LONG-TERM DEBT (Tables)

6 Months Ended

Mar. 31, 2015



		At March 31, 2015														At September 30, 2014
		Outstanding Balance			Original Issuer Discount			Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate (1)		Outstanding Balance			Original Issuer Discount			Capitalized Fees & Expenses			Balance Sheet			Coupon Interest Rate (1)
Senior notes due 2022	(a)	$	600,000		$	—		$	(8,909	)	$	591,091		5.25	%	$	600,000		$	—		$	(9,553	)	$	590,447		5.25	%
Revolver due 2020	(a)	95,000			—			(2,278		)	92,722			n/a		25,000			—			(2,009		)	22,991			n/a
Convert. debt due 2017	(b)	100,000			(7,632		)	(813		)	91,555			4.00	%	100,000			(9,584		)	(1,034		)	89,382			4.00	%
Real estate mortgages	(c)	15,958			—			(504		)	15,454			n/a		16,388			—			(576		)	15,812			n/a
ESOP Loans	(d)	37,845			—			(257		)	37,588			n/a		38,946			—			(262		)	38,684			n/a
Capital lease - real estate	(e)	8,044			—			(169		)	7,875			5.00	%	8,551			—			(181		)	8,370			5.00	%
Non U.S. lines of credit	(f)	4,491			—			—			4,491			n/a		3,306			—			—			3,306			n/a
Non U.S. term loans	(g)	25,191			—			(112		)	25,079			n/a		28,470			—			(161		)	28,309			n/a
Other long term debt	(h)	1,635			—			(13		)	1,622			n/a		1,910			—			(24		)	1,886			n/a
Totals		888,164			(7,632		)	(13,055		)	867,477					822,571			(9,584		)	(13,800		)	799,187
less: Current portion		(9,162		)	—			—			(9,162		)			(7,886		)	—			—			(7,886		)
Long-term debt		$	879,002		$	(7,632	)	$	(13,055	)	$	858,315				$	814,685		$	(9,584	)	$	(13,800	)	$	791,301

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 2022 (“Senior Notes”); interest is payable semi-annually on March 1 and September 1. 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 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 the Senior Notes approximated $594,000 on March 31, 2015 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 March 13, 2015, Griffon amended its Revolving Credit Facility (the “Credit Agreement”) to increase the credit facility from $225,000 to $250,000, extend its maturity date from March 28, 2019 to March 13, 2020 and modify certain other provisions of the credit facility. The facility includes a letter of credit sub-facility with a limit of $50,000 (decreased from $60,000), and a multi-currency sub-facility of $50,000. The Credit Agreement provides for same day borrowings of base rate loans in lieu of a swing line sub-facility. 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 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 1.00% (compared to 1.25% prior to the amendment) for base rate loans and 2.00% (compared to 2.25% prior to the amendment) 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 ("ESOP") ranks pari passu with the lien granted on such assets under the Credit Agreement; see footnote (d) below). At March 31, 2015, outstanding borrowings and standby letters of credit were $95,000 and $20,560, respectively, under the Credit Agreement; $134,440 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 69.3811 shares of Griffon’s common stock per $1 principal amount of notes, corresponding to a conversion price of $14.41 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 March 31, 2015, the above conversion price reflects dividends paid through March 26, 2015. At both March 31, 2015 and 2014, 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 $129,813 on March 31, 2015 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%.

(d)

In December 2013, Griffon’s 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 to 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 $551, 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. 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 March 31, 2015. The revolving facility matures in November 2015 and is renewable upon mutual agreement with the bank. The revolving credit facility accrues interest at EURIBOR plus 2.20% per annum (2.28% at March 31, 2015). 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 Brazil maintains lines of credit of $4,000. Interest on borrowings accrues at a rate of Brazilian CDI plus 6.0% (18.60% at March 31, 2015). At March 31, 2015 there was $2,200 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 (1.54% LIBOR USD and 2.45% Bankers Acceptance Rate CDN as of March 31, 2015). The revolving facility matures in November 2015. Garant is required to maintain a certain minimum equity. At March 31, 2015, there was $2,291 borrowed under the revolving credit facility with CAD $12,110 available.

