CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

9 Months Ended

Jun. 30, 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 June 30, 2020 and September 30, 2019 and for the three and nine months ended June 30, 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 June 30, 2020

 

($ in thousands)	Parent Company		Guarantor Companies		Non-Guarantor Companies			Elimination			Consolidation
CURRENT ASSETS
Cash and equivalents	$	4,727	$	19,697	$	47,575		$	—		$	71,999
Accounts receivable, net of allowances	—		307,625		217,590			(165,751		)	359,464
Contract costs and recognized income not yet billed, net of progress payments	—		89,526		2,617			—			92,143
Inventories, net	—		347,703		63,903			(578		)	411,028
Prepaid and other current assets	19,519		24,144		5,068			2,634			51,365
Assets of discontinued operations	—		—		1,951			—			1,951
Total Current Assets	24,246		788,695		338,704			(163,695		)	987,950
PROPERTY, PLANT AND EQUIPMENT, net	1,232		289,224		44,862			—			335,318
OPERATING LEASE RIGHT-OF-USE ASSETS	9,633		124,566		20,756			—			154,955
GOODWILL	—		375,734		63,933			—			439,667
INTANGIBLE ASSETS, net	93		219,056		135,235			—			354,384
INTERCOMPANY RECEIVABLE	16,555		679,666		84,671			(780,892		)	—
EQUITY INVESTMENTS IN SUBSIDIARIES	1,702,746		766,863		3,154,553			(5,624,162		)	—
OTHER ASSETS	12,228		39,491		(5,638		)	(14,221		)	31,860
ASSETS OF DISCONTINUED OPERATIONS	—		—		6,086			—			6,086
Total Assets	$	1,766,733	$	3,283,295	$	3,843,162		$	(6,582,970	)	$	2,310,220
CURRENT LIABILITIES
Notes payable and current portion of long-term debt	$	—	$	2,973	$	6,262		$	—		$	9,235
Accounts payable and accrued liabilities	58,619		426,260		72,451			(163,142		)	394,188
Current portion of operating lease liabilities	1,842		22,229		4,947			—			29,018
Liabilities of discontinued operations	—		—		3,730			—			3,730
Total Current Liabilities	60,461		451,462		87,390			(163,142		)	436,171
LONG-TERM DEBT, net	1,087,135		10,258		25,972			—			1,123,365
LONG-TERM OPERATING LEASE LIABILITIES	8,886		106,552		16,212			—			131,650
INTERCOMPANY PAYABLES	77,139		254,479		467,463			(799,081		)	—
OTHER LIABILITIES	24,657		77,228		10,242			(7,829		)	104,298
LIABILITIES OF DISCONTINUED OPERATIONS	—		—		6,281			—			6,281
Total Liabilities	1,258,278		899,979		613,560			(970,052		)	1,801,765
SHAREHOLDERS’ EQUITY	508,455		2,383,316		3,229,602			(5,612,918		)	508,455
Total Liabilities and Shareholders’ Equity	$	1,766,733	$	3,283,295	$	3,843,162		$	(6,582,970	)	$	2,310,220

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 June 30, 2020

 

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
Revenue	$	—		$	515,083		$	126,847		$	(9,869	)	$	632,061
Cost of goods and services	—			385,717			91,541			(10,200		)	467,058
Gross profit	—			129,366			35,306			331			165,003
Selling, general and administrative expenses	5,229			85,512			22,913			(145		)	113,509
Income (loss) from operations	(5,229		)	43,854			12,393			476			51,494
Other income (expense)
Interest income (expense), net	(7,013		)	(9,537		)	(35		)	—			(16,585		)
Loss from debt extinguishment, net	(1,235		)	—			—			—			(1,235		)
Other, net	126			(2,852		)	4,004			(472		)	806
Total other income (expense)	(8,122		)	(12,389		)	3,969			(472		)	(17,014		)
Income (loss) before taxes	(13,351		)	31,465			16,362			4			34,480
Provision (benefit) for income taxes	(3,533		)	10,843			5,335			4			12,649
Income (loss) before equity in net income of subsidiaries	(9,818		)	20,622			11,027			—			21,831
Equity in net income (loss) of subsidiaries	31,649			10,920			20,622			(63,191		)	—
Net Income (loss)	$	21,831		$	31,542		$	31,649		$	(63,191	)	$	21,831
Comprehensive income (loss)	$	30,533		$	36,940		$	26,251		$	(63,191	)	$	30,533

