Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ☑ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þ☑ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

~~Accelerated Filer~~ o

~~Smaller Reporting Company~~ o

~~Non-accelerated Filer~~ o

Emerging growth ~~Company~~ o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o☐ No þ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common stock — $0.01 par value — ~~42,158,288~~36,026,752 shares as of January 4, ~~2018.~~

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS

Commitments and contingencies (see Commitments and Contingencies footnote)

November 30, 2017
August 31, 2017
(unaudited)

ASSETS

Current assets:

Cash and cash equivalents $ 428.6

$ 311.1
Accounts receivable, less reserve for doubtful accounts of $2.0 and $1.9, respectively 514.3

573.3
Inventories 339.6

328.6
Prepayments and other current assets 41.3

32.6
Total current assets 1,323.8

1,245.6
Property, plant, and equipment, at cost:

Land 22.3

22.5
Buildings and leasehold improvements 181.4

180.7
Machinery and equipment 492.9

484.6
Total property, plant, and equipment 696.6

687.8
Less — Accumulated depreciation and amortization
(410.5 )
(400.1 )
Property, plant, and equipment, net 286.1

287.7
Goodwill 896.5

900.9
Intangible assets, net 439.9

448.8
Deferred income taxes 3.3

3.4
Other long-term assets 11.8

13.2
Total assets $ 2,961.4

$ 2,899.6
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 364.6

$ 395.1
Current maturities of long-term debt 0.4

0.4
Accrued compensation 31.2

41.8
Other accrued liabilities 198.7

163.6
Total current liabilities 594.9

600.9
Long-term debt 356.5

356.5
Accrued pension liabilities 95.9

96.9
Deferred income taxes 108.3

108.2
Self-insurance reserves 8.6

7.9
Other long-term liabilities 71.1

63.6
Total liabilities 1,235.3

1,234.0
Commitments and contingencies (see Commitments and Contingencies footnote)

Stockholders’ equity:

Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued —

—
Common stock, $0.01 par value; 500,000,000 shares authorized; 53,621,355 and 53,549,840 issued, respectively 0.5

0.5
Paid-in capital 884.3

881.0
Retained earnings 1,725.9

1,659.9
Accumulated other comprehensive loss (108.6 )
(99.7 )
Treasury stock, at cost — 11,676,689 and 11,678,002 shares, respectively (776.0 )
(776.1 )
Total stockholders’ equity 1,726.1

1,665.6
Total liabilities and stockholders’ equity $ 2,961.4

$ 2,899.6

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In millions, except per-share data)


	Three Months Ended
	November 30, 2020		November 30, 2019
Net sales	$	792.0	$	834.7
Cost of products sold	459.6		478.9
Gross profit	332.4		355.8
Selling, distribution, and administrative expenses	246.0		265.3
Special charges	0.7		6.9
Operating profit	85.7		83.6
Other expense:
Interest expense, net	4.9		8.3
Miscellaneous expense, net	1.6		1.4
Total other expense	6.5		9.7
Income before income taxes	79.2		73.9
Income tax expense	19.6		16.9
Net income	$	59.6	$	57.0

Earnings per share:
Basic earnings per share	$	1.58	$	1.44
Basic weighted average number of shares outstanding	37.6		39.5
Diluted earnings per share	$	1.57	$	1.44
Diluted weighted average number of shares outstanding	37.8		39.6
Dividends declared per share	$	0.13	$	0.13

Comprehensive income:
Net income	$	59.6	$	57.0
Other comprehensive income (loss) items:
Foreign currency translation adjustments	4.6		1.9
Defined benefit plans, net of tax	1.6		1.9
Other comprehensive income items, net of tax	6.2		3.8
Comprehensive income	$	65.8	$	60.8

Three Months Ended
November 30, 2017
November 30, 2016
Net sales $ 842.8

$ 851.2
Cost of products sold 492.6

491.6
Gross profit 350.2

359.6
Selling, distribution, and administrative expenses 231.4

231.8
Special charge 0.2

1.2
Operating profit 118.6

126.6
Other expense (income):

Interest expense, net 8.1

8.2
Miscellaneous income, net (0.4 )
(7.9 )
Total other expense 7.7

0.3
Income before provision for income taxes 110.9

126.3
Provision for income taxes 39.4

44.6
Net income $ 71.5

$ 81.7

Earnings per share:

Basic earnings per share $ 1.71

$ 1.87
Basic weighted average number of shares outstanding 41.9

43.8
Diluted earnings per share $ 1.70

$ 1.86
Diluted weighted average number of shares outstanding 42.1

44.0
Dividends declared per share $ 0.13

$ 0.13

Comprehensive income:

Net income $ 71.5

$ 81.7
Other comprehensive income (loss) items:

Foreign currency translation adjustments (10.5 )
(11.9 )
Defined benefit pension plans, net of tax 1.6

2.0
Other comprehensive loss, net of tax (8.9 )
(9.9 )
Comprehensive income $ 62.6

$ 71.8

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended
	November 30, 2020		November 30, 2019
Cash flows from operating activities:
Net income	$	59.6	$	57.0
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	25.0		24.2
Share-based payment expense	7.7		16.7

Asset impairment	4.0		0





Accounts receivable	56.3		66.3
Inventories	4.1		4.9
Prepayments and other current assets	(20.3)		(3.3)
Accounts payable	(9.2)		(22.7)
Other	(3.3)		(13.5)
Net cash provided by operating activities	123.9		129.6
Cash flows from investing activities:
Purchases of property, plant, and equipment	(11.4)		(11.6)
Proceeds from sale of property, plant, and equipment	0.4		0
Acquisition of businesses, net of cash acquired	0		(302.0)

Other investing activities	(3.1)		(1.5)
Net cash used for investing activities	(14.1)		(315.1)
Cash flows from financing activities:

Issuance of long-term debt	493.9		0
Repayments of long-term debt	(395.1)		(0.4)
Repurchases of common stock	(255.2)		0
Proceeds from stock option exercises and other	0.3		0.2
Payments of taxes withheld on net settlement of equity awards	(3.0)		(4.1)
Dividends paid	(5.0)		(5.2)

Net cash used for financing activities	(164.1)		(9.5)
Effect of exchange rate changes on cash and cash equivalents	0.6		0.6
Net change in cash and cash equivalents	(53.7)		(194.4)
Cash and cash equivalents at beginning of period	560.7		461.0
Cash and cash equivalents at end of period	$	507.0	$	266.6
Supplemental cash flow information:
Income taxes paid during the period	$	9.3	$	4.6
Interest paid during the period	$	15.1	$	12.9

Three Months Ended
November 30, 2017 November 30, 2016
Cash flows from operating activities:
Net income $ 71.5
$ 81.7
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization 19.0
17.2
Share-based payment expense 8.5
7.9
Loss on sale or disposal of property, plant, and equipment 0.1
0.1
Gain on sale of investment in unconsolidated affiliate —
(7.2 )
Deferred income taxes (0.1 ) —
Change in assets and liabilities, net of effect of acquisitions, divestitures, and exchange rate changes:
Accounts receivable 57.6
47.6
Inventories (11.1 ) (40.3 )
Prepayments and other current assets (9.3 ) (10.7 )
Accounts payable (32.5 ) (7.2 )
Other current liabilities 25.5
(45.7 )
Other 10.6
12.4
Net cash provided by operating activities 139.8
55.8
Cash flows from investing activities:

Purchases of property, plant, and equipment (10.3 ) (19.5 )
Proceeds from sale of property, plant, and equipment —
5.4
Proceeds from sale of investment in unconsolidated affiliate —
13.0
Net cash used for investing activities (10.3 ) (1.1 )
Cash flows from financing activities:

Issuances of long-term debt —
0.9
Repayments of long-term debt (0.1 ) —
Repurchases of common stock —
(0.4 )
Proceeds from stock option exercises and other 0.8
2.1
Payments for employee taxes on net settlement of equity awards (6.0 ) (11.3 )
Dividends paid (5.5 ) (5.8 )
Net cash used for financing activities (10.8 ) (14.5 )
Effect of exchange rate changes on cash and cash equivalents (1.2 ) (2.2 )
Net change in cash and cash equivalents 117.5
38.0
Cash and cash equivalents at beginning of period 311.1
413.2
Cash and cash equivalents at end of period $ 428.6
$ 451.2
Supplemental cash flow information:

Income taxes paid during the period $ 2.7
$ 29.0
Interest paid during the period $ 12.7
$ 12.1

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

Table of Contents

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 — Description of Business and Basis of Presentation

Acuity Brands, Inc. (“Acuity Brands”) is the parent company of Acuity Brands Lighting, Inc. (“ABL”) and other wholly-owned subsidiaries (Acuity Brands, ABL, and such other subsidiaries are collectively referred to herein as ~~the “Company”)~~“we,” “our,” “us,” “the Company,” or similar references) and was incorporated in 2001 under the laws of the State of Delaware. ~~The Company is one of the world’s leading providers of~~We are a market-leading industrial technology company that develops, manufactures, and provides lighting and building ~~management~~technology solutions and services for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. ~~The Company’s~~Our lighting and building ~~management~~technology solutions include devices such as luminaires, lighting controls, ~~controllers~~controls for various building systems, power supplies, prismatic skylights, and drivers, as well as integrated systems designed to optimize energy efficiency and comfort for various indoor and outdoor applications. Additionally, we continue to evolve Atrius as the ~~Company continues to expand its solutions portfolio to provide~~intelligent building platform upon which a host of ~~other economic benefits, including software~~problem-solving applications can be deployed. Our solution, built on our local operating system, delivers increased efficiency and ~~services that enable the Internet~~productivity by solving facility, operational, and line of Things (“IoT”). The Company's IoT solutions provide customers with access to robust data analytics; support the advancement of smart buildings, smart cities, and the smart grid; and allow businesses to develop custom applications to scale their operations. The Company has onebusiness problems through location awareness. We have 1 reportable segment serving the North American lighting market and select international markets.

~~The~~ We prepared the Consolidated Financial Statements ~~have been prepared by the Company~~ in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) ~~and~~to present the financial position, results of operations, and cash flows of Acuity Brands and its wholly-owned subsidiaries.

These unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly ~~the Company’s~~our consolidated financial position as of November 30, ~~2017, the~~2020, our consolidated comprehensive income for the three months ended November 30, ~~2017~~2020 and ~~2016,~~2019, and ~~the~~our consolidated cash flows for the three months ended November 30, ~~2017~~2020 and ~~2016.~~2019. Certain information and footnote disclosures normally included in ~~the Company’s~~our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. However, ~~the Company believes~~we believe that the disclosures included herein are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the audited consolidated financial statements ~~of the Company~~ as of and for the three years ended August 31, ~~2017~~2020 and notes thereto included in ~~the Company’s~~our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October ~~26, 2017~~23, 2020 (File No. 001-16583) (“Form 10-K”).

The results of operations for the three months ended November 30, ~~2017~~2020 and ~~2016~~2019 are not necessarily indicative of the results to be expected for the full fiscal year due primarily to ~~seasonality, which results in the net sales and net income of the Company generally being higher in the second half of its fiscal year, the impact of any acquisitions, and, among other reasons, the~~ continued uncertainty of general economic conditions that may impact ~~the~~our key end markets ~~of the Company~~ for the remainder of fiscal ~~2018.~~2021, seasonality, and the impact of any acquisitions, among other reasons. Additionally, we are uncertain of the future impact of the ongoing COVID-19 pandemic and of possible sustained deterioration in economic conditions to our sales channels, supply chain, manufacturing, and distribution as well as overall construction, renovation, and consumer spending.

Note 2 — Significant Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Certain prior-period amounts have been reclassified to conform to the current year presentation. No material reclassifications occurred during the current period. ~~Refer to the~~ ~~New Accounting Pronouncements~~ ~~footnote for additional information regarding retrospective reclassifications related to accounting standards adopted in the current year.~~

Table of Contents

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 3 — Acquisitions

The following discussion relates to acquisitions completed during fiscal 2020. NaN acquisitions were completed during fiscal 2021.

Fiscal 2020 Acquisitions

The Luminaires Group

On September 17, 2019, using cash on hand and borrowings under available existing credit arrangements, we acquired all of the equity interests of The Luminaires Group (“TLG”), a leading provider of specification-grade luminaires for commercial, institutional, hospitality, and municipal markets, all of which complement our current and dynamic lighting portfolio. TLG's indoor and outdoor lighting fixtures are marketed to architects, landscape architects, interior designers, and engineers through 5 niche lighting brands: A-light™, Cyclone™, Eureka®, Luminaire LED™, and Luminis®.

On November 25, 2019, using cash on hand, we acquired all of the equity interests of LocusLabs, Inc (“LocusLabs”). The LocusLabs software platform supports navigation applications used on mobile devices, web browsers, and digital displays in airports, event centers, multi-floor office buildings, and campuses.

Accounting for Fiscal 2020 Acquisitions

We accounted for the acquisitions of TLG and LocusLabs (collectively, the “2020 Acquisitions”) in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Acquired assets and liabilities were recorded at their estimated acquisition-date fair values, and acquisition-related costs were expensed as incurred. As of November 30, 2020, we have finalized the acquisition accounting for the 2020 Acquisitions. There were no material changes to our financial statements as a result of the finalization of the acquisition accounting for the 2020 Acquisitions.

The aggregate purchase price of these acquisitions reflects total goodwill and identified intangible assets of approximately $107.6 million and $180.6 million, respectively, as of November 30, 2020. Identified intangible assets consist of indefinite-lived marketing-related intangibles as well as definite-lived customer-based and technology-based assets, which have a weighted average useful life of approximately 16 years. Goodwill recognized from these acquisitions is comprised primarily of expected benefits related to complementing and expanding our solutions portfolio, including dynamic lighting and software, as well as the trained workforce acquired with these businesses and expected synergies from combining the operations of the acquired businesses with our operations. Goodwill from these acquisitions totaling $77.7 million is expected to be tax deductible.

Note 4 — New Accounting Pronouncements

Accounting Standards Adopted in Fiscal ~~2018~~2021

In ~~March~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~,2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU ~~2016-09”~~2016-13”), which ~~changes certain aspects~~requires an entity to assess impairment of accounting for share-based payments to employees. The standard requires that all excess tax benefits and deficiencies previously recorded as additional paid-in capital be prospectively recorded in income tax expense, which could create volatility in the Company's effective income tax rate on a quarter by quarter basis due primarily to fluctuations in the Company's stock price and the timing of stock option exercises and vesting of restricted share grants. The standard also requires excess tax benefits to be presented as an operating activityits financial instruments based on the ~~statement~~entity's estimate of ~~cash flows rather than as a financing activity and taxes paid for employee withholdings to be presented as a financing activity. The Company adopted~~expected credit losses. Since the issuance of ASU ~~2016-09 effective as of September 1, 2017. Excess tax benefits and deficiencies are recorded within~~ ~~Provision for income taxes~~ ~~within the~~ ~~Consolidated Statements of Comprehensive Income~~ on a prospective basis as required by the standard; however, the Company elected to present changes to the statement of cash flows on a retrospective basis as allowed by the standard in order to maintain comparability between fiscal years. As such, cash flows from operations for three months ended November 30, 2016 increased $17.1 million, with a corresponding decrease to cash flows from financing activities, compared to amounts previously reported.

~~Accounting Standards Yet to Be Adopted~~

~~In March 2017,~~2016-13, the FASB ~~issued ASU No. 2017-07,~~ ~~Compensation — Retirement Benefits (Topic 715): Improving~~released several amendments to improve and clarify the ~~Presentation~~implementation guidance. These standards have been collectively codified within ASC Topic 326, Credit Losses (“ASC 326”). The provisions of ~~Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ (“ASU 2017-07”), which will change the presentation of net periodic benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will be included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net periodic benefit pension cost will be presented separately outside of operating income. Additionally, only service costs may be capitalized in assets. ASU 2017-07 isASC 326 are effective for fiscal years, ~~(and~~and interim reporting periods within those ~~years)~~years, beginning after December 15, ~~2017. The~~2019. We adopted the provisions of ~~ASU 2017-07 are not expected~~ASC 326 as of September 1, 2020 and applied these changes through an immaterial cumulative-effect adjustment of $0.2 million to ~~have a material effect on the Company's financial condition, results of operations, or cash flows.~~

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Clarifying the Definition of a Business~~ ~~(“ASU 2017-01”), which requires an evaluation of whether substantially all~~retained earnings as of the ~~fair value~~date of ~~assets acquired is concentrated in a single identifiable asset or a group~~adoption. Our estimation of similar identifiable assets. If so, the transaction does not qualify as a business. The guidance also requires an acquired business to include at least one substantive process and narrows the definitioncurrent expected credit losses reflects our considerations of ~~outputs. The Company is required to apply this guidance to annual periods beginning after December 15, 2017, including interim periods within those periods. The Company is currently evaluating~~ the impact of general economic conditions, including construction spending, unemployment rates, the ~~provisions of ASU 2017-01 and intends to implement the standard as required in fiscal 2019.~~

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows~~ (“ASU 2016-15”), which is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows including debt prepayment and extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance. ASU 2016-15 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2017. The Company intends to implement the standard as required in fiscal 2019, and the provisions of ASU 2016-15 are not expected to have a material impact on the Company's financial statement disclosures.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (“ASU 2016-02”), which requires lessees to include most leases on the balance sheet. ASU 2016-02 is effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2018. The Company is currently evaluating the impacteffects of the ~~provisions of ASU 2016-02~~COVID-19 pandemic, and ~~intends~~macroeconomic growth, on our customers' ability to ~~implement the standard as required in fiscal 2020.~~meet their obligations.

Table of Contents

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

In ~~May 2014,~~August 2018, the FASB issued ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~ (“2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU ~~2014-09”~~2018-15”), which ~~will replace most existing revenue recognition~~requires customers to apply internal-use software guidance ~~in U.S. GAAP. ASU 2014-09 outlines a single comprehensive model for entities~~ to use in accounting for revenue arising from contracts with customers. The standard also requires additional disclosures about the nature, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 permits two transition methods: the full retrospective method and the modified retrospective method. Under the full retrospective method, the standard would be applied to each prior reporting period presented with the cumulative effect of applying the standard recognized at the earliest period shown. Under the modified retrospective method, the cumulative effect of applying the standard would be recognized at the date of initial application. In March 2016, the FASB issued ASU 2016-08, ~~Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in ASU 2014-09 and has the same effective date as the original standard. During the three months ended July 1, 2016, the FASB issued ASU 2016-10,~~ ~~Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing;~~ ~~ASU 2016-11,~~ ~~Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting;~~ ~~and ASU 2016-12,~~ ~~Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients.~~ ~~These amendments are intended to improve and clarify~~determine the implementation ~~guidance of ASU 2014-09 and have~~costs that are able to be capitalized. Capitalized implementation costs are required to be amortized over the ~~same effective date as the original standard.~~

The Company has an implementation team tasked with identifying potential differences that will result from applying the new revenue recognition standard to the Company's contracts with its customers. The implementation team reports the findings and progressterm of the ~~project to management on a frequent basis~~arrangement, beginning when the cloud computing arrangement is ready for its intended use. ASU 2018-15 is effective for fiscal years, and ~~to the Audit Committee of the Board of Directors on a quarterly basis. The implementation team has completed its initial phase of contract reviews~~interim reporting periods within those years, beginning after December 15, 2019. We adopted ASU 2018-15 prospectively, and ~~continues to evaluate the results of those reviews with respect to potential changes from adopting the new~~this standard on the Company's consolidated financial statements. Management anticipates the most significant changes will relate to additional deferral of revenue recognition for certain services provided and the gross presentation of right of return assets and refund liabilities for sales with a right of return. Based on the current portfolio of the Company's revenue generating activities, these changes aredid not ~~expected to~~ have a material ~~impact~~effect on ~~the Company's consolidated~~our financial condition, results of operations, or cash flows. ~~Additionally,~~

Accounting Standards Yet to Be Adopted

In December 2019, the ~~implementation team~~FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes,and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is ineffective for fiscal years beginning after December 15, 2020. Most amendments within the ~~process of identifying appropriate changes~~standard are required to ~~the Company's business processes, systems, and controls to support recognition and disclosure under the new standard. Based~~be applied on ~~the implementation team's current findings and the overall expected immaterial impact of adoption, the implementation team is~~a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating ~~which adoption method would provide~~ the ~~most meaningful information to the Company's stakeholders. The Company will adopt the requirements~~impacts of the ~~new standard no later than the effective date~~provisions of ~~September 1, 2018.~~ASU 2019-12 on our financial condition, results of operations, and cash flows.

