ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 11-1893410 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
712 Fifth Ave, 18th Floor, New York, New York | 10019 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer | ý | |
Non-accelerated filer o | Smaller reporting company | o | |
(Do not check if a smaller reporting company) |
Page | |
(Unaudited) | |||||||
December 31, 2016 | September 30, 2016 | ||||||
CURRENT ASSETS | |||||||
Cash and equivalents | $ | 52,269 | $ | 72,553 | |||
Accounts receivable, net of allowances of $6,677 and $6,452 | 228,025 | 233,751 | |||||
Contract costs and recognized income not yet billed, net of progress payments of $7,145 and $8,001 | 108,572 | 126,961 | |||||
Inventories, net | 323,192 | 308,869 | |||||
Prepaid and other current assets | 41,410 | 38,605 | |||||
Assets of discontinued operations | 218 | 219 | |||||
Total Current Assets | 753,686 | 780,958 | |||||
PROPERTY, PLANT AND EQUIPMENT, net | 400,151 | 405,404 | |||||
GOODWILL | 357,507 | 361,185 | |||||
INTANGIBLE ASSETS, net | 210,251 | 210,599 | |||||
OTHER ASSETS | 21,634 | 21,982 | |||||
ASSETS OF DISCONTINUED OPERATIONS | 1,960 | 1,968 | |||||
Total Assets | $ | 1,745,189 | $ | 1,782,096 | |||
CURRENT LIABILITIES | |||||||
Notes payable and current portion of long-term debt | $ | 26,347 | $ | 22,644 | |||
Accounts payable | 161,140 | 190,341 | |||||
Accrued liabilities | 95,594 | 103,594 | |||||
Liabilities of discontinued operations | 1,498 | 1,684 | |||||
Total Current Liabilities | 284,579 | 318,263 | |||||
LONG-TERM DEBT, net | 938,673 | 913,914 | |||||
OTHER LIABILITIES | 130,818 | 137,266 | |||||
LIABILITIES OF DISCONTINUED OPERATIONS | 2,098 | 1,706 | |||||
Total Liabilities | 1,356,168 | 1,371,149 | |||||
COMMITMENTS AND CONTINGENCIES - See Note 19 | |||||||
SHAREHOLDERS’ EQUITY | |||||||
Total Shareholders’ Equity | 389,021 | 410,947 | |||||
Total Liabilities and Shareholders’ Equity | $ | 1,745,189 | $ | 1,782,096 |
COMMON STOCK | CAPITAL IN EXCESS OF PAR VALUE | RETAINED EARNINGS | TREASURY SHARES | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | DEFERRED COMPENSATION | ||||||||||||||||||||||||||||
(in thousands) | SHARES | PAR VALUE | SHARES | COST | Total | ||||||||||||||||||||||||||||
Balance at September 30, 2016 | 79,966 | $ | 19,992 | $ | 529,980 | $ | 475,760 | 34,797 | $ | (501,866 | ) | $ | (81,241 | ) | $ | (31,678 | ) | $ | 410,947 | ||||||||||||||
Net income | — | — | — | 12,264 | — | — | — | — | 12,264 | ||||||||||||||||||||||||
Dividend | — | — | — | (2,499 | ) | — | — | — | — | (2,499 | ) | ||||||||||||||||||||||
Tax effect from exercise/vesting of equity awards, net | — | — | (97 | ) | — | 555 | (12,872 | ) | — | — | (12,969 | ) | |||||||||||||||||||||
Amortization of deferred compensation | — | — | — | — | — | — | — | 893 | 893 | ||||||||||||||||||||||||
Common stock issued | 2 | — | 7 | — | — | — | — | — | 7 | ||||||||||||||||||||||||
Common stock acquired | — | — | — | — | 129 | (2,201 | ) | — | — | (2,201 | ) | ||||||||||||||||||||||
Equity awards granted, net | 293 | 73 | (73 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
ESOP purchase of common stock | — | — | — | — | — | — | — | (9,213 | ) | (9,213 | ) | ||||||||||||||||||||||
ESOP allocation of common stock | — | — | 652 | — | — | — | — | — | 652 | ||||||||||||||||||||||||
Stock-based compensation | — | — | 2,452 | — | — | — | — | — | 2,452 | ||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | — | — | (11,312 | ) | — | (11,312 | ) | ||||||||||||||||||||||
Balance at December 31, 2016 | 80,261 | $ | 20,065 | $ | 532,921 | $ | 485,525 | 35,481 | $ | (516,939 | ) | $ | (92,553 | ) | $ | (39,998 | ) | $ | 389,021 |
Three Months Ended December 31, | ||||||||
2016 | 2015 | |||||||
Revenue | $ | 467,100 | $ | 494,149 | ||||
Cost of goods and services | 350,972 | 378,044 | ||||||
Gross profit | 116,128 | 116,105 | ||||||
Selling, general and administrative expenses | 89,743 | 91,299 | ||||||
Income from operations | 26,385 | 24,806 | ||||||
Other income (expense) | ||||||||
Interest expense | (13,373 | ) | (12,023 | ) | ||||
Interest income | 6 | 11 | ||||||
Other, net | (42 | ) | 555 | |||||
Total other expense, net | (13,409 | ) | (11,457 | ) | ||||
Income before taxes | 12,976 | 13,349 | ||||||
Provision for income taxes | 712 | 2,561 | ||||||
Net income | $ | 12,264 | $ | 10,788 | ||||
Basic income per common share | $ | 0.31 | $ | 0.26 | ||||
Weighted-average shares outstanding | 39,336 | 41,968 | ||||||
Diluted income per common share | $ | 0.29 | $ | 0.24 | ||||
Weighted-average shares outstanding | 42,312 | 45,384 | ||||||
Dividends paid per common share | $ | 0.06 | $ | 0.05 | ||||
Net income | $ | 12,264 | $ | 10,788 | ||||
Other comprehensive income (loss), net of taxes: | ||||||||
Foreign currency translation adjustments | (13,479 | ) | (3,349 | ) | ||||
Pension and other post retirement plans | 544 | 386 | ||||||
Change in cash flow hedges | 1,623 | (1,015 | ) | |||||
Total other comprehensive income (loss), net of taxes | (11,312 | ) | (3,978 | ) | ||||
Comprehensive income (loss), net | $ | 952 | $ | 6,810 |
Three Months Ended December 31, | |||||||
2016 | 2015 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 12,264 | $ | 10,788 | |||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 18,394 | 17,084 | |||||
Stock-based compensation | 2,452 | 3,066 | |||||
Provision for losses on accounts receivable | 118 | (24 | ) | ||||
Amortization of debt discounts and issuance costs | 1,915 | 1,671 | |||||
Deferred income taxes | (196 | ) | 2,763 | ||||
Gain on sale of assets and investments | (103 | ) | (77 | ) | |||
Change in assets and liabilities, net of assets and liabilities acquired: | |||||||
(Increase) decrease in accounts receivable and contract costs and recognized income not yet billed | 21,459 | (6,106 | ) | ||||
Increase in inventories | (16,253 | ) | (9,080 | ) | |||
(Increase) decrease in prepaid and other assets | (2,637 | ) | 316 | ||||
Decrease in accounts payable, accrued liabilities and income taxes payable | (31,475 | ) | (38,324 | ) | |||
Other changes, net | 1,616 | 519 | |||||
Net cash provided by (used in) operating activities | 7,554 | (17,404 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Acquisition of property, plant and equipment | (22,478 | ) | (25,018 | ) | |||
Acquired businesses, net of cash acquired | (6,051 | ) | — | ||||
Investment in unconsolidated joint venture | — | (2,726 | ) | ||||
Proceeds from sale of assets | 118 | 484 | |||||
Investment sales | — | 715 | |||||
Net cash used in investing activities | (28,411 | ) | (26,545 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Dividends paid | (2,499 | ) | (2,281 | ) | |||
Purchase of shares for treasury | (15,073 | ) | (10,910 | ) | |||
Proceeds from long-term debt | 39,056 | 79,874 | |||||
Payments of long-term debt | (8,827 | ) | (24,126 | ) | |||
Change in short-term borrowings | (702 | ) | (147 | ) | |||
Financing costs | (172 | ) | — | ||||
Purchase of ESOP shares | (9,213 | ) | — | ||||
Other, net | (349 | ) | 203 | ||||
Net cash provided by financing activities | 2,221 | 42,613 | |||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |||||||
Net cash used in operating activities | (430 | ) | (387 | ) | |||
Net cash used in discontinued operations | (430 | ) | (387 | ) | |||
Effect of exchange rate changes on cash and equivalents | (1,218 | ) | (310 | ) | |||
NET DECREASE IN CASH AND EQUIVALENTS | (20,284 | ) | (2,033 | ) | |||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 72,553 | 52,001 | |||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 52,269 | $ | 49,968 |
• | Home & Building Products (“HBP”) consists of two companies, The AMES Companies, Inc. (“AMES”) and Clopay Building Products Company, Inc. (“CBP”): |
- | AMES, founded in 1774, is the leading U.S. manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals. |
- | CBP, since 1964, is a leading manufacturer and marketer of residential and commercial garage doors and sells to professional dealers and some of the largest home center retail chains in North America. |
• | Telephonics Corporation ("Telephonics"), founded in 1933, is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers. |
• | Clopay Plastic Products Company, Inc. ("PPC") , incorporated in 1934, is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies. |
• | Level 1 inputs are measured and recorded at fair value based upon quoted prices in active markets for identical assets. |
• | Level 2 inputs include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities. |
• | Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
At December 31, 2016 | At September 30, 2016 | ||||||
Raw materials and supplies | $ | 79,260 | $ | 81,345 | |||
Work in process | 89,764 | 75,852 | |||||
Finished goods | 154,168 | 151,672 | |||||
Total | $ | 323,192 | $ | 308,869 |
At December 31, 2016 | At September 30, 2016 | ||||||
Land, building and building improvements | $ | 140,441 | $ | 138,204 | |||
Machinery and equipment | 798,766 | 804,280 | |||||
Leasehold improvements | 53,389 | 51,015 | |||||
992,596 | 993,499 | ||||||
Accumulated depreciation and amortization | (592,445 | ) | (588,095 | ) | |||
Total | $ | 400,151 | $ | 405,404 |
At September 30, 2016 | Other adjustments including currency translations | At December 31, 2016 | |||||||||
Home & Building Products | $ | 287,617 | $ | (1,269 | ) | $ | 286,348 | ||||
Telephonics | 18,545 | — | 18,545 | ||||||||
PPC | 55,023 | (2,409 | ) | 52,614 | |||||||
Total | $ | 361,185 | $ | (3,678 | ) | $ | 357,507 |
At December 31, 2016 | At September 30, 2016 | ||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Average Life (Years) | Gross Carrying Amount | Accumulated Amortization | |||||||||||||
Customer relationships | $ | 167,198 | $ | 47,740 | 25 | $ | 170,652 | $ | 47,217 | ||||||||
Unpatented technology | 5,927 | 4,095 | 12.5 | 6,073 | 4,060 | ||||||||||||
Total amortizable intangible assets | 173,125 | 51,835 | 176,725 | 51,277 | |||||||||||||
Trademarks | 88,961 | — | 85,151 | — | |||||||||||||
Total intangible assets | $ | 262,086 | $ | 51,835 | $ | 261,876 | $ | 51,277 |
At December 31, 2016 | At September 30, 2016 | |||||||||||||||||||||||||||||||||||||
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) | $ | 725,000 | $ | (1,379 | ) | $ | (9,509 | ) | $ | 714,112 | 5.25 | % | 725,000 | $ | (1,447 | ) | $ | (9,799 | ) | $ | 713,754 | 5.25 | % | ||||||||||||||
Revolver due 2021 | (b) | 23,000 | — | (2,260 | ) | 20,740 | n/a | — | — | (2,425 | ) | (2,425 | ) | n/a | ||||||||||||||||||||||||
Convert. debt due 2017 | (c) | 100,000 | (190 | ) | (37 | ) | 99,773 | 4.00 | % | 100,000 | (1,248 | ) | (148 | ) | 98,604 | 4.00 | % | |||||||||||||||||||||
Real estate mortgages | (d) | 37,190 | — | (525 | ) | 36,665 | n/a | 37,861 | — | (595 | ) | 37,266 | n/a | |||||||||||||||||||||||||
ESOP Loans | (e) | 42,945 | — | (301 | ) | 42,644 | n/a | 34,387 | — | (237 | ) | 34,150 | n/a | |||||||||||||||||||||||||
Capital lease - real estate | (f) | 6,169 | — | (124 | ) | 6,045 | 5.00 | % | 6,447 | — | (131 | ) | 6,316 | 5.00 | % | |||||||||||||||||||||||
Non U.S. lines of credit | (g) | 11,910 | — | (32 | ) | 11,878 | n/a | 11,462 | — | (1 | ) | 11,461 | n/a | |||||||||||||||||||||||||
Non U.S. term loans | (g) | 29,676 | — | (262 | ) | 29,414 | n/a | 33,669 | — | (247 | ) | 33,422 | n/a | |||||||||||||||||||||||||
Other long term debt | (h) | 3,772 | — | (23 | ) | 3,749 | n/a | 4,030 | — | (20 | ) | 4,010 | n/a | |||||||||||||||||||||||||
Totals | 979,662 | (1,569 | ) | (13,073 | ) | 965,020 | 952,856 | (2,695 | ) | (13,603 | ) | 936,558 | ||||||||||||||||||||||||||
less: Current portion | (26,347 | ) | — | — | (26,347 | ) | (22,644 | ) | — | — | (22,644 | ) | ||||||||||||||||||||||||||
Long-term debt | $ | 953,315 | $ | (1,569 | ) | $ | (13,073 | ) | $ | 938,673 | $ | 930,212 | $ | (2,695 | ) | $ | (13,603 | ) | $ | 913,914 |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | |||||||||||||||||||||||||||||||||||||
