DISCONTINUED OPERATIONS

9 Months Ended

Jun. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

On September 27, 2021, Griffon announced it was exploring strategic alternatives for its DE segment, which consists of its Telephonics subsidiary. On June 27, 2022, Griffon completed the sale of Telephonics to TTM for $330,000 in cash, subject to customary post-closing adjustments. In connection with the sale of Telephonics, the Company recorded a gain of $108,949 ($88,977, net of tax) during the quarter ended June 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: 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 Three Months Ended June 30,				For the Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	50,795	$	62,574	$	161,061	$	190,492
Cost of goods and services	39,059		52,780		125,208		166,292
Gross profit	11,736		9,794		35,853		24,200
Selling, general and administrative expenses	6,114		7,875		26,423		27,102


Income (loss) from discontinued operations	5,622		1,919		9,430		(2,902)
Other income (expense)

Interest income, net	—		—		2		1
Gain on sale of business	108,949		—		108,949		5,291
Other, net	(1,114)		261		(604)		1,166
Total other income (expense)	107,835		261		108,347		6,458
Income from discontinued operations before taxes	$	113,457	$	2,180	$	117,777	$	3,556
Provision (benefit) for income taxes	25,952		288		20,149		(2,085)
Income from discontinued operations	$	87,505	$	1,892	$	97,628	$	5,641

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 $2,342 and $7,442 in the three and nine months ended June 30, 2022, respectively.

The Company completed the sale of Telephonics on June 27, 2022. The following amounts related to Telephonics that 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,
	2021
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	47,771
OPERATING LEASE RIGHT-OF-USE ASSETS	1,167
GOODWILL	17,734
INTANGIBLE ASSETS, net	131
OTHER ASSETS	5,629
Total Assets	$	275,814
CURRENT LIABILITIES

Accounts payable	60,588
Accrued liabilities	15,326
Current portion of operating lease liabilities	287

LONG-TERM OPERATING LEASE LIABILITIES	867
OTHER LIABILITIES	3,955
Total Liabilities	$	81,023

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 June 30, 2022		At September 30, 2021
Assets of discontinued operations:
Prepaid and other current assets	$	487	$	605
Other long-term assets	2,623		3,424
Total assets of discontinued operations	$	3,110	$	4,029

Liabilities of discontinued operations:
Accrued liabilities, current	$	30,806	$	3,280
Other long-term liabilities	3,825		3,794
Total liabilities of discontinued operations	$	34,631	$	7,074

Accrued liabilities as of June 30, 2022 includes the Company's obligation of $27,703 in connection with the sale of Telephonics primarily related to income taxes payable. At June 30, 2022 and September 30, 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily relate to insurance claims, warranty and environmental reserves total $6,928 and $7,074, respectively.

There was no reported revenue in the quarter and nine month period ended June 30, 2022 and 2021 for Installations Services and other discontinued operations.