DISCONTINUED OPERATIONS

3 Months Ended

Dec. 31, 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 $2,568 for post-closing working capital adjustments. 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 a discontinued operation:


	For the Three Months Ended December 31, 2021

Revenue		$	53,993
Cost of goods and services		40,961
Gross profit		13,032
Selling, general and administrative expenses		10,020


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

Interest income, net		—

Other, net		308
Total other income (expense)		308
Income from discontinued operations before taxes		$	3,320
Provision for income taxes		726
Income from discontinued operations		$	2,594

Depreciation and amortization was excluded from the prior 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 would have been approximately $2,700 for the quarter ended December 31, 2021.

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 December 31, 2022		At September 30, 2022
Assets of discontinued operations:
Prepaid and other current assets	$	1,122	$	1,189
Other long-term assets	4,571		4,586
Total assets of discontinued operations	$	5,693	$	5,775

Liabilities of discontinued operations:
Accrued liabilities, current	$	8,141	$	12,656
Other long-term liabilities	4,209		4,262
Total liabilities of discontinued operations	$	12,350	$	16,918

At December 31, 2022 and September 30, 2022, Griffon's discontinued assets and liabilities includes the Company's obligation of $5,288 and $8,846, respectively, in connection with the sale of Telephonics primarily related to certain customary post-closing adjustments, primarily working capital and stay bonuses. At December 31, 2022 and September 30, 2022, Griffon’s liabilities for Installations Services and other discontinued operations primarily relate to insurance claims, income taxes, product liability, warranty and environmental reserves total $7,062 and $8,072, respectively.

There was no reported revenue in the quarters ended December 31, 2022 and 2021 for Installations Services and other discontinued operations.