10b5-1 plan, pursuant to an accelerated share repurchase program or issuer tender offer, or in privately negotiated transactions.

During the year ended September 30, 2023, Griffon purchased 4,142,794 shares of common stock under these repurchase programs, for a total of $ 150,772 , or $ 36.39 per share, excluding excise taxes.

As of September 30, 2023, $ 107,183 remains under these Board authorized repurchase programs.

In connection with the share repurchases, excise taxes totaling $ 1,301 were accrued as of September 30, 2023.

On September 5, 2023, Griffon repurchased 400,000 shares of its common stock, par value $ 0.25 per share, beneficially owned by two separately managed accounts of which Voss Capital, LLC is the investment manager (the “Selling Shareholders”), in a private transaction to facilitate redemptions by investors in the Selling Shareholders.

The purchase price per share was approximately $ 41.87 , for an aggregate purchase price of $ 16,746 .

The Selling Shareholders are affiliates of Voss Capital, LLC.

Cocke, the Founder, Chief Investment Officer and Managing Member of Voss Capital, LLC, is a member of the Board of Directors of the Company.

These shares are included in the total shares purchased in the previous paragraph.

Subsequent to September 30, 2023 and through November 14, 2023, Griffon purchased 1,127,062 shares of common stock for a total of $ 44,980 , or $ 39.91 per share under these Board authorized repurchase programs.

On November 15, 2023, Griffon announced a $ 200,000 increase to its share repurchase program which on November 15, 2023 had $ 262,203 available given effect to all repurchases through November 14, 2023.

During the year ended September 30, 2023, 365,823 shares, with a market value of $ 12,882 , or $ 35.21 per share, were withheld to settle employee taxes due upon the vesting of restricted stock, and were added to treasury stock.

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Amounts purchased under such commitments were $ 184,422 , $ 255,661 and $ 235,148 for the years ended September 30, 2023, 2022 and 2021, respectively.

Aggregate future minimum purchase obligations at September 30, 2022 are $ 184,422 in 2022, $ 16,463 in 2023, $ 3,622 in 2024, $ 0 in 2025 and $ 0 in 2026.

Aggregate future minimum purchase obligations at September 30, 2023 are $ 160,539 in 2024 and $ 3,622 in 2025.

There were no purchase obligations after 2025.

Legal and environmental

Peekskill Site.

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

Lightron Corporation (“Lightron”), a wholly-owned subsidiary of Griffon, once conducted lamp manufacturing and metal finishing operations at a location in the Town of Cortlandt, New York, just outside the cit of Peekskill, New York (the “Peekskill Site”) which was owned by ISC Properties, Inc.

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

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Based upon studies conducted by ISCP and the New York Department of Environmental Conservation, soils and groundwater beneath the Peekskill Site contain chlorinated solvents and metals.

Stream sediments downgradient of the Peekskill Site also contain metals.

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 reached agreement with Lightron and ISCP wherein Lightron and ISCP will perform a Remedial Investigation/Feasibility Study (“RI/FS”).

Stream sediments downgradient from the Peekskill Site also contain metals.

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 reached agreement with Lightron and ISCP pursuant to which Lightron and ISCP will perform a Remedial Investigation/Feasibility Study (“RI/FS”).

Performance of the RI/FS is expected to be completed in calendar 2024.

Lightron has not engaged in any operations in over three decades.

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One of Griffon’s insurers is defending Lightron, ISCP and Griffon subject to a reservation of rights and is paying the costs of the RI/FS.

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 entered into an Order on Consent with the New York State Department of Environmental Conservation (“DEC”).

While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, the Order required AMES to perform a remedial investigation of certain portions of the property and to recommend a remediation option.

In 2011, remediation of chlorinated solvents in the groundwater was completed to the satisfaction of DEC.

In June 2020, AMES completed the remediation required by the Record of Decision issued by DEC in 2019 and filed a Construction Completion Report, a Site Management Plan and an environmental easement with DEC.

DEC has approved the Site Management Plan, which requires annual inspection of the site cover and groundwater monitoring every five years.

AMES also has completed an investigation of certain areas adjacent to the site perimeter and a statistical analysis to determine the area, if any, required to be remediated.

DEC has informed AMES that no further investigation or remediation is required.

AMES has a number of defenses to liability in this matter, including its rights under a

GRIFFON CORPORATION

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

previous Consent Judgment entered into between 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 for both the on-site and off-site activities.

