EMPLOYEE BENEFIT PLANS

12 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Compensation and Employee Benefit Plans [Text Block]

NOTE 11 – EMPLOYEE BENEFIT PLANS

Griffon offers defined contribution plans to most of its U.S. employees. In addition to employee contributions to the plans, Griffon makes contributions based upon various percentages of compensation and/or employee contributions, which were $6,950 in 2013, $7,300 in 2012 and $7,500 in 2011.

The Company also provides healthcare and life insurance benefits for certain groups of retirees through several plans. For certain employees, the benefits are at fixed amounts per retiree and are partially contributory by the retiree. The post-retirement benefit obligation was $1,972 and $2,262 as of September 30, 2013 and 2012. The accumulated other comprehensive income (loss) for these plans was $161 and ($79) as of September 30, for 2013 and 2012, respectively and the 2013 and 2012 benefit expense was $65 and $76, respectively. It is the Company’s practice to fund these benefits as incurred.

Griffon also has qualified and non-qualified defined benefit plans covering certain employees with benefits based on years of service and employee compensation. Over time, these amounts will be recognized as part of net periodic pension costs in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Griffon is responsible for overseeing the management of the investments of the qualified defined benefit plan and uses the service of an investment manager to manage these assets based on agreed upon risk profiles set by Griffon management. The primary objective of the qualified defined benefit plan is to secure participant retirement benefits. As such, the key objective in this plan’s financial management is to promote stability and, to the extent appropriate, growth in the funded status. Financial objectives are established in conjunction with a review of current and projected plan financial requirements. The fair value of a majority of the plan assets were determined by the plans’ trustee using quoted market prices for identical instruments (level 1 inputs) as of September 30, 2013 and 2012. The fair value of various other investments were determined by the plan’s trustee using direct observable market corroborated inputs, including quoted market prices for similar assets (level 2 inputs). The fair value of investments with significant unobservable inputs was supported by audited financial statements (level 3 inputs).

Effective January 1, 2012, the Clopay Pension Plan merged with the Ames True Temper Inc. Pension Plan. The merged qualified defined benefit plan was named the Clopay Ames True Temper Pension Plan (the “CATT Plan”).

The Clopay portion of the CATT Plan has been frozen to new entrants since December 2000. Certain employees who were part of the plan prior to December 2000 continued to accrue a service benefit through December 2010, at which time all plan participants stopped accruing service benefits.

The ATT portion of the CATT Plan has been frozen to all new entrants since November 2009 and stopped accruing benefits in December 2009.

The ATT supplemental executive retirement plan was frozen to new entrants and participants in the plan stopped accruing benefits in 2008.

In 2013, SG&A expenses included a $2,142, non-cash, pension settlement loss resulting from the lump-sum buyout of certain participant’s balances in the Company’s defined benefit plan. The buyouts, funded by the pension plan, reduced the Company’s net pension liability by $3,472 and increased Accumulated Other Comprehensive Income (Loss) by $3,649.

Griffon uses judgment to estimate the assumptions used in determining the future liability of the plan, as well as the investment returns on the assets invested for the plan. The expected return on assets assumption used for pension expense was developed through analysis of historical market returns, current market conditions and the past experience of plan asset investments. The long-term rate of return assumption represents the expected average rate of earnings on the funds invested, or to be invested, to provide for the benefits included in the benefit obligations. The assumption is based on several factors including historical market index returns, the anticipated long-term asset allocation of plan assets and the historical return. The discount rate assumption is determined by developing a yield curve based on high quality bonds with maturities matching the plans’ expected benefit payment stream. The plans’ expected cash flows are then discounted by the resulting year-by-year spot rates. A 10% change in the discount rate, average wage increase or return on assets would not have a material effect on the financial statements of Griffon.

Net periodic costs (benefits) were as follows:

	Defined Benefits for the Years Ended  September 30,									Supplemental Benefits for the Years  Ended September 30,
	2013			2012			2011			2013		2012		2011
Net periodic (benefits) costs:
Service cost	$	165		$	238		$	377		$	35	$	36	$	34
Interest cost		7,977			9,191			9,552			1,344		1,692		1,759
Expected return on plan assets		(11,870	)		(11,896	)		(11,501	)		—		—		—
Recognition of settlement		2,143			—			—			—		—		—
Amortization of:
Prior service costs		6			6			8			14		171		328
Actuarial loss		1,795			1,735			1,144			1,288		1,137		1,141
Total net periodic (benefits) costs	$	216		$	(726	)	$	(420	)	$	2,681	$	3,036	$	3,262

The tax benefits in 2013, 2012 and 2011 for the amortization of pension costs in Other comprehensive income (loss) were $1,086, $1,067 and $917, respectively.

