SEC Info - Griffon Corp - ‘10-K’ for 9/30/14

NOTES PAYABLE, CAPITALIZED LEASES AND LONG-TERM DEBT

The present value of the net minimum payments on capitalized leases as of September 30, 2014 was follows:



	At September 30, 2014
Total minimum lease payments	$	11,430
Less amount representing interest payments	(1,739		)
Present value of net minimum lease payments	9,691
Current portion	(1,446		)
Capitalized lease obligation, less current portion	$	8,245

Minimum payments under capital leases for the next five years are as follows: $1,905 in 2015, $1,878 in 2016, $1,646 in 2017, $1,514 in 2018, $1,424 in 2019 and $3,063 thereafter.

Included in the consolidated balance sheet at September 30, 2014 under Property, plant and equipment, are costs and accumulated depreciation subject to capitalized leases of $16,446 and $6,755, respectively, and included in Other assets are deferred interest charges of $181. Included in the consolidated balance sheet at September 30, 2013, under Property, plant and equipment are costs and accumulated depreciation subject to capitalized leases of $15,304 and $5,460, respectively, and included in Other assets are deferred interest charges of $207. The capitalized leases carry interest rates from 5% to 10% and mature from 2015 through 2022. Amortization expense was $1,579, $1,605, and $1,598 in 2014, 2013 and 2012, 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, 2014 and 2013 consisted of the following:



		At September 30, 2014
		Outstanding Balance			Original Issuer Discount			Balance Sheet			Capitalized Fees & Expenses		Coupon Interest Rate
Senior note due 2022	(a)	$	600,000		$	—		$	600,000		$	9,553	5.25	%
Revolver due 2019	(b)	25,000			—			25,000			2,009		n/a
Convert. debt due 2017	(c)	100,000			(9,584		)	90,416			1,034		4.00	%
Real estate mortgages	(d)	16,388			—			16,388			576		n/a
ESOP Loans	(e)	38,946			—			38,946			262		n/a
Capital lease - real estate	(f)	8,551			—			8,551			181		5.00	%
Non U.S. lines of credit	(f)	3,306			—			3,306			—		n/a
Non U.S. term loans	(g)	28,470			—			28,470			161		n/a
Other long term debt	(g)	1,910			—			1,910			24		n/a
Totals		822,571			(9,584		)	812,987			$	13,800
less: Current portion		(7,886		)	—			(7,886		)
Long-term debt		$	814,685		$	(9,584	)	$	805,101



		At September 30, 2013
		Outstanding Balance			Original Issuer Discount			Balance Sheet			Capitalized Fees & Expenses		Coupon Interest Rate
Senior notes due 2018	(a)	$	550,000		$	—		$	550,000		$	7,328	7.10	%
Revolver due 2019	(a)	—			—			—			2,425		n/a
Convert. debt due 2017	(b)	100,000			(13,246		)	86,754			1,478		4.00	%
Real estate mortgages	(c)	13,212			—			13,212			185		n/a
ESOP Loans	(d)	21,098			—			21,098			24		n/a
Capital lease - real estate	(e)	9,529			—			9,529			207		5.00	%
Non U.S. lines of credit	(f)	4,606			—			4,606			—		n/a
Non U.S. term loans	(f)	3,115			—			3,115			27		n/a
Other long term debt	(g)	941			—			941			—
Totals		702,501			(13,246		)	689,255			$	11,674
less: Current portion		(10,768		)	—			(10,768		)
Long-term debt		$	691,733		$	(13,246	)	$	678,487

Interest expense consists of the following for the years ended September 30, 2014, 2013 and 2012.



		Year Ended September 30, 2014
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2018	(a)	7.4	%	$	15,930		$	—	$	667	$	16,597
Senior notes due 2022	(a)	5.25	%	18,550			—		759		19,309
Revolver due 2018	(a)	n/a		1,094			—		570		1,664
Convert. debt due 2017	(b)	9.1	%	4,000			3,662		443		8,105
Real estate mortgages	(c)	3.9	%	500			—		144		644
ESOP Loans	(d)	2.8	%	747			—		54		801
Capital lease - real estate	(e)	5.3	%	456			—		25		481
Non U.S. lines of credit	(g)	n/a		919			—		27		946
Non U.S. term loans	(g)	n/a		847			—		36		883
Other long term debt	(h)	n/a		(13		)	—		40		27
Capitalized interest				(1,010		)	—		—		(1,010		)
Totals				$	42,020		$	3,662	$	2,765	$	48,447