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Three Months Ended June 30, 2019

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
Revenue	$	—		$	470,228		$	118,694		$	(13,952	)	$	574,970
Cost of goods and services	—			350,197			84,568			(14,278		)	420,487
Gross profit	—			120,031			34,126			326			154,483
Selling, general and administrative expenses	5,342			85,885			27,252			(490		)	117,989
Income (loss) from operations	(5,342		)	34,146			6,874			816			36,494
Other income (expense)
Interest income (expense), net	(7,171		)	(9,048		)	(868		)	—			(17,087		)
Other, net	4,963			(15,918		)	12,762			(828		)	979
Total other income (expense)	(2,208		)	(24,966		)	11,894			(828		)	(16,108		)
Income (loss) before taxes	(7,550		)	9,180			18,768			(12		)	20,386
Provision (benefit) for income taxes	(4,815		)	9,124			1,961			(12		)	6,258
Income (loss) before equity in net income of subsidiaries	(2,735		)	56			16,807			—			14,128
Equity in net income (loss) of subsidiaries	16,330			15,641			56			(32,027		)	—
Income (loss) from continuing operations	13,595			15,697			16,863			(32,027		)	14,128
Income (loss) from operation of discontinued businesses	—			—			—			—			—
Provision (benefit) from income taxes	—			—			533			—			533
Income (loss) from discontinued operations	—			—			(533		)	—			(533		)
Net Income (loss)	$	13,595		$	15,697		$	16,330		$	(32,027	)	$	13,595
Comprehensive income (loss)	$	12,560		$	(597	)	$	32,624		$	(32,027	)	$	12,560

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Nine Months Ended June 30, 2020

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies		Elimination			Consolidation
Revenue	$	—		$	1,418,975		$	357,812	$	(29,938	)	$	1,746,849
Cost of goods and services	—			1,058,556			252,331		(30,994		)	1,279,893
Gross profit	—			360,419			105,481		1,056			466,956
Selling, general and administrative expenses	19,169			264,698			74,237		(330		)	357,774
Income (loss) from operations	(19,169		)	95,721			31,244		1,386			109,182
Other income (expense)
Interest income (expense), net	(20,217		)	(28,916		)	37		—			(49,096		)
Loss from debt extinguishment, net	(7,925		)	—			—		—			(7,925		)
Other, net	(389		)	(6,870		)	10,844		(1,386		)	2,199
Total other income (expense)	(28,531		)	(35,786		)	10,881		(1,386		)	(54,822		)
Income (loss) before taxes	(47,700		)	59,935			42,125		—			54,360
Provision (benefit) for income taxes	(17,355		)	22,648			15,729		—			21,022
Income (loss) before equity in net income of subsidiaries	(30,345		)	37,287			26,396		—			33,338
Equity in net income (loss) of subsidiaries	63,683			26,457			37,287		(127,427		)	—
Net income (loss)	$	33,338		$	63,744		$	63,683	$	(127,427	)	$	33,338
Comprehensive income (loss)	$	34,047		$	63,744		$	63,683	$	(127,427	)	$	34,047

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Nine Months Ended June 30, 2019

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
Revenue	$	—		$	1,352,211		$	311,219		$	(28,305	)	$	1,635,125
Cost of goods and services	—			1,013,676			215,786			(29,370		)	1,200,092
Gross profit	—			338,535			95,433			1,065			435,033
Selling, general and administrative expenses	15,651			255,674			72,478			(277		)	343,526
Income (loss) from operations	(15,651		)	82,861			22,955			1,342			91,507
Other income (expense)
Interest income (expense), net	(20,806		)	(27,306		)	(2,611		)	—			(50,723		)
Other, net	4,228			(14,102		)	14,479			(1,354		)	3,251
Total other income (expense)	(16,578		)	(41,408		)	11,868			(1,354		)	(47,472		)
Income (loss) before taxes	(32,229		)	41,453			34,823			(12		)	44,035
Provision (benefit) for income taxes	(12,592		)	20,390			6,878			(12		)	14,664
Income (loss) before equity in net income of subsidiaries	(19,637		)	21,063			27,945			—			29,371
Equity in net income (loss) of subsidiaries	40,829			33,337			21,063			(95,229		)	—
Income (loss) from continuing operations	$	21,192		$	54,400		$	49,008		$	(95,229	)	$	29,371
Income (loss) from operations of discontinued businesses	—			—			(11,000		)	—			(11,000		)
Provision (benefit) from income taxes	—			—			(2,821		)	—			(2,821		)
Income (loss) from discontinued operations	—			—			(8,179		)	—			(8,179		)
Net income (loss)	$	21,192		$	54,400		$	40,829		$	(95,229	)	$	21,192
Comprehensive income (loss)	$	17,587		$	58,450		$	36,779		$	(95,229	)	$	17,587