Memphis, TN site.

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The State of Tennessee Department of Environment and Conservation (“TDEC”) identified the Memphis site as being potentially contaminated, raising the possibility that site operations could have resulted in soil and groundwater contamination involving volatile organic compounds and metals.

The TDEC performed a preliminary assessment of the site and recommended to the United States Environmental Protection Agency (“EPA”) that the site be listed on the National Priorities List established under CERCLA.

In 2021, the TDEC performed a preliminary assessment of the site and recommended to the United States Environmental Protection Agency (“EPA”) that it include the site on the National Priorities List established under CERCLA.

The TDEC further recommended that the EPA fund an investigation of potential soil gas contamination in receptors near the site.

The TDEC has also indicated that it will proceed with this investigation if the EPA does not act.

It is unknown whether the EPA will add the Memphis Site to the National Priorities List, whether a site investigation will reveal contamination and, if there is contamination, the extent of such contamination.

However, given that certain PCB work was not completed in the past and the TDEC’s stated intent for the EPA to perform an investigation (and the statement by the TDEC that it will perform the investigation if the EPA will not), liability is probable in this matter.

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If the EPA decides to add this site to the National Priorities List, a Remedial Investigation/Feasibility Study (“RI/FS”) will be required.

Hunter expects that EPA will ask it to perform this work.

Hunter expects that the EPA will ask it to perform this work.

If Hunter does not reach an agreement with the EPA to perform this work, the EPA will implement the RI/FS on its own.

Should the EPA implement the RI/FS or perform further studies and/or subsequently remediate the site without first reaching an agreement with one or more relevant parties, the EPA would likely seek from such parties, including Hunter, reimbursement for the costs incurred.

Should the EPA implement the RI/FS or perform further studies and/or subsequently remediate the site without first reaching an agreement with one or more relevant parties, the EPA would likely seek reimbursement from such parties, including Hunter, for the costs incurred.

General legal

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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.

In August 2020, Griffon Corporation completed the Public Offering of 8,700,000 shares of our common stock at a price of $ 21.50 per share.

Total proceeds, net of fees, were $ 178,165 .

The following table is a reconciliation of the share amounts (in thousands) used in computing basic and diluted EPS for 2023, 2022 and 2021:

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Shares of the ESOP that have been allocated to employee accounts are treated as outstanding in determining earnings per share.

NOTE 18 – RELATED PARTIES

On September 5, 2023 Griffon entered into a stock purchase agreement to repurchase 400,000 shares of its common stock, par value $ 0.25 per share, beneficially owned by two separately managed accounts of which Voss Capital, LLC is the investment manager (the “Selling Shareholders”), in a private transaction to facilitate redemptions by investors in the Selling Shareholders.

The purchase price per share was approximately $ 41.87 , for an aggregate purchase price of $ 16,746 .

The Selling Shareholders are affiliates of Voss Capital, LLC.

Cocke, the Founder, Chief Investment Officer and Managing Member of Voss Capital, LLC, is a member of the Board of Directors of the Company.

NOTE 19 — REPORTABLE SEGMENTS

Griffon conducts its operations through two reportable segments, as follows:

• Consumer and Professional Products (“CPP”) is a leading North American manufacturer and a global provider of branded consumer and professional tools;

• 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 Cornell and Cookson brands.

• Consumer and Professional Products (“CPP”) is a leading global provider of branded consumer and professional tools;

residential, industrial and commercial fans;

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CPP sells products globally through a portfolio of leading brands including AMES, since 1774, Hunter, since 1886, True Temper, and ClosetMaid.

• Home and Building Products ("HBP") conducts its operations through Clopay.

Founded in 1964, Clopay is the largest manufacturer and marketer of garage doors and rolling steel doors in North America.

Residential and commercial sectional garage doors are sold through professional dealers and leading home center retail chains throughout North America under the brands Clopay, Ideal, and Holmes.

Rolling steel door and grille products designed for commercial, industrial, institutional, and retail use are sold under the Cornell and Cookson brands.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Information on Griffon’s reportable segments from continuing operations is as follows:

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REVENUE 2023 2022 2021

Consumer and Professional Products $ 1,341,606 $ 1,229,518 $ 1,139,233

Home and Building Products $ 1,588,505 $ 1,506,882 $ 1,041,108

Consumer and Professional Products 1,096,678 1,341,606 1,229,518

Total revenue $ 2,685,183 $ 2,848,488 $ 2,270,626

Griffon evaluates performance and allocates resources based on each segment's operating results from continuing operations before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (primarily corporate overhead), non-cash impairment charges, restructuring charges, debt extinguishment and acquisition related expenses, as well as other items that may affect comparability, as applicable (“Segment Adjusted EBITDA”).

