SEC Info - Griffon Corp - ‘10-K’ for 9/30/18

NOTES PAYABLE, CAPITALIZED LEASES AND LONG-TERM DEBT

The present value of the net minimum payments on capitalized leases as of September 30, 2018 was follows:



	At September 30, 2018
Total minimum lease payments	$	10,586
Less amount representing interest payments	(812		)
Present value of net minimum lease payments	9,774
Current portion	(3,579		)
Capitalized lease obligation, less current portion	$	6,195

Minimum payments under capital leases for the next five years are as follows: $4,242 in 2019, $3,764 in 2020, $2,102 in 2021, $443 in 2022, $35 in 2023 and $0 thereafter.

Included in the consolidated balance sheet at September 30, 2018 under Property, plant and equipment, are costs and accumulated depreciation subject to capitalized leases of $41,742 and $31,969, respectively, and included in Other assets are deferred interest charges of $80. Included in the consolidated balance sheet at September 30, 2017, under Property, plant and equipment are costs and accumulated depreciation subject to capitalized leases of $19,238 and $11,831, respectively, and included in Other assets are deferred interest charges of $105. Amortization expense was $3,514, $1,683, and $1,628 in 2018, 2017 and 2016 respectively.

In October 2006, a subsidiary of Griffon entered into a capital lease totaling $14,290 for real estate it occupies in Troy, Ohio. Approximately $10,000 was used to acquire the building and the remaining amount was used for improvements. The lease matures in 2022, bears interest at a fixed rate of 5.0%, is secured by a mortgage on the real estate and is guaranteed by Griffon.

Debt at September 30, 2018 and 2017 consisted of the following:



		At September 30, 2018
		Outstanding Balance			Original Issuer Discount		Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior note due 2022	(a)	$	1,000,000		1,220		$	(12,968	)	$	988,252		5.25	%
Revolver due 2021	(b)	25,000			—		(1,413		)	23,587			n/a
ESOP Loans	(e)	34,694			—		(186		)	34,508			n/a
Capital lease - real estate	(f)	7,503			—		(80		)	7,423			5.00	%
Non U.S. lines of credit	(g)	7,951					(16		)	7,935			n/a
Non U.S. term loans	(g)	53,533			—		(148		)	53,385			n/a
Other long term debt	(h)	6,011			—		(19		)	5,992			n/a
Totals		1,134,692			1,220		(14,830		)	1,121,082
less: Current portion		(13,011		)	—		—			(13,011		)
Long-term debt		$	1,121,681		$	1,220	$	(14,830	)	$	1,108,071



		At September 30, 2017
		Outstanding Balance			Original Issuer Discount			Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate
Senior notes due 2022	(a)	$	725,000		$	(1,177	)	$	(9,220	)	$	714,603		5.25	%
Revolver due 2021	(b)	144,216			—			(1,951		)	142,265			n/a
Real estate mortgages	(d)	23,642			—			(320		)	23,322			n/a
ESOP Loans	(e)	42,675			—			(310		)	42,365			n/a
Capital lease - real estate	(f)	5,312			—			(105		)	5,207			5.00	%
Non U.S. lines of credit	(g)	9,402						(31		)	9,371			n/a
Non U.S. term loans	(g)	35,943			—			(108		)	35,835			n/a
Other long term debt	(h)	6,211			—			(21		)	6,190
Totals		992,401			(1,177		)	(12,066		)	979,158
less: Current portion		(11,078		)	—			—			(11,078		)
Long-term debt		$	981,323		$	(1,177	)	$	(12,066	)	$	968,080

Interest expense consists of the following for the years ended September 30, 2018, 2017 and 2016.



		Year Ended September 30, 2018
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2022	(a)	5.66	%	52,500			270		3,803		56,573
Revolver due 2020	(b)	n/a		3,718			—		565		4,283
Convert. debt due 2017	(c)	n/a		—			—		—		—
Real estate mortgages	(d)	3.3	%	349			—		320		669
ESOP Loans	(e)	6.3	%	1,802			—		124		1,926
Capital lease - real estate	(f)	n/a		581			—		25		606
Non U.S. lines of credit	(g)	n/a		34			—		15		49
Non U.S. term loans	(g)	n/a		1,420			—		90		1,510
Other long term debt	(h)	n/a		494					7		501
Capitalized interest				(549		)	—		—		(549		)
Totals				$	60,349		$	270	$	4,949	$	65,568