The estimated net actuarial loss and prior service cost that will be amortized from Accumulated other comprehensive income into Net periodic pension cost during 2014 are $1,954 and $15, respectively.

The weighted-average assumptions used in determining the net periodic (benefits) costs were as follows:

	Defined Benefits for the Years Ended  September 30,									Supplemental Benefits for the Years  Ended September 30,
	2013			2012			2011			2013			2012			2011
Discount rate		3.67	%		4.44	%		4.89	%		3.40	%		4.30	%		4.26	%
Average wage increase		0.11	%		0.11	%		0.72	%		4.87	%		4.89	%		4.89	%
Expected return on assets		7.80	%		7.71	%		7.72	%		—			—			—

Plan assets and benefit obligation of the defined and supplemental benefit plans were as follows:

	Defined Benefits at September 30,						Supplemental Benefits at September 30,
	2013			2012			2013			2012
Change in benefit obligation:
Benefit obligation at beginning of fiscal year	$	232,939		$	212,660		$	41,473		$	41,285
Benefits earned during the year		165			238			35			36
Interest cost		7,977			9,191			1,344			1,692
Plan participant contributions		15			16			—			—
Benefits paid		(10,632	)		(10,369	)		(4,051	)		(3,936	)
Benefits paid - settlement		(11,548	)		—			—			—
Effect of foreign currency		462			(413	)		—			—
Actuarial (gain) loss		(19,945	)		21,616			(127	)		2,396
Actuarial gain - settlement		(3,472	)		—			—			—
Benefit obligation at end of fiscal year		195,961			232,939			38,674			41,473
Change in plan assets:
Fair value of plan assets at beginning of fiscal year		160,823			137,678			—			—
Actual return on plan assets		12,537			25,190			—			—
Plan participant contributions		15			16			—			—
Company contributions		2,203			8,638			4,051			3,936
Effect of foreign currency		333			(330	)		—			—
Benefits paid		(10,632	)		(10,369	)		(4,051	)		(3,936	)
Benefits paid - settlement		(11,548	)		—			—			—
Fair value of plan assets at end of fiscal year		153,731			160,823			—			—
Projected benefit obligation in excess of plan assets	$	(42,230	)	$	(72,116	)	$	(38,674	)	$	(41,473	)
Amounts recognized in the statement of financial position consist of:
Accrued liabilities	$	—		$	—		$	(4,031	)	$	(3,897	)
Other liabilities (long-term)		(42,230	)		(72,116	)		(34,643	)		(37,576	)
Total Liabilities		(42,230	)		(72,116	)		(38,674	)		(41,473	)
Net actuarial losses		16,679			44,656			19,335			20,750
Prior service cost		4			10			99			113
Deferred taxes		(5,839	)		(15,633	)		(6,802	)		(7,302	)
Total Accumulated other comprehensive loss, net of tax		10,844			29,033			12,632			13,561
Net amount recognized at September 30,	$	(31,386	)	$	(43,083	)	$	(26,042	)	$	(27,912	)
Accumulated benefit obligations	$	195,590		$	232,574		$	38,674		$	41,473
Information for plans with accumulated benefit obligations in excess of plan assets:
ABO	$	195,590		$	232,574		$	38,674		$	41,473
PBO		195,961			232,939			38,674			41,473
Fair value of plan assets		153,731			160,823			—			—

The weighted-average assumptions used in determining the benefit obligations were as follows:

	Defined Benefits at  September 30,						Supplemental Benefits at  September 30,
	2013			2012			2013			2012
Weighted average discount rate		4.49	%		3.67	%		4.09	%		3.40	%
Weighted average wage increase		0.15	%		0.11	%		0.00	%		4.87	%

The actual and weighted-average asset allocation for qualified benefit plans were as follows:

	At September 30,
	2013			2012			Target
Equity securities		55.8	%		66.0	%		63.0	%
Fixed income		41.3	%		29.0	%		37.0	%
Other		2.9	%		5.0	%		0.0	%
Total		100.0	%		100.0	%		100.0	%

Estimated future benefit payments to retirees, which reflect expected future service, are as follows:

For the fiscal years ending September 30,		Defined Benefits		Supplemental Benefits
	2014	$	10,794	$	4,085
	2015		10,866		4,010
	2016		11,049		3,954
	2017		11,192		3,895
	2018		11,322		3,453
	2019 through 2023		59,464		14,632

Griffon expects to contribute $6,942 to the Defined Benefit plans in 2014, in addition to the $4,085 in payments related to the Supplemental Benefits that will primarily be funded from the general assets of Griffon.