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

Griffon evaluates performance and allocates resources based on segment adjusted EBITDA and adjusted EBITDA, non GAAP measures, defined as income before taxes from continuing operations, excluding interest income and expense, depreciation and amortization, strategic review charges, non-cash impairment charges, restructuring charges, gain/loss from debt extinguishment, and acquisition related expenses, as well other items that may affect comparability, as applicable, non GAAP measures.

Segment adjusted EBITDA also excludes unallocated amounts, mainly corporate overhead.

Griffon believes this information is useful to investors for the same reason.

The following table provides a reconciliation of segment adjusted EBITDA to income (loss) before taxes from continuing operations:

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Segment Adjusted EBITDA:

Consumer and Professional Products $ 99,308 $ 115,673 $ 104,053

Home and Building Products $ 510,876 $ 412,738 $ 181,015

Consumer and Professional Products 50,343 99,308 115,673

Segment Adjusted EBITDA 561,219 512,046 296,688

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Debt extinguishment, net

Acquisition contingent consideration — — 1,733

( 437 ) ( 4,529 ) —

Acquisition costs — ( 9,303 ) —

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Special dividend ESOP charges ( 15,494 ) ( 10,538 ) —

Gain on sale of buildings 12,655 — —

Proxy expenses ( 2,685 ) ( 6,952 ) —

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Income (loss) before taxes from continuing operations $ 112,682 $ ( 270,879 ) $ 109,955

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

For the Years Ended September 30,

DEPRECIATION and AMORTIZATION 2023 2022 2021

Consumer and Professional Products $ 47,562 $ 34,433 $ 32,788

Home and Building Products $ 15,066 $ 16,539 $ 17,370

Consumer and Professional Products 49,811 47,562 34,433

Total segment depreciation and amortization 64,877 64,101 51,803

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CAPITAL EXPENDITURES

Consumer and Professional Products $ 31,279 $ 28,265 $ 23,321

Home and Building Products (1)

$ 24,065 $ 11,029 $ 8,648

Consumer and Professional Products (2)

39,476 31,279 28,265

Total segment 63,541 42,308 36,913

1 unchanged sentence

Total consolidated capital expenditures $ 63,604 $ 42,488 $ 36,951

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

________________________

(1) During the year ended September 30, 2023, HBP's capital expenditures included approximately $ 6,000 in connection with the purchase of HBP's Mason headquarters.

(2) During the year ended September 30, 2023, CPP's capital expenditures included approximately $ 23,207 in connection with the purchase of CPP's Ocala, Florida manufacturing facility.

This above table excludes proceeds from the sale of real estate of approximately $ 8,900 .

(3) During the year ended September 30, 2023, Corporate's capital expenditures exclude proceeds from the sale of real estate of approximately $ 11,800 .

At September 30, 2023 At September 30, 2022

Segment assets:

Consumer and Professional Products $ 1,914,529 $ 1,377,618

Home and Building Products $ 703,661 $ 737,860

Consumer and Professional Products 1,579,588 1,914,529

Total segment assets 2,283,249 2,652,389

1 unchanged sentence

Total continuing assets 2,413,588 2,810,699

Discontinued operations - held for sale — 275,814

Other discontinued operations 5,291 5,775

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For the Years Ended September 30,

2022 2021 2020

Residential repair and remodel 757,088 736,525 516,995

Commercial 700,112 630,066 407,585

Residential new construction 131,305 140,291 116,528

Total Home and Building Products 1,588,505 1,506,882 1,041,108

Residential repair and remodel $ 377,775 $ 392,490 $ 185,896

Retail 267,046 456,735 577,839

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Total Consumer and Professional Products 1,096,678 1,341,606 1,229,518

Residential repair and remodel 736,525 516,995 467,112

Commercial construction 630,066 407,585 354,916

Residential new construction 140,291 116,528 105,285

Total Home and Building Products 1,506,882 1,041,108 927,313

Total Revenue $ 2,685,183 $ 2,848,488 $ 2,270,626

1 unchanged sentence

For the Year Ended September 30, 2023

Revenue by Geographic Area - Destination Consumer and Professional Products Home and Building Products Total