		Year Ended September 30, 2017
		Effective Interest Rate		Cash Interest		Amort. Debt Discount	Amort. Deferred Cost & Other Fees	Total Interest Expense
Senior notes due 2022	(a)	5.55	%	38,063		270	1,857	40,190
Revolver due 2020	(b)	n/a		4,951		—	567	5,518
Convert. debt due 2017	(c)	8.9	%	1,167		1,248	148	2,563
Real estate mortgages	(d)	2.6	%	582		—	58	640
ESOP Loans	(e)	4.2	%	1,557		—	133	1,690
Capital lease - real estate	(f)	5.5	%	296		—	25	321
Non U.S. lines of credit	(g)	n/a		76		—	128	204
Non U.S. term loan	(g)	n/a		860		—	67	927
Other long term debt	(h)			245			10	255
Capitalized interest				(795	)	—	—	(795	)
Totals				47,002		1,518	2,993	51,513



		Year Ended September 30, 2016
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2022	(a)	5.48	%	33,906			103		1,481		35,490
Revolver due 2020	(b)	n/a		2,564			—		512		3,076
Convert. debt due 2017	(c)	9.0	%	4,000			4,346		443		8,789
Real estate mortgages	(d)	2.2	%	439			—		62		501
ESOP Loans	(e)	3.1	%	1,090			—		236		1,326
Capital lease - real estate	(f)	5.5	%	353			—		25		378
Non U.S. lines of credit	(g)	n/a		553			—		91		644
Non U.S. term loan	(g)	n/a		659			—		13		672
Other long term debt	(h)			260					9		269
Capitalized interest				(1,202		)	—		—		(1,202		)
Totals				$	42,622		$	4,449	$	2,872	$	49,943

Minimum payments under debt agreements for the next five years are as follows: $13,011 in 2019, $43,330 in 2020, $6,802 in 2021, $5,233 in 2022, $4,827 in 2023 and $1,061,489 thereafter.

(a)

On October 2, 2017, in an unregistered offering through a private placement under Rule 144A, Griffon completed the add-on offering of $275,000 principal amount of its 5.25% senior notes due 2022, at 101.0% of par, to Griffon's previously issued $125,000 principal amount of its 5.25% senior notes due 2022, at 98.76% of par, completed on May 18, 2016 and $600,000 5.25% senior notes due in 2022, at par, which was completed on February 27, 2014 (collectively the “Senior Notes”). As of September 30, 2018, outstanding Senior Notes due totaled $1,000,000; interest is payable semi-annually on March 1 and September 1. The net proceeds of the $275,000 add-on offering were used to acquire ClosetMaid with the remaining proceeds used to pay down outstanding loan borrowings under Griffon's Revolving Credit Facility (the "Credit Agreement"). The net proceeds of the previously issued $125,000 add-on offering were used to pay down outstanding revolving loan borrowings under the Credit Agreement.

Proceeds from the $600,000 5.25% senior notes due in 2022 were used to redeem $550,000 of 7.125% senior notes due 2018, to pay a call and tender offer premium of $31,530 and to make interest payments of $16,716, with the balance used to pay a portion of the related transaction fees and expenses. In connection with the issuance of the Senior Notes, all obligations under the $550,000 of 7.125% senior notes due in 2018 were discharged.

The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On February 5, 2018, July 20, 2016 and June 18, 2014, Griffon exchanged all of the $275,000, $125,000 and $600,000 Senior Notes, respectively, for substantially identical Senior Notes registered under the Securities Act of 1933 via an exchange offer. The fair value of the Senior Notes approximated $990,000 on September 30, 2018 based upon quoted market prices (level 1 inputs). In connection with the issuance and exchange of the $275,000 senior notes, Griffon capitalized $8,472 of underwriting fees and other expenses; in addition to $13,329 capitalized under the previously issued $725,000 Senior Notes. All capitalized fees for the Senior Notes will amortize over the term of the notes and, at September 30, 2018, $14,830 remained to be amortized.

