DISCONTINUED OPERATIONS

3 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component of an entity meets the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria, the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. 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 a discontinued operation:


	For the Quarter Ended December 31,
	2021		2020
Revenue	$	53,993	$	67,768
Cost of goods and services	40,961		62,101
Gross profit	13,032		5,667
Selling, general and administrative expenses	10,020		9,942


Income (loss) from discontinued operations	3,012		(4,275)
Other income (expense)


Gain on sale of business	—		6,240
Other, net	2		66
Total other income (expense)	2		6,306
Income from discontinued operations before taxes	$	3,014	$	2,031
Provision (benefit) for income taxes	621		(2,039)
Income from discontinued operations	$	2,393	$	4,070

During the three months ended December 31, 2021, Income from discontinued operations includes $1,792 of costs associated with consulting and stay bonuses. Depreciation and amortization was excluded from the current year results since DE is classified as a discontinued operation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines. Depreciation and amortization would have been approximately $2,700 in the quarter ended December 31, 2021.

The gain on sale of business relates to the divestiture of the SEG business on December 18, 2020; SEG had sales of $6,713 in the quarter ended December 31, 2020.

In September 2020, a Voluntary Employee Retirement Plan was initiated, which was subsequently followed by a reduction in force in November 2020, to improve efficiencies by combining functions and responsibilities. The reduction in force initiative resulted in severance charges of approximately $2,200, recorded in the first quarter ended December 31, 2020. These actions reduced headcount by approximately 90 people.

Income from discontinued operations includes charges of $5,601 recorded in fiscal 2021 primarily related to exiting older weather radar product lines.

The following amounts related to Telephonics have been segregated from Griffon's continuing operations and are reported as assets and liabilities of discontinued operations held for sale in the consolidated balance sheets:


	At December 31,		At September 30,
	2021		2021
CURRENT ASSETS

Accounts receivable, net	32,642		42,020
Contract assets, net of progress payments	69,043		72,983
Inventories	84,796		83,970
Prepaid and other current assets	4,363		4,409
PROPERTY, PLANT AND EQUIPMENT, net	46,205		45,371
OPERATING LEASE RIGHT-OF-USE ASSETS	1,167		1,167
GOODWILL	17,734		17,734
INTANGIBLE ASSETS, net	131		131
OTHER ASSETS	5,433		5,629
Total Assets Held for Sale	$	261,514	$	273,414
CURRENT LIABILITIES

Accounts payable	55,661		60,486
Accrued liabilities	15,547		15,153
Current portion of operating lease liabilities	221		287

LONG-TERM OPERATING LEASE LIABILITIES	817		867
OTHER LIABILITIES	2,010		3,955
Total Liabilities Held for Sale	$	74,256	$	80,748

Installation Services and Other Discontinued Activities

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


	At December 31, 2021		At September 30, 2021
Assets of discontinued operations:
Prepaid and other current assets	$	583	$	605
Other long-term assets	3,375		3,424
Total assets of discontinued operations	$	3,958	$	4,029

Liabilities of discontinued operations:
Accrued liabilities, current	$	3,095	$	3,280
Other long-term liabilities	3,740		3,794
Total liabilities of discontinued operations	$	6,835	$	7,074

At December 31, 2021 and September 30, 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance claims, warranty and environmental reserves totaling liabilities of approximately $6,835 and $7,074, respectively.

There was no reported revenue in the quarters ended December 31 2021 and 2020.