All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

Note 5 — Fair Value Measurements

~~The Company determines~~We determine fair value measurements based on the assumptions a market participant would use in pricing an asset or liability. ~~Accounting Standards Codification (“ASC”) Topic~~ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a ~~three level~~three-level hierarchy ~~making a distinction between~~that categorizes market participant assumptions based on (i) unadjusted quoted prices for identical assets or liabilities in an active market (Level 1), (ii) quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (Level 2), and (iii) prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (Level 3).

The Company's cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $428.6 million and $311.1 million as of November 30, 2017 and August 31, 2017, respectively.

~~The Company utilizes~~We utilize valuation methodologies to determine the fair values of ~~its~~our financial assets and liabilities in conformity with the concepts of “exit price” and the fair value hierarchy as prescribed in ASC 820. All valuation methods and assumptions are validated at least quarterly to ensure the accuracy and relevance of the fair values. There were no material changes to the valuation methods or assumptions used to determine fair values during the current period.

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~The Company used quoted market prices to determine the fair value of Level 1 assets and liabilities.~~ No transfers between the levels of the fair value hierarchy occurred during the current fiscal period. In the event of a transfer in or out of a level within the fair value hierarchy, the transfers would be recognized on the date of occurrence.

We used quoted market prices to determine the fair value of Level 1 assets and liabilities. Our cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $507.0 million and $560.7 million as of November 30, 2020 and August 31, 2020, respectively.

Disclosures of fair value information about financial instruments (whether or not recognized in the balance sheet), for which it is practicable to estimate that value, are required each reporting period in addition to any financial instruments carried at fair value on a recurring basis as prescribed by ASC ~~Topic~~ 825, Financial Instruments (“ASC 825”). In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.

Table of Contents

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The carrying values and estimated fair values of certain of ~~the Company’s~~our financial instruments were as follows ~~at November 30, 2017 and August 31, 2017~~as of the dates presented (in millions):


	November 30, 2020				August 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Investments in unconsolidated affiliates	$	5.5	$	5.5	$	6.0	$	6.0
Liabilities:
Senior unsecured public notes, net of unamortized discount and deferred costs	$	493.9	$	501.0	$	0	$	0
Borrowings under Term Loan Facility	0		0		395.0		395.0
Industrial revenue bond	4.0		4.0		4.0		4.0
Bank loans	2.0		2.2		2.1		2.3

November 30, 2017 August 31, 2017
Carrying Value Fair Value Carrying Value Fair Value
Senior unsecured public notes, net of unamortized discount and deferred costs $ 349.2
$ 374.1
$ 349.1
$ 379.7
Industrial revenue bond 4.0
4.0
4.0
4.0
Bank loans 3.7
3.7
3.8
3.8
We hold equity investments in three unconsolidated affiliates without readily determinable fair value. These strategic investments represent less than a 20% ownership interest in each of the privately-held affiliates, and we do not maintain power over or control of the entities. We have elected the practical expedient in ASC 321, Investments—Equity Securities, to measure these investments at cost less any impairment adjusted for observable price changes, if any. Based on these considerations, we estimate that the carrying value of the acquired shares represents the fair value of the investment as of November 30, 2020. During the first quarter of fiscal 2021, we recorded an impairment charge for one of these investments of $4.0 million as a recapitalization of the underlying company diluted our holding value. This impairment is reflected in Miscellaneous expense, net within our Consolidated Statements of Comprehensive Income.

~~The~~Our senior unsecured public notes are carried at the outstanding balance, net of unamortized bond discount and deferred costs, as of the end of the reporting period. Fair value is estimated based on discounted future cash flows using rates currently available for debt of similar terms and maturity (Level 2).

~~The~~ Our industrial revenue bond (“IRB”) is carried at the outstanding balance as of the end of the reporting period. The ~~industrial revenue bond~~IRB is a ~~tax-exempt,~~ variable-rate instrument that resets on a ~~weekly~~frequent short-term basis; therefore, ~~the Company estimates~~we estimate that the face amount of ~~the~~this bond approximates its fair value as of November 30, ~~2017~~2020 based on ~~bonds~~instruments of similar terms and maturity (Level 2).

The bank loans are carried at the outstanding balance as of the end of the reporting period. Fair value is estimated based on discounted future cash flows using rates currently available for debt of similar terms and maturity (Level 2). See Note 9 — Debt and Lines of Credit for further details on our borrowings.

ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value to ~~the Company.~~us. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instruments. In evaluating ~~the Company’s~~our management of liquidity and other risks, the fair values of all assets and liabilities should be taken into consideration, not only those presented above.

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


5.			~~Goodwill and Intangible Assets~~

Note 6 — Inventories

Inventories include materials, labor, inbound freight, and related manufacturing overhead, are stated at the lower of cost (on a first-in, first-out or average cost basis) and net realizable value, and consist of the following as of the dates presented (in millions):


	November 30, 2020		August 31, 2020
Raw materials, supplies, and work in process (1)	$	161.4	$	170.3
Finished goods	196.4		199.1
Inventories excluding reserves	357.8		369.4
Less: Reserves	(41.7)		(49.3)
Total inventories	$	316.1	$	320.1

(1) Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, we do not believe the segregation of raw materials and work in process is meaningful information.

We review inventory quantities on hand and record a provision for excess or obsolete inventory primarily based on estimated future demand and current market conditions. A significant change in customer demand or market conditions could render certain inventory obsolete and could have a material adverse impact on our operating results in the period the change occurs.

Note 7 — Property, Plant, and Equipment

Property, plant, and equipment consisted of the following as of the dates presented (in millions):


	November 30, 2020		August 31, 2020
Land	$	22.4	$	22.2
Buildings and leasehold improvements	194.4		192.2
Machinery and equipment	601.6		588.4
Total property, plant, and equipment, at cost	818.4		802.8
Less: Accumulated depreciation and amortization	(549.6)		(532.3)
Property, plant, and equipment, net	$	268.8	$	270.5

Note 8 — Goodwill and Intangible Assets

Through multiple acquisitions, ~~the Company~~we have acquired definite-lived intangible assets consisting primarily of trademarks and trade names associated with specific products, ~~with finite lives, definite-lived~~ distribution networks, patented technology, non-compete agreements, and customer relationships, which are amortized over their estimated useful lives. Indefinite-lived intangible assets consist of trade names that are expected to generate cash flows indefinitely.

~~The Company~~We recorded amortization expense of ~~$6.6~~$10.1 million and ~~$5.9~~$9.6 million during the three months ended November 30, ~~2017~~2020 and ~~2016,~~2019, respectively. Amortization expense is generally recorded on a straight-line basis and is expected to be approximately ~~$26.2 million in fiscal 2018, $26.1 million in fiscal 2019, $25.8 million in fiscal 2020, $23.0~~$40.7 million in fiscal 2021, ~~and $21.2~~$40.6 million in fiscal ~~2022.~~

2022, $40.3 million in fiscal 2023, $40.1 million in fiscal 2024, and $33.3 million in fiscal 2025.

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The ~~change~~following table summarizes the changes in the carrying amount of goodwill during the ~~three months ended November 30, 2017 is summarized below~~periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Beginning balance	$	1,080.0	$	967.3
Provisional additions from acquired businesses	0		147.8

Foreign currency translation adjustments	0.6		0.4
Ending balance	$	1,080.6	$	1,115.5

Balance at August 31, 2017 $ 900.9
Foreign currency translation adjustments (4.4 )
Balance at November 30, 2017 $ 896.5

Further discussion of ~~the Company’s~~ goodwill and other intangible assets is included within the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

Note 9 — Debt and Lines of Credit

On November 10, 2020, Acuity Brands Lighting, Inc. (“ABL”), our wholly-owned operating subsidiary, issued $500.0 million aggregate principal amount of 2.150% senior unsecured notes due December 2030 (the "Unsecured Notes"). The Unsecured Notes bear interest at a rate of 2.150% per annum and were issued at a price equal to 99.737% of their face value. Interest on the Unsecured Notes will be paid semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2021. The Unsecured Notes will mature on December 15, 2030. The Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by Acuity Brands and ABL IP Holding LLC, a wholly-owned subsidiary of Acuity Brands. Additionally, we recorded $4.8 million of deferred issuance costs related to the Unsecured Notes as a direct deduction from the face amount of the Unsecured Notes. These issuance costs are amortized over the 10-year term of the Unsecured Notes. As of November 30, 2020, the balance of the bond net of unamortized discount and deferred issuance costs was $493.9 million.

As of November 30, 2020, we also had $4.0 million of tax-exempt industrial revenue bonds that are scheduled to mature in June 2021. The carrying value of these bonds is reflected within Current maturities of debt on the Consolidated Balance Sheets as of November 30, 2020. Additionally, we had $2.0 million outstanding under fixed-rate bank loans at November 30, 2020 that mature in February 2028, subject to monthly or quarterly repayment schedules. Further discussion of our long-term debt is included within the ~~Company’s~~Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

On June 29, 2018, we entered into a credit agreement (“Credit Agreement”) with a syndicate of banks that provides us with a $400.0 million five-year unsecured revolving credit facility (“Revolving Credit Facility”) and provided us with a $400.0 million unsecured delayed draw term loan facility (the “Term Loan Facility”). We had 0 borrowings outstanding under the Revolving Credit Facility as of November 30, 2020 or August 31, 2020. We had $395.0 million of borrowings under the Term Loan Facility as of August 31, 2020, which we fully repaid during the first quarter of fiscal 2021 using the proceeds from the Unsecured Notes. The Credit Agreement allows for no future borrowings under the Term Loan Facility.

Generally, amounts outstanding under the Revolving Credit Facility allow for borrowings to bear interest at either the Eurocurrency Rate or the base rate at our option, plus an applicable margin. Eurocurrency Rate advances can be denominated in a variety of currencies, including U.S. Dollars, and amounts outstanding bear interest at a periodic fixed rate equal to the London Inter-Bank Offered Rate (“LIBOR”) or screen rate for the applicable currency plus an applicable margin. The Eurocurrency Rate applicable margin is based on our leverage ratio, as defined in the Credit Agreement, with such margin ranging from 1.000% to 1.375%. Base rate advances bear interest at an alternate base rate plus an applicable margin. The base rate applicable margin is based on our leverage ratio, as defined in the Credit Agreement, with such margin ranging from 0.000% to 0.375%.

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


6.			~~Inventories~~

~~Inventories include materials, labor, in-bound freight,~~We are required to pay certain fees in connection with the Credit Agreement, including administrative service fees and ~~related manufacturing overhead,~~annual facility fees. The annual facility fee is payable quarterly, in arrears, and is determined by our leverage ratio as defined in the Credit Agreement. The facility fee ranges from 0.125% to 0.250% of the aggregate $800.0 million commitment of the lenders under the Credit Agreement. The Credit Agreement contains financial covenants, including a minimum interest expense coverage ratio (“Minimum Interest Expense Coverage Ratio”) and a leverage ratio (“Maximum Leverage Ratio”) of total indebtedness to earnings before interest, tax, depreciation, and amortization (“EBITDA”), as such terms are ~~stated~~defined in the Credit Agreement. These ratios are computed at the end of each fiscal quarter for the most recent 12-month period. The Credit Agreement generally allows for a Minimum Interest Expense Coverage Ratio of 2.50 and a Maximum Leverage Ratio of 3.50, subject to certain conditions, as such terms are defined in the Credit Agreement.

We were in compliance with all financial covenants under the Credit Agreement as of November 30, 2020. At November 30, 2020, we had additional borrowing capacity under the Credit Agreement of $395.9 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less the outstanding letters of credit of $4.1 million issued under the Revolving Credit Facility. As of November 30, 2020, we had outstanding letters of credit totaling $8.3 million, primarily for securing collateral requirements under our casualty insurance programs and for providing credit support for our industrial revenue bond, which includes the $4.1 million issued under the Revolving Credit Facility.

Borrowings and repayments on our Revolving Credit Facility with terms of three months or less are reported on a net basis on our Consolidated Statements of Cash Flows.

Interest Expense, net

Interest expense, net, is comprised primarily of interest expense on long-term debt, obligations in connection with non-qualified retirement benefits, and Revolving Credit Facility borrowings, partially offset by interest income earned on cash and cash equivalents.

The following table summarizes the components of interest expense, net for the periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Interest expense	$	5.1	$	9.0
Interest income	(0.2)		(0.7)
Interest expense, net	$	4.9	$	8.3

Note 10 — Commitments and Contingencies

In the normal course of business, we are subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance estimated liabilities and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended November 30, 2020, no material changes have occurred in our estimated liabilities for self-insurance, litigation, environmental matters, guarantees and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Product Warranty and Recall Costs

Our products generally have a standard warranty term of five years that assure our products comply with agreed upon specifications. We record an accrual for the estimated amount of future warranty costs when the related revenue is recognized. Estimated costs related to product recalls based on a formal campaign soliciting repair or return of that product are accrued when they are deemed to be probable and can be reasonably estimated. Estimated future warranty and recall costs are primarily based on historical experience of identified warranty and recall claims. However, there can be no assurance that future warranty or recall costs will not exceed historical amounts or that new technology products may not generate unexpected costs. If actual future warranty or recall costs exceed historical amounts, additional increases in the accrual may be required, which could have a material adverse impact on our results of operations and cash flows.

Estimated liabilities for product warranty and recall costs are included in Other accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. The following table summarizes changes in the estimated liabilities for product warranty and recall costs for the periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Beginning balance	$	16.1	$	11.5
Warranty and recall costs	6.6		7.9
Payments and other deductions	(5.9)		(7.8)
Acquired warranty and recall liabilities	0		0.1

Ending balance	$	16.8	$	11.7

Lighting Science Group Patent Litigation

On April 30, 2019 and May 1, 2019, Lighting Science Group Corp. (“LSG”) filed complaints with the International Trade Commission and United States District Court for the District of Delaware, respectively, alleging infringement of 8 patents by the Company and others. On May 17, 2019, LSG amended both of its complaints and dropped its claims regarding 1 of the patents. On October 9, 2019 and November 6, 2019, LSG dropped from the International Trade Commission action its claims regarding 4 additional patents. For the remaining 3 patents, LSG’s infringement allegations relate to certain of our LED luminaires. On April 7, 2020 and October 1, 2020, the International Trade Commission made final determinations that LSG was not entitled to any relief. In the District of Delaware action, LSG separately sought unspecified monetary damages, costs, and attorneys’ fees. During fiscal 2021, LSG and the Company reached an agreement to resolve their patent disputes pending before the International Trade Commission, United States District Court for the District of Delaware, and the Patent Trial and Appeal Board. According to the terms of the settlement, the various pending actions will be dismissed with prejudice, each party will bear its own fees and costs, and the Company will pay no compensation for the rights granted under the settlement agreement.

Securities Class Action

On January 3, 2018, a shareholder filed a class action complaint in the United States District Court for the District of Delaware against us and certain of our officers on behalf of all persons who purchased or otherwise acquired our stock between June 29, 2016 and April 3, 2017. On February 20, 2018, a different shareholder filed a second class action complaint in the same venue against the same parties on behalf of all persons who purchased or otherwise acquired our stock between October 15, 2015 and April 3, 2017. The cases were transferred on April 30, 2018, to the United States District Court for the Northern District of Georgia and subsequently were consolidated as In re Acuity Brands, Inc. Securities Litigation, Civil Action No. 1:18-cv-02140-MHC (N.D. Ga.). On October 5, 2018, the court-appointed lead plaintiff filed a consolidated amended class action complaint (the “Consolidated Complaint”), which supersedes the initial complaints. The Consolidated Complaint is brought on behalf of all persons who purchased our common stock between October 7, 2015 and April 3, 2017 and alleges that we and certain of our current and former officers/executives violated the federal securities laws by making false or misleading statements and/or omitting to disclose material adverse facts that (i) concealed known trends negatively impacting sales of our products and (ii) overstated our ability to achieve profitable sales growth. The plaintiffs seek unspecified monetary damages, costs, and attorneys’ fees. We dispute the allegations in the complaints and intend to vigorously defend against the claims. We filed a motion to dismiss the Consolidated Complaint. On August 12, 2019, the court entered

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

an order granting our motion to dismiss in part and dismissing all claims based on 42 of the 47 statements challenged in the Consolidated Complaint but also denying the motion in part and allowing claims based on 5 challenged statements to proceed to discovery. The Eleventh Circuit Court of Appeals has granted the Company permission to file an interlocutory appeal of the District Court’s class certification order. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, we are currently unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from the matters described above. We are insured, in excess of a self-retention, for Directors and Officers liability.

We are subject to various other legal claims arising in the normal course of business, including patent infringement, employment matters, and product liability claims. Based on information currently available, it is the opinion of management that the ultimate resolution of pending and threatened legal proceedings will not have a material adverse effect on our financial condition, results of operations, or cash flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of any such matters, if unfavorable, could have a material adverse effect on our financial condition, results of operations, or cash flows in future periods. We establish estimated liabilities for legal claims when associated costs become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher than the amounts accrued for such claims. However, we cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the accrued amounts.

Note 11 — Changes in Stockholders' Equity

The following tables summarize changes in the components of ~~cost (on a first-in, first-out~~stockholders' equity for the periods presented (in millions):


	Common Stock Outstanding
	Shares	Amount		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock, at cost		Total
Balance, August 31, 2020	38.9	$	0.5	$	963.6	$	2,523.3	$	(132.7)	$	(1,227.2)	$	2,127.5
Net income	—	—		—		59.6		—		—		59.6
Other comprehensive income	—	—		—		—		6.2		—		6.2

Cumulative effect of adoption of ASC 326 (1)	—	—		—		(0.2)		—		—		(0.2)
Share-based payment amortization, issuances, and cancellations	0.1	—		4.7		—		—		—		4.7
Employee stock purchase plan issuances	—	—		0.3		—		—		—		0.3
Cash dividends of $0.13 per share paid on common stock	—	—		—		(5.0)		—		—		(5.0)

Repurchases of common stock	(2.6)	—		—		—		—		(256.1)		(256.1)
Balance, November 30, 2020	36.4	$	0.5	$	968.6	$	2,577.7	$	(126.5)	$	(1,483.3)	$	1,937.0

____________________________________

(1) See Note 4 - New Accounting Pronouncements for further details on our adoption of ASC 326.


	Common Stock Outstanding
	Shares	Amount		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock, at cost		Total
Balance, August 31, 2019	39.5	$	0.5	$	930.0	$	2,295.8	$	(151.4)	$	(1,156.0)	$	1,918.9
Net income	—	—		—		57.0		—		—		57.0
Other comprehensive income	—	—		—		—		3.8		—		3.8


Share-based payment amortization, issuances, and cancellations	0	—		12.6		—		—		—		12.6
Employee stock purchase plan issuances	—	—		0.2		—		—		—		0.2
Cash dividends of $0.13 per share paid on common stock	—	—		—		(5.2)		—		—		(5.2)


Balance, November 30, 2019	39.5	$	0.5	$	942.8	$	2,347.6	$	(147.6)	$	(1,156.0)	$	1,987.3

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 12 — Revenue Recognition

We recognize revenue when we transfer control of goods and services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for goods and services and is recognized net of allowances for rebates, sales incentives, product returns, and discounts to customers. Further details regarding revenue recognition are included within the Revenue Recognition footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

Our rights related to collections from customers are unconditional and are reflected within Accounts receivable on the Consolidated Balance Sheets. We do not have any other significant contract assets. Contract liabilities arise when we receive cash or ~~average cost basis)~~an unconditional right to collect cash prior to the transfer of control of goods or ~~market, and consist~~services.

The amount of transaction price from contracts with customers allocated to our contract liabilities consists of the following as of the periods presented (in millions):


	November 30, 2020		August 31, 2020
Current deferred revenues	$	5.2	$	5.4
Non-current deferred revenues	54.2		53.6

Current deferred revenues primarily consist of software licenses as well as professional service and sales-type warranty fees collected prior to performing the related service. Current deferred revenues are included within Other current liabilities on the Consolidated Balance Sheets. These services are expected to be performed within one year. Non-current deferred revenues primarily consist of long-term service-type warranties, which are typically recognized ratably as revenue between five and ten years from the date of sale, and are included within Other long-term liabilities on the Consolidated Balance Sheets. Revenue recognized from beginning balances of contract liabilities during the three months ended November 30, 2020 totaled $2.8 million.

Unsatisfied performance obligations as of November 30, 2020 that do not represent contract liabilities consist primarily of orders for physical goods that have not yet been shipped, which are typically shipped within a few weeks of order receipt.