		Year Ended September 30, 2013
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2018	(a)	7.4	%	$	39,188		$	—	$	1,626	$	40,814
Revolver due 2016	(a)	n/a		785			—		582		1,367
Convert. debt due 2017	(b)	9.1	%	4,000			3,361		443		7,804
Real estate mortgages	(c)	4.9	%	538			—		86		624
ESOP Loans	(d)	2.9	%	628			—		8		636
Capital lease - real estate	(e)	5.3	%	504			—		25		529
Term loan due 2013	(f)	3.9	%	271			—		87		358
Revolver due 2013	(f)	0.5	%	68			—		—		68
Non U.S. lines of credit	(g)	n/a		520			—		—		520
Non U.S. term loans	(g)	n/a		216			—		14		230
Other long term debt	(h)			553			—		—		553
Capitalized interest				(983		)	—		—		(983		)
Totals				$	46,288		$	3,361	$	2,871	$	52,520



		Year Ended September 30, 2012
		Effective Interest Rate		Cash Interest			Amort. Debt Discount		Amort. Deferred Cost & Other Fees		Total Interest Expense
Senior notes due 2018	(a)	7.4	%	$	39,188		$	—	$	1,623	$	40,811
Revolver due 2016	(a)	n/a		881			—		622		1,503
Convert. debt due 2017	(b)	9.2	%	4,000			3,086		443		7,529
Real estate mortgages	(c)	4.0	%	575			—		86		661
ESOP Loans	(d)	3.0	%	707			—		6		713
Capital lease - real estate	(e)	5.3	%	551			—		25		576
Term loan due 2013	(f)	5	%	831			—		87		918
Non U.S. lines of credit	(g)	n/a		228			—		—		228
Non U.S. term loans	(g)	n/a		238			—		11		249
Other long term debt	(h)			680			—		34		714
Capitalized interest				(1,895		)	—		—		(1,895		)
Totals				$	45,984		$	3,086	$	2,937	$	52,007

Minimum payments under debt agreements for the next five years are as follows: $7,886 in 2015, $33,332 in 2016, $4,531 in 2017, $104,442 in 2018, $57,402 in 2019 and $614,978 thereafter.

(a)

On February 27, 2014, in an unregistered offering through a private placement under Rule 144A, Griffon issued, at par, $600,000 of 5.25% Senior Notes due in 2022 (“Senior Notes”); interest is payable semi-annually on March 1 and September 1, starting September 1, 2014. Proceeds from the Senior Notes 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 June 18, 2014, Griffon exchanged all of the Senior Notes for substantially identical Senior Notes registered under the Securities Act of 1933 via an exchange offer. The fair value of Senior Notes approximated $570,000 on September 30, 2014 based upon quoted market prices (level 1 inputs).

In connection with these transactions, Griffon capitalized $10,313 of underwriting fees and other expenses incurred related to the issuance and exchange of the Senior Notes, which will amortize over the term of such notes. Griffon recognized a loss on the early extinguishment of debt on the 7.125% senior notes aggregating $38,890, comprised of the $31,530 tender offer premium, the write-off of $6,574 of remaining deferred financing fees and $786 of prepaid interest on defeased notes.

On February 14, 2014, Griffon amended its $225,000 Revolving Credit Facility (“Credit Agreement”) to extend its maturity from March 18, 2018 to March 28, 2019, and to amend certain financial maintenance and negative covenants to improve Griffon's financial and operating flexibility. The facility includes a letter of credit sub-facility with a limit of $60,000, a multi-currency sub-facility of $50,000 and a swingline sub-facility with a limit of $30,000. 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 a default or 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 1.25% for base rate loans and 2.25% 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 each of 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 ranks pari passu with the lien granted on such assets under the Credit Agreement; see footnote (d) below). At September 30, 2014, there were $18,929 of standby letters of credit outstanding under the Credit Agreement and $25,000 in outstanding borrowings; $181,071 was available for borrowing at that date.

(b)

On December 21, 2009, Griffon issued $100,000 principal of 4% convertible subordinated notes due 2017 (the “2017 Notes”). The current conversion rate of the 2017 Notes is 68.4571 shares of Griffon’s common stock per $1 principal amount of notes, corresponding to a conversion price of $14.61 per share. When a cash dividend is declared that would result in an adjustment to the conversion ratio of less than 1%, any adjustment to the conversion ratio is deferred until the first to occur of (i) actual conversion; (ii) the 42nd trading day prior to maturity of the notes; and (iii) such time as the cumulative adjustment equals or exceeds 1%. As of September 30, 2014, aggregate dividends since the last conversion price adjustment of $0.06 per share would have resulted in an adjustment to the conversion ratio of approximately 0.52%. At both September 30, 2014 and 2013, the 2017 Notes had a capital in excess of par component, net of tax, of $15,720. The fair value of the 2017 Notes approximated $110,188 on September 30, 2014 based upon quoted market prices (level 1 inputs).


