CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

6 Months Ended

Mar. 31, 2019

Consolidating Guarantor And Non Guarantor Financial Information [Abstract]

CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

Griffon’s Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by the domestic assets of Clopay Building Products Company, Inc., Telephonics Corporation, The AMES Companies, Inc., ATT Southern LLC, Clopay Ames True Temper Holding Corp., ClosetMaid, LLC, CornellCookson, LLC and Cornell Real Estate Holdings, LLC, all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act, presented below are condensed consolidating financial information as of March 31, 2019 and September 30, 2018 and for the three months ended March 31, 2019 and 2018. The financial information may not necessarily be indicative of the results of operations or financial position of the guarantor companies or non-guarantor companies had they operated as independent entities. The guarantor companies and the non-guarantor companies include the consolidated financial results of their wholly-owned subsidiaries accounted for under the equity method.

The indenture relating to the Senior Notes (the “Indenture”) contains terms providing that, under certain limited circumstances, a guarantor will be released from its obligations to guarantee the Senior Notes.  These circumstances include (i) a sale of at least a majority of the stock, or all or substantially all the assets, of the subsidiary guarantor as permitted by the Indenture; (ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the Indenture (generally, a business the EBITDA of which constitutes less than 50% of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters), and that meets certain other specified conditions as set forth in the Indenture; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indenture, in compliance with the terms of the Indenture; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indenture, in each case in accordance with the terms of the Indenture; and (v) upon obtaining the requisite consent of the holders of the Senior Notes.CONDENSED CONSOLIDATING BALANCE SHEETS

At March 31, 2019

 

($ in thousands)	Parent Company		Guarantor Companies		Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	5,067	$	31,858	$	21,054		$	—		$	57,979
Accounts receivable, net of allowances	—		288,362		55,687			—			344,049
Contract costs and recognized income not yet billed, net of progress payments	—		82,811		1,093			—			83,904
Inventories, net	—		389,223		67,835			13			457,071
Prepaid and other current assets	17,735		19,910		5,761			2,372			45,778
Assets of discontinued operations	—		—		324			—			324
Total Current Assets	22,802		812,164		151,754			2,385			989,105
PROPERTY, PLANT AND EQUIPMENT, net	1,005		291,449		40,398			—			332,852
GOODWILL	—		394,056		45,062			—			439,118
INTANGIBLE ASSETS, net	93		278,055		86,592			—			364,740
INTERCOMPANY RECEIVABLE	122,555		679,010		66,931			(868,496		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,552,035		512,201		3,045,503			(5,109,739		)	—
OTHER ASSETS	7,180		16,774		(2,079		)	(6,683		)	15,192
ASSETS OF DISCONTINUED OPERATIONS	—		—		2,901			—			2,901
Total Assets	$	1,705,670	$	2,983,709	$	3,437,062		$	(5,982,533	)	$	2,143,908
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	—	$	3,495	$	7,312		$	—		$	10,807
Accounts payable and accrued liabilities	17,409		292,428		31,439			2,444			343,720
Liabilities of discontinued operations	—		—		11,657			—			11,657
Total Current Liabilities	17,409		295,923		50,408			2,444			366,184
LONG-TERM DEBT, net	1,146,231		4,378		55,586			—			1,206,195
INTERCOMPANY PAYABLES	56,415		381,703		421,184			(859,302		)	—
OTHER LIABILITIES	11,331		69,856		17,401			(3,650		)	94,938
LIABILITIES OF DISCONTINUED OPERATIONS	—		—		2,307			—			2,307
Total Liabilities	1,231,386		751,860		546,886			(860,508		)	1,669,624
SHAREHOLDERS’ EQUITY	474,284		2,231,849		2,890,176			(5,122,025		)	474,284
Total Liabilities and Shareholders’ Equity	$	1,705,670	$	2,983,709	$	3,437,062		$	(5,982,533	)	$	2,143,908