Disaggregated Revenues

Our lighting and building management solutions are sold primarily through independent sales agents who cover specific geographic areas and market channels, by internal sales representatives, through consumer retail channels, and directly to large corporate accounts. The following table shows revenue from contracts with customers by sales channel for the periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Independent sales network	$	599.5	$	618.0
Direct sales network	76.3		84.3
Retail sales	55.0		53.4
Corporate accounts	24.0		33.5
Other	37.2		45.5
Total	$	792.0	$	834.7

Note 13 — Share-based Payments

November 30, 2017 August 31, 2017
Raw materials, supplies, and work in process ⁽¹⁾
$ 176.4
$ 176.5
Finished goods 193.1
180.8
Inventories excluding reserves 369.5
357.3
Less: Reserves (29.9 ) (28.7 )
Total inventories $ 339.6
$ 328.6
We account for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors over the related requisite service period, including stock options, performance share units, and restricted shares (all part of our equity incentive plan), as well as share units representing certain deferrals into our director deferred compensation plan or our supplemental deferred

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


⁽¹⁾			Due to the immaterial amount of estimated work in process and the short lead times for the conversion of raw materials to finished goods, the Company does not believe the segregation of raw materials and work in process is meaningful information.

savings plan.

The following table presents share-based payment expense for the periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Share-based payment expense	$	7.7	$	16.7

Further details regarding our stock options, restricted shares, and director compensation award programs as well as our share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

Equity Plan Updates

Effective for restricted stock and performance share grants awarded in October 2020 and thereafter, the Board of Directors (the “Board”) discontinued a policy that provided for the continued vesting of stock awards following retirement for all eligible participants who have attained age 60 and have at least ten years of service with the Company. This policy required acceleration of share-based payment expense in certain circumstances.

Stock Options

As of November 30, 2020, we had approximately 1,192,000 options outstanding to officers and other key employees. The increase from the prior fiscal year end was due to a grant on September 1, 2020 of approximately 277,000 options that have an exercise price equal to or greater than the fair market value of our stock as of the grant date. These options vest and become exercisable over a four-year period and are also subject to a market condition (the "Market Options"). All of these options expire after ten years from the date of grant.

The following weighted average assumptions were used to estimate the fair value of the Market Options granted in the first quarter of fiscal 2021:


7.			~~Earnings Per Share~~
			Market Options
Valuation Methodology			Monte Carlo Simulation
Dividend yield			0.5%
Expected volatility			36.5%
Risk-free interest rate			0.7%
Expected life of options			8 years
Weighted-average fair value of options			$40.45

The dividend yield was calculated based on annual dividends paid and the trailing 12-month average closing stock price at the time of grant. Expected volatility was based on historical volatility of our stock, calculated using the most recent time period equal to the expected life of the options. The risk-free interest rate was based on the U.S. Treasury yield for a term equal to the contractual term for the Market Options. The expected life of the options is based on projected exercise dates resulting from the Monte Carlo simulation for each award tranche. All inputs noted above are estimates made at the time of grant. Actual realized value of each option grant could materially differ from these estimates, without impact to future reported share-based payment expense.

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ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Stock option activity during the periods presented was as follows:


	Outstanding			Exercisable
	Number of Shares (in millions)		Weighted Average Exercise Price	Number of Shares (in millions)		Weighted Average Exercise Price
Outstanding at August 31, 2020	0.9		$133.19	0.4		$151.07
Granted	0.3		$108.96

Canceled	0	*	0
Outstanding at November 30, 2020	1.2		$127.56	0.4		$148.90

Range of option exercise prices:

$40.01 - $100.00 (average life - 1.9 years)	0.1		$62.25	0.1		$62.25
$100.01 - $160.00 (average life - 8.6 years)	1.0		$119.11	0.2		$126.85
$160.01 - $210.00 (average life - 4.9 years)	0.1		$207.80	0.1		$207.80
$210.01 - $239.76 (average life - 5.9 years)	0	*	$239.76	0	*	$239.76

___________________________

* Represents shares of less than 0.1 million.

NaN options were exercised during the three months ended November 30, 2020 or 2019. As of November 30, 2020, the total intrinsic value of options outstanding was $7.5 million, the total intrinsic value of options expected to vest was $2.9 million, and the total intrinsic value of options exercisable was $4.5 million. As of November 30, 2020, there was $23.6 million of total unrecognized compensation cost related to unvested options. That cost is expected to be recognized over a weighted-average period of approximately 2.5 years.

Note 14 — Pension Plans

We have several pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the final years of employment. We make at least the minimum annual contributions to the plans to the extent indicated by actuarial valuations and statutory requirements. Plan assets are invested primarily in equity and fixed income securities.

Service cost of net periodic pension cost is allocated between Cost of products sold and Selling, distribution, and administrative expenses in the Consolidated Statements of Comprehensive Income based on the nature of the employee's services. All other components of net periodic pension cost are included within Miscellaneous expense, net in the Consolidated Statements of Comprehensive Income. Net periodic pension cost included the following components before tax for the periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Service cost	$	1.2	$	1.2
Interest cost	1.6		1.8
Expected return on plan assets	(3.3)		(3.1)
Amortization of prior service cost	0.7		1.0

Recognized actuarial loss	1.4		1.4
Net periodic pension cost	$	1.6	$	2.3

Further details regarding our pension plans are included within the Pension and Defined Contribution Plans footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 15 — Special Charges

During the first three months of fiscal 2021, we recognized pre-tax special charges of $0.7 million, which consisted of severance costs and charges for relocation costs associated with the previously announced transfer of activities from planned facility closures. We expect these actions to streamline our business activities, integrate recent acquisitions, and respond to reduced demand due to the COVID-19 pandemic will allow us to reduce spending in certain areas while permitting continued investment in future growth initiatives, such as new products, expanded market presence, and technology and innovation. Further details regarding our special charges are included within the Special Charges footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

The following table summarizes costs reflected within Special charges on the Consolidated Statements of Comprehensive Income for the periods presented (in millions):


	Three Months Ended
	November 30, 2020		November 30, 2019
Severance and employee-related costs	$	0.3	$	5.1
Relocation and other restructuring costs	0.4		1.8
Total special charges	$	0.7	$	6.9

As of November 30, 2020, remaining restructuring reserves were $2.0 million and are included in Accrued compensation on the Consolidated Balance Sheets. The changes in the reserves related to these programs during the period presented are summarized as follows (in millions):


	Fiscal 2020 Actions
Balance at August 31, 2020	$	3.0
Severance and employee-related costs	0.3
Payments made during the period	(1.3)
Balance at November 30, 2020	$	2.0

Note 16 — Earnings Per Share

Basic earnings per share ~~for the periods presented~~ is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share is computed similarly but reflects the potential dilution that would occur if dilutive options were exercised, all unvested share-based payment awards were vested, and other distributions related to deferred stock agreements were incurred.

The following table calculates basic earnings per common share and diluted earnings per common share for the ~~three months ended November 30, 2017 and 2016~~periods presented (in millions, except per share data):


	Three Months Ended
	November 30, 2020		November 30, 2019
Net income	$	59.6	$	57.0
Basic weighted average shares outstanding	37.6		39.5
Common stock equivalents	0.2		0.1
Diluted weighted average shares outstanding	37.8		39.6
Basic earnings per share	$	1.58	$	1.44
Diluted earnings per share	$	1.57	$	1.44

Three Months Ended
November 30, 2017 November 30, 2016
Net income $ 71.5
$ 81.7
Basic weighted average shares outstanding 41.9
43.8
Common stock equivalents 0.2
0.2
Diluted weighted average shares outstanding 42.1

44.0
Basic earnings per share $ 1.71
$ 1.87
Diluted earnings per share $ 1.70

$ 1.86

Table of Contents

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following table presents stock options, performance stock awards, and restricted stock awards that were excluded from the diluted earnings per share calculation for the ~~three months ended November 30, 2017 and 2016~~periods presented as the effect of inclusion would have been antidilutive:


	Three Months Ended
	November 30, 2020	November 30, 2019
Stock options	1,127,837	278,972

Restricted stock awards	185,419	118,036

Three Months Ended
November 30, 2017 November 30, 2016
Stock options 163,812
81,487
Restricted stock awards 211,576
25,994
NaN performance share units were antidilutive for the three months ended November 30, 2020 and 2019.

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

Further discussion of ~~the Company’s~~our stock options and restricted stock awards is included within the Common Stock and Related Matters and Share-based Payments footnotes of the Notes to Consolidated Financial Statements within ~~the Company’s~~our Form 10-K.

Note 17 — Comprehensive Income


8.	~~Comprehensive Income~~

Comprehensive income represents a measure of all changes in equity that result from recognized transactions and other economic events other than transactions with owners in their capacity as owners. Other comprehensive income (loss) ~~for the Company~~items includes foreign currency translation and pension adjustments.

The following ~~table presents~~tables summarize the changes in each component of accumulated other comprehensive ~~income (loss)~~loss during the ~~three months ended November 30, 2017~~periods presented (in millions):


	Foreign Currency Items		Defined Benefit Pension Plans		Accumulated Other Comprehensive Loss Items
Balance at August 31, 2020	$	(53.5)	$	(79.2)	$	(132.7)
Other comprehensive income before reclassifications	4.6		0		4.6
Amounts reclassified from accumulated other comprehensive loss (1)	0		1.6		1.6
Net current period other comprehensive income	4.6		1.6		6.2
Balance at November 30, 2020	$	(48.9)	$	(77.6)	$	(126.5)


	Foreign Currency Items		Defined Benefit Pension Plans		Accumulated Other Comprehensive Loss Items
Balance at August 31, 2019	$	(65.4)	$	(86.0)	$	(151.4)
Other comprehensive income before reclassifications	1.9		0		1.9
Amounts reclassified from accumulated other comprehensive loss (1)	0		1.9		1.9
Net current period other comprehensive income	1.9		1.9		3.8

Balance at November 30, 2019	$	(63.5)	$	(84.1)	$	(147.6)

_______________________________________

(1) The before tax amounts of the defined benefit pension plan items are included in net periodic pension cost. See the Pension and Defined Contribution Plans footnote for additional details.

Table of Contents

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items
Balance at August 31, 2017 $ (28.7 ) $ (71.0 ) $ (99.7 )
Other comprehensive loss before reclassifications (10.5 ) —
(10.5 )
Amounts reclassified from accumulated other comprehensive income —
1.6
1.6
Net current period other comprehensive (loss) income (10.5 ) 1.6
(8.9 )
Balance at November 30, 2017 $ (39.2 ) $ (69.4 ) $ (108.6 )

The following table ~~presents~~summarizes the tax expense or benefit allocated to each component of other comprehensive income (loss) for the ~~three months ended November 30, 2017 and 2016~~periods presented (in millions):


	Three Months Ended
	November 30, 2020						November 30, 2019
	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount		Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
Foreign currency translation adjustments	$	4.6	$	0	$	4.6	$	1.9	$	0	$	1.9
Defined benefit pension plans:


Amortization of defined benefit pension items:
Prior service cost	0.7		(0.2)		0.5		1.0		(0.2)		0.8
Actuarial losses	1.4		(0.3)		1.1		1.4		(0.3)		1.1

Total defined benefit pension plans, net	2.1		(0.5)		1.6		2.4		(0.5)		1.9
Other comprehensive income	$	6.7	$	(0.5)	$	6.2	$	4.3	$	(0.5)	$	3.8

Three Months Ended
November 30, 2017 November 30, 2016
Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount
Foreign currency translation adjustments $ (10.5 ) $ —
$ (10.5 ) $ (11.9 ) $ —
$ (11.9 )
Defined benefit pension plans:
Amortization of defined benefit pension items:
Prior service cost⁽¹⁾
0.8
(0.3 ) 0.5
0.8
(0.3 ) 0.5
Actuarial losses ⁽¹⁾
1.7
(0.6 ) 1.1
2.2
(0.7 ) 1.5
Total defined benefit pension plans, net 2.5
(0.9 ) 1.6
3.0
(1.0 ) 2.0
Other comprehensive loss $ (8.0 ) $ (0.9 ) $ (8.9 ) $ (8.9 ) $ (1.0 ) $ (9.9 )


⁽¹⁾	~~The before tax amount of these other comprehensive income (loss) components is included in net periodic pension cost. See~~ ~~Pension Plans~~ ~~footnotewithin the~~ ~~Notes to Consolidated Financial Statements~~ ~~for additional details.~~

Table of Contents

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~


9.	~~Debt~~

~~Lines of Credit~~

On August 27, 2014, the Company executed a $250.0 million revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility will mature, and all amounts outstanding will be due and payable, on August 27, 2019. Generally, amounts outstanding under the Revolving Credit Facility bear interest at a Eurocurrency Rate. Eurocurrency Rate advances can be denominated in a variety of currencies, including U.S. Dollars, and amounts outstanding bear interest at a periodic fixed rate equal to the London Inter Bank Offered Rate (“LIBOR”) for the applicable currency plus a margin as determined by the Company's leverage ratio (“Applicable Margin”). The Applicable Margin is based on the Company’s leverage ratio, as defined in the Revolving Credit Facility, with such margin ranging from 1.000% to 1.575%. The Company had no borrowings outstanding under the Revolving Credit Facility as of November 30, 2017. Additionally, the Company is required to pay certain fees in connection with the Revolving Credit Facility, including administrative service fees and an annual facility fee. The annual facility fee is payable quarterly, in arrears, and is determined by the Company’s leverage ratio as defined in the Revolving Credit Facility. This facility fee ranges from 0.125% to 0.300% of the aggregate $250.0 million commitment of the lenders under the Revolving Credit Facility.

The Revolving Credit Facility contains financial covenants, including a minimum interest coverage ratio (“Minimum Interest Coverage Ratio”) and a leverage ratio (“Maximum Leverage Ratio”) of total indebtedness to earnings before interest, taxes, depreciation, and amortization expense (“EBITDA”), as such terms are defined in the Revolving Credit Facility agreement. These ratios are computed at the end of each fiscal quarter for the most recent 12-month period. The Revolving Credit Facility allows for a Minimum Interest Coverage Ratio of 2.50 and a Maximum Leverage Ratio of 3.50, subject to certain conditions defined in the financing agreement.

As of November 30, 2017, the Company was in compliance with all financial covenants under the Revolving Credit Facility. As of November 30, 2017, the Company had outstanding letters of credit totaling $10.2 million, primarily for securing collateral requirements under the Company's casualty insurance programs and for providing credit support for the Company’s industrial revenue bond (not an outstanding amount under the Revolving Credit Facility). At November 30, 2017, the Company had additional borrowing capacity under the Revolving Credit Facility of $244.7 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less outstanding letters of credit of $5.3 million issued under the Revolving Credit Facility.

~~Long-term Debt~~

At November 30, 2017, the Company had $350.0 million of publicly-traded, senior unsecured notes outstanding at a 6% interest rate that are scheduled to mature in December 2019 (the “Unsecured Notes”) and $4.0 million of tax-exempt industrial revenue bonds that are scheduled to mature in 2021. The Company also had $3.7 million outstanding under fixed-rate bank loans. Further discussion of the Company's long-term debt is included within the ~~Debt and Lines of Credit~~ ~~footnote of the~~ ~~Notes to Consolidated Financial Statements~~ ~~within the Company’s Form 10-K.~~

~~Interest Expense, net~~

~~The following table summarizes the components of interest expense, net for the three months ended November 30, 2017 and 2016 (in millions):~~

Three Months Ended
November 30, 2017 November 30, 2016
Interest expense $ 8.7
$ 8.6
Interest income (0.6 ) (0.4 )
Interest expense, net $ 8.1
$ 8.2

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~


~~10.~~	~~Commitments and Contingencies~~

In the normal course of business, the Company is subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance reserves and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. The Company establishes reserves when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended November 30, 2017, no material changes have occurred in the Company's reserves for self-insurance, litigation, environmental matters, guarantees and indemnities, or relevant events and circumstances, from those disclosed in the ~~Commitments and Contingencies~~ ~~footnote of the~~ ~~Notes to Consolidated Financial Statements~~ ~~within the Company's Form 10-K.~~

~~Trade Compliance Matters~~

In the course of routine reviews of import and export activity, the Company determined that it misclassified and/or inaccurately valued certain international shipments of products. The Company is conducting a detailed review of this activity to determine the extent of any liabilities and the appropriate remedial measures. At this time, the Company is unable to determine the likelihood or amount of any loss associated with these shipments.

~~Product Warranty and Recall Costs~~

The Company's products generally have a standard warranty term of five years. The Company records an allowance for the estimated amount of future warranty costs when the related revenue is recognized. Estimated costs related to product recalls based on a formal campaign soliciting repair or return of that product are accrued when they are deemed to be probable and can be reasonably estimated. Estimated future warranty and recall costs are primarily based on historical experience of identified warranty and recall claims. In certain limited cases, the Company has warranty arrangements for terms that exceed the standard term. Given that these longer-term warranties are not included in the Company’s historical experience, the Company utilizes estimated failure rates from industry sources to determine the potential future warranty cost. However, there can be no assurance that future warranty or recall costs will not exceed historical amounts or that new technology products, which may include extended warranties, may not generate unexpected costs. If actual future warranty or recall costs exceed historical amounts, additional allowances may be required, which could have a material adverse impact on the Company’s results of operations and cash flows.

~~Reserves for product warranty and recall costs are included in~~ ~~Other accrued liabilities~~ ~~and~~ ~~Other long-term liabilities~~ ~~on the~~ ~~Consolidated Balance Sheets.~~ ~~The changes in the reserves for product warranty and recall costs during the three months ended November 30, 2017 and 2016 are summarized as follows (in millions):~~

Three Months Ended
November 30, 2017 November 30, 2016
Beginning balance $ 22.0
$ 15.5
Warranty and recall costs 8.6
9.2
Payments and other deductions (6.7 ) (7.2 )
Ending balance $ 23.9
$ 17.5

~~Securities Class Action~~

On January 3, 2018, a shareholder filed a class action complaint in the United States District Court for the District of Delaware against the Company and certain of its officers on behalf of all persons who purchased or otherwise acquired the Company’s stock between June 29, 2016 and April 3, 2017. The complaint alleges that the defendants violated the federal securities laws by making false or misleading statements and/or omitting to disclose material adverse facts that (i) concealed known trends negatively impacting sales of the Company’s products and (ii) overstated the Company’s ability to achieve profitable sales growth. The plaintiff seeks class certification, unspecified monetary damages, costs, and attorneys’ fees. The Company disputes the allegations in the complaint and intends to vigorously defend against the claims. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, the Company is currently unable to predict the ultimate timing or outcome of, or reasonably estimate the possible losses or a range of possible losses resulting from the matter described above.

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~Other Litigation~~

The Company is subject to various other legal claims arising in the normal course of business, including patent infringement, employment matters, and product liability claims. Based on information currently available, it is the opinion of management that the ultimate resolution of any such pending and threatened legal proceedings will not have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, in the event of unexpected future developments, it is possible that the ultimate resolution of any such matters, if unfavorable, could have a material adverse effect on the financial condition, results of operations, or cash flows of the Company in future periods. The Company establishes reserves for legal claims when associated costs become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher than the amounts reserved for such claims. However, the Company cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the amounts reserved.


~~11.~~	~~Share-based Payments~~

The Company accounts for share-based payments through the measurement and recognition of compensation expense for share-based payment awards made to employees and directors of the Company, including stock options and restricted shares (all part of the Company's equity incentive plan), and share units representing certain deferrals into the Company's director deferred compensation plan or the Company's supplemental deferred savings plan.

~~The following table presents share-based payment expense and new shares issued upon exercise of stock options for the three months ended November 30, 2017 and 2016 (in millions, except shares):~~

Three Months Ended
November 30, 2017 November 30, 2016
Share-based payment expense $ 8.5
$ 7.9
Shares issued from option exercises 6,156
12,030

~~Further details regarding each of these award programs and the Company's share-based payments are included within the~~ ~~Share-based Payments~~ ~~footnote of the~~ ~~Notes to Consolidated Financial Statements~~ ~~within the Company’s Form 10-K.~~


~~12.~~	~~Pension Plans~~

The Company has several pension plans, both qualified and non-qualified, covering certain hourly and salaried employees. Benefits paid under these plans are based generally on employees’ years of service and/or compensation during the final years of employment. Plan assets are invested primarily in equity and fixed income securities.