(b)

On March 22, 2016, Griffon amended its Credit Agreement to increase the credit facility from $250,000 to $350,000, extend its maturity from March 13, 2020 to March 22, 2021, and modify certain other provisions of the facility. On October 2, 2017 and on May 31, 2018, Griffon amended the Credit Agreement in connection with the ClosetMaid and the CornellCookson acquisitions, respectively, to modify the net leverage covenant. The facility includes a letter of credit sub-facility with a limit of $50,000 and a multi-currency sub-facility of $100,000. The Credit Agreement provides for same day borrowings of base rate loans. Borrowings under the Credit Agreement may be repaid and re-borrowed at any time, subject to final maturity of the facility or the occurrence of an event of default under the Credit Agreement. Interest is payable on borrowings at either a LIBOR or base rate benchmark rate, in each case without a floor, plus an applicable margin, which adjusts based on financial performance. Current margins are 1.75% for base rate loans and 2.75% for LIBOR loans. The Credit Agreement has certain financial maintenance tests including a maximum total leverage ratio, a maximum senior secured leverage ratio and a minimum interest coverage ratio, as well as customary affirmative and negative covenants and events of default. The negative covenants place limits on Griffon's ability to, among other things, incur indebtedness, incur liens, and make restricted payments and investments. Borrowings under the Credit Agreement are guaranteed by Griffon’s material domestic subsidiaries and are secured, on a first priority basis, by substantially all domestic assets of the Company and the guarantors, and a pledge of not greater than 65% of the equity interest in Griffon’s material, first-tier foreign subsidiaries (except that a lien on the assets of Griffon’s material domestic subsidiaries securing a limited amount of the debt under the credit agreement relating to Griffon's Employee Stock Ownership Plan ("ESOP") ranks pari passu with the lien granted on such assets under the Credit Agreement; see footnote (e) below). At September 30, 2018, under the Credit Agreement, there were $25,000 outstanding borrowings; outstanding standby letters of credit were $14,623; and $310,377 was available, subject to certain loan covenants, for borrowing at that date.

(c)

On December 21, 2009, Griffon issued $100,000 principal of 4% convertible subordinated notes due 2017 (the “2017 Notes”). On July 14, 2016, Griffon announced that it would settle, upon conversion, up to $125,000 of the conversion value of the 2017 Notes in cash, with amounts in excess of $125,000, if any, to be settled in shares of Griffon common stock. On January 17, 2017, Griffon settled the convertible debt for $173,855 with $125,000 in cash, utilizing borrowings under the Credit Agreement, and $48,858, or 1,954,993 shares of common stock issued from treasury.

(d)

In September 2015 and March 2016, Griffon entered into mortgage loans in the amount of $32,280 and $8,000, respectively, and were due to mature in September 2025 and April 2018, respectively. The mortgage loans were secured and collateralized by four properties occupied by Griffon's subsidiaries and were guaranteed by Griffon. The loans had an interest at a rate of LIBOR plus 1.50%. The loans were paid off during the year ended September 30, 2018.

(e)

In August 2016, Griffon’s ESOP entered into an agreement that refinanced the existing ESOP loan into a new Term Loan in the amount of $35,092 (the "Agreement"). The Agreement also provided for a Line Note with $10,908 available to purchase shares of Griffon common stock in the open market. During 2017, Griffon's ESOP purchased 621,875 shares of common stock for a total of $10,908 or $17.54 per share, under a borrowing line that has now been fully utilized. On June 30, 2017, the Term Loan and Line Note were combined into a single Term Loan. The Term Loan bears interest at LIBOR plus 3.0%. The Term Loan requires quarterly principal payments of $569 with a balloon payment due at maturity on March 22, 2020. As a result of the special cash dividend of $1.00 per share, paid on April 16, 2018, the outstanding balance of the Term Loan was reduced by $5,705. As of September 30, 2018, $34,508, net of issuance costs, was outstanding under the Term Loan. The Term Loan is secured by shares purchased with the proceeds of the loan and with a lien on a specific amount of Griffon assets (which lien ranks pari passu with the lien granted on such assets under the Credit Agreement) and is guaranteed by Griffon.

(f)

Two Griffon subsidiaries have capital leases outstanding for real estate located in Troy, Ohio and Ocala, Florida. The leases mature in 2021 and 2022, respectively, and bear interest at fixed rates of approximately 5.0% and 8.0%, respectively. The Troy, Ohio lease is secured by a mortgage on the real estate and is guaranteed by Griffon. The Ocala, Florida lease contains two five-year renewal options. As of September 30, 2018, $7,423 was outstanding, net of issuance costs.

(g)

In November 2012, Garant G.P. (“Garant”) entered into a CAD 15,000 ($11,498 as of September 30, 2018) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (3.70% LIBOR USD and 3.24% Bankers Acceptance Rate CDN as of September 30, 2018). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity. As of September 30, 2018, there were no borrowings under the revolving credit facility with CAD 15,000 ($11,498 as of September 30, 2018) available for borrowing.

In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries ("Griffon Australia") entered into an AUD 30,000 term loan and an AUD 10,000 revolver. The term loan refinanced two existing term loans and the revolver replaced two existing lines. In December 2016, the amount available under the revolver was increased from AUD 10,000 to AUD 20,000 and, in March 2017 the term loan commitment was increased by AUD 5,000. In September 2017, the term commitment was increased by AUD 15,000. The term loan requires quarterly principal payments of AUD 1,250 plus interest with a balloon payment of AUD 37,125 due upon maturity in October 2019, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 2.00% per annum (3.99% at September 30, 2018). As of September 30, 2018, the term had an outstanding balance of AUD 40,875 ($29,546 as of September 30, 2018). The revolving facility matures in March 2019, but is renewable upon mutual agreement with the lender, and accrues interest at BBSY plus 2.0% per annum (3.90% at September 30, 2018). At September 30, 2018, the revolver had an outstanding balance of AUD 11,000 ($7,951 at September 30, 2018). The revolver and the term loan are both secured by substantially all of the assets of Griffon Australia and its subsidiaries. Griffon guarantees the term loan. Griffon Australia is required to maintain a certain minimum equity level and is subject to a maximum leverage ratio and a minimum fixed charges cover ratio.

A UK subsidiary of Griffon maintained an invoice discounting arrangement secured by trade receivables. Interest was variable at 2.0% over the Sterling base rate. This facility was canceled in July 2018.

In July 2018, the AMES Companies UK Ltd and its subsidiaries ("Ames UK") entered into a GBP 14,000 term loan, GBP 4,000 mortgage loan and GBP 5,000 revolver. The term loan and mortgage loan require quarterly principal payments of GBP 350 and GBP 83 plus interest, respectively, and have balloon payments due upon maturity, July 2023, of GBP 7,000 and GBP 2,333, respectively. The Term Loan and Mortgage Loans accrue interest at the GBP LIBOR Rate plus 2.25% and 1.8%, respectively (3.05% and 2.60% at September 30, 2018, respectively). The revolving facility matures in July 2019, but is renewable upon mutual agreement with the lender, and accrues interest at the Bank of England Base Rate plus 1.5% (2.25% as of September 30, 2018). The revolver and the term loan are both secured by substantially all of the assets of Ames UK and its subsidiaries. Ames UK is subject to a maximum leverage ratio and a minimum fixed charges cover ratio. The invoice discounting arrangement was canceled and replaced by the above loan facilities. As of September 30, 2018, outstanding borrowings on these facilities totaled $23,987.

(h) Other long-term debt primarily consists of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases.

At September 30, 2018, Griffon and its subsidiaries were in compliance with the terms and covenants of its credit and loan agreements.

This ‘10-K’ Filing	Date	Other Filings

	3/22/21
	3/22/20
	3/13/20	CORRESP, S-4
Filed as of:	11/19/18	4, 5/A
Filed on:	11/16/18	4
For Period end:	9/30/18	5, 5/A
	5/31/18	8-K, SD
	4/16/18
	2/5/18	4
	10/2/17	8-K, 8-K/A
	9/30/17	10-K, 5
	6/30/17	10-Q
	1/17/17
	9/30/16	10-K, 5
	7/20/16	CORRESP, UPLOAD
	7/14/16	8-K
	5/18/16	8-K
	3/22/16	8-K
	6/18/14
	2/27/14	8-K
	12/21/09	4, 8-K, SC 13D/A
		List all Filings

Griffon Corp – ‘10-K’ for 9/30/18 – ‘R15’

On: Friday, 11/16/18, at 8:10pm ET · As of: 11/19/18 · For: 9/30/18 · Accession #: 50725-18-75 · File #: 1-06620

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Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘R15’ — Notes Payable, Capitalized Leases and Long-Term Debt

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

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