Discontinued Operations

12 Months Ended

Nov. 30, 2014

Discontinued Operations

Discontinued Operations

2. Discontinued Operations

Imperial

        Effective January 8, 2014, in accordance with the terms of the Imperial Sale, Imperial sold its inventory and certain assets for $732 in cash and a non-interest bearing note receivable of $4,250 (the "Promissory Note"). Net cash of $732 was received from Monrovia in fiscal 2014 and Griffin paid $563 in severance and other expenses. The Promissory Note is due in two installments: $2,750 was due and paid on June 1, 2014 and $1,500 is due on June 1, 2015. The Promissory Note was discounted at 7% to its present value of $4,036 at inception and is secured by an irrevocable letter of credit. Under the terms of the Imperial Sale, Griffin and Imperial agreed to indemnify Monrovia for any potential environmental liabilities relating to periods prior to the effective date of the Imperial Sale and also agreed to certain non-competition restrictions for a four-year period.

        Concurrent with the Imperial Sale, Imperial and River Bend Holdings, LLC, a wholly owned subsidiary of Griffin, entered into a Lease and Option Agreement and an Addendum to such agreement (the "Imperial Lease", and together with the Imperial Sale, the "Imperial Transaction") with Monrovia, pursuant to which Monrovia is leasing Imperial's Connecticut production nursery for a ten-year period, with options to extend for up to an additional fifteen years exercisable by Monrovia. The Imperial Lease provides for net annual rent payable to Griffin of $500 for each of the first five years with rent for subsequent years determined in accordance with the Imperial Lease. The Imperial Lease also grants Monrovia an option to purchase most of the land, land improvements and other operating assets that were used by Imperial in its Connecticut growing operations during the first thirteen years of the lease period for $10,500, or $7,000 if only a certain portion of the land is purchased, subject in each case to certain adjustments as provided for in the Imperial Lease. Accordingly, the operating results of Imperial's growing operations are reflected as a discontinued operation in Griffin's consolidated statements of operations for all periods presented and the assets and liabilities of the growing operations of Imperial (excluding those assets that are part of the Imperial Lease) are shown as assets and liabilities of the discontinued operation on Griffin's consolidated balance sheets. The property and equipment previously used by Imperial and currently leased to Monrovia was reclassified on January 8, 2014 from property and equipment to real estate assets on Griffin's consolidated balance sheet. The property and equipment had a cost of $11,485 and accumulated depreciation of $9,850 at the time it was reclassified (see Notes 4 and 6).

        Imperial's revenue and the pretax income (loss), reflected as a discontinued operation in Griffin's consolidated statements of operations, were as follows:

	For the Fiscal Years Ended,
	Nov. 30, 2014		Nov. 30, 2013			Dec. 1, 2012
Net sales and other revenue	$	159	$	13,220		$	12,376
Pretax income (loss)	$	259	$	(12,142	)	$	(1,260	)

        Imperial's pretax income in fiscal 2014 includes $451 for the reclassification of actuarial gains related to Griffin's postretirement benefits program from other comprehensive income into pretax income as a result of the termination of Griffin's postretirement benefits program (see Note 10).

        In fiscal 2013, Imperial's pretax loss included a charge of $10,400 to reduce Imperial's inventories to fair value, which was the net realizable value based on the terms of the Imperial Sale. Also in fiscal 2013, Imperial's pretax loss included a charge of $500 to increase inventory reserves for plants that were expected to be sold below cost as seconds. In fiscal 2012, Imperial's pretax loss included a charge of $380 to increase reserves for unsaleable inventories and plants that were expected to be sold below cost as seconds.

        The pretax loss from the Imperial Sale in fiscal 2014 was as follows:

Consideration received from Monrovia, reflecting cash of $732 and note receivable of $4,036	$	4,768
Carrying value of assets sold, principally inventory		(4,561	)
Curtailment of employee benefit plan (see Note 10)		309
Severance and other expenses		(563	)
Pretax loss on sale	$	(47	)

        The assets and liabilities of Imperial's growing operation, reflected as a discontinued operation, are as follows:

	Nov. 30, 2014		Nov. 30, 2013
Assets:
Accounts receivable	$	—	$	1,151
Inventories		—		4,116
Other		36		360
	$	36	$	5,627
Liabilities:
Accounts payable and accrued liabilities	$	8	$	768

Griffin Land

        On January 31, 2012, Griffin Land closed on the sale of its Manchester, Connecticut warehouse to its full building tenant in that building, an affiliate of Raymour & Flanigan ("Raymour"). Accordingly, the gain on the sale of the Manchester warehouse and the operating results of the Manchester warehouse are reflected as a discontinued operation in Griffin's fiscal 2012 consolidated statement of operations. Net cash proceeds from the sale, after selling expenses of $438 paid out of proceeds at closing and $25 paid separately, were $15,537, and a pretax gain of $2,886 is included in the results of discontinued operations in fiscal 2012. Upon completion of the sale, Griffin deposited the cash of $15,562 received from the sale at closing into an escrow account for the potential purchase of a replacement property under a Section 1031 like-kind exchange. As Griffin Land did not identify a replacement property within the time frame required under the tax rules and regulations governing a Section 1031 like-kind exchange, in the second quarter of fiscal 2012, the cash being held in escrow was released to Griffin Land. Rental revenue and pretax income from the operations of the Manchester warehouse in fiscal 2012 prior to its sale were $273 and $221, respectively.