(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 AUD $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 (5.2% at March 31, 2015 for each loan). As of March 31, 2015, Northcote had an outstanding combined balance of $25,079 on the term loans, net of deferred costs.

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 (4.61% at March 31, 2015) and 2.50% per annum (4.86% at March 31, 2015), respectively. At March 31, 2015, there were no outstanding borrowings under the lines. Griffon 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)	Other long-term debt primarily consists of capital leases.

Schedule of Interest Expense For Long Term Debt



		Three Months Ended March 31, 2015												Three Months Ended March 31, 2014
		Effective Interest Rate (1)		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense			Effective Interest Rate (1)		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2018	(a)	n/a		$	—		$	—	$	—	$	—		7.1	%	$	6,133		$	—	$	261	$	6,394
Senior notes due 2022	(a)	5.5	%	7,875			—		322		8,197			5.3		2,800			—		111		2,911
Revolver due 2020	(a)	n/a		659			—		133		792			n/a		306			—		142		448
Convert. debt due 2017	(b)	9.2	%	1,000			990		110		2,100			9.3	%	1,000			909		110		2,019
Real estate mortgages	(c)	3.8	%	116			—		36		152			3.8	%	122			—		37		159
ESOP Loans	(d)	2.9	%	254			—		18		272			3.4	%	180			—		5		185
Capital lease - real estate	(e)	5.3	%	102			—		6		108			5.3	%	114			—		7		121
Non U.S. lines of credit	(f)	n/a		109			—		—		109			n/a		224			—		—		224
Non U.S. term loans	(g)	n/a		337			—		14		351			n/a		101			—		—		101
Other long term debt	(h)	n/a		22			—		2		24			n/a		—			—		—		—
Capitalized interest				(93		)	—		—		(93		)			(173		)	—		—		(173		)
Totals				$	10,381		$	990	$	641	$	12,012				$	10,807		$	909	$	673	$	12,389

(1) not applicable = n/a



		Six Months Ended March 31, 2015												Six Months Ended March 31, 2014
		Effective Interest Rate (1)		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense			Effective Interest Rate (1)		Cash Interest			Amort. Debt Discount		Amort. Debt Issuance Costs & Other Fees		Total Interest Expense
Senior notes due 2018	(a)	n/a		$	—		$	—	$	—	$	—		7.1	%	$	15,930		$	—	$	667	$	16,597
Senior notes due 2022	(a)	5.5	%	15,750			—		644		16,394			5.3		2,800			—		111		2,911
Revolver due 2020	(a)	n/a		997			—		291		1,288			n/a		473			—		278		751
Convert. debt due 2017	(b)	9.1	%	2,000			1,952		221		4,173			9.1	%	2,000			1,792		221		4,013
Real estate mortgages	(c)	3.9	%	240			—		72		312			4.0	%	252			—		73		325
ESOP Loans	(d)	2.9	%	514			—		35		549			3.2	%	332			—		7		339
Capital lease - real estate	(e)	5.3	%	208			—		12		220			5.3	%	233			—		14		247
Non U.S. lines of credit	(f)	n/a		250			—		—		250			n/a		417			—		—		417
Non U.S. term loans	(g)	n/a		725			—		30		755			n/a		153			—		4		157
Other long term debt	(h)	n/a		53			—		8		61			n/a		11			—		21		32
Capitalized interest				(236		)	—		—		(236		)			(266		)	—		—		(266		)
Totals				$	20,501		$	1,952	$	1,313	$	23,766				$	22,335		$	1,792	$	1,396	$	25,523

(b)


(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%.

(d)


(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)

(g)


(h)	Other long-term debt primarily consists of capital leases.