CONDENSED CONSOLIDATING BALANCE SHEETS

At September 30, 2018

($ in thousands)	Parent Company		Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	15,976	$	16,353		$	37,429		$	—		$	69,758
Accounts receivable, net of allowances	—		234,885			69,729			(24,105		)	280,509
Contract costs and recognized income not yet billed, net of progress payments	—		121,393			410			—			121,803
Inventories, net	—		332,067			66,373			(81		)	398,359
Prepaid and other current assets	12,179		21,313			6,168			2,461			42,121
Assets of discontinued operations	—		—			324			—			324
Total Current Assets	28,155		726,011			180,433			(21,725		)	912,874
PROPERTY, PLANT AND EQUIPMENT, net	936		299,920			41,636			—			342,492
GOODWILL	6,646		361,507			71,242			—			439,395
INTANGIBLE ASSETS, net	93		293,093			77,672			—			370,858
INTERCOMPANY RECEIVABLE	56,396		314,394			(121,445		)	(249,345		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,528,932		968,330			3,347,894			(5,845,156		)	—
OTHER ASSETS	8,651		15,942			374			(8,612		)	16,355
ASSETS OF DISCONTINUED OPERATIONS	—		—			2,916			—			2,916
Total Assets	$	1,629,809	$	2,979,197		$	3,600,722		$	(6,124,838	)	$	2,084,890
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	2,276	$	3,398		$	7,337		$	—		$	13,011
Accounts payable and accrued liabilities	26,639		303,154			59,531			(16,474		)	372,850
Liabilities of discontinued operations	—		(22,327		)	29,537			—			7,210
Total Current Liabilities	28,915		284,225			96,405			(16,474		)	393,071
LONG-TERM DEBT, net	1,044,071		6,110			57,890			—			1,108,071
INTERCOMPANY PAYABLES	66,058		(77,760		)	263,227			(251,525		)	—
OTHER LIABILITIES	16,374		73,391			20,592			(3,647		)	106,710
LIABILITIES OF DISCONTINUED OPERATIONS	—		—			2,647			—			2,647
Total Liabilities	1,155,418		285,966			440,761			(271,646		)	1,610,499
SHAREHOLDERS’ EQUITY	474,391		2,693,231			3,159,961			(5,853,192		)	474,391
Total Liabilities and Shareholders’ Equity	$	1,629,809	$	2,979,197		$	3,600,722		$	(6,124,838	)	$	2,084,890

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended March 31, 2019

 

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
Revenue	$	—		$	462,739		$	94,285		$	(7,391	)	$	549,633
Cost of goods and services	—			354,382			65,516			(7,769		)	412,129
Gross profit	—			108,357			28,769			378			137,504
Selling, general and administrative expenses	5,249			84,813			21,409			312			111,783
Income (loss) from operations	(5,249		)	23,544			7,360			66			25,721
Other income (expense)
Interest income (expense), net	(7,328		)	(9,128		)	(849		)	—			(17,305		)
Other, net	(473		)	1,129			676			(64		)	1,268
Total other income (expense)	(7,801		)	(7,999		)	(173		)	(64		)	(16,037		)
Income (loss) before taxes	(13,050		)	15,545			7,187			2			9,684
Provision (benefit) for income taxes	(4,242		)	5,292			2,142			2			3,194
Income (loss) before equity in net income of subsidiaries	(8,808		)	10,253			5,045			—			6,490
Equity in net income (loss) of subsidiaries	7,652			11,646			10,253			(29,551		)	—
Income from continuing operations	$	(1,156	)	$	21,899		$	15,298		$	(29,551	)	$	6,490
Income from operations of discontinued businesses	—			—			(11,000		)	—			(11,000		)
Provision from income taxes	—			—			(3,354		)	—			(3,354		)
Income from discontinued operations	—			—			(7,646		)	—			(7,646		)
Net Income (loss)	$	(1,156	)	$	21,899		$	7,652		$	(29,551	)	$	(1,156	)
Comprehensive income (loss)	$	1,724		$	5,448		$	8,736		$	(14,184	)	$	1,724