~~Net periodic pension cost for the Company’s defined benefit pension plans during the three months ended November 30, 2017 and 2016 included the following components before tax (in millions):~~

Three Months Ended
November 30, 2017 November 30, 2016
Service cost $ 0.7
$ 0.9
Interest cost 2.2
2.0
Expected return on plan assets (3.1 ) (2.8 )
Amortization of prior service cost 0.8
0.8
Recognized actuarial loss 1.7
2.2
Net periodic pension cost $ 2.3
$ 3.1

~~Further details regarding the Company's pension plans are included within the~~ ~~Pension and Defined Contribution Plans~~ ~~footnote of the~~ ~~Notes to Consolidated Financial Statements~~ ~~within the Company’s Form 10-K.~~

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~


~~13.~~	~~Special Charge~~

During fiscal 2017, the Company recognized pre-tax special charges consisting primarily of severance and employee-related benefit costs for the elimination of certain operations and positions following a realignment of the Company's operating structure, including positions within various selling, distribution, and administrative (“SD&A”) departments. During fiscal 2016, the Company recognized pre-tax special charges primarily related to the Company's continued efforts to integrate recent acquisitions and to streamline the organization by realigning certain responsibilities primarily within various SD&A departments, as well as the consolidation of certain production activities. The Company expects that actions to streamline its business activities taken in previous fiscal years will allow it to reduce spending in certain areas while permitting continued investment in future growth initiatives, such as new products, expanded market presence, and technology and innovation. The Company did not initiate any such actions during the first quarter of fiscal 2018.

~~The details of the special charge during the three months ended November 30, 2017 and 2016 are summarized as follows (in millions):~~

Three Months Ended
November 30, 2017 November 30, 2016
Severance and employee-related costs $ 0.2
$ (0.2 )
Lease termination and other costs —
1.4
Total special charges $ 0.2
$ 1.2

~~As of November 30, 2017, remaining restructuring reserves were $10.2 million and are included in~~ ~~Accrued compensation~~ ~~and~~ ~~Other long-term liabilities~~ ~~on the~~ ~~Consolidated Balance Sheets. The changes in the reserves related to these programs during the three months ended November 30, 2017 are summarized as follows (in millions):~~

Fiscal 2017 Actions Fiscal 2016 Actions Total
Balance at August 31, 2017 $ 11.2
$ 1.4
$ 12.6
Severance costs 0.2
—
0.2
Payments made during the period (2.1 ) (0.5 ) (2.6 )
Balance at November 30, 2017 $ 9.3
$ 0.9
$ 10.2


~~14.~~	~~Subsequent Events~~

On December 22, 2017, the President of the U.S. signed into law the Tax Cuts and Jobs Act (H.R. 1) (the “Act”), which is expected to have a materially favorable impact to the Company's net income, cash flows, and diluted earnings per share in future periods. The Act reduces the federal corporate tax rate from 35% to 21% effective January 1, 2018. Additionally, the Company will be required to evaluate the Act's impact on certain discrete items, including the remeasurement of the Company's net deferred tax liabilities and the taxation of the Company's accumulated unremitted foreign earnings. The Company is currently reviewing the components of the Act and evaluating its impact on its financial position, operations, and future cash flows.

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~


~~15.~~	~~Supplemental Guarantor Condensed Consolidating Financial Statements~~

~~In December 2009, ABL, the 100% owned and principal operating subsidiary of Acuity Brands, refinanced the then current outstanding debt through the issuance of the Notes. See~~ ~~Debt and Lines of Credit~~ ~~footnote for further information.~~

In accordance with the registration rights agreement by and between ABL and the guarantors to the Notes and the initial purchasers of the Notes, ABL and the guarantors to the Notes filed a registration statement with the SEC for an offer to exchange the Notes for an issue of SEC-registered notes with identical terms. Due to the filing of the registration statement and offer to exchange, the Company determined the need for compliance with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”). In lieu of providing separate audited financial statements for ABL and ABL IP Holding, the Company has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(d) of SEC Regulation S-X since the Notes are fully and unconditionally guaranteed by Acuity Brands and ABL IP Holding. The column marked “Parent” represents the financial condition, results of operations, and cash flows of Acuity Brands. The column marked “Subsidiary Issuer” represents the financial condition, results of operations, and cash flows of ABL. The column entitled “Subsidiary Guarantor” represents the financial condition, results of operations, and cash flows of ABL IP Holding. Lastly, the column listed as “Non-Guarantors” includes the financial condition, results of operations, and cash flows of the non-guarantor direct and indirect subsidiaries of Acuity Brands, which consist primarily of foreign subsidiaries. Consolidating adjustments were necessary in order to arrive at consolidated amounts. In addition, the equity method of accounting was used to calculate investments in subsidiaries. Accordingly, this basis of presentation is not intended to present the Company's financial condition, results of operations, or cash flows for any purpose other than to comply with the specific requirements for parent-subsidiary guarantor reporting.

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~(In millions)~~

November 30, 2017
Parent
Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantors
Consolidating Adjustments Consolidated
ASSETS
Current assets:

Cash and cash equivalents $ 364.8
$ —
$ —
$ 63.8
$ —
$ 428.6
Accounts receivable, net —
443.5
—
70.8
—
514.3
Inventories —
314.5
—
25.1
—
339.6
Other current assets 11.0
14.8
—
15.5
—
41.3
Total current assets 375.8
772.8
—
175.2
—
1,323.8
Property, plant, and equipment, net 0.3
227.0
—
58.8
—
286.1
Goodwill —
677.5
2.7
216.3
—
896.5
Intangible assets, net —
232.5
108.9
98.5
—
439.9
Deferred income taxes 51.5
—
—
7.9
(56.1 ) 3.3
Other long-term assets 0.2
9.3
—
2.3
—
11.8
Investments in and amounts due from affiliates 1,469.7
459.4
244.0
—
(2,173.1 ) —
Total assets $ 1,897.5
$ 2,378.5
$ 355.6
$ 559.0
$ (2,229.2 ) $ 2,961.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable $ 0.3
$ 340.5
$ —
$ 23.8
$ —
$ 364.6
Current maturities of long-term debt —
—
—
0.4
—
0.4
Other accrued liabilities 65.5
126.1
—
38.3
—
229.9
Total current liabilities 65.8
466.6
—
62.5
—
594.9
Long-term debt —
353.2
—
3.3
—
356.5
Deferred income taxes —
134.6
—
29.8
(56.1 ) 108.3
Other long-term liabilities 105.6
49.7
—
20.3
—
175.6
Amounts due to affiliates —
—
—
117.4
(117.4 ) —
Total stockholders’ equity 1,726.1
1,374.4
355.6
325.7
(2,055.7 ) 1,726.1
Total liabilities and stockholders’ equity $ 1,897.5
$ 2,378.5
$ 355.6
$ 559.0
$ (2,229.2 ) $ 2,961.4

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~CONDENSED CONSOLIDATING BALANCE SHEETS~~

~~(In millions)~~

August 31, 2017
Parent
Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantors
Consolidating Adjustments Consolidated
ASSETS
Current assets:

Cash and cash equivalents $ 237.7
$ —
$ —
$ 73.4
$ —
$ 311.1
Accounts receivable, net —
494.6
—
78.7
—
573.3
Inventories —
305.5
—
23.1
—
328.6
Other current assets 1.6
15.8
—
15.2
—
32.6
Total current assets 239.3
815.9
—
190.4
—
1,245.6
Property, plant, and equipment, net 0.2
228.3
—
59.2
—
287.7
Goodwill —
677.7
2.7
220.5
—
900.9
Intangible assets, net —
235.5
109.8
103.5
—
448.8
Deferred income taxes 51.6
—
—
8.0
(56.2 ) 3.4
Other long-term assets 1.5
10.9
—
0.8
—
13.2
Investments in and amounts due from affiliates 1,500.3
330.4
234.2
—
(2,064.9 ) —
Total assets $ 1,792.9
$ 2,298.7
$ 346.7
$ 582.4
$ (2,121.1 ) $ 2,899.6

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable $ 0.9
$ 366.4
$ —
$ 27.8
$ —
$ 395.1
Current maturities of long-term debt —
—
—
0.4
—
0.4
Other accrued liabilities 27.6
138.9
—
38.9
—
205.4
Total current liabilities 28.5
505.3
—
67.1
—
600.9
Long-term debt —
353.1
—
3.4
—
356.5
Deferred income taxes —
134.6
—
29.8
(56.2 ) 108.2
Other long-term liabilities 98.7
49.3
—
20.4
—
168.4
Amounts due to affiliates —
—
—
128.8
(128.8 ) —
Total stockholders’ equity 1,665.7
1,256.4
346.7
332.9
(1,936.1 ) 1,665.6
Total liabilities and stockholders’ equity $ 1,792.9
$ 2,298.7
$ 346.7
$ 582.4
$ (2,121.1 ) $ 2,899.6

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME~~

~~(In millions)~~

Three Months Ended November 30, 2017
Parent
Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantors
Consolidating Adjustments Consolidated
Net sales:

External sales $ —
$ 744.2
$ —
$ 98.6
$ —
$ 842.8
Intercompany sales —
—
12.0
43.5
(55.5 ) —
Total sales —
744.2
12.0
142.1
(55.5 ) 842.8
Cost of products sold —
429.8
—
104.9
(42.1 ) 492.6
Gross profit —
314.4
12.0
37.2
(13.4 ) 350.2
Selling, distribution, and administrative expenses 12.7
194.7
0.8
36.6
(13.4 ) 231.4
Intercompany charges (1.0 ) (0.5 ) —
1.5
—
—
Special charge —
0.2
—
—
—
0.2
Operating (loss) profit (11.7 ) 120.0
11.2
(0.9 ) —
118.6
Interest expense, net 2.7
4.0
—
1.4
—
8.1
Equity earnings in subsidiaries (80.9 ) (1.1 ) —
—
82.0
—
Miscellaneous expense (income), net —
0.8
—
(1.2 ) —
(0.4 )
Income (loss) before provision for income taxes 66.5
116.3
11.2
(1.1 ) (82.0 ) 110.9
(Benefit) provision for income taxes (5.0 ) 42.2
2.2
—
—
39.4
Net income (loss) 71.5
74.1
9.0
(1.1 ) (82.0 ) 71.5

Other comprehensive income (loss) items:
Foreign currency translation adjustments (10.5 ) (10.5 ) —
—
10.5
(10.5 )
Defined benefit pension plans, net 1.6
1.2
—
0.4
(1.6 ) 1.6
Other comprehensive (loss) income items, net of tax (8.9 ) (9.3 ) —
0.4
8.9
(8.9 )
Comprehensive income (loss) $ 62.6
$ 64.8
$ 9.0
$ (0.7 ) $ (73.1 ) $ 62.6