Revenue by Geographic Area - Destination Home and Building Products Consumer and Professional Products Total

United States $ 1,515,479 $ 716,098 $ 2,231,577

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For the Year Ended September 30, 2022

Revenue by Geographic Area - Destination Consumer and Professional Products Home and Building Products Total

Revenue by Geographic Area - Destination Home and Building Products Consumer and Professional Products Total

United States $ 1,437,085 $ 858,956 $ 2,296,041

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For the Year Ended September 30, 2021

Revenue by Geographic Area - Destination Consumer and Professional Products Home and Building Products Total

Revenue by Geographic Area - Destination Home and Building Products Consumer and Professional Products Total

United States $ 986,925 $ 766,150 $ 1,753,075

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Total Revenue $ 1,041,108 $ 1,229,518 $ 2,270,626

As a percentage of segment revenue, CPP sales to The Home Depot approximated 19 %, 26 % and 27 % in 2022, 2021 and 2020, respectively;

HBP sales to The Home Depot approximated 7 %, 10 % and 12 % in 2022, 2021 and 2020, respectively.

As a percentage of Griffon's consolidated revenue, CPP sales to The Home Depot approximated 13 %, 14 % and 13 % in 2022, 2021 and 2020, respectively;

HBP sales to The Home Depot approximated 7 % in 2022 and 5 % in both 2021 and 2020.

As a percentage of segment revenue, HBP sales to The Home Depot approximated 9 %, 7 % and 10 % in 2023, 2022 and 2021, respectively;

CPP sales to The Home Depot approximated 15 %, 19 % and 26 % in 2023, 2022 and 2021, respectively.

As a percentage of Griffon's consolidated revenue, sales to The Home Depot approximated 12 %, 13 % and 19 % in 2023, 2022 and 2021, respectively.

NOTE 20 – OTHER INCOME (EXPENSE)

For the year ended September 30, 2022, 2021 and 2020, Other income (expense) from continuing operations of $ 6,881 , $ 2,107 and $ 1,661 , respectively, includes $ 305 , ($ 81 ) and $( 915 ), respectively, of net currency exchange transaction gains (losses) from receivables and payables held in non-functional currencies, $( 225 ), $ 283 and $ 184 , respectively, of net gains or (losses) on investments, and $ 4,256 , $ 907 and $ 1,559 , respectively, of net periodic benefit plan income.

Other income (expense) also includes rental income of $ 689 in 2022, and $ 624 in both 2021 and 2020.

Additionally, it includes royalty income of $ 2,250 for the year ended September 30, 2022.

For the year ended September 30, 2023, 2022 and 2021, Other income (expense) from continuing operations of $ 2,928 , $ 6,881 and $ 2,107 , respectively, includes $ 302 , $ 305 and $( 81 ), respectively, of net currency exchange transaction gains (losses) from receivables and payables held in non-functional currencies, $ 469 , $( 225 ) and $ 283 , respectively, of net gains or (losses) on investments, and $( 866 ), $ 4,256 and $ 907 , respectively, of net periodic benefit plan income (expense).

Other income (expense) also includes rental income of $ 212 , $ 689 and $ 624 in 2023, 2022 and 2021, respectively.

Additionally, it includes royalty income of 2,104 and $ 2,250 for the years ended September 30, 2023 and 2022, respectively.

NOTE 21 - OTHER COMPREHENSIVE INCOME (LOSS)

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Years Ended September 30,

2022 2021 2020

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

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NOTE 22 — 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 recognized ROU assets of $ 163,552 and lease liabilities of $ 163,676 associated with our operating leases.

The standard had no material impact to retained earnings or on our Consolidated Statements of Income or Consolidated Statements of Cash Flows.

We also elected a practical expedient to determine the reasonably certain lease term.

The Company recognizes right-of-use ("ROU") assets and lease liabilities on the balance sheet, with the exception of leases with a term of twelve months or less.

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.

The ROU assets and short and long-term liabilities associated with our Operating leases are shown as separate line items on our Consolidated Balance Sheets.

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

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 year ended September 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 10, Restructuring Charges.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from 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.

Lease payments primarily include rent and insurance costs (lease components).

The Company's leases also include non-lease components such as real estate taxes and common-area maintenance costs.

The Company elected the practical expedient to account for lease and non-lease components as a single component.