(c)	On October 21, 2013, Griffon refinanced two real estate mortgages to secure loans totaling $17,175. The loans mature in October 2018, are collateralized by the related properties and are guaranteed by Griffon. The loans bear interest at a rate of LIBOR plus 2.75%. At September 30, 2014, $16,388 was outstanding.

(d)

In December 2013, Griffon’s Employee Stock Ownership Plan (“ESOP”) entered into an agreement that refinanced the two existing ESOP loans into one new Term Loan in the amount of $21,098 (the "Agreement"). The Agreement also provided for a Line Note with $10,000 available to purchase shares of Griffon common stock in the open market. In July 2014, Griffon's ESOP entered into an amendment of the existing Agreement which provided an additional $10,000 Line Note available to purchase shares in the open market. During 2014, the Line Notes were combined with the Term Loan to form one new Term Loan. The Term Loan bears interest at LIBOR plus 2.38% or the lender’s prime rate, at Griffon’s option. The Term Loan requires quarterly principal payments of $506, with a balloon payment of approximately $30,137 due at maturity on December 31, 2018. During 2014, 1,591,117 shares of Griffon common stock, for a total of $20,000, or $12.57 per share, were purchased with proceeds from the Line Notes. At September 30, 2014, $38,946 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.


(e)	In October 2006, CBP entered into a capital lease totaling $14,290 for real estate in Troy, Ohio. 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.

(f)

In November 2010, Clopay Europe GMBH (“Clopay Europe”) entered into a €10,000 revolving credit facility and a €20,000 term loan. The term loan was paid off in December 2013 and the revolver had no borrowings outstanding at September 30, 2014. The revolving facility matures in November 2014, but is renewable upon mutual agreement with the bank. The revolving credit facility accrues interest at EURIBOR plus 2.20% per annum. Clopay Europe is required to maintain a certain minimum equity to assets ratio and keep leverage below a certain level, defined as the ratio of total debt to EBITDA.

Clopay do Brasil maintains lines of credit of approximately $5,200. Interest on borrowings accrues at a rate of Brazilian CDI plus 6.0% (17.00% at September 30, 2014). At September 30, 2014 there was approximately $3,306 borrowed under the lines. Clopay Plastic Products Company, Inc. guarantees the loan and lines.

In November 2012, Garant G.P. (“Garant”) entered into a CAD $15,000 revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (1.53% LIBOR USD and 2.52% Bankers Acceptance Rate CDN as of September 30, 2014). The revolving facility matures in November 2015. Garant is required to maintain a certain minimum equity. At September 30, 2014, there were no borrowings under the revolving credit facility with CAD $15,000 available for borrowing.

(g)

In December 2013 and May 2014, Northcote Holdings Pty Ltd entered into two unsecured term loans in the outstanding amounts of AUD $12,500 and AUD $20,000, respectively. The AUD $12,500 term loan requires quarterly interest payments with principal due upon maturity in December 2016. The AUD $20,000 term loan requires quarterly principal payments of $625 beginning in August 2015 with a balloon payment due upon maturity in May 2017. The loans accrue interest at Bank Bill Swap Bid Rate “BBSY” plus 2.8% per annum (5.5% at September 30, 2014 for each loan). As of September 30, 2014, Griffon had an outstanding combined balance of $28,470 on the term loans.

Subsidiaries of Northcote Holdings Pty Ltd also maintain two lines of credit of AUD $3,000 and AUD $5,000 which accrue interest at BBSY plus 2.25% per annum (4.95% at September 30, 2014) and 2.50% per annum (5.20% at September 30, 2014), respectively. At September 30, 2014, there were no outstanding borrowings under the lines. Griffon Corporation guarantees the term loans and the AUD $3,000 line of credit; the assets of a subsidiary of Northcote Holdings Pty Ltd secures the AUD $5,000 line of credit.


(h)	At September 30, 2012, Griffon had $532 of 4% convertible subordinated notes due 2023 (“2023 Notes”) outstanding. On April 15, 2013, the 2023 Notes were redeemed at par plus accrued interest. Other long-term debt also includes capital leases.

At September 30, 2014, 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

	3/28/19
	12/31/18	10-Q, SD
	3/18/18
Filed as of:	11/13/14	3
Filed on:	11/12/14	8-K
For Period end:	9/30/14
	9/1/14
	6/18/14
	2/27/14	8-K
	2/14/14	8-K, SC 13G/A
	10/21/13
	9/30/13	10-K
	4/15/13
	9/30/12	10-K, 5, ARS
	12/21/09	4, 8-K, SC 13D/A
		List all Filings

Griffon Corp – ‘10-K’ for 9/30/14 – ‘R16’

On: Wednesday, 11/12/14, at 5:40pm ET · As of: 11/13/14 · For: 9/30/14 · Accession #: 50725-14-6 · File #: 1-06620

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

‘R16’ — Notes Payable, Capitalized Leases and Long-Term Debt

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference