DISCONTINUED OPERATIONS

12 Months Ended

Sep. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

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. 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: 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 discontinued operations:


	For the Year Ended September 30,
	2022		2021		2020
Revenue	$	161,061	$	271,060	$	340,976
Cost of goods and services	125,208		232,075		285,022
Gross profit	35,853		38,985		55,954
Selling, general and administrative expenses	26,423		35,532		42,314


Income from discontinued operations	9,430		3,453		13,640
Other income (expense)
Gain on sale of business	107,517		5,291		—
Interest income, net	2		117		4
Other, net	(604)		1,260		1,632
Total other income (expense)	106,915		6,668		1,636
Income from discontinued operations before tax	$	116,345	$	10,121	$	15,276
Provision for income taxes	20,188		1212		3,291
Income from discontinued operations	96,157		8,909		11,985

Depreciation and amortization was excluded from the current year results since DE was classified as a discontinued operation and, accordingly, the Company ceased depreciation and amortization in accordance with discontinued operations accounting guidelines. 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,
	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	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

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, 2022		At September 30, 2021
Assets of discontinued operations:
Prepaid and other current assets	$	1,189	$	605
Other long-term assets	4,586		3,424
Total assets of discontinued operations	$	5,775	$	4,029

Liabilities of discontinued operations:
Accrued liabilities, current	$	12,656	$	3,280
Other long-term liabilities	4,262		3,794
Total liabilities of discontinued operations	$	16,918	$	7,074

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.

At September 30, 2022 and 2021, Griffon’s liabilities for Installations Services and other discontinued operations primarily related to insurance claims, income taxes, product liability, warranty and environmental reserves totaling $10,049 and $7,074, respectively. The increase in assets and liabilities for Installations Services and other discontinued operations was primarily associated with insurance claims receivable and payable.

Except for revenue from the Telephonics business, as noted above, there was no reported revenue in 2022, 2021 and 2020 for Installations Services and other discontinued operations.