CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

6 Months Ended

Mar. 31, 2020

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 by Clopay Corporation, Telephonics Corporation, The AMES Companies, Inc., ATT Southern LLC, Clopay Ames 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, 2020 and September 30, 2019 and for the three months ended March 31, 2020 and 2019. 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 indentures relating to the Senior Notes (the “Indentures”) contain 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 Indentures; (ii) a public equity offering of a subsidiary guarantor that qualifies as a “Minority Business” as defined in the Indentures (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 Indentures; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indentures, in compliance with the terms of the Indentures; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indentures, in each case in accordance with the terms of the Indentures; and (v) upon obtaining the requisite consent of the holders of the Senior Notes.

CONDENSED CONSOLIDATING BALANCE SHEETS

At March 31, 2020

 

($ in thousands)	Parent Company		Guarantor Companies		Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	9,252	$	18,977	$	40,795		$	—		$	69,024
Accounts receivable, net of allowances	—		283,929		206,456			(155,352		)	335,033
Contract costs and recognized income not yet billed, net of progress payments	—		91,998		2,497			—			94,495
Inventories, net	—		391,934		70,756			(571		)	462,119
Prepaid and other current assets	11,482		23,468		5,149			2,624			42,723
Assets of discontinued operations	—		—		321			—			321
Total Current Assets	20,734		810,306		325,974			(153,299		)	1,003,715
PROPERTY, PLANT AND EQUIPMENT, net	1,295		290,685		43,840			—			335,820
OPERATING LEASE RIGHT-OF-USE ASSETS	10,060		127,133		19,065			—			156,258
GOODWILL	—		375,734		61,048			—			436,782
INTANGIBLE ASSETS, net	93		220,796		132,854			—			353,743
INTERCOMPANY RECEIVABLE	67,266		928,899		148,568			(1,144,733		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,658,792		745,746		3,109,559			(5,514,097		)	—
OTHER ASSETS	8,695		37,669		(2,446		)	(14,362		)	29,556
ASSETS OF DISCONTINUED OPERATIONS	—		—		2,873			—			2,873
Total Assets	$	1,766,935	$	3,536,968	$	3,841,335		$	(6,826,491	)	$	2,318,747
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	—	$	3,474	$	5,996		$	—		$	9,470
Accounts payable and accrued liabilities	28,873		412,118		58,903			(152,741		)	347,153
Current portion of operating lease liabilities	1,830		22,068		4,149			—			28,047
Liabilities of discontinued operations	—		—		2,450			—			2,450
Total Current Liabilities	30,703		437,660		71,498			(152,741		)	387,120
LONG-TERM DEBT, net	1,167,023		10,642		38,561			—			1,216,226
LONG-TERM OPERATING LEASE LIABILITIES	9,353		108,872		15,273			—			133,498
INTERCOMPANY PAYABLES	63,230		563,964		536,815			(1,164,009		)	—
OTHER LIABILITIES	20,172		77,292		12,650			(7,819		)	102,295
LIABILITIES OF DISCONTINUED OPERATIONS	—		—		3,154			—			3,154
Total Liabilities	1,290,481		1,198,430		677,951			(1,324,569		)	1,842,293
SHAREHOLDERS’ EQUITY	476,454		2,338,538		3,163,384			(5,501,922		)	476,454
Total Liabilities and Shareholders’ Equity	$	1,766,935	$	3,536,968	$	3,841,335		$	(6,826,491	)	$	2,318,747

CONDENSED CONSOLIDATING BALANCE SHEETS

At September 30, 2019

($ in thousands)	Parent Company		Guarantor Companies		Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	1,649	$	25,217	$	45,511		$	—		$	72,377
Accounts receivable, net of allowances	—		227,069		38,580			(1,199		)	264,450
Contract costs and recognized income not yet billed, net of progress payments	—		104,109		1,002			—			105,111
Inventories, net	—		372,839		69,540			(258		)	442,121
Prepaid and other current assets	8,238		25,754		6,951			(144		)	40,799
Assets of discontinued operations	—		—		321			—			321
Total Current Assets	9,887		754,988		161,905			(1,601		)	925,179
PROPERTY, PLANT AND EQUIPMENT, net	1,184		289,282		46,860			—			337,326
GOODWILL	—		375,734		61,333			—			437,067
INTANGIBLE ASSETS, net	93		224,275		132,271			—			356,639
INTERCOMPANY RECEIVABLE	5,834		864,884		75,684			(946,402		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,628,031		581,438		3,233,038			(5,442,507		)	—
OTHER ASSETS	8,182		24,635		(2,352		)	(14,625		)	15,840
ASSETS OF DISCONTINUED OPERATIONS	—		—		2,888			—			2,888
Total Assets	$	1,653,211	$	3,115,236	$	3,711,627		$	(6,405,135	)	$	2,074,939
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	—	$	3,075	$	7,450		$	—		$	10,525
Accounts payable and accrued liabilities	41,796		266,411		68,390			(1,356		)	375,241
Liabilities of discontinued operations	—		—		4,333			—			4,333
Total Current Liabilities	41,796		269,486		80,173			(1,356		)	390,099
LONG-TERM DEBT, net	1,040,449		3,119		50,181			—			1,093,749
INTERCOMPANY PAYABLES	71,634		457,265		444,557			(973,456		)	—
OTHER LIABILITIES	21,569		81,582		15,017			(8,171		)	109,997
LIABILITIES OF DISCONTINUED OPERATIONS	—		—		3,331			—			3,331
Total Liabilities	1,175,448		811,452		593,259			(982,983		)	1,597,176
SHAREHOLDERS’ EQUITY	477,763		2,303,784		3,118,368			(5,422,152		)	477,763
Total Liabilities and Shareholders’ Equity	$	1,653,211	$	3,115,236	$	3,711,627		$	(6,405,135	)	$	2,074,939

