LONG-TERM DEBT (Tables)

3 Months Ended

Dec. 31, 2016



		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

(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").

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.

(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 the loan and with a lien on a specific amount of Griffon assets (which lien ranks pari passu with the lien granted on such assets under the Credit Agreement) and is guaranteed by Griffon.


(f)	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).

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.


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

At December 31, 2016, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.

Schedule of Interest Expense For Long Term Debt



		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

(1) n/a = not applicable

(a)

(b)

(c)

(d)

(e)


(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)


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

At December 31, 2016, Griffon and its subsidiaries were in compliance with the terms and covenants of all credit and loan agreements.