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended March 31, 2018

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
Revenue	$	—		$	397,759		$	89,910		$	(9,109	)	$	478,560
Cost of goods and services	—			305,919			60,627			(9,365		)	357,181
Gross profit	—			91,840			29,283			256			121,379
Selling, general and administrative expenses	5,438			65,871			33,277			(93		)	104,493
Income (loss) from operations	(5,438		)	25,969			(3,994		)	349			16,886
Other income (expense)
Interest income (expense), net	(5,961		)	(8,013		)	(2,070		)	—			(16,044		)
Other, net	697			12,149			(10,038		)	(462		)	2,346
Total other income (expense)	(5,264		)	4,136			(12,108		)	(462		)	(13,698		)
Income (loss) before taxes	(10,702		)	30,105			(16,102		)	(113		)	3,188
Provision (benefit) for income taxes	(10,168		)	(10,037		)	(6,202		)	27,644			1,237
Income (loss) before equity in net income of subsidiaries	(534		)	40,142			(9,900		)	(27,757		)	1,951
Equity in net income (loss) of subsidiaries	90,814			(59,707		)	40,140			(71,247		)	—
Income (loss) from continuing operations	90,280			(19,565		)	30,240			(99,004		)	1,951
Income from operation of discontinued businesses	—			(8,423		)	121,799			—			113,376
Provision (benefit) from income taxes	—			859			24,188			—			25,047
Income (loss) from discontinued operations	—			(9,282		)	97,611			—			88,329
Net Income (loss)	$	90,280		$	(28,847	)	$	127,851		$	(99,004	)	$	90,280
Comprehensive income (loss)	$	110,681		$	1,444		$	123,670		$	(125,114	)	$	110,681

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Six Months Ended March 31, 2019

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	7,597		$	38,703		$	24,499		$	(63,202	)	$	7,597
Net (income) loss from discontinued operations	—			—			7,646			—			7,646
Net cash provided by (used in) operating activities:	(77,881		)	24,130			(1,255		)	—			(55,006		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(210		)	(14,071		)	(3,137		)	—			(17,418		)
Acquired businesses, net of cash acquired	(9,219		)	—			—			—			(9,219		)
Investment purchases	(149		)	—			—			—			(149		)
Insurance proceeds (payments)	(10,604		)	—			—			—			(10,604		)
Proceeds from sale of assets	—			36			26			—			62
Net cash provided by investing activities	(20,182		)	(14,035		)	(3,111		)	—			(37,328		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury	(1,478		)	—			—			—			(1,478		)
Proceeds from long-term debt	130,484			76			12,541			—			143,101
Payments of long-term debt	(32,419		)	(1,724		)	(14,026		)	—			(48,169		)
Financing costs	(945		)	—			—			—			(945		)
Contingent consideration for acquired businesses	—			—			(1,686		)	—			(1,686		)
Dividends paid	(6,847		)	—			—			—			(6,847		)
Other, net	(1,641		)	7,150			(5,426		)	—			83
Net cash provided by (used in) financing activities	87,154			5,502			(8,597		)	—			84,059
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash used in discontinued operations	—			—			(3,438		)	—			(3,438		)
Effect of exchange rate changes on cash and equivalents	—			(92		)	26			—			(66		)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	(10,909		)	15,505			(16,375		)	—			(11,779		)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	15,976			16,353			37,429			—			69,758
CASH AND EQUIVALENTS AT END OF PERIOD	$	5,067		$	31,858		$	21,054		$	—		$	57,979

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Six Months Ended March 31, 2018

 

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	121,269		$	(19,529	)	$	142,905		$	(123,376	)	$	121,269
Net (income) loss from discontinued operations	—			4,921			(101,408		)	—			(96,487		)
Net cash provided by (used in) operating activities:	275,619			(360,855		)	38,136			—			(47,100		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(331		)	(16,208		)	(5,089		)	—			(21,628		)
Acquired businesses, net of cash acquired	(185,729		)	(5,076		)	(55,425		)	—			(246,230		)
Proceeds from sale of business	—			473,977			—			—			473,977
Insurance proceeds (payments)	8,254			—			—			—			8,254
Proceeds from sale of assets	—			21			433			—			454
Net cash provided by (used in) investing activities	(177,806		)	452,714			(60,081		)	—			214,827
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury	(32,861		)	—			—			—			(32,861		)
Proceeds from long-term debt	342,161			2,195			3,542			—			347,898
Payments of long-term debt	(197,322		)	(1,613		)	(31,006		)	—			(229,941		)
Financing costs	(7,451		)	—			—			—			(7,451		)
Dividends paid	(5,872		)	—			—			—			(5,872		)
Other, net	(22,279		)	(40,668		)	63,073			—			126
Net cash provided by (used in) financing activities	76,376			(40,086		)	35,609			—			71,899
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash used in discontinued operations	—			(36,875		)	(11,508		)	—			(48,383		)
Effect of exchange rate changes on cash and equivalents	—			(27		)	(2,441		)	—			(2,468		)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	174,189			14,871			(285		)	—			188,775
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	3,240			8,066			36,375			—			47,681
CASH AND EQUIVALENTS AT END OF PERIOD	$	177,429		$	22,937		$	36,090		$	—		$	236,456