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 2022 | (a) | 5.5 | % | 9,516 | 67 | 473 | 10,056 | 5.4 | % | 7,875 | — | 322 | 8,197 | |||||||||||||||||||||||||
Revolver due 2021 | (b) | n/a | 325 | — | 132 | 457 | n/a | 571 | — | 115 | 686 | |||||||||||||||||||||||||||
Convert. debt due 2017 | (c) | 9.1 | % | 1,000 | 1,058 | 111 | 2,169 | 9.0 | % | 1,000 | 1,048 | 111 | 2,159 | |||||||||||||||||||||||||
Real estate mortgages | (d) | 2.3 | % | 187 | — | 2 | 189 | 3.3 | % | 151 | — | 12 | 163 | |||||||||||||||||||||||||
ESOP Loans | (e) | 3.3 | % | 364 | — | 27 | 391 | 3.0 | % | 256 | — | 18 | 274 | |||||||||||||||||||||||||
Capital lease - real estate | (f) | 5.4 | % | 80 | — | 6 | 86 | 5.4 | % | 93 | — | 6 | 99 | |||||||||||||||||||||||||
Non U.S. lines of credit | (g) | n/a | 135 | — | 3 | 138 | n/a | 259 | — | 24 | 283 | |||||||||||||||||||||||||||
Non U.S. term loans | (g) | n/a | 304 | — | 34 | 338 | n/a | 284 | — | 13 | 297 | |||||||||||||||||||||||||||
Other long term debt | (h) | n/a | 74 | — | 2 | 76 | n/a | 19 | — | — | 19 | |||||||||||||||||||||||||||
Capitalized interest | (527 | ) | — | — | (527 | ) | (156 | ) | — | 2 | (154 | ) | ||||||||||||||||||||||||||
Totals | $ | 11,458 | $ | 1,125 | $ | 790 | $ | 13,373 | $ | 10,352 | $ | 1,048 | $ | 623 | $ | 12,023 |
(a) | On May 18, 2016, in an unregistered offering through a private placement under Rule 144A, Griffon completed the add-on offering of $125,000 principal amount of its 5.25% senior notes due 2022, at 98.76% of par, to Griffon's previous issuance of $600,000 5.25% senior notes due 2022, at par, which was completed on February 27, 2014 (collectively the “Senior Notes”). As of May 18, 2016, outstanding Senior Notes due totaled $725,000; interest is payable semi-annually on March 1 and September 1. The net proceeds of the add-on offering were used to pay down outstanding borrowings under Griffon's Revolving Credit Facility (the "Credit Agreement"). |
(b) | On March 22, 2016, Griffon amended the Credit Agreement to increase the credit facility from $250,000 to $350,000, extend its maturity date from March 13, 2020 to March 22, 2021 and modify certain other provisions of the facility. The facility includes a letter sub-facility with a limit of $50,000 and a multi-currency sub-facility of $50,000. 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 1.25% 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 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 December 31, 2016, there were $23,000 in outstanding borrowings and standby letters of credit were $16,029 under the Credit Agreement; $310,971 was available, subject to certain loan covenants, for borrowing at that date. |
(c) | On December 21, 2009, Griffon issued $100,000 principal amount of 4% convertible subordinated notes due 2017 (the “2017 Notes”). As of December 31, 2016, the conversion rate of the 2017 Notes was 70.7738 shares of Griffon’s common stock per $1 principal amount of notes, corresponding to a conversion price of $14.13 per share. Under the terms of the 2017 Notes, Griffon had the right to settle the conversion of the 2017 Notes in cash, stock or a combination of cash and stock. 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. At both December 31, 2016 and 2015, the 2017 Notes had a capital in excess of par component, net of tax, of $15,720. On January 17, 2017, Griffon settled the convertible debt for $173,855, which consisted of $125,000 in cash, utilizing the Revolving Credit Facility, and 1,954,993 shares of common stock. |
(d) | In September 2015 and March 2016, Griffon entered into mortgage loans in the amounts of $32,280 and $8,000, respectively. The mortgage loans are secured by four properties occupied by Griffon's subsidiaries. The loans mature in September 2025 and April 2018, respectively, are collateralized by the specific properties financed and are guaranteed by Griffon. The loans bear interest at a rate of LIBOR plus 1.50%. At December 31, 2016, $36,665 was outstanding, net of issuance costs. |
(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. The availability period for the Line Note runs through August 2017 at which point the outstanding balance under the Line Note will be combined with the Term Loan. The Term Loan and Line Note bear interest at LIBOR plus 2.50%. The Term Loan requires quarterly principal payments of $655 through September 30, 2017 and $569 thereafter, with a balloon payment due at maturity on March 22, 2020. During the quarter, Griffon purchased 548,912 shares of common stock, for a total of $9,213 or $16.78 per share, with proceeds from the Line Notes. The remaining amount available under the Line Note is $1,695. As of December 31, 2016, $42,644, net of issuance costs, was outstanding under the Term Loan and Line Note. The Term Loan is secured by shares purchased with the proceeds of |
(f) | 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. At December 31, 2016, $6,045 was outstanding, net of issuance costs. |
(g) | In September 2015, Clopay Europe GmbH (“Clopay Europe”) entered into a EUR 5,000 ($5,227 as of December 31, 2016) revolving credit facility and EUR 15,000 term loan. The term loan is payable in twelve quarterly installments of EUR 1,250, bears interest at a fixed rate of 2.5% and matures in September 2018. The revolving facility matures in September 2017, but is renewable upon mutual agreement with the bank. The revolving credit facility accrues interest at EURIBOR plus 1.75% per annum (1.75% at December 31, 2016). The revolver and the term loan are both secured by substantially all of the assets of Clopay Europe and its subsidiaries. Griffon guarantees the revolving facility and term loan. The term loan had an outstanding balance of EUR 8,750 ($9,147 at December 31, 2016) and the revolver had no outstanding borrowings at December 31, 2016. Clopay Europe is required to maintain a certain minimum equity to assets ratio and is subject to a maximum debt leverage ratio (defined as the ratio of total debt to EBITDA). |
(h) | Other long-term debt consists primarily of a loan with the Pennsylvania Industrial Development Authority, with the balance consisting of capital leases. |
Three Months Ended December 31, | ||||||
2016 | 2015 | |||||
Weighted average shares outstanding - basic | 39,336 | 41,968 | ||||
Incremental shares from stock based compensation | 1,922 | 2,195 | ||||
Convertible debt due 2017 | 1,054 | 1,221 | ||||
Weighted average shares outstanding - diluted | 42,312 | 45,384 | ||||
Anti-dilutive options excluded from diluted EPS computation | — | 419 |
• | HBP is the leading U.S. manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals, as well as a leading manufacturer and marketer of residential and commercial garage doors and sells to professional dealers and some of the largest home center retail chains in North America. |
• | Telephonics is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers. |
• | PPC is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies. |
For the Three Months Ended December 31, | |||||||
REVENUE | 2016 | 2015 | |||||
Home & Building Products: | |||||||
AMES | $ | 120,724 | $ | 118,290 | |||
CBP | 143,460 | 142,908 | |||||
Home & Building Products | 264,184 | 261,198 | |||||
Telephonics | 88,093 | 109,037 | |||||
PPC | 114,823 | 123,914 | |||||
Total consolidated net sales | $ | 467,100 | $ | 494,149 |
For the Three Months Ended December 31, | ||||||||
INCOME BEFORE TAXES | 2016 | 2015 | ||||||
Segment operating profit: | ||||||||
Home & Building Products | $ | 22,640 | $ | 21,159 | ||||
Telephonics | 5,391 | 7,813 | ||||||
PPC | 8,031 | 6,017 | ||||||
Total segment operating profit | 36,062 | 34,989 | ||||||
Net interest expense | (13,367 | ) | (12,012 | ) | ||||
Unallocated amounts | (9,719 | ) | (9,628 | ) | ||||
Income before taxes | $ | 12,976 | $ | 13,349 |
For the Three Months Ended December 31, | ||||||||
2016 | 2015 | |||||||
Segment adjusted EBITDA: | ||||||||
Home & Building Products | $ | 31,807 | $ | 29,829 | ||||
Telephonics | 8,108 | 10,344 | ||||||
PPC | 14,437 | 11,785 | ||||||
Total Segment adjusted EBITDA | 54,352 | 51,958 | ||||||
Net interest expense | (13,367 | ) | (12,012 | ) | ||||
Segment depreciation and amortization | (18,290 | ) | (16,969 | ) | ||||
Unallocated amounts | (9,719 | ) | (9,628 | ) | ||||
Income before taxes | $ | 12,976 | $ | 13,349 |
For the Three Months Ended December 31, | ||||||||
DEPRECIATION and AMORTIZATION | 2016 | 2015 | ||||||
Segment: | ||||||||
Home & Building Products | $ | 9,167 | $ | 8,670 | ||||
Telephonics | 2,717 | 2,531 | ||||||
PPC | 6,406 | 5,768 | ||||||
Total segment depreciation and amortization | 18,290 | 16,969 | ||||||
Corporate | 104 | 115 | ||||||
Total consolidated depreciation and amortization | $ | 18,394 | $ | 17,084 | ||||
CAPITAL EXPENDITURES | ||||||||
Segment: | ||||||||
Home & Building Products | $ | 6,273 | $ | 17,280 | ||||
Telephonics | 1,296 | 1,280 | ||||||
PPC | 14,906 | 6,404 | ||||||
Total segment | 22,475 | 24,964 | ||||||
Corporate | 3 | 54 | ||||||
Total consolidated capital expenditures | $ | 22,478 | $ | 25,018 |
ASSETS | At December 31, 2016 | At September 30, 2016 | |||||
Segment assets: | |||||||
Home & Building Products | $ | 1,027,389 | $ | 1,020,297 | |||
Telephonics | 318,290 | 334,631 | |||||
PPC | 358,387 | 365,920 | |||||
Total segment assets | 1,704,066 | 1,720,848 | |||||
Corporate | 38,945 | 59,061 | |||||
Total continuing assets | 1,743,011 | 1,779,909 | |||||
Assets of discontinued operations | 2,178 | 2,187 | |||||
Consolidated total | $ | 1,745,189 | $ | 1,782,096 |
Three Months Ended December 31, | ||||||||
2016 | 2015 | |||||||
Interest cost | $ | 1,402 | $ | 2,080 | ||||
Expected return on plan assets | (2,736 | ) | (2,916 | ) | ||||
Amortization: | ||||||||
Prior service cost | 4 | 4 | ||||||
Recognized actuarial loss | 832 | 590 | ||||||
Net periodic expense (income) | $ | (498 | ) | $ | (242 | ) |
At December 31, 2016 | At September 30, 2016 | ||||||
Assets of discontinued operations: | |||||||
Prepaid and other current assets | $ | 218 | $ | 219 | |||
Other long-term assets | 1,960 | 1,968 | |||||
Total assets of discontinued operations | $ | 2,178 | $ | 2,187 | |||
Liabilities of discontinued operations: | |||||||
Accrued liabilities, current | $ | 1,498 | $ | 1,684 | |||
Other long-term liabilities | 2,098 | 1,706 | |||||
Total liabilities of discontinued operations | $ | 3,596 | $ | 3,390 |
Workforce Reduction | Other Related | Total | |||||||||
Accrued liability at September 30, 2016 | $ | 2,487 | $ | 1,004 | $ | 3,491 | |||||
Payments | (970 | ) | (148 | ) | (1,118 | ) | |||||
Accrued liability at December 31, 2016 | $ | 1,517 | $ | 856 | $ | 2,373 |
Three Months Ended December 31, | |||||||
2016 | 2015 | ||||||
Balance, beginning of period | $ | 6,322 | $ | 6,040 | |||
Warranties issued and changes in estimated pre-existing warranties | 1,294 | 1,502 | |||||
Actual warranty costs incurred | (1,601 | ) | (1,480 | ) | |||
Balance, end of period | $ | 6,015 | $ | 6,062 |
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | ||||||||||||||||||||||
Pre-tax | Tax | Net of tax | Pre-tax | Tax | Net of tax | ||||||||||||||||||
Foreign currency translation adjustments | $ | (13,479 | ) | $ | — | $ | (13,479 | ) | $ | (3,349 | ) | $ | — | $ | (3,349 | ) | |||||||
Pension and other defined benefit plans | 836 | (292 | ) | 544 | 594 | (208 | ) | 386 | |||||||||||||||
Cash flow hedges | 2,272 | (649 | ) | 1,623 | (1,450 | ) | 435 | (1,015 | ) | ||||||||||||||
Total other comprehensive income (loss) | $ | (10,371 | ) | $ | (941 | ) | $ | (11,312 | ) | $ | (4,205 | ) | $ | 227 | $ | (3,978 | ) |
December 31, 2016 | September 30, 2016 | ||||||
Foreign currency translation adjustments | $ | (56,373 | ) | $ | (42,894 | ) | |
Pension and other defined benefit plans | (36,799 | ) | (37,343 | ) | |||
Change in Cash flow hedges | 619 | (1,004 | ) | ||||
$ | (92,553 | ) | $ | (81,241 | ) |
For the Three Months Ended December 31, | |||||||
Gain (Loss) | 2016 | 2015 | |||||
Pension amortization | $ | (836 | ) | $ | (594 | ) | |
Cash flow hedges | (649 | ) | 405 | ||||
Total gain (loss) | (1,485 | ) | (189 | ) | |||
Tax benefit (expense) | 97 | 87 | |||||
Total | $ | (1,388 | ) | $ | (102 | ) |
Parent Company | Guarantor Companies | Non-Guarantor Companies | Elimination | Consolidation | |||||||||||||||
CURRENT ASSETS | |||||||||||||||||||
Cash and equivalents | $ | 1,726 | $ | 13,749 | $ | 36,794 | $ | — | $ | 52,269 | |||||||||
Accounts receivable, net of allowances | — | 178,803 | 57,055 | (7,833 | ) | 228,025 | |||||||||||||
Contract costs and recognized income not yet billed, net of progress payments | — | 108,028 | 544 | — | 108,572 | ||||||||||||||
Inventories, net | — | 262,141 | 61,051 | — | 323,192 | ||||||||||||||
Prepaid and other current assets | 39,453 | 33,165 | 17,524 | (48,732 | ) | 41,410 | |||||||||||||
Assets of discontinued operations | — | — | 218 | — | 218 | ||||||||||||||
Total Current Assets | 41,179 | 595,886 | 173,186 | (56,565 | ) | 753,686 | |||||||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 878 | 301,822 | 97,451 | — | 400,151 | ||||||||||||||
GOODWILL | — | 284,875 | 72,632 | — | 357,507 | ||||||||||||||
INTANGIBLE ASSETS, net | — | 146,847 | 63,404 | — | 210,251 | ||||||||||||||
INTERCOMPANY RECEIVABLE | 554,518 | 882,627 | 322,103 | (1,759,248 | ) | — | |||||||||||||
EQUITY INVESTMENTS IN SUBSIDIARIES | 826,587 | 866,959 | 1,921,056 | (3,614,602 | ) | — | |||||||||||||
OTHER ASSETS | 6,773 | 11,802 | 14,124 | (11,065 | ) | 21,634 | |||||||||||||
ASSETS OF DISCONTINUED OPERATIONS | — | — | 1,960 | — | 1,960 | ||||||||||||||
Total Assets | $ | 1,429,935 | $ | 3,090,818 | $ | 2,665,916 | $ | (5,441,480 | ) | $ | 1,745,189 | ||||||||
CURRENT LIABILITIES | |||||||||||||||||||
Notes payable and current portion of long-term debt | $ | 3,067 | $ | 2,320 | $ | 20,960 | $ | — | $ | 26,347 | |||||||||
Accounts payable and accrued liabilities | 63,239 | 178,179 | 56,382 | (41,066 | ) | 256,734 | |||||||||||||
Liabilities of discontinued operations | — | — | 1,498 | — | 1,498 | ||||||||||||||
Total Current Liabilities | 66,306 | 180,499 | 78,840 | (41,066 | ) | 284,579 | |||||||||||||
LONG-TERM DEBT, net | 881,781 | 18,316 | 38,576 | — | 938,673 | ||||||||||||||
INTERCOMPANY PAYABLES | 64,051 | 921,844 | 758,271 | (1,744,166 | ) | — | |||||||||||||
OTHER LIABILITIES | 28,776 | 112,763 | 21,060 | (31,781 | ) | 130,818 | |||||||||||||
LIABILITIES OF DISCONTINUED OPERATIONS | — | — | 2,098 | — | 2,098 | ||||||||||||||
Total Liabilities | 1,040,914 | 1,233,422 | 898,845 | (1,817,013 | ) | 1,356,168 | |||||||||||||
SHAREHOLDERS’ EQUITY | 389,021 | 1,857,396 | 1,767,071 | (3,624,467 | ) | 389,021 | |||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,429,935 | $ | 3,090,818 | $ | 2,665,916 | $ | (5,441,480 | ) | $ | 1,745,189 |
Parent Company | Guarantor Companies | Non-Guarantor Companies | Elimination | Consolidation | |||||||||||||||
CURRENT ASSETS | |||||||||||||||||||
Cash and equivalents | $ | 6,517 | $ | 27,692 | $ | 38,344 | $ | — | $ | 72,553 | |||||||||
Accounts receivable, net of allowances | — | 175,583 | 63,810 | (5,642 | ) | 233,751 | |||||||||||||
Contract costs and recognized income not yet billed, net of progress payments | — | 126,961 | — | — | 126,961 | ||||||||||||||
Inventories, net | — | 239,325 | 69,544 | — | 308,869 | ||||||||||||||
Prepaid and other current assets | 39,763 | 31,191 | 16,447 | (48,796 | ) | 38,605 | |||||||||||||
Assets of discontinued operations | — | — | 219 | — | 219 | ||||||||||||||
Total Current Assets | 46,280 | 600,752 | 188,364 | (54,438 | ) | 780,958 | |||||||||||||
PROPERTY, PLANT AND EQUIPMENT, net | 956 | 303,735 | 100,713 | — | 405,404 | ||||||||||||||
GOODWILL | — | 284,875 | 76,310 | — | 361,185 | ||||||||||||||
INTANGIBLE ASSETS, net | — | 147,960 | 62,639 | — | 210,599 | ||||||||||||||
INTERCOMPANY RECEIVABLE | 539,938 | 713,118 | 307,081 | (1,560,137 | ) | — | |||||||||||||
EQUITY INVESTMENTS IN SUBSIDIARIES | 824,887 | 866,595 | 1,916,622 | (3,608,104 | ) | — | |||||||||||||
OTHER ASSETS | 6,529 | 12,151 | 12,675 | (9,373 | ) | 21,982 | |||||||||||||
ASSETS OF DISCONTINUED OPERATIONS | — | — | 1,968 | — | 1,968 | ||||||||||||||
Total Assets | $ | 1,418,590 | $ | 2,929,186 | $ | 2,666,372 | $ | (5,232,052 | ) | $ | 1,782,096 | ||||||||
CURRENT LIABILITIES | |||||||||||||||||||
Notes payable and current portion of long-term debt | $ | 3,153 | $ | 2,307 | $ | 17,184 | $ | — | $ | 22,644 | |||||||||
Accounts payable and accrued liabilities | 65,751 | 202,657 | 65,213 | (39,686 | ) | 293,935 | |||||||||||||
Liabilities of discontinued operations | — | — | 1,684 | — | 1,684 | ||||||||||||||
Total Current Liabilities | 68,904 | 204,964 | 84,081 | (39,686 | ) | 318,263 | |||||||||||||
LONG-TERM DEBT, net | 848,589 | 18,872 | 46,453 | — | 913,914 | ||||||||||||||
INTERCOMPANY PAYABLES | 57,648 | 737,980 | 735,053 | (1,530,681 | ) | — | |||||||||||||
OTHER LIABILITIES | 32,502 | 114,491 | 26,574 | (36,301 | ) | 137,266 | |||||||||||||
LIABILITIES OF DISCONTINUED OPERATIONS | — | — | 1,706 | — | 1,706 | ||||||||||||||
Total Liabilities | 1,007,643 | 1,076,307 | 893,867 | (1,606,668 | ) | 1,371,149 | |||||||||||||
SHAREHOLDERS’ EQUITY | 410,947 | 1,852,879 | 1,772,505 | (3,625,384 | ) | 410,947 | |||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 1,418,590 | $ | 2,929,186 | $ | 2,666,372 | $ | (5,232,052 | ) | $ | 1,782,096 |
($ in thousands) | Parent Company | Guarantor Companies | Non-Guarantor Companies | Elimination | Consolidation | ||||||||||||||
Revenue | $ | — | $ | 359,861 | $ | 114,849 | $ | (7,610 | ) | $ | 467,100 | ||||||||
Cost of goods and services | — | 271,732 | 87,100 | (7,860 | ) | 350,972 | |||||||||||||
Gross profit | — | 88,129 | 27,749 | 250 | 116,128 | ||||||||||||||
Selling, general and administrative expenses | 6,644 | 62,997 | 20,194 | (92 | ) | 89,743 | |||||||||||||
Income (loss) from operations | (6,644 | ) | 25,132 | 7,555 | 342 | 26,385 | |||||||||||||
Other income (expense) | |||||||||||||||||||
Interest income (expense), net | (4,027 | ) | (8,058 | ) | (1,282 | ) | — | (13,367 | ) | ||||||||||
Other, net | 93 | 651 | (444 | ) | (342 | ) | (42 | ) | |||||||||||
Total other income (expense) | (3,934 | ) | (7,407 | ) | (1,726 | ) | (342 | ) | (13,409 | ) | |||||||||
Income (loss) before taxes | (10,578 | ) | 17,725 | 5,829 | — | 12,976 | |||||||||||||
Provision (benefit) for income taxes | (9,029 | ) | 7,668 | 2,073 | — | 712 | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (1,549 | ) | 10,057 | 3,756 | — | 12,264 | |||||||||||||
Equity in net income (loss) of subsidiaries | 13,813 | 3,798 | 10,057 | (27,668 | ) | — | |||||||||||||
Net income (loss) | $ | 12,264 | $ | 13,855 | $ | 13,813 | $ | (27,668 | ) | $ | 12,264 | ||||||||
Net Income (loss) | $ | 12,264 | $ | 13,855 | $ | 13,813 | $ | (27,668 | ) | $ | 12,264 | ||||||||
Other comprehensive income (loss), net of taxes | (11,312 | ) | (4,317 | ) | 13,634 | (9,317 | ) | (11,312 | ) | ||||||||||
Comprehensive income (loss) | $ | 952 | $ | 9,538 | $ | 27,447 | $ | (36,985 | ) | $ | 952 |
($ in thousands) | Parent Company | Guarantor Companies | Non-Guarantor Companies | Elimination | Consolidation | ||||||||||||||
Revenue | $ | — | $ | 389,260 | $ | 112,732 | $ | (7,843 | ) | $ | 494,149 | ||||||||
Cost of goods and services | — | 298,384 | 87,896 | (8,236 | ) | 378,044 | |||||||||||||
Gross profit | — | 90,876 | 24,836 | 393 | 116,105 | ||||||||||||||
Selling, general and administrative expenses | 6,397 | 65,948 | 19,046 | (92 | ) | 91,299 | |||||||||||||
Income (loss) from operations | (6,397 | ) | 24,928 | 5,790 | 485 | 24,806 | |||||||||||||
Other income (expense) | |||||||||||||||||||
Interest income (expense), net | (2,256 | ) | (7,789 | ) | (1,967 | ) | — | (12,012 | ) | ||||||||||
Other, net | 193 | 1,016 | (169 | ) | (485 | ) | 555 | ||||||||||||
Total other income (expense) | (2,063 | ) | (6,773 | ) | (2,136 | ) | (485 | ) | (11,457 | ) | |||||||||
Income (loss) before taxes | (8,460 | ) | 18,155 | 3,654 | — | 13,349 | |||||||||||||
Provision (benefit) for income taxes | (7,989 | ) | 8,817 | 1,733 | — | 2,561 | |||||||||||||
Income (loss) before equity in net income of subsidiaries | (471 | ) | 9,338 | 1,921 | — | 10,788 | |||||||||||||
Equity in net income (loss) of subsidiaries | 11,259 | 1,929 | 9,338 | (22,526 | ) | — | |||||||||||||
Net income (loss) | $ | 10,788 | $ | 11,267 | $ | 11,259 | $ | (22,526 | ) | $ | 10,788 | ||||||||
Net Income (loss) | $ | 10,788 | $ | 11,267 | $ | 11,259 | $ | (22,526 | ) | $ | 10,788 | ||||||||
Other comprehensive income (loss), net of taxes | (3,978 | ) | 139 | (4,117 | ) | 3,978 | (3,978 | ) | |||||||||||
Comprehensive income (loss) | $ | 6,810 | $ | 11,406 | $ | 7,142 | $ | (18,548 | ) | $ | 6,810 |
Parent Company | Guarantor Companies | Non-Guarantor Companies | Elimination | Consolidation | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income (loss) | $ | 12,264 | $ | 13,855 | $ | 13,813 | $ | (27,668 | ) | $ | 12,264 | ||||||||
Net cash provided by (used in) operating activities: | (8,907 | ) | 6,787 | 9,674 | — | 7,554 | |||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Acquisition of property, plant and equipment | (3 | ) | (19,161 | ) | (3,314 | ) | — | (22,478 | ) | ||||||||||
Acquired businesses, net of cash acquired | — | — | (6,051 | ) | — | (6,051 | ) | ||||||||||||
Proceeds from sale of assets | — | 96 | 22 | — | 118 | ||||||||||||||
Net cash provided by (used in) investing activities | (3 | ) | (19,065 | ) | (9,343 | ) | — | (28,411 | ) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Purchase of shares for treasury | (15,073 | ) | — | — | — | (15,073 | ) | ||||||||||||
Proceeds from long-term debt | 32,213 | — | 6,843 | — | 39,056 | ||||||||||||||
Payments of long-term debt | (788 | ) | (554 | ) | (7,485 | ) | — | (8,827 | ) | ||||||||||
Change in short-term borrowings | — | — | (702 | ) | — | (702 | ) | ||||||||||||
Financing costs | (172 | ) | — | — | — | (172 | ) | ||||||||||||
Purchase of ESOP shares | (9,213 | ) | — | — | — | (9,213 | ) | ||||||||||||
Dividends paid | (2,499 | ) | — | — | — | (2,499 | ) | ||||||||||||
Other, net | (349 | ) | (1,111 | ) | 1,111 | — | (349 | ) | |||||||||||
Net cash provided by (used in) financing activities | 4,119 | (1,665 | ) | (233 | ) | — | 2,221 | ||||||||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |||||||||||||||||||
Net cash used in discontinued operations | — | — | (430 | ) | — | (430 | ) | ||||||||||||
Effect of exchange rate changes on cash and equivalents | — | — | (1,218 | ) | — | (1,218 | ) | ||||||||||||
NET DECREASE IN CASH AND EQUIVALENTS | (4,791 | ) | (13,943 | ) | (1,550 | ) | — | (20,284 | ) | ||||||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 6,517 | 27,692 | 38,344 | — | 72,553 | ||||||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 1,726 | $ | 13,749 | $ | 36,794 | $ | — | $ | 52,269 |
Parent Company | Guarantor Companies | Non-Guarantor Companies | Elimination | Consolidation | |||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||
Net income (loss) | $ | 10,788 | $ | 11,267 | $ | 11,259 | $ | (22,526 | ) | $ | 10,788 | ||||||||
Net cash provided by (used in) operating activities: | (45,973 | ) | 29,701 | (1,132 | ) | — | (17,404 | ) | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||
Acquisition of property, plant and equipment | (54 | ) | (22,017 | ) | (2,947 | ) | — | (25,018 | ) | ||||||||||
Investment in unconsolidated joint venture | — | (2,726 | ) | — | — | (2,726 | ) | ||||||||||||
Investment sales | 715 | — | — | — | 715 | ||||||||||||||
Proceeds from sale of assets | — | 472 | 12 | — | 484 | ||||||||||||||
Net cash provided by (used in) investing activities | 661 | (24,271 | ) | (2,935 | ) | — | (26,545 | ) | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||
Purchase of shares for treasury | (10,910 | ) | — | — | — | (10,910 | ) | ||||||||||||
Proceeds from long-term debt | 62,000 | 2,215 | 15,659 | — | 79,874 | ||||||||||||||
Payments of long-term debt | (2,551 | ) | (524 | ) | (21,051 | ) | — | (24,126 | ) | ||||||||||
Change in short-term borrowings | — | — | (147 | ) | — | (147 | ) | ||||||||||||
Dividends paid | (2,281 | ) | — | — | — | (2,281 | ) | ||||||||||||
Other, net | 203 | (5,684 | ) | 5,684 | — | 203 | |||||||||||||
Net cash provided by (used in) financing activities | 46,461 | (3,993 | ) | 145 | — | 42,613 | |||||||||||||
CASH FLOWS FROM DISCONTINUED OPERATIONS: | |||||||||||||||||||
Net cash used in discontinued operations | — | — | (387 | ) | — | (387 | ) | ||||||||||||
Effect of exchange rate changes on cash and equivalents | — | — | (310 | ) | — | (310 | ) | ||||||||||||
NET DECREASE IN CASH AND EQUIVALENTS | 1,149 | 1,437 | (4,619 | ) | — | (2,033 | ) | ||||||||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 2,440 | 10,671 | 38,890 | — | 52,001 | ||||||||||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 3,589 | $ | 12,108 | $ | 34,271 | $ | — | $ | 49,968 |
• | Home & Building Products ("HBP") consists of two companies, The AMES Companies, Inc. (“AMES”) and Clopay Building Products Company, Inc. (“CBP”): |
- | AMES, founded in 1774, is the leading U.S. manufacturer and a global provider of long-handled tools and landscaping products for homeowners and professionals. |
- | CBP, since 1964, is a leading manufacturer and marketer of residential and commercial garage doors and sells to professional dealers and some of the largest home center retail chains in North America. |
• | Telephonics Corporation ("Telephonics"), founded in 1933, is recognized globally as a leading provider of highly sophisticated intelligence, surveillance and communications solutions for defense, aerospace and commercial customers. |
• | Clopay Plastic Products Company, Inc. ("PPC"), incorporated in 1934, is a global leader in the development and production of embossed, laminated and printed specialty plastic films for hygienic, health-care and industrial products and sells to some of the world's largest consumer products companies. |
For the Three Months Ended December 31, | ||||||||
2016 | 2015 | |||||||
Net income | $ | 12,264 | $ | 10,788 | ||||
Adjusting items, net of tax: | ||||||||
Discrete and certain other tax provisions (benefits) | (4,263 | ) | (2,591 | ) | ||||
Adjusted net income | $ | 8,001 | $ | 8,197 | ||||
Diluted income per common share | $ | 0.29 | $ | 0.24 | ||||
Adjusting items, net of tax: | ||||||||
Discrete and certain other tax provisions (benefits) | (0.10 | ) | (0.06 | ) | ||||
Adjusted earnings per common share | $ | 0.19 | $ | 0.18 | ||||
Weighted-average shares outstanding (in thousands) | 42,312 | 45,384 |
For the Three Months Ended December 31, | ||||||||
2016 | 2015 | |||||||
Segment operating profit: | ||||||||
Home & Building Products | $ | 22,640 | $ | 21,159 | ||||
Telephonics | 5,391 | 7,813 | ||||||
PPC | 8,031 | 6,017 | ||||||
Total segment operating profit | 36,062 | 34,989 | ||||||
Net interest expense | (13,367 | ) | (12,012 | ) | ||||
Unallocated amounts | (9,719 | ) | (9,628 | ) | ||||
Income before taxes | $ | 12,976 | $ | 13,349 |
For the Three Months Ended December 31, | |||||||
2016 | 2015 | ||||||
Segment adjusted EBITDA: | |||||||
Home & Building Products | $ | 31,807 | $ | 29,829 | |||
Telephonics | 8,108 | 10,344 | |||||
PPC | 14,437 | 11,785 | |||||
Total Segment adjusted EBITDA | 54,352 | 51,958 | |||||
Net interest expense | (13,367 | ) | (12,012 | ) | |||
Segment depreciation and amortization | (18,290 | ) | (16,969 | ) | |||
Unallocated amounts | (9,719 | ) | (9,628 | ) | |||
Income before taxes | $ | 12,976 | $ | 13,349 |
For the Three Months Ended December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
Revenue: | ||||||||||||||
AMES | $ | 120,724 | $ | 118,290 | ||||||||||
CBP | 143,460 | 142,908 | ||||||||||||
Home & Building Products | $ | 264,184 | $ | 261,198 | ||||||||||
Segment operating profit | $ | 22,640 | 8.6 | % | $ | 21,159 | 8.1 | % | ||||||
Depreciation and amortization | 9,167 | 8,670 | ||||||||||||
Segment adjusted EBITDA | $ | 31,807 | 12.0 | % | $ | 29,829 | 11.4 | % |
For the Three Months Ended December 31, | |||||||||||||
2016 | 2015 | ||||||||||||
Revenue | $ | 88,093 | $ | 109,037 | |||||||||
Segment operating profit | $ | 5,391 | 6.1 | % | $ | 7,813 | 7.2% | ||||||
Depreciation and amortization | 2,717 | 2,531 | |||||||||||
Segment adjusted EBITDA | $ | 8,108 | 9.2 | % | $ | 10,344 | 9.5% |
For the Three Months Ended December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
Revenue | $ | 114,823 | $ | 123,914 | ||||||||||
Segment operating profit | $ | 8,031 | 7.0 | % | $ | 6,017 | 4.9 | % | ||||||
Depreciation and amortization | 6,406 | 5,768 | ||||||||||||
Segment adjusted EBITDA | $ | 14,437 | 12.6 | % | $ | 11,785 | 9.5 | % |
Cash Flows from Continuing Operations | For the Three Months Ended December 31, | ||||||
(in thousands) | 2016 | 2015 | |||||
Net Cash Flows Provided by (Used In): | |||||||
Operating activities | $ | 7,554 | $ | (17,404 | ) | ||
Investing activities | (28,411 | ) | (26,545 | ) | |||
Financing activities | 2,221 | 42,613 |
• | The United States Government and its agencies, through either prime or subcontractor relationships, represented 14% of Griffon’s consolidated revenue and 72% of Telephonics’ revenue. |
• | Procter & Gamble Co. represented 12% of Griffon’s consolidated revenue and 51% of PPC revenue. |
• | The Home Depot represented 11% of Griffon’s consolidated revenue and 19% of HBP’s revenue. |
Cash and Equivalents and Debt | December 31, | September 30, | |||||
(in thousands) | 2016 | 2016 | |||||
Cash and equivalents | $ | 52,269 | $ | 72,553 | |||
Notes payables and current portion of long-term debt | 26,347 | 22,644 | |||||
Long-term debt, net of current maturities | 938,673 | 913,914 | |||||
Debt discount and issuance costs | 14,642 | 16,298 | |||||
Total debt | 979,662 | 952,856 | |||||
Debt, net of cash and equivalents | $ | 927,393 | $ | 880,303 |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid Per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1) | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||
October 1 - 31, 2016 | 129,000 | (1) | $ | 17.06 | 129,000 | |||||||||
November 1 - 30, 2016 | 477,692 | (2) | 22.89 | — | ||||||||||
December 1 - 31, 2016 | 77,355 | (2) | 25.05 | — | ||||||||||
Total | 684,047 | $ | 22.04 | 129,000 | $ | 49,437 |
1. | On each of July 30, 2015 and August 3, 2016, the Company’s Board of Directors authorized the repurchase of up to $50,000 of Griffon common stock; as of December 31, 2016, an aggregate of $49,437 remained available for the purchase of Griffon common stock under the August 3, 2016 Board authorization. |
2. | Shares acquired by the Company from holders of restricted stock upon vesting of the restricted stock, to satisfy tax-withholding obligations of the holders. |
Nominee | For | Withheld | Broker Non-Votes |
Thomas J. Brosig | 40,385,158 | 924,836 | 1,995,994 |
Rear Admiral Robert G. Harrison (USN Ret.) | 36,457,805 | 4,852,189 | 1,995,994 |
Ronald J. Kramer | 40,465,056 | 844,938 | 1,995,994 |
General Victor Eugene Renuart (USAF Ret.) | 40,718,535 | 591,459 | 1,995,994 |
For | Against | Abstain | Broker Non-votes |
34,015,443 | 6,844,229 | 450,322 | 1,995,994 |
One Year | Two Years | Three Years | Abstain | Broker Non-votes |
39,364,863 | 415,930 | 1,168,836 | 360,365 | 1,995,994 |
For | Against | Abstain |
43,012,946 | 105,412 | 187,630 |
Item 6 | Exhibits |
31.1 | Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32 | Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document* |
101.SCH | XBRL Taxonomy Extension Schema Document* |
101.CAL | XBRL Taxonomy Extension Calculation Document* |
101.DEF | XBRL Taxonomy Extension Definitions Document* |
101.LAB | XBRL Taxonomy Extension Labels Document* |
101.PRE | XBRL Taxonomy Extension Presentations Document* |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed”. |
GRIFFON CORPORATION | ||
/s/ Brian G. Harris | ||
Brian G. Harris | ||
Senior Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
/s/ W. Christopher Durborow | ||
W. Christopher Durborow | ||
Vice President, Controller and Chief Accounting Officer | ||
(Principal Accounting Officer) |
31.1 | Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 | Certification pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32 | Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS | XBRL Instance Document* |
101.SCH | XBRL Taxonomy Extension Schema Document* |
101.CAL | XBRL Taxonomy Extension Calculation Document* |
101.DEF | XBRL Taxonomy Extension Definitions Document* |
101.LAB | XBRL Taxonomy Extension Labels Document* |
101.PRE | XBRL Taxonomy Extension Presentations Document* |
* | In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed”. |
1. | I have reviewed this quarterly report on Form 10-Q of Griffon Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Ronald J. Kramer | ||
Ronald J. Kramer | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Griffon Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Brian G. Harris | ||
Brian G. Harris | ||
Senior Vice President and Chief Financial Officer | ||
(Principal Financial Officer) |
/s/ Ronald J. Kramer | ||
Name: Ronald J. Kramer | ||
Date: January 31, 2017 |
/s/ Brian G. Harris | ||
Name: Brian G. Harris | ||
Date: January 31, 2017 |
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Jan. 31, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | GRIFFON CORP | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --09-30 | |
Entity Common Stock, Shares Outstanding | 47,266,068 | |
Amendment Flag | false | |
Entity Central Index Key | 0000050725 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Dec. 31, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q1 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, net allowances | $ 6,677 | $ 6,452 |
Contract costs, net of progress payments | 7,145 | 8,001 |
Debt discount, long term debt | $ 1,569 | $ 2,695 |
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - 3 months ended Dec. 31, 2016 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock [Member] |
CAPITAL INEXCESS OFPAR VALUE [Member] |
RETAINED EARNINGS [Member] |
TREASURY SHARES [Member] |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Member] |
DEFERRED COMPENSATION [Member] |
---|---|---|---|---|---|---|---|
Balance at Sep. 30, 2016 | $ 410,947 | $ 19,992 | $ 529,980 | $ 475,760 | $ (501,866) | $ (81,241) | $ (31,678) |
Balance (in Shares) at Sep. 30, 2016 | 79,966 | 34,797 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 12,264 | 12,264 | |||||
Dividend | (2,499) | (2,499) | |||||
Tax effect from exercise/vesting of equity awards, net | (12,969) | (97) | $ 12,872 | ||||
Tax effect from exercise/vesting of equity awards, net | (555) | ||||||
Amortization of deferred compensation | 893 | 893 | |||||
Common stock issued (shares) | 2 | ||||||
Common stock issued | 7 | $ 0 | 7 | ||||
Common stock acquired | (2,201) | $ (2,201) | |||||
Common stock acquired (in Shares) | 129 | ||||||
Equity awards granted, net | 0 | $ 73 | (73) | ||||
ESOP purchase of common stock | 9,213 | 9,213 | |||||
Stock grants and equity awards, net (in Shares) | 293 | ||||||
ESOP allocation of common stock | 652 | 652 | |||||
Stock-based compensation | 2,452 | 2,452 | |||||
Other comprehensive income, net of tax | (11,312) | (11,312) | |||||
Balance at Dec. 31, 2016 | $ 389,021 | $ 20,065 | $ 532,921 | $ 485,525 | $ (516,939) | $ (92,553) | $ (39,998) |
Balance (in Shares) at Dec. 31, 2016 | 80,261 | 35,481 |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
3 Months Ended | ||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION About Griffon Corporation Griffon Corporation (the “Company” or “Griffon”) is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital. Headquartered in New York, N.Y., the Company was founded in 1959 and is incorporated in Delaware. Griffon is listed on the New York Stock Exchange and trades under the symbol GFF. Griffon currently conducts its operations through three reportable segments:
Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements. As such, they should be read with reference to Griffon’s Annual Report on Form 10-K for the year ended September 30, 2016, which provides a more complete explanation of Griffon’s accounting policies, financial position, operating results, business properties and other matters. In the opinion of management, these financial statements reflect all adjustments considered necessary for a fair statement of interim results. Griffon’s HBP operations are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year. The condensed consolidated balance sheet information at September 30, 2016 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2016. The condensed consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated on consolidation. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. These estimates may be adjusted due to changes in economic, industry or customer financial conditions, as well as changes in technology or demand. Significant estimates include allowances for doubtful accounts receivable and returns, net realizable value of inventories, restructuring reserves, valuation of goodwill and intangible assets, percentage of completion method of accounting, pension assumptions, useful lives associated with depreciation and amortization of intangible and fixed assets, warranty reserves, sales incentive accruals, stock based compensation assumptions, income taxes and tax valuation reserves, environmental reserves, legal reserves, insurance reserves and the valuation of assets and liabilities of discontinued operations, acquisition assumptions used and the accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions Griffon may undertake in the future. Actual results may ultimately differ from these estimates. Certain amounts in the prior year have been reclassified to conform to current year presentation. |
FAIR VALUE MEASUREMENTS |
3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The carrying values of cash and equivalents, accounts receivable, accounts and notes payable, and revolving credit and variable interest rate debt approximate fair value due to either the short-term nature of such instruments or the fact that the interest rate of the revolving credit and variable rate debt is based upon current market rates. Applicable accounting guidance establishes a fair value hierarchy requiring the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The accounting guidance establishes three levels of inputs that may be used to measure fair value, as follows:
The fair values of Griffon’s 2022 senior notes approximated $730,438 on December 31, 2016. Fair values were based upon quoted market prices (level 1 inputs). On January 17, 2017, Griffon's 4% convertible subordinated notes settled for a total of $173,855. The total settlement value for the convertible notes was based on the sum of the daily Volume Weighted Average Price multiplied by the conversion rate over a 40-day observation period (level 1 inputs). The settlement value was split between $125,000 in cash and 1,954,993 shares of common stock. Insurance contracts with values of $3,347 at December 31, 2016 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets. Items Measured at Fair Value on a Recurring Basis At December 31, 2016, trading securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $1,375 ($1,000 cost basis), were included in Prepaid and other current assets on the Consolidated Balance Sheets. During the first quarter of 2016, the Company settled trading securities with proceeds totaling $715 and recognized a loss of $13 in Other income (expense). Realized and unrealized gains and losses on trading securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss). In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates. To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options. During 2017, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in US dollars. At December 31, 2016, Griffon had $16,500 of Australian dollar contracts at a weighted average rate of $1.39, which qualified for hedge accounting. These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred gains of $974 ($619, net of tax) at December 31, 2016 and losses of $649 were recorded in COGS during the quarter ended December 31, 2016 for all settled contracts. All contracts expire in 30 to 180 days. At December 31, 2016, Griffon had $4,655 of Canadian dollar contracts at a weighted average rate of $1.34. The contracts, which protect Canada operations from currency fluctuations for U.S. dollar based purchases, do not qualify for hedge accounting. For the quarter ended December 31, 2016, a fair value gain of $111 was recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized losses of $41 were recorded in Other income during the quarter ended December 31, 2016 for all settled contracts. All contracts expire in 30 to 180 days. |
ACQUISITIONS |
3 Months Ended |
---|---|
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS AND INVESTMENTS On December 30, 2016, AMES Australia acquired Hills Home Living ("Hills") for approximately $6,051 (AUD 8,400). The preliminary allocation of the purchase price consists of $1,500 of inventory and $4,551 of intangible assets including trademarks, intellectual property and customer relationships. Hills, founded in 1946, is a market leader in the supply of clothesline, laundry and garden products. The Hills acquisition adds to AMES' existing broad category of products and enhances our lawn and garden product offerings in Australia. On February 14, 2016, AMES Australia acquired substantially all of the Intellectual Property (IP) assets of Australia-based Nylex Plastics Pty Ltd. for approximately $1,700. Through this acquisition, AMES and Griffon secured the ownership of the trademark “Nylex” for certain categories of AMES products, principally in the country of Australia. Previously, the Nylex name was licensed. The acquisition of the Nylex IP was contemplated as a post-closing activity of the Cyclone acquisition and supports AMES' Australian watering products strategy. The purchase price was allocated to indefinite lived trademarks and is not deductible for income taxes. In December 2015, Telephonics invested an additional $2,726 increasing its equity stake from 26% to 49% in Mahindra Telephonics Integrated Systems ("MTIS"), a joint venture with Mahindra Defence Systems, a Mahindra Group Company. MTIS is an aerospace and defense manufacturing and development facility in Prithla, India. This investment is accounted for using the equity method. |
INVENTORIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Inventories are stated at the lower of cost (first-in, first-out or average) or market. The following table details the components of inventory:
|
PROPERTY, PLANT AND EQUIPMENT |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT | PROPERTY, PLANT AND EQUIPMENT The following table details the components of property, plant and equipment, net:
Depreciation and amortization expense for property, plant and equipment was $16,533 and $15,209 for the quarters ended December 31, 2016 and 2015, respectively. Depreciation included in SG&A expenses was $3,513 and $3,157 for the quarters ended December 31, 2016 and 2015, respectively. Remaining components of depreciation, attributable to manufacturing operations, are included in Cost of goods and services. No event or indicator of impairment occurred during the quarter ended December 31, 2016, which would require additional impairment testing of property, plant and equipment. |
GOODWILL AND OTHER INTANGIBLES |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES The following table provides changes in the carrying value of goodwill by segment during the three months ended December 31, 2016:
The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:
Amortization expense for intangible assets was $1,861 and $1,875 for the quarters ended December 31, 2016 and 2015, respectively. No event or indicator of impairment occurred during the quarter ended December 31, 2016 which would require impairment testing of long-lived intangible assets including goodwill. |
INCOME TAXES |
3 Months Ended |
---|---|
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company reported pretax income, and recognized a tax provision of 5.5% for the quarter ended December 31, 2016 compared to 19.2% in the prior year period. The December 31, 2016 and 2015 tax rates included net benefits of $4,263 and $2,591, respectively, primarily related to discrete benefits for the adoption of recent Financial Accounting Standards Board ("FASB") guidance which requires the company to recognize excess tax benefits from the vesting of equity awards within income tax expense. Excluding these benefits, the effective tax rates for the quarters ended December 31, 2016 and 2015 were 38.3% and 38.6%, respectively. Griffon's Income tax provision for the quarter ended December 31, 2015 included a $2,193 benefit from the adoption of the FASB accounting guidance which requires excess tax benefits from vesting of equity awards to be recognized within income tax expense. Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation are recognized within income tax expense. Under prior guidance windfalls were recognized to Additional Paid In Capital and shortfalls were only recognized to the extent they exceeded the pool of windfall tax benefits. |
LONG-TERM DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT | LONG-TERM DEBT
(1) n/a = not applicable
(1) n/a = not applicable $600,000 5.25% senior notes due 2022, at par, which was completed on February 27, 2014 (collectively the “Senior Notes”). As of May 18, 2016, outstanding Senior Notes due totaled $725,000; interest is payable semi-annually on March 1 and September 1. The net proceeds of the add-on offering were used to pay down outstanding borrowings under Griffon's Revolving Credit Facility (the "Credit Agreement"). The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On July 20, 2016 and June 18, 2014, Griffon exchanged all of the $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 $730,438 on December 31, 2016 based upon quoted market prices (level 1 inputs). In connection with the issuance and exchange of the $125,000 senior notes, Griffon capitalized $3,016 of underwriting fees and other expenses, which will amortize over the term of such notes; Griffon capitalized $10,313 in connection with the previously issued $600,000 senior notes.
Clopay do Brazil maintains a line of credit of R$7,000 ($2,148 as of December 31, 2016). Interest on borrowings accrues at various fixed rates which averaged about 17.4% as of December 31, 2016. At December 31, 2016 there was approximately R$4,778 ($1,466 as of December 31, 2016) borrowed under the line. PPC guarantees the loans and the line. In November 2012, Garant G.P. (“Garant”) entered into a CAD $15,000 ($11,088 as of December 31, 2016) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.30% LIBOR USD and 2.19% Bankers Acceptance Rate CDN as of December 31, 2016). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity. At December 31, 2016, there were no borrowings under the revolving credit facility. In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries 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. The term loan requires quarterly principal payments of AUD 750 plus interest, with a balloon payment of AUD 21,000 due upon maturity in June 2019, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 2.25% per annum (4.12% at December 31, 2016). The term loan had an outstanding balance of AUD 28,500 ($20,529 as of December 31, 2016 ). The revolving facility matures in November 2017 but is renewable upon mutual agreement with the bank, and accrues interest at BBSY plus 2.0% per annum (3.68% at December 31, 2016). The revolver had an outstanding balance of AUD 14,500 ($10,444 as of December 31, 2016). 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.
At December 31, 2016, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements. |
SHAREHOLDERS' EQUITY |
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Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY During the first quarter of 2017, the Company paid a quarterly cash dividend of $0.06 per share. During 2016, the Company paid quarterly cash dividends of $0.05 per share, totaling $0.20 per share for the year. Dividends paid on allocated shares in the ESOP were used to pay down the ESOP loan and recorded as a reduction of debt service payments and compensation expense. A dividend payable was established for the holders of restricted shares; such dividends will be released upon vesting of the underlying restricted shares. On January 31, 2017 the Board of Directors declared a quarterly cash dividend of $0.06 per share, payable on March 22, 2017 to shareholders of record as of the close of business on February 23, 2017. Compensation expense for restricted stock is recognized ratably over the required service period based on the fair value of the grant, calculated as the number of shares granted multiplied by the stock price on the date of grant and, for performance shares, the likelihood of achieving the performance criteria. Compensation cost related to stock-based awards with graded vesting, generally over a period of three to four years, is recognized using the straight-line attribution method and recorded within SG&A expenses. On January 29, 2016, shareholders approved the Griffon Corporation 2016 Equity Incentive Plan ("Incentive Plan") under which awards of performance shares, performance units, stock options, stock appreciation rights, restricted shares, restricted stock units, deferred shares and other stock-based awards may be granted. Options granted under the Incentive Plan may be either “incentive stock options” or nonqualified stock options, generally expire ten years after the date of grant and are granted at an exercise price of not less than 100% of the fair market value at the date of grant. The maximum number of shares of common stock available for award under the Incentive Plan is 2,350,000 (600,000 of which may be issued as incentive stock options), plus (i) any shares reserved for issuance under the 2011 Equity Incentive Plan as of the effective date of the Incentive Plan, and (ii) any shares underlying awards outstanding on such effective date under the 2011 Incentive Plan that are canceled or forfeited. As of December 31, 2016, there were 1,622,167 shares available for grant. All grants outstanding under former equity plans will continue under their terms; no additional awards will be granted under such plans. During the first quarter of 2017, Griffon granted 300,494 shares of restricted stock, subject to certain performance conditions, with vesting periods of three years, with a total fair value of $6,055, or a weighted average fair value of $20.15 per share. For the quarters ended December 31, 2016 and 2015, stock based compensation expense totaled $2,452 and $3,066, respectively. During the quarter ended December 31, 2016, 555,047 shares, with a market value of $12,872 or $23.19 per share were withheld to settle employee taxes due to the vesting of restricted stock, and were added to treasury. On January 30, 2017, Griffon granted 528,000 shares of restricted stock to two senior executives with a vesting period of four years and a two year post-vesting holding period, subject to the achievement of certain absolute and relative performance conditions relating to the price of Griffon's common stock. So long as the minimum performance condition is attained, the amount of shares that can vest will range from 384,000 to 528,000. The total fair value of these restricted shares is approximately $8,500. On each of July 29, 2015 and August 3, 2016, Griffon’s Board of Directors authorized the repurchase of up to $50,000 of Griffon’s outstanding common stock. Under these share repurchase programs, the Company may purchase shares in the open market, including pursuant to a 10b5-1 plan, or in privately negotiated transactions. During the quarter ended December 31, 2016, Griffon purchased 129,000 shares of common stock under these programs, for a total of $2,201 or $17.06 per share. As of December 31, 2016, $49,437 remains under the August 2016 Board authorization. From August 2011 to December 31, 2016, Griffon repurchased 15,984,854 shares of common stock, for a total of $211,621 or $13.24 per share, under Board authorized repurchase programs. In addition to repurchases under Board authorized programs, on December 10, 2013, Griffon repurchased 4,444,444 shares of its common stock for $50,000 from GS Direct, L.L.C. (“GS Direct”), an affiliate of The Goldman Sachs Group, Inc. Subject to certain exceptions, if GS Direct intends to sell its remaining 5,555,556 shares of Griffon common stock at any time prior to December 31, 2017, it will first negotiate in good faith to sell such shares to the Company. |
EARNINGS PER SHARE (EPS) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE (EPS) | EARNINGS PER SHARE (EPS) Basic EPS (and diluted EPS in periods when a loss exists) was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS was calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with stock based compensation and upon the settlement of the 2017 convertible notes. The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:
As of December 31, 2016, Griffon had the intent and ability to settle the principal amount of the 2017 Notes in cash, and as such, the potential issuance of shares related to the principal amount of the 2017 Notes does not affect diluted shares. 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. Subsequent to December 31, 2016, Griffon settled the convertible debt for $173,855, which consisted of $125,000 in cash and 1,954,993 shares of common stock. |
BUSINESS SEGMENTS |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENTS | BUSINESS SEGMENTS Griffon’s reportable segments are as follows:
Information on Griffon’s reportable segments is as follows:
The following table reconciles segment operating profit to income before taxes:
Griffon evaluates performance and allocates resources based on each segment's operating results before interest income and expense, income taxes, depreciation and amortization, unallocated amounts (mainly corporate overhead) and restructuring charges, as applicable (“Segment adjusted EBITDA”). Griffon believes this information is useful to investors for the same reason. The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes:
Unallocated amounts typically include general corporate expenses not attributable to a reportable segment.
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DEFINED BENEFIT PENSION EXPENSE |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEFINED BENEFIT PENSION EXPENSE | DEFINED BENEFIT PENSION EXPENSE Defined benefit pension expense (income) was as follows:
In 2016, the Company changed the method used to estimate the service and interest components of net periodic benefit cost for pension and other post-retirement benefits from the single weighted-average discount rate to the spot rate method. There was no impact on the total benefit obligation. |
RECENT ACCOUNTING PRONOUNCEMENTS |
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Dec. 31, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting pronouncements In March 2016, the FASB issued guidance on Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The amendments are effective for annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2016 using either prospective, retrospective or modified retrospective transition method, depending on the area covered in this update. The Company early adopted this guidance for 2016 in order to simplify the accounting for employee share-based payments. Under this guidance all excess tax benefits (“windfalls”) and deficiencies (“shortfalls”) related to employee stock compensation were recognized within income tax expense for the year ended September 30, 2016. Under prior guidance, windfalls were recognized to Capital in excess of par value and shortfalls were only recognized to the extent they exceeded the pool of windfall tax benefits. As a result of the adoption, a tax benefit of $2,193 was recognized within income tax expense reflecting the excess tax benefits for the quarter ended December 31, 2015. Additionally, income tax benefits at settlement of an award were previously reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. Griffon has elected to apply that change in cash flow classification on a prospective basis, which has resulted in a $2,193 increase to net cash provided by operating activities and a corresponding decrease to net cash used in financing activities in the accompanying Consolidated Statement of Cash Flows for the quarter ended December 31, 2015. The remaining provisions of this accounting standard did not have a material impact on the accompanying condensed consolidated financial statements. Newly issued but not yet effective accounting pronouncements In January 2017, the FASB issued guidance that simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. This guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those periods and will be effective for the Company beginning in 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures. In January 2017, the FASB issued guidance that clarifies the definition of a business, which will impact many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The new standard is intended to help companies and other organizations evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods and will be effective for the Company beginning in 2019. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures. In August 2016, the FASB issued guidance on the Statement of Cash Flows Classification of certain cash receipts and cash payments (a consensus of the FASB Emerging Issues Task Force). This guidance addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company beginning in 2019. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures. In February 2016, the FASB issued guidance on lease accounting requiring lessees to recognize a right-of-use asset and a lease liability for long-term leases. The liability will be equal to the present value of lease payments. This guidance must be applied using a modified retrospective transition approach to all annual and interim periods presented and is effective for the Company beginning in 2020. We are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures. In August 2014, the FASB issued guidance on management's responsibility in evaluating whether there is substantial doubt about a company's ability to continue as a going concern and related footnote disclosures. Management will be required to evaluate, at each reporting period, whether there are conditions or events that raise substantial doubt about a company's ability to continue as a going concern within one year from the date the financial statements are issued. This guidance is effective prospectively for annual and interim reporting periods beginning in 2017; implementation of this guidance is not expected to have a material effect on the Company’s financial condition or results of operations. In May 2014, the FASB issued guidance on revenue from contracts with customers. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved, in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. This guidance permits the use of either the retrospective or cumulative effect transition method and is effective for the Company beginning in 2019; early adoption is permitted beginning in 2018. We have not yet selected a transition method and are currently evaluating the impact of the guidance on the Company's financial condition, results of operations and related disclosures. The FASB has also issued the following additional guidance clarifying certain issues on revenue from contracts with customers; Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients and Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. The Company is currently evaluating this guidance to determine the impact it will have on its consolidated financial statements. The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements, and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
DISCONTINUED OPERATIONS |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS The following amounts related to the Installation Services segment, discontinued in 2008, and other businesses discontinued several years ago, which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the condensed consolidated balance sheets:
There was no Installation Services revenue or income for the quarter ended December 31, 2016 or 2015. |
RESTRUCTURING AND OTHER RELATED CHARGES (Notes) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING AND OTHER RELATED CHARGES | RESTRUCTURING AND OTHER RELATED CHARGES During the third quarter of 2016, PPC incurred pre-tax restructuring and related exit costs approximating $5,900 primarily related to headcount reductions at PPC’s Dombuhl, Germany facility, other location headcount reductions and for costs related to the shut down of PPC's Turkey facility. These actions resulted in the elimination of approximately 83 positions. The Dombuhl charges are related to an optimization plan that will drive innovation and enhance PPC's industry leading position in printed breathable back sheet. The facility will be transformed into a state of the art hygiene products facility focused on breathable printed film and siliconized products. In conjunction with this effort, PPC's customer base will be streamlined, and PPC will dispose of old assets and reduce overhead costs, allowing for gains in efficiencies. The activity in the restructuring accrual recorded in accrued liabilities consisted of the following:
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OTHER EXPENSE |
3 Months Ended |
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Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |
OTHER EXPENSE | OTHER INCOME (EXPENSE) For the quarters ended December 31, 2016 and 2015, Other income (expense) included $46 and $431, respectively, of net currency exchange gains in connection with the translation of receivables and payables denominated in currencies other than the functional currencies of Griffon and its subsidiaries as well as $87 and $192, respectively, of net investment income. |
WARRANTY LIABILITY |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WARRANTY LIABILITY | WARRANTY LIABILITY Telephonics offers warranties against product defects for periods generally ranging from one to two years, depending on the specific product and terms of the customer purchase agreement. CBP also offers warranties against product defects for periods generally ranging from one to ten years, with limited lifetime warranties on certain door models. Typical warranties require CBP and Telephonics to repair or replace the defective products during the warranty period at no cost to the customer. At the time revenue is recognized, Griffon records a liability for warranty costs, estimated based on historical experience, and periodically assesses its warranty obligations and adjusts the liability as necessary. AMES offers an express limited warranty for a period of ninety days on all products from the date of original purchase unless otherwise stated on the product or packaging. Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:
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COMMITMENTS AND CONTINGENCIES |
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Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal and environmental Department of Environmental Conservation of New York State (“DEC”), with ISC Properties, Inc. Lightron Corporation (“Lightron”), a wholly-owned subsidiary of Griffon, once conducted operations at a location in Peekskill in the Town of Cortlandt, New York (the “Peekskill Site”) owned by ISC Properties, Inc. (“ISC”), a wholly-owned subsidiary of Griffon. ISC sold the Peekskill Site in November 1982. Subsequently, Griffon was advised by the DEC that random sampling at the Peekskill Site and in a creek near the Peekskill Site indicated concentrations of solvents and other chemicals common to Lightron’s prior plating operations. ISC then entered into a consent order with the DEC in 1996 (the “Consent Order”) to perform a remedial investigation and prepare a feasibility study. After completing the initial remedial investigation pursuant to the Consent Order, ISC was required by the DEC, and did accordingly conduct over the next several years, supplemental remedial investigations, including soil vapor investigations, under the Consent Order. In April 2009, the DEC advised ISC’s representatives that both the DEC and the New York State Department of Health had reviewed and accepted an August 2007 Remedial Investigation Report and an Additional Data Collection Summary Report dated January 30, 2009. With the acceptance of these reports, ISC completed the remedial investigation required under the Consent Order and was authorized, accordingly, by the DEC to conduct the Feasibility Study required by the Consent Order. Pursuant to the requirements of the Consent Order and its obligations thereunder, ISC, without acknowledging any responsibility to perform any remediation at the Site, submitted to the DEC in August 2009, a draft feasibility study which recommended for the soil, groundwater and sediment media, remediation alternatives having a current net capital cost value, in the aggregate, of approximately $5,000. In February 2011, DEC advised ISC it has accepted and approved the feasibility study. Accordingly, ISC has no further obligations under the consent order. Upon acceptance of the feasibility study, DEC issued a Proposed Remedial Action Plan (“PRAP”) that sets forth the proposed remedy for the site. The PRAP accepted the recommendation contained in the feasibility study for remediation of the soil and groundwater media, but selected a different remediation alternative for the sediment medium. The approximate cost and the current net capital cost value of the remedy proposed by DEC in the PRAP is approximately $10,000. After receiving public comments on the PRAP, the DEC issued a Record of Decision (“ROD”) that set forth the specific remedies selected and responded to public comments. The remedies selected by the DEC in the ROD are the same remedies as those set forth in the PRAP. It is now expected that DEC will enter into negotiations with potentially responsible parties to request they undertake performance of the remedies selected in the ROD, and if such parties do not agree to implement such remedies, then the State of New York may use State Superfund money to remediate the Peekskill site and seek recovery of costs from such parties. Griffon does not acknowledge any responsibility to perform any remediation at the Peekskill Site. Improper Advertisement Claim involving Union Tools® Products. Beginning in December 2004, a customer of AMES had been named in various litigation matters relating to certain Union Tools products. The plaintiffs in those litigation matters asserted causes of action against the customer of AMES for improper advertisement to end consumers. The allegations suggested that advertisements led the consumers to believe that Union Tools’ hand tools were wholly manufactured within boundaries of the United States. The complaints asserted various causes of action against the customer of AMES under federal and state law, including common law fraud. At some point, the customer may seek indemnity (including recovery of its legal fees and costs) against AMES for an unspecified amount. Presently, AMES cannot estimate the amount of loss, if any, if the customer were to seek legal recourse against AMES. Union Fork and Hoe, Frankfort, NY site. The former Union Fork and Hoe property in Frankfort, NY was acquired by Ames in 2006 as part of a larger acquisition, and has historic site contamination involving chlorinated solvents, petroleum hydrocarbons and metals. AMES has entered into an Order on Consent with the New York State Department of Environmental Conservation. While the Order is without admission or finding of liability or acknowledgment that there has been a release of hazardous substances at the site, AMES is required to perform a remedial investigation of certain portions of the property and to recommend a remediation option. At the conclusion of the remediation phase to the satisfaction of the DEC, the DEC will issue a Certificate of Completion. AMES has performed significant investigative and remedial activities in the last few years under work plans approved by the DEC, and the DEC has approved the final remedial investigation report. AMES submitted a Feasibility Study, evaluating a number of remedial options, and recommending excavation and offsite disposal of lead contaminated soils, capping of other areas of the site impacted by other metals and performing limited groundwater monitoring. The DEC accepted the Feasibility Study and is expected to issue a Record of Decision approving the selection of a remedial alternative in 2017. Implementation of the selected remedial alternative is also expected to occur in 2017, or if there are further delays in regulatory approvals, early 2018. AMES has a number of defenses to liability in this matter, including its rights under a previous Consent Judgment entered into between the DEC and a predecessor of AMES relating to the site. U.S. Government investigations and claims Defense contracts and subcontracts, including Griffon’s contracts and subcontracts, are subject to audit and review by various agencies and instrumentalities of the United States government, including among others, the Defense Contract Audit Agency (“DCAA”), the Defense Criminal Investigative Service (“DCIS”), and the Department of Justice ("DOJ") which has responsibility for asserting claims on behalf of the U.S. government. In addition to ongoing audits, Griffon is currently in discussions with the civil division of the U.S. Department of Justice regarding certain amounts the civil division has indicated it believes it is owed from Griffon with respect to certain U.S. government contracts in which Griffon acted as a subcontractor. No claim has been asserted against Griffon in connection with this matter, and Griffon believes that it does not have a material financial exposure in connection with this matter. In general, departments and agencies of the U.S. Government have the authority to investigate various transactions and operations of Griffon, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. Government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on Telephonics because of its reliance on government contracts. General legal Griffon is subject to various laws and regulations relating to the protection of the environment and is a party to legal proceedings arising in the ordinary course of business. Management believes, based on facts presently known to it, that the resolution of the matters above and such other matters will not have a material adverse effect on Griffon’s consolidated financial position, results of operations or cash flows. |
CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION |
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Dec. 31, 2016 | |
Consolidating Guarantor And Non Guarantor Financial Information [Abstract] | |
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., Clopay Plastic Products Company, Inc., Telephonics Corporation, The AMES Companies, Inc., ATT Southern, Inc. and Clopay Ames True Temper Holding Corp., all of which are indirectly 100% owned by Griffon. In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, presented below are condensed consolidating financial information as of December 31, 2016 and September 30, 2016 and for the three months ended December 31, 2016 and 2015. 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% of the segment adjusted EBITDA of the Company for the most recently ended four fiscal quarters), and that meets certain other specified conditions as set forth in the Indenture; (iii) the designation of a guarantor as an “unrestricted subsidiary” as defined in the Indenture, in compliance with the terms of the Indenture; (iv) Griffon exercising its right to defease the Senior Notes, or to otherwise discharge its obligations under the Indenture, in each case in accordance with the terms of the Indenture; and (v) upon obtaining the requisite consent of the holders of the Senior Notes. |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements. As such, they should be read with reference to Griffon’s Annual Report on Form 10-K for the year ended September 30, 2016, which provides a more complete explanation of Griffon’s accounting policies, financial position, operating results, business properties and other matters. In the opinion of management, these financial statements reflect all adjustments considered necessary for a fair statement of interim results. Griffon’s HBP operations are seasonal; for this and other reasons, the financial results of the Company for any interim period are not necessarily indicative of the results for the full year. The condensed consolidated balance sheet information at September 30, 2016 was derived from the audited financial statements included in Griffon’s Annual Report on Form 10-K for the year ended September 30, 2016. The condensed consolidated financial statements include the accounts of Griffon and all subsidiaries. Intercompany accounts and transactions have been eliminated on consolidation. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. These estimates may be adjusted due to changes in economic, industry or customer financial conditions, as well as changes in technology or demand. Significant estimates include allowances for doubtful accounts receivable and returns, net realizable value of inventories, restructuring reserves, valuation of goodwill and intangible assets, percentage of completion method of accounting, pension assumptions, useful lives associated with depreciation and amortization of intangible and fixed assets, warranty reserves, sales incentive accruals, stock based compensation assumptions, income taxes and tax valuation reserves, environmental reserves, legal reserves, insurance reserves and the valuation of assets and liabilities of discontinued operations, acquisition assumptions used and the accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions Griffon may undertake in the future. Actual results may ultimately differ from these estimates. Certain amounts in the prior year have been reclassified to conform to current year presentation. |
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Fair Value Measurements | FAIR VALUE MEASUREMENTS The carrying values of cash and equivalents, accounts receivable, accounts and notes payable, and revolving credit and variable interest rate debt approximate fair value due to either the short-term nature of such instruments or the fact that the interest rate of the revolving credit and variable rate debt is based upon current market rates. Applicable accounting guidance establishes a fair value hierarchy requiring the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The accounting guidance establishes three levels of inputs that may be used to measure fair value, as follows:
The fair values of Griffon’s 2022 senior notes approximated $730,438 on December 31, 2016. Fair values were based upon quoted market prices (level 1 inputs). On January 17, 2017, Griffon's 4% convertible subordinated notes settled for a total of $173,855. The total settlement value for the convertible notes was based on the sum of the daily Volume Weighted Average Price multiplied by the conversion rate over a 40-day observation period (level 1 inputs). The settlement value was split between $125,000 in cash and 1,954,993 shares of common stock. Insurance contracts with values of $3,347 at December 31, 2016 are measured and recorded at fair value based upon quoted prices in active markets for similar assets (level 2 inputs) and are included in Prepaid and other current assets on the Consolidated Balance Sheets. Items Measured at Fair Value on a Recurring Basis At December 31, 2016, trading securities, measured at fair value based on quoted prices in active markets for similar assets (level 2 inputs), with a fair value of $1,375 ($1,000 cost basis), were included in Prepaid and other current assets on the Consolidated Balance Sheets. During the first quarter of 2016, the Company settled trading securities with proceeds totaling $715 and recognized a loss of $13 in Other income (expense). Realized and unrealized gains and losses on trading securities are included in Other income in the Consolidated Statements of Operations and Comprehensive Income (Loss). In the normal course of business, Griffon’s operations are exposed to the effects of changes in foreign currency exchange rates. To manage these risks, Griffon may enter into various derivative contracts such as foreign currency exchange contracts, including forwards and options. During 2017, Griffon entered into several such contracts in order to lock into a foreign currency rate for planned settlements of trade and inter-company liabilities payable in US dollars. At December 31, 2016, Griffon had $16,500 of Australian dollar contracts at a weighted average rate of $1.39, which qualified for hedge accounting. These hedges were all deemed effective as cash flow hedges with gains and losses related to changes in fair value deferred and recorded in Accumulated other comprehensive income (loss) ("AOCI") and Prepaid and other current assets, or Accrued liabilities, until settlement. Upon settlement, gains and losses are recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss) in Cost of goods and services ("COGS"). AOCI included deferred gains of $974 ($619, net of tax) at December 31, 2016 and losses of $649 were recorded in COGS during the quarter ended December 31, 2016 for all settled contracts. All contracts expire in 30 to 180 days. At December 31, 2016, Griffon had $4,655 of Canadian dollar contracts at a weighted average rate of $1.34. The contracts, which protect Canada operations from currency fluctuations for U.S. dollar based purchases, do not qualify for hedge accounting. For the quarter ended December 31, 2016, a fair value gain of $111 was recorded to Other liabilities and to Other income for the outstanding contracts, based on similar contract values (level 2 inputs). Realized losses of $41 were recorded in Other income during the quarter ended December 31, 2016 for all settled contracts. All contracts expire in 30 to 180 days. |
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Inventories | Inventories are stated at the lower of cost (first-in, first-out or average) or market. |
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New Accounting Pronouncements | The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements, and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
ACQUISITIONS (Tables) |
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Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | ACQUISITIONS AND INVESTMENTS On December 30, 2016, AMES Australia acquired Hills Home Living ("Hills") for approximately $6,051 (AUD 8,400). The preliminary allocation of the purchase price consists of $1,500 of inventory and $4,551 of intangible assets including trademarks, intellectual property and customer relationships. Hills, founded in 1946, is a market leader in the supply of clothesline, laundry and garden products. The Hills acquisition adds to AMES' existing broad category of products and enhances our lawn and garden product offerings in Australia. On February 14, 2016, AMES Australia acquired substantially all of the Intellectual Property (IP) assets of Australia-based Nylex Plastics Pty Ltd. for approximately $1,700. Through this acquisition, AMES and Griffon secured the ownership of the trademark “Nylex” for certain categories of AMES products, principally in the country of Australia. Previously, the Nylex name was licensed. The acquisition of the Nylex IP was contemplated as a post-closing activity of the Cyclone acquisition and supports AMES' Australian watering products strategy. The purchase price was allocated to indefinite lived trademarks and is not deductible for income taxes. In December 2015, Telephonics invested an additional $2,726 increasing its equity stake from 26% to 49% in Mahindra Telephonics Integrated Systems ("MTIS"), a joint venture with Mahindra Defence Systems, a Mahindra Group Company. MTIS is an aerospace and defense manufacturing and development facility in Prithla, India. This investment is accounted for using the equity method. |
INVENTORIES (Tables) |
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Schedule of Inventory | The following table details the components of inventory:
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PROPERTY, PLANT AND EQUIPMENT (Tables) |
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Property, Plant and Equipment | The following table details the components of property, plant and equipment, net:
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GOODWILL AND OTHER INTANGIBLES (Tables) |
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Schedule of Goodwill | The following table provides changes in the carrying value of goodwill by segment during the three months ended December 31, 2016:
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Schedule Of Identifiable Intangible Assets | The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:
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LONG-TERM DEBT (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt |
The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On July 20, 2016 and June 18, 2014, Griffon exchanged all of the $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 $730,438 on December 31, 2016 based upon quoted market prices (level 1 inputs). In connection with the issuance and exchange of the $125,000 senior notes, Griffon capitalized $3,016 of underwriting fees and other expenses, which will amortize over the term of such notes; Griffon capitalized $10,313 in connection with the previously issued $600,000 senior notes.
Clopay do Brazil maintains a line of credit of R$7,000 ($2,148 as of December 31, 2016). Interest on borrowings accrues at various fixed rates which averaged about 17.4% as of December 31, 2016. At December 31, 2016 there was approximately R$4,778 ($1,466 as of December 31, 2016) borrowed under the line. PPC guarantees the loans and the line. In November 2012, Garant G.P. (“Garant”) entered into a CAD $15,000 ($11,088 as of December 31, 2016) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.30% LIBOR USD and 2.19% Bankers Acceptance Rate CDN as of December 31, 2016). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity. At December 31, 2016, there were no borrowings under the revolving credit facility. In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries 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. The term loan requires quarterly principal payments of AUD 750 plus interest, with a balloon payment of AUD 21,000 due upon maturity in June 2019, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 2.25% per annum (4.12% at December 31, 2016). The term loan had an outstanding balance of AUD 28,500 ($20,529 as of December 31, 2016 ). The revolving facility matures in November 2017 but is renewable upon mutual agreement with the bank, and accrues interest at BBSY plus 2.0% per annum (3.68% at December 31, 2016). The revolver had an outstanding balance of AUD 14,500 ($10,444 as of December 31, 2016). 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.
At December 31, 2016, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements. |
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Schedule of Interest Expense For Long Term Debt |
(1) n/a = not applicable
The Senior Notes are senior unsecured obligations of Griffon guaranteed by certain domestic subsidiaries, and subject to certain covenants, limitations and restrictions. On July 20, 2016 and June 18, 2014, Griffon exchanged all of the $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 $730,438 on December 31, 2016 based upon quoted market prices (level 1 inputs). In connection with the issuance and exchange of the $125,000 senior notes, Griffon capitalized $3,016 of underwriting fees and other expenses, which will amortize over the term of such notes; Griffon capitalized $10,313 in connection with the previously issued $600,000 senior notes.
Clopay do Brazil maintains a line of credit of R$7,000 ($2,148 as of December 31, 2016). Interest on borrowings accrues at various fixed rates which averaged about 17.4% as of December 31, 2016. At December 31, 2016 there was approximately R$4,778 ($1,466 as of December 31, 2016) borrowed under the line. PPC guarantees the loans and the line. In November 2012, Garant G.P. (“Garant”) entered into a CAD $15,000 ($11,088 as of December 31, 2016) revolving credit facility. The facility accrues interest at LIBOR (USD) or the Bankers Acceptance Rate (CDN) plus 1.3% per annum (2.30% LIBOR USD and 2.19% Bankers Acceptance Rate CDN as of December 31, 2016). The revolving facility matures in October 2019. Garant is required to maintain a certain minimum equity. At December 31, 2016, there were no borrowings under the revolving credit facility. In July 2016, Griffon Australia Holdings Pty Ltd and its Australian subsidiaries 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. The term loan requires quarterly principal payments of AUD 750 plus interest, with a balloon payment of AUD 21,000 due upon maturity in June 2019, and accrues interest at Bank Bill Swap Bid Rate “BBSY” plus 2.25% per annum (4.12% at December 31, 2016). The term loan had an outstanding balance of AUD 28,500 ($20,529 as of December 31, 2016 ). The revolving facility matures in November 2017 but is renewable upon mutual agreement with the bank, and accrues interest at BBSY plus 2.0% per annum (3.68% at December 31, 2016). The revolver had an outstanding balance of AUD 14,500 ($10,444 as of December 31, 2016). 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.