The CATT Plan is covered by the Pension Protection Act of 2006. The Adjusted Funding Target Attainment Percent for the plan as of January 1, 2013 was 89.8%. Since the plan was in excess of the 80% funding threshold there were no plan restrictions. The expected level of 2014 catch up contributions is $4,028.

The following is a description of the valuation methodologies used for plan assets measured at fair value:

Short-term investment funds – The fair value is determined using the Net Asset Value (“NAV”) provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is a quoted price in a market that is not active and is primarily classified as Level 2. These investments can be liquidated on demand.

Government and agency securities – When quoted market prices are available in an active market, the investments are classified as Level 1. When quoted market prices are not available in an active market, the investments are classified as Level 2.

Equity securities – The fair values reflect the closing price reported on a major market where the individual securities are traded. These investments are classified within Level 1 of the valuation hierarchy.

Debt securities – The fair values are based on a compilation of primarily observable market information or a broker quote in a non-active market. These investments are primarily classified within Level 2 of the valuation hierarchy.

Commingled funds – The fair values are determined using NAV provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the trust/entity, minus its liabilities, and then divided by the number of shares outstanding. These investments are generally classified within Level 2 of the valuation hierarchy and can be liquidated on demand.

Interest in limited partnerships and hedge funds - One limited partnership investment is a private equity fund and the fair value is determined by the fund managers based on the estimated value of the various holdings of the fund portfolio. One of the commingled mutual funds is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding; these asset values are estimated by underlying managers of the assets in which the fund invests. These investments are classified within Level 2 of the valuation hierarchy.

The following table presents the fair values of Griffon’s pension and post-retirement plan assets by asset category:

At September 30, 2013	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and equivalents	$	—	$	—	$	—	$	—
Short-term investment funds		—		2,949		—		2,949
Government agency securities		3,006		—		—		3,006
Debt instruments		30,856		—		—		30,856
Equity securities		47,690		—		—		47,690
Commingled funds		—		66,130		—		66,130
Limited partnerships and hedge fund investments		—		3,101		—		3,101
Total	$	81,552	$	72,180	$	—	$	153,732

The activity for the level 3 assets was as follows:

Beginning Balance At September 30, 2012	$	3,016
Transfers out of Level 3		(3,016	)
Ending Balance At September 30, 2013	$	—

Transfers were due to the availability of observable inputs in the current year.

At September 30, 2012	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and equivalents	$	29	$	—	$	—	$	29
Short-term investment funds		—		5,231		—		5,231
Government agency securities		—		2,899		—		2,899
Debt instruments		—		30,616		—		30,616
Equity securities		62,713		—		—		62,713
Commingled funds		—		56,329		—		56,329
Insurance contracts		—		—		—		—
Limited partnerships and hedge fund investments		—		—		3,016		3,016
Total	$	62,742	$	95,075	$	3,016	$	160,833

Griffon has an ESOP that covers substantially all domestic employees. All U.S. employees of Griffon, who are not members of a collective bargaining unit, automatically become eligible to participate in the plan on the October 1^st following completion of one year of service. Griffon’s securities are allocated to participants’ individual accounts based on the proportion of each participant’s aggregate compensation (not to exceed $255 for the plan year ended September 30, 2013), to the total of all participants’ compensation. Shares of the ESOP which have been allocated to employee accounts are charged to expense based on the fair value of the shares transferred and are treated as outstanding in determining earnings per share. Dividens paid on shares held by the ESOP are used to offset debt service on ESOP Loans. Dividends paid on shares held in participant accounts are utilized to allocate shares from the aggregate number of shares to be released, equal in value tdo those dividends, based on the closing price of Griffon common stock on the dividend payment date. Compensation expense under the ESOP was $2,015 in 2013, $1,796 in 2012 and $841 in 2011. The cost of the shares held by the ESOP and not yet allocated to employees is reported as a reduction of Shareholders’ Equity. The fair value of the unallocated ESOP shares as of September 30, 2013 and 2012 based on the closing stock price of Griffon’s stock was $24,257 and $21,993, respectively. The ESOP shares were as follows:

	At September 30,
	2013		2012
Allocated shares		2,309,812		2,335,040
Unallocated shares		1,934,338		2,135,287
		4,244,150		4,470,327