RESTRUCTURING CHARGES

3 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

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 UK and Australia businesses, and a manufacturing facility in China.

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

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

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

During the quarters ended December 31, 2020 and 2019, CPP incurred pre-tax restructuring and related exit costs approximating $3,079 and $6,434, respectively. During the quarter ended December 31, 2020, cash charges totaled $2,886 non-cash and asset-related charges totaled $193; the cash charges included $362 for one-time termination benefits and other personnel-related costs and $2,524 for facility exit costs. During the quarter ended December 31, 2019, cash charges totaled $2,274 and non-cash, asset-related charges totaled $4,160; the cash charges included $2,134 for one-time termination benefits and other personnel-related costs and $140 for facility exit costs. Non-cash charges included a $1,740 impairment charge related to a facility's operating lease as well as $671 of leasehold improvements made to the leased facility 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. During the quarter ended December 31, 2020, headcount was reduced by 61.

In September 2020, the DE Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities. The combined actions resulted in severance charges of approximately $4,240, with $2,120 recognized in the fourth quarter of fiscal 2020, and the remaining $2,120 was recognized during the quarter ended December 31, 2020. These actions reduced headcount by approximately 90 people.

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

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


	For the Three Months Ended December 31,
	2020		2019
Cost of goods and services	$	6,425	$	2,723
Selling, general and administrative expenses	4,375		3,711
Total restructuring charges	$	10,800	$	6,434


	For the Three Months Ended December 31,
	2020		2019
Personnel related costs	$	2,482	$	2,134
Facilities, exit costs and other	2,524		140

Non-cash facility and other	5,794		4,160
Total	$	10,800	$	6,434

The following table summarizes the accrued liabilities of the Company's restructuring actions:


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