At December 31, 2016, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements. |
EARNINGS PER SHARE (EPS) (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table is a reconciliation of the share amounts (in thousands) used in computing earnings per share:
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BUSINESS SEGMENTS (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Information on Griffon’s reportable segments is as follows:
The following table reconciles segment operating profit to income before taxes: The following table provides a reconciliation of Segment adjusted EBITDA to Income before taxes:
Unallocated amounts typically include general corporate expenses not attributable to a reportable segment. |
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Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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DEFINED BENEFIT PENSION EXPENSE (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Defined Benefit Plans Disclosures | Defined benefit pension expense (income) was as follows:
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DISCONTINUED OPERATIONS (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | The following amounts related to the Installation Services segment, discontinued in 2008, and other businesses discontinued several years ago, which have been segregated from Griffon’s continuing operations, and are reported as assets and liabilities of discontinued operations in the condensed consolidated balance sheets:
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RESTRUCTURING AND OTHER RELATED CHARGES (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The activity in the restructuring accrual recorded in accrued liabilities consisted of the following:
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WARRANTY LIABILITY (Tables) |
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | Changes in Griffon’s warranty liability, included in Accrued liabilities, were as follows:
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OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) | The amounts recognized in other comprehensive income (loss) were as follows:
The components of Accumulated other comprehensive income (loss) are as follows:
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Comprehensive Income (Loss) Note [Text Block] | OTHER COMPREHENSIVE INCOME (LOSS) The amounts recognized in other comprehensive income (loss) were as follows:
The components of Accumulated other comprehensive income (loss) are as follows:
Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:
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Reclassification out of Accumulated Other Comprehensive Income | Amounts reclassified from accumulated other comprehensive income (loss) to income were as follows:
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CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Tables) |
3 Months Ended |
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Dec. 31, 2016 | |
Consolidating Guarantor And Non Guarantor Financial Information [Abstract] | |
Condensed Balance Sheet | . |
Condensed Income Statement | . |
Condensed Cash Flow Statement | . |
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) |
3 Months Ended |
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Dec. 31, 2016
segment
company
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | segment | 3 |
Number of companies | company | 2 |
ACQUISITIONS (Details) AUD in Thousands |
3 Months Ended | |||||
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Dec. 30, 2016
AUD
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Dec. 30, 2016
USD ($)
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Feb. 14, 2016
USD ($)
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Dec. 31, 2016
USD ($)
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Dec. 31, 2015
USD ($)
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Sep. 30, 2016 |
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Business Acquisition [Line Items] | ||||||
Amount invested | $ 0 | $ 2,726,000 | ||||
Acquired businesses, net of cash acquired | (6,051,000) | 0 | ||||
Guarantor Companies [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount invested | 2,726,000 | |||||
Acquired businesses, net of cash acquired | $ 0 | |||||
Hills Home Living [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, consideration transferred | AUD 8,400 | $ 6,051,000 | ||||
Business combination, inventory acquired | 1,500,000 | |||||
Business combination, intangible assets acquired | $ 4,551,000 | |||||
Nylex Plastics Pty Ltd. [Member] | The AMES Companies, Inc. [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, consideration transferred | $ 1,700,000 | |||||
Mahindra Telephonics Integrated Systems [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amount invested | $ 3,000 | |||||
Equity stake | 49.00% | 26.00% |
ACQUISITIONS (Details) - Summary of Goodwill and Intangible Asset Classifications - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2016 |
Sep. 30, 2016 |
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Business Acquisition [Line Items] | ||
Goodwill | $ 357,507 | $ 361,185 |
Customer relationships [Member] | ||
Business Acquisition [Line Items] | ||
Amortization Period (Years) | 25 years |
INVENTORIES (Details) - Summary of Inventories Stated at Lower Cost - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
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Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 79,260 | $ 81,345 |
Work in process | 89,764 | 75,852 |
Finished goods | 154,168 | 151,672 |
Total | $ 323,192 | $ 308,869 |
PROPERTY, PLANT AND EQUIPMENT (Details) - Summary of Property Plant and Equipment - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
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Property, Plant and Equipment [Line Items] | ||
Property Plant And Equipment Gross | $ 992,596 | $ 993,499 |
Accumulated depreciation and amortization | (592,445) | (588,095) |
Total | 400,151 | 405,404 |
Land, building and building improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant And Equipment Gross | 140,441 | 138,204 |
Machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant And Equipment Gross | 798,766 | 804,280 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant And Equipment Gross | $ 53,389 | $ 51,015 |
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization expense | $ 16,533 | $ 15,209 |
Selling, general and administrative expense [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization expense | $ 3,513 | $ 3,157 |
GOODWILL AND OTHER INTANGIBLES (Details) - Summary of Changes in Carrying Value of Goodwill $ in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
September 30, 2016 | $ 361,185 |
Other adjustments including currency translations | (3,678) |
December 31, 2016 | 357,507 |
Home & Building Products [Member] | |
Goodwill [Roll Forward] | |
September 30, 2016 | 287,617 |
Other adjustments including currency translations | (1,269) |
December 31, 2016 | 286,348 |
Telephonics [Member] | |
Goodwill [Roll Forward] | |
September 30, 2016 | 18,545 |
December 31, 2016 | 18,545 |
Plastics [Member] | |
Goodwill [Roll Forward] | |
September 30, 2016 | 55,023 |
Other adjustments including currency translations | (2,409) |
December 31, 2016 | $ 52,614 |
GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 1,861 | $ 1,875 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate reconciliation, provision (benefit) percent | (5.50%) | (19.20%) |
Effective income tax rate reconciliation, change in enacted tax rate, amount | $ (4,263,000) | $ (2,591,000) |
Effective income tax rate reconciliation, nondeductible provision (benefit) percent | 38.30% | 38.60% |
Effective income tax rate reconciliation, excess tax benefit, amount | $ 2,193,000 |
BUSINESS SEGMENTS (Details) - Summary of Segment Assets - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Segment assets: | ||
Continuing Assets | $ 1,743,011 | $ 1,779,909 |
Assets of discontinued operations | 2,178 | 2,187 |
Total Assets | 1,745,189 | 1,782,096 |
Home And Building Products [Member] | ||
Segment assets: | ||
Continuing Assets | 1,027,389 | 1,020,297 |
Telephonics [Member] | ||
Segment assets: | ||
Continuing Assets | 318,290 | 334,631 |
Plastics [Member] | ||
Segment assets: | ||
Continuing Assets | 358,387 | 365,920 |
Operating Segments [Member] | ||
Segment assets: | ||
Continuing Assets | 1,704,066 | 1,720,848 |
Corporate, Non-Segment [Member] | ||
Segment assets: | ||
Continuing Assets | $ 38,945 | $ 59,061 |
DEFINED BENEFIT PENSION EXPENSE (Details) - Summary of Defined Benefit Pension Expense - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Compensation and Retirement Disclosure [Abstract] | ||
Interest cost | $ 1,402 | $ 2,080 |
Expected return on plan assets | (2,736) | (2,916) |
Amortization: | ||
Prior service cost | 4 | 4 |
Recognized actuarial loss | 832 | 590 |
Net periodic expense (income) | $ (498) | $ (242) |
RECENT ACCOUNTING PRONOUNCEMENTS RECENT ACCOUNTING PRONOUNCEMENTS (Details) |
3 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Accounting Changes and Error Corrections [Abstract] | |
Effective income tax rate reconciliation, excess tax benefit, amount | $ 2,193,000 |
DISCONTINUED OPERATIONS (Details) - Summary of Discontinued Operations - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Assets of discontinued operations: | ||
Prepaid and other current assets | $ 218 | $ 219 |
Other long-term assets | 1,960 | 1,968 |
Total assets of discontinued operations | 2,178 | 2,187 |
Liabilities of discontinued operations: | ||
Accrued liabilities, current | 1,498 | 1,684 |
Other long-term liabilities | 2,098 | 1,706 |
Total liabilities of discontinued operations | $ 3,596 | $ 3,390 |
DISCONTINUED OPERATIONS (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||
Installation Services revenue | $ 0 | $ 0 |
RESTRUCTURING AND OTHER RELATED CHARGES (Details) - Plastics [Member] $ in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
position
| |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and other related charges | $ 5,900 |
Number of positions eliminated | position | 83 |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve | $ 3,491 |
Payments for Restructuring | (1,118) |
Restructuring Reserve | 2,373 |
Workforce Reduction | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve | 2,487 |
Payments for Restructuring | (970) |
Restructuring Reserve | 1,517 |
Other Related Costs | |
Restructuring Reserve [Roll Forward] | |
Restructuring Reserve | 1,004 |
Payments for Restructuring | (148) |
Restructuring Reserve | $ 856 |
OTHER EXPENSE (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other Income and Expenses [Abstract] | ||
Foreign currency transaction gain (loss), before tax | $ 46 | $ 431 |
Investment income, net | $ 87 | $ 192 |
WARRANTY LIABILITY (Details) |
3 Months Ended |
---|---|
Dec. 31, 2016 | |
Telephonics [Member] | Minimum [Member] | |
WARRANTY LIABILITY (Details) [Line Items] | |
Product Warranty Period | 1 year |
Telephonics [Member] | Maximum [Member] | |
WARRANTY LIABILITY (Details) [Line Items] | |
Product Warranty Period | 2 years |
Ames True Temper Inc [Member] | |
WARRANTY LIABILITY (Details) [Line Items] | |
Product Warranty Period | 90 days |
WARRANTY LIABILITY (Details) - Summary of Changes in Warrant Liability Included in Accrued Liabilities - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance, beginning of period | $ 6,322 | $ 6,040 |
Warranties issued and changes in estimated pre-existing warranties | 1,294 | 1,502 |
Actual warranty costs incurred | (1,601) | (1,480) |
Balance, end of period | $ 6,015 | $ 6,062 |
OTHER COMPREHENSIVE INCOME (LOSS) (Details) - Summary of Other Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Pre-tax | ||
Foreign currency translation adjustments | $ (13,479) | $ (3,349) |
Pension and other defined benefit plans | 836 | 594 |
Cash flow hedges | 2,272 | (1,450) |
Total other comprehensive income (loss) | (10,371) | (4,205) |
Tax | ||
Pension and other defined benefit plans | (292) | (208) |
Cash flow hedges | (649) | 435 |
Total other comprehensive income (loss) | (941) | 227 |
Net of tax | ||
Foreign currency translation adjustments | (13,479) | (3,349) |
Pension and other defined benefit plans | 544 | 386 |
Cash flow hedges | 1,623 | (1,015) |
Total other comprehensive income (loss), net of taxes | $ (11,312) | $ (3,978) |
OTHER COMPREHENSIVE INCOME (LOSS)-AOCI (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Sep. 30, 2016 |
---|---|---|
Class of Stock [Line Items] | ||
Accumulated other comprehensive income (loss) | $ (92,553) | $ (81,241) |
Foreign currency translation adjustments [Member] | ||
Class of Stock [Line Items] | ||
Accumulated other comprehensive income (loss) | (56,373) | (42,894) |
Pension and other defined benefit plans [Member] | ||
Class of Stock [Line Items] | ||
Accumulated other comprehensive income (loss) | (36,799) | (37,343) |
Gain on cash flow hedge [Member] | ||
Class of Stock [Line Items] | ||
Accumulated other comprehensive income (loss) | $ 619 | $ (1,004) |
OTHER COMPREHENSIVE INCOME (LOSS)- Total comprehensive income (loss) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2016 |
|
Equity [Abstract] | |||
Net income | $ 12,264 | $ 10,788 | $ 0 |
Other comprehensive income (loss), net of taxes | (11,312) | (3,978) | |
Comprehensive loss | $ 952 | $ 6,810 | $ 0 |
OTHER COMPREHENSIVE INCOME (LOSS) (Details) - Summary of Amounts Reclassified from Accumulated Other Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Pension amortization | $ (836) | $ (594) |
Cash flow hedges | (649) | 405 |
Total gain (loss) | (1,485) | (189) |
Tax benefit (expense) | (97) | (87) |
Amounts reclassified from accumulated other comprehensive income (loss) | $ (1,388) | $ (102) |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) |
Dec. 31, 2016 |
Feb. 28, 2011 |
Apr. 30, 2009 |
---|---|---|---|
Commitments and Contingencies Disclosure [Abstract] | |||
Net capital cost value | $ 5,000,000 | ||
Obligation under consent order | $ 0 | ||
Net capital cost value in proposed remedial action plan | $ 10,000,000 | ||
Loss contingency claim asserted | $ 0 |
CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION (Details) |
3 Months Ended |
---|---|
Dec. 31, 2016 | |
Consolidating Guarantor And Non Guarantor Financial Information [Abstract] | |
Noncontrolling interest, ownership percentage by parent | 100.00% |
Maximum percentage of segment adjusted EBITDA to business EBITDA | 50.00% |
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