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Nine Months Ended June 30, 2020

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	33,338		$	63,744		$	63,683		$	(127,427	)	$	33,338
Net cash provided by (used in) operating activities:	(10,683		)	35,520			31,107			—			55,944
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(306		)	(30,497		)	(3,948		)	—			(34,751		)
Acquired businesses, net of cash acquired	—			—			(10,531		)	—			(10,531		)
Investment purchases	(130		)	—			—			—			(130		)
Proceeds from sale of assets	—			341			(2		)	—			339
Net cash provided by (used in) investing activities	(436		)	(30,156		)	(14,481		)	—			(45,073		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury	(7,479		)	—			—			—			(7,479		)
Proceeds from long-term debt	1,224,722			—			5,896			—			1,230,618
Payments of long-term debt	(1,171,365		)	(2,647		)	(31,219		)	—			(1,205,231		)
Financing costs	(16,543		)	—			—			—			(16,543		)
Dividends paid	(10,639		)	—			—			—			(10,639		)
Other, net	(4,499		)	(7,723		)	12,191			—			(31		)
Net cash provided by (used in) financing activities	14,197			(10,370		)	(13,132		)	—			(9,305		)
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used) in discontinued operations	—			—			(2,481		)	—			(2,481		)
Effect of exchange rate changes on cash and equivalents	—			(514		)	1,051			—			537
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	3,078			(5,520		)	2,064			—			(378		)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	1,649			25,217			45,511			—			72,377
CASH AND EQUIVALENTS AT END OF PERIOD	$	4,727		$	19,697		$	47,575		$	—		$	71,999

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Nine Months Ended June 30, 2019

 

($ in thousands)	Parent Company			Guarantor Companies			Non-Guarantor Companies			Elimination			Consolidation
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	21,192		$	54,400		$	40,829		$	(95,229	)	$	21,192
Net (income) loss from discontinued operations	—			—			8,179			—			8,179
Net cash provided by (used in) operating activities:	(20,805		)	24,179			11,608			—			14,982
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment	(247		)	(23,221		)	(4,326		)	—			(27,794		)
Acquired businesses, net of cash acquired	(9,219		)	—			—			—			(9,219		)
Investment purchases	(149		)	—			—			—			(149		)
Proceeds from sale of business	(9,500		)	—			—			—			(9,500		)
Insurance payments	(10,604		)	—			—			—			(10,604		)
Proceeds from sale of assets	—			79			25			—			104
Net cash provided by (used in) investing activities	(29,719		)	(23,142		)	(4,301		)	—			(57,162		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of shares for treasury	(1,478		)	—			—			—			(1,478		)
Proceeds from long-term debt	138,541			116			18,143			—			156,800
Payments of long-term debt	(75,694		)	(2,605		)	(29,961		)	—			(108,260		)
Contingent consideration for acquired businesses	—			—			(1,686		)	—			(1,686		)
Financing costs	(1,012		)	—			—			—			(1,012		)
Dividends paid	(10,262		)	—			—			—			(10,262		)
Other, net	(197		)	5,694			(5,694		)	—			(197		)
Net cash provided by (used in) financing activities	49,898			3,205			(19,198		)	—			33,905
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash provided by (used in) discontinued operations	—			—			(3,874		)	—			(3,874		)
Effect of exchange rate changes on cash and equivalents	—			(118		)	621			—			503
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS	(626		)	4,124			(15,144		)	—			(11,646		)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD	15,976			16,353			37,429			—			69,758
CASH AND EQUIVALENTS AT END OF PERIOD	$	15,350		$	20,477		$	22,285		$	—		$	58,112