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended March 31, 2020

 

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies		Elimination			Consolidation
Revenue	$	—		$	462,500		$	113,926	$	(10,076	)	$	566,350
Cost of goods and services	—			345,626			79,112		(10,420		)	414,318
Gross profit	—			116,874			34,814		344			152,032
Selling, general and administrative expenses	7,922			91,338			27,300		(93		)	126,467
Income (loss) from operations	(7,922		)	25,536			7,514		437			25,565
Other income (expense)
Interest income (expense), net	(6,880		)	(9,706		)	25		—			(16,561		)
Loss from debt extinguishment, net	(6,690		)	—			—		—			(6,690		)
Other, net	(418		)	(2,667		)	4,141		(441		)	615
Total other income (expense)	(13,988		)	(12,373		)	4,166		(441		)	(22,636		)
Income (loss) before taxes	(21,910		)	13,163			11,680		(4		)	2,929
Provision (benefit) for income taxes	(9,427		)	6,078			5,387		(4		)	2,034
Income (loss) before equity in net income of subsidiaries	(12,483		)	7,085			6,293		—			895
Equity in net income (loss) of subsidiaries	13,378			6,341			7,085		(26,804		)	—
Net Income (loss)	$	895		$	13,426		$	13,378	$	(26,804	)	$	895
Comprehensive income (loss)	$	(13,939	)	$	8,028		$	18,776	$	(26,804	)	$	(13,939	)

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 (loss) from continuing operations	(1,156		)	21,899			15,298			(29,551		)	6,490
Income (loss) from operation of discontinued businesses	—			—			(11,000		)	—			(11,000		)
Provision (benefit) from income taxes	—			—			(3,354		)	—			(3,354		)
Income (loss) 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 CASH FLOWS

For the Six Months Ended March 31, 2020

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	11,507		$	32,202		$	32,034		$	(64,236	)	$	11,507
Net cash provided by (used in) operating activities:	(92,042		)	26,593			4,606			—			(60,843		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(282		)	(19,982		)	(2,255		)	—			(22,519		)
Acquired businesses, net of cash acquired	—			—			(10,531		)	—			(10,531		)
Proceeds from sale of assets	—			292			(2		)	—			290
Net cash provided by (used in) investing activities	(282		)	(19,690		)	(12,788		)	—			(32,760		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury	(7,479		)	—			—			—			(7,479		)
Proceeds from long-term debt	1,054,636			—			6,707			—			1,061,343
Payments of long-term debt	(921,904		)	(1,752		)	(15,415		)	—			(939,071		)
Financing costs	(13,176		)	—			—			—			(13,176		)
Dividends paid	(7,349		)	—			—			—			(7,349		)
Other, net	(4,801		)	(10,839		)	15,723			—			83
Net cash provided by (used in) financing activities	99,927			(12,591		)	7,015			—			94,351
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used) in discontinued operations	—			—			(1,994		)	—			(1,994		)
Effect of exchange rate changes on cash and equivalents	—			(552		)	(1,555		)	—			(2,107		)
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	7,603			(6,240		)	(4,716		)	—			(3,353		)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	1,649			25,217			45,511			—			72,377
CASH AND EQUIVALENTS AT END OF PERIOD	$	9,252		$	18,977		$	40,795		$	—		$	69,024

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 payments	(10,604		)	—			—			—			(10,604		)
Proceeds from sale of assets	—			36			26			—			62
Net cash provided by (used in) 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		)
Contingent consideration for acquired businesses	—			—			(1,686		)	—			(1,686		)
Financing costs	(945		)	—			—			—			(945		)
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 provided by (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