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 December 31, 2018 and September 30, 2018 and for the three months ended December 31, 2018 and 2017 . 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% At December 31, 2018 ($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation CURRENT ASSETS Cash and equivalents $ 10,629 $ 32,096 $ 39,027 $ — $ 81,752 Accounts receivable, net of allowances — 217,290 36,535 (474 ) 253,351 Contract costs and recognized income not yet billed, net of progress payments — 88,019 1,213 — 89,232 Inventories, net — 384,893 67,462 7 452,362 Prepaid and other current assets 8,067 22,507 6,668 2,373 39,615 Assets of discontinued operations — — 325 — 325 Total Current Assets 18,696 744,805 151,230 1,906 916,637 PROPERTY, PLANT AND EQUIPMENT, net 887 295,409 40,194 — 336,490 GOODWILL — 394,008 44,420 — 438,428 INTANGIBLE ASSETS, net 93 279,849 85,439 — 365,381 INTERCOMPANY RECEIVABLE 67,780 621,995 58,690 (748,465 ) — EQUITY INVESTMENTS IN SUBSIDIARIES 1,542,276 508,267 3,029,840 (5,080,383 ) — OTHER ASSETS 6,708 17,057 (2,136 ) (6,685 ) 14,944 ASSETS OF DISCONTINUED OPERATIONS — — 2,909 — 2,909 Total Assets $ 1,636,440 $ 2,861,390 $ 3,410,586 $ (5,833,627 ) $ 2,074,789 CURRENT LIABILITIES Notes payable and current portion of long-term debt $ 2,276 $ 3,448 $ 7,148 $ — $ 12,872 Accounts payable and accrued liabilities 27,556 280,395 32,424 7,195 347,570 Liabilities of discontinued operations — — 6,882 — 6,882 Total Current Liabilities 29,832 283,843 46,454 7,195 367,324 LONG-TERM DEBT, net 1,077,036 5,250 59,793 — 1,142,079 INTERCOMPANY PAYABLES 51,497 283,010 415,912 (750,419 ) — OTHER LIABILITIES 6,514 71,569 16,882 (3,650 ) 91,315 LIABILITIES OF DISCONTINUED OPERATIONS — — 2,510 — 2,510 Total Liabilities 1,164,879 643,672 541,551 (746,874 ) 1,603,228 SHAREHOLDERS’ EQUITY 471,561 2,217,718 2,869,035 (5,086,753 ) 471,561 Total Liabilities and Shareholders’ Equity $ 1,636,440 $ 2,861,390 $ 3,410,586 $ (5,833,627 ) $ 2,074,789 At September 30, 2018 ($ in thousands) Parent Guarantor Non-Guarantor 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 For the Three Months Ended December 31, 2018 ($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation Revenue $ — $ 419,244 $ 98,240 $ (6,962 ) $ 510,522 Cost of goods and services — 309,097 65,702 (7,323 ) 367,476 Gross profit — 110,147 32,538 361 143,046 Selling, general and administrative expenses 5,060 84,976 23,817 (99 ) 113,754 Income (loss) from operations (5,060 ) 25,171 8,721 460 29,292 Other income (expense) Interest income (expense), net (6,307 ) (9,130 ) (894 ) — (16,331 ) Other, net (262 ) 687 1,041 (462 ) 1,004 Total other income (expense) (6,569 ) (8,443 ) 147 (462 ) (15,327 ) Income (loss) before taxes (11,629 ) 16,728 8,868 (2 ) 13,965 Provision (benefit) for income taxes (3,535 ) 5,974 2,775 (2 ) 5,212 Income (loss) before equity in net income of subsidiaries (8,094 ) 10,754 6,093 — 8,753 Equity in net income (loss) of subsidiaries 16,847 6,050 10,754 (33,651 ) — Income from continuing operations $ 8,753 $ 16,804 $ 16,847 $ (33,651 ) $ 8,753 Net Income (loss) $ 8,753 $ 16,804 $ 16,847 $ (33,651 ) $ 8,753 Comprehensive income (loss) $ 3,303 $ 53,569 $ (4,551 ) $ (49,018 ) $ 3,303 For the Three Months Ended December 31, 2017 ($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation Revenue $ — $ 351,312 $ 92,519 $ (6,528 ) $ 437,303 Cost of goods and services — 262,640 60,779 (6,895 ) 316,524 Gross profit — 88,672 31,740 367 120,779 Selling, general and administrative expenses 11,337 75,330 20,049 (92 ) 106,624 Income (loss) from operations (11,337 ) 13,342 11,691 459 14,155 Other income (expense) Interest income (expense), net (6,774 ) (6,202 ) (3,666 ) — (16,642 ) Other, net (5 ) 1,205 (324 ) (462 ) 414 Total other income (expense) (6,779 ) (4,997 ) (3,990 ) (462 ) (16,228 ) Income (loss) before taxes (18,116 ) 8,345 7,701 (3 ) (2,073 ) Provision (benefit) for income taxes (29,692 ) 2,734 2,057 (3 ) (24,904 ) Income (loss) before equity in net income of subsidiaries 11,576 5,611 5,644 — 22,831 Equity in net income (loss) of subsidiaries 19,413 (652 ) 5,611 (24,372 ) — Income (loss) from continuing operations 30,989 4,959 11,255 (24,372 ) 22,831 Income (loss) from discontinued operations — 4,360 3,798 — 8,158 Net Income (loss) $ 30,989 $ 9,319 $ 15,053 $ (24,372 ) $ 30,989 Comprehensive income (loss) $ 39,347 $ 22,769 $ 47,447 $ (70,216 ) $ 39,347 For the Three Months Ended December 31, 2018 ($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 8,753 $ 16,804 $ 16,847 $ (33,651 ) $ 8,753 Net cash provided by (used in) operating activities: (23,532 ) 16,272 8,301 — 1,041 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (18 ) (6,935 ) (1,444 ) — (8,397 ) Acquired businesses, net of cash acquired (9,219 ) — — — (9,219 ) Proceeds from sale of assets — 38 13 — 51 Net cash provided by investing activities (9,237 ) (6,897 ) (1,431 ) — (17,565 ) CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of shares for treasury (1,348 ) — — — (1,348 ) Proceeds from long-term debt 32,412 — 6,553 — 38,965 Payments of long-term debt (569 ) (855 ) (2,898 ) — (4,322 ) Change in short-term borrowings — 38 — — 38 Financing costs (67 ) — — — (67 ) Contingent consideration for acquired businesses — — (1,686 ) — (1,686 ) Dividends paid (3,143 ) — — — (3,143 ) Other, net 137 7,240 (7,240 ) — 137 Net cash provided by (used in) financing activities 27,422 6,423 (5,271 ) — 28,574 CASH FLOWS FROM DISCONTINUED OPERATIONS: Net cash used in discontinued operations — — (458 ) — (458 ) Effect of exchange rate changes on cash and equivalents — (55 ) 457 — 402 NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (5,347 ) 15,743 1,598 — 11,994 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 15,976 16,353 37,429 — 69,758 CASH AND EQUIVALENTS AT END OF PERIOD $ 10,629 $ 32,096 $ 39,027 $ — $ 81,752 For the Three Months Ended December 31, 2017 ($ in thousands) Parent Company Guarantor Companies Non-Guarantor Companies Elimination Consolidation CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 30,989 $ 9,319 $ 15,053 $ (24,372 ) $ 30,989 Net (income) loss from discontinued operations — (4,360 ) (3,798 ) — (8,158 ) Net cash provided by (used in) operating activities: (68,932 ) 48,147 15,131 — (5,654 ) CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property, plant and equipment (121 ) (7,984 ) (2,680 ) — (10,785 ) Acquired businesses, net of cash acquired (194,001 ) (4,682 ) — — (198,683 ) Proceeds from sale of assets — 7 432 — 439 Net cash provided by (used in) investing activities (194,122 ) (12,659 ) (2,248 ) — (209,029 ) CASH FLOWS FROM FINANCING ACTIVITIES: Purchase of shares for treasury (4,332 ) — — — (4,332 ) Proceeds from long-term debt 326,094 976 (976 ) — 326,094 Payments of long-term debt (45,719 ) (1,776 ) (5,478 ) — (52,973 ) Change in short-term borrowings — 35 — — 35 Financing costs (7,392 ) — — — (7,392 ) Dividends paid (2,990 ) — — — (2,990 ) Other, net 84 (10,524 ) 10,524 — 84 Net cash provided by (used in) financing activities 265,745 (11,289 ) 4,070 — 258,526 CASH FLOWS FROM DISCONTINUED OPERATIONS: Net cash used in discontinued operations — (827 ) (5,592 ) — (6,419 ) Effect of exchange rate changes on cash and equivalents — (1 ) (684 ) — (685 ) NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 2,691 23,371 10,677 — 36,739 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 3,240 8,066 36,375 — 47,681 CASH AND EQUIVALENTS AT END OF PERIOD $ 5,931 $ 31,437 $ 47,052 $ — $ 84,420 |