In certain of the Company's leases, the non-lease components are variable and in accordance with the standard are therefore excluded from lease payments to determine the ROU asset.

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.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term.

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:

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

For the Year Ended September 30,

2023 2022 2021

$ 44,457 $ 38,362 $ 36,155

Fixed $ 45,993 $ 44,457 $ 38,362

Variable (a), (b)

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Total $ 43,697 $ 49,737 $ 47,259

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

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

As of September 30,

14 unchanged sentences

Total financing lease liabilities $ 464 $ 14,060

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

(1) For the years ended September 30, 2023 and 2022, finance lease assets are recorded net of accumulated depreciation of $ 6,769 and $ 4,972 , respectively.

Griffon has one finance lease outstanding for real estate located in Ocala, Florida.

The lease matures in 2025 and bears interest at a fixed rate of approximately 5.6 %.

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

At September 30, 2022, $ 13,091 was outstanding.

On September 28, 2023, the Company closed on the exercise of its lease purchase option, as permitted under the lease agreement, to acquire ownership of the manufacturing facility located in Ocala, Florida for a cash purchase price of $ 23,207 .

The Ocala lease had a maturity date in 2025 and bore interest at a fixed rate of approximately 5.6 %.

As a result of exercising the purchase option, the Company no longer has any future lease obligations related to this real estate.

During the year ended September 30, 2022, the financing lease on the Troy, Ohio location expired.

The lease bore interest at a rate of approximately 5.0 %, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease.

The Troy lease bore interest at a rate of approximately 5.0 %, was secured by a mortgage on the real estate, which was guaranteed by Griffon, and had a one dollar buyout at the end of the lease.

Griffon exercised the one dollar buyout option in November 2021.

The remaining lease liability balance relates to finance equipment leases.

GRIFFON CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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

The aggregate future maturities of lease payments for operating leases and finance leases as of September 30, 2023 are as follows (in thousands):

21 unchanged sentences

however, payment of dividends is determined by the Board of Directors, at its discretion, based on various factors, and no assurance can be provided as to the payment of future dividends.

Subsequent to September 30, 2023 and through November 14, 2023, Griffon purchased 1,127,062 shares of its common stock for a total of $ 44,980 , or $ 39.91 per share under Board authorized share repurchase programs.

On November 15, 2023, Griffon granted 174,104 shares of restricted stock and restricted stock units to 43 executives and key employees, subject to certain performance conditions, with a vesting period of thirty-six months , with a total fair value of $ 8,225 , or a weighted average fair value of $ 47.24 per share.

GRIFFON CORPORATION

3 unchanged sentences

Description Balance at

Year Additions Reductions Other (1) Balance at

Year Additions Reductions Other (1)

FOR THE YEAR ENDED SEPTEMBER 30, 2023

Allowance for doubtful accounts

$ 12,137 $ 971 $ ( 1,186 ) $ ( 658 ) $ 11,264

Inventory valuation (2)

$ 22,875 $ 44,570 $ ( 11,692 ) $ ( 16 ) $ 55,737

Deferred tax valuation allowance $ 13,490 $ 4,502 $ — $ — $ 17,992

1 unchanged sentence

Allowance for doubtful accounts

$ 8,787 $ 1,172 $ ( 251 ) $ 2,429 $ 12,137

Inventory valuation $ 31,605 $ 4,725 $ ( 14,103 ) $ 648 $ 22,875

2 unchanged sentences

Allowance for doubtful accounts

Allowance for Doubtful Accounts $ 7,588 $ 5,175 $ ( 4,584 ) $ ( 1 ) $ 8,178

$ 8,178 $ 795 $ ( 393 ) $ 207 $ 8,787

Inventory valuation $ 18,903 $ 24,400 $ ( 12,099 ) $ 401 $ 31,605

Deferred tax valuation allowance $ 9,824 $ 601 $ — $ — $ 10,425

___________________________________________

(1) For the year ended September 30, 2022, Other primarily consists of foreign currency and opening balances of reserves assumed from the Hunter acquisition.

See Note 6 for the detail on the Allowance for Doubtful Accounts.

(2) In connection with the Company's restructuring activities described in Note 10, Restructuring Charges, during the year ended September 30, 2023, CPP recorded an inventory impairment charge of $ 37,100 to adjust to net realizable value.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

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-K

Item 8. Financial Statements and Supplementary Data