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS~~ ~~OF COMPREHENSIVE INCOME~~

~~(In millions)~~

Three Months Ended November 30, 2016
Parent
Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantors
Consolidating Adjustments Consolidated
Net sales:

External sales $ —
$ 746.3
$ —
$ 104.9
$ —
$ 851.2
Intercompany sales —
—
11.5
51.6
(63.1 ) —
Total sales —
746.3
11.5
156.5
(63.1 ) 851.2
Cost of products sold —
426.9
—
114.9
(50.2 ) 491.6
Gross profit —
319.4
11.5
41.6
(12.9 ) 359.6
Selling, distribution, and administrative expenses 11.8
199.9
0.9
32.1
(12.9 ) 231.8
Intercompany charges (1.2 ) 0.2
—
1.0
—
—
Special charge —
1.2
—
—
—
1.2
Operating (loss) profit (10.6 ) 118.1
10.6
8.5
—
126.6
Interest expense, net 2.8
4.0
—
1.4
—
8.2
Equity earnings in subsidiaries (90.4 ) (9.1 ) —
0.2
99.3
—
Miscellaneous income, net —
(7.3 ) —
(0.6 ) —
(7.9 )
Income before provision for income taxes 77.0
130.5
10.6
7.5
(99.3 ) 126.3
(Benefit) provision for income taxes (4.7 ) 47.8
0.9
0.6
—
44.6
Net income 81.7
82.7
9.7
6.9
(99.3 ) 81.7

Other comprehensive income (loss) items:
Foreign currency translation adjustments (11.9 ) (11.9 ) —
—
11.9
(11.9 )
Defined benefit pension plans, net 2.0
0.7
—
0.7
(1.4 ) 2.0
Other comprehensive (loss) income items, net of tax (9.9 ) (11.2 ) —
0.7
10.5
(9.9 )
Comprehensive income $ 71.8
$ 71.5
$ 9.7
$ 7.6
$ (88.8 ) $ 71.8

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~(In millions)~~

Three Months Ended November 30, 2017
Parent
Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantors
Consolidating Adjustments Consolidated
Net cash provided by operating activities $ 137.8
$ 5.8
$ —
$ (3.8 ) $ —
$ 139.8
Cash flows from investing activities:
Purchases of property, plant, and equipment —
(7.2 ) —
(3.1 ) —
(10.3 )
Net cash used for investing activities —
(7.2 ) —
(3.1 ) —
(10.3 )
Cash flows from financing activities:

Repayments of long-term debt —
—
—
(0.1 ) —
(0.1 )
Proceeds from stock option exercises and other 0.8
—
—
—
—
0.8
Employee taxes on net settlement of equity awards (6.0 ) —
—
—
—
(6.0 )
Dividends paid (5.5 ) —
—
—
—
(5.5 )
Net cash used for financing activities (10.7 ) —
—
(0.1 ) —
(10.8 )
Effect of exchange rates changes on cash —
1.4
—
(2.6 ) —
(1.2 )
Net change in cash and cash equivalents 127.1
—
—
(9.6 ) —
117.5
Cash and cash equivalents at beginning of period 237.7
—
—
73.4
—
311.1
Cash and cash equivalents at end of period $ 364.8
$ —
$ —
$ 63.8
$ —
$ 428.6

~~Table of Contents~~

~~ACUITY BRANDS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~

~~CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS~~

~~(In millions)~~

Three Months Ended November 30, 2016
Parent
Subsidiary
Issuer

Subsidiary
Guarantor

Non-
Guarantors
Consolidating Adjustments Consolidated
Net cash provided by operating activities $ 36.5
$ 2.2
$ —
$ 17.1
$ —
$ 55.8
Cash flows from investing activities:
Purchases of property, plant, and equipment —
(16.5 ) —
(3.0 ) —
(19.5 )
Proceeds from sale of property, plant, and equipment —
—
—
5.4
—
5.4
Proceeds from sale of investment —
13.0
—
—
—
13.0
Net cash (used for) provided by investing activities —
(3.5 ) —
2.4
—
(1.1 )
Cash flows from financing activities:

Issuance of long-term debt —
—
—
0.9
—
0.9
Proceeds from stock option exercises and other 2.1
—
—
—
—
2.1
Repurchases of common stock (0.4 ) —
—
—
—
(0.4 )
Employee taxes on net settlement of equity awards (11.3 ) —
—
—
—
(11.3 )
Dividends paid (5.8 ) —
—
—
—
(5.8 )
Net cash (used for) provided by financing activities (15.4 ) —
—
0.9
—
(14.5 )
Effect of exchange rate changes on cash —
1.3
—
(3.5 ) —
(2.2 )
Net change in cash and cash equivalents 21.1
—
—
16.9
—
38.0
Cash and cash equivalents at beginning of period 368.2
—
—
45.0
—
413.2
Cash and cash equivalents at end of period $ 389.3
$ —
$ —
$ 61.9
$ —
$ 451.2


~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this discussion and analysis is to enhance the understanding and evaluation of the results of operations, financial position, cash flows, indebtedness, and other key financial information of Acuity Brands, Inc. (“Acuity Brands”) and its subsidiaries as of November 30, ~~2017~~2020 and for the three months ended November 30, ~~2017~~2020 and ~~2016.~~2019. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements included within this report. Also, please refer to ~~the Company’s~~Acuity Brands' Annual Report on Form 10-K for the fiscal year ended August 31, ~~2017,~~2020, filed with the Securities and Exchange Commission (the “SEC”) on October ~~26, 2017~~23, 2020 (“Form 10-K”).

Overview

Company

Acuity Brands is the parent company of Acuity Brands Lighting, Inc. (“ABL”) and other subsidiaries (Acuity Brands, ABL, and such other subsidiaries are collectively referred to herein as ~~the “Company”)~~“we,” “our,” “us,” “the Company,” or similar references). ~~The Company has its~~Our principal office is located in Atlanta, Georgia.

~~The Company is one of the world’s leading providers of lighting~~We are a market-leading industrial technology company that designs, manufactures, and ~~building management solutions~~brings to market products and services for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. ~~The Company’s lighting and~~Our products include building management ~~solutions include devices such as luminaires,~~systems, lighting, lighting controls, ~~controllers for various building systems, power supplies, prismatic skylights,~~ and ~~drivers, as well as integrated systems designed~~location aware applications. We achieve growth through the development of innovative new products and services. Through the Acuity Business System, we achieve customer-focused efficiencies that allow us to ~~optimize energy efficiency~~increase market share and ~~comfort for various indoor~~deliver superior returns. We look to aggressively deploy capital to grow the business and ~~outdoor applications. Additionally, the Company continues~~ to expand its solutions portfolio to provide a host of other economic benefits, including software and services that enable the Internet of Things (“IoT”). The Company's IoT solutions provide customers with access to robust data analytics; support the advancement of smart buildings, smart cities, and the smart grid; and allow businesses to develop custom applications to scale their operations.enter attractive new verticals. As of November 30, ~~2017, the Company operates 19~~2020, we operate 18 manufacturing facilities and ~~seven~~eight distribution facilities along with ~~one warehouse~~two warehouses to serve ~~its~~our extensive customer base.

~~The Company does~~We do not consider acquisitions a critical element of ~~its~~our strategy but ~~seeks~~seek opportunities to expand and enhance ~~its~~our portfolio of ~~solutions. No acquisitions were completed~~solutions, including the following transactions during the ~~first quarter~~prior fiscal year.

On September 17, 2019, using cash on hand and borrowings under available existing credit arrangements, we acquired all of the equity interests of The Luminaires Group (“TLG”), a leading provider of specification-grade luminaires for commercial, institutional, hospitality, and municipal markets, all of which complement our current and dynamic lighting portfolio. TLG’s indoor and outdoor lighting fixtures are marketed to architects, landscape architects, interior designers, and engineers through five niche lighting brands: A-light™, Cyclone™, Eureka®, Luminaire LED™, and Luminis®.

The results of operations for the three months ended November 30, 2020 and 2019 are not necessarily indicative of the results to be expected for the full fiscal ~~2018~~year due primarily to continued uncertainty of general economic conditions that may impact our key end markets for fiscal 2021, seasonality, and the impact of any acquisitions, among other reasons. Additionally, we are uncertain of the future impact of the ongoing COVID-19 pandemic and of possible sustained deterioration in economic conditions to our sales channels, supply chain, manufacturing, and distribution as well as overall construction, renovation, and consumer spending.

The COVID-19 Pandemic

During March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. This pandemic has resulted in worldwide government restrictions on the movement of people, goods, and services resulting in increased volatility in and disruptions to global markets. However, our manufacturing operations are deemed essential and continue to operate. We remain committed to prioritizing the health and well-being of our associates and their families and ensuring that we operate effectively. We have implemented policies to screen associates, contractors, and vendors for COVID-19 symptoms upon entering our manufacturing and distribution and open office facilities in the United States, Mexico, and other locations as permitted by law. We have also implemented one-way traffic flows, additional cleaning requirements for common spaces, mandatory face coverings, hand sanitizer stations, socially distanced workspaces, and self-serve pay stations within our cafeterias to mitigate the spread of the virus. Additionally, we are requiring certain employees whose job functions can be performed remotely to work from home for the foreseeable future.

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Government-mandated and voluntary social distancing measures had an adverse impact on our results of operations. The pandemic has caused reduced construction and renovation spending during the year as well as a disruption in our supply chain for certain components, both of which negatively impacted our fiscal 2021 sales. In fiscal 2020 we experienced a limited number of temporary facility shutdowns due to government-mandated closures. We also continue to incur additional health and safety costs including expenditures for personal protection equipment and facility enhancements to maintain proper distancing guidelines issued by the Centers for Disease Control and Prevention. In response to our sales declines, we have taken actions to reduce costs, including the realignment of headcount with current volumes, a freeze on all non-essential employee travel, other efforts to decrease discretionary spending, and planned reductions in our real estate footprint.

Although we have implemented significant measures to mitigate further spread of the virus, our employees, customers, suppliers, and contractors may continue to experience disruptions to business activities due to potential further government-mandated or ~~fiscal 2017.~~voluntary shutdowns, general economic conditions, or other negative impacts of the COVID-19 pandemic. We are continuously monitoring the adverse effects of the pandemic and identifying steps to mitigate those effects. As the COVID-19 pandemic is continually evolving, we are uncertain of its ultimate duration and impact. See Part I, Item 1a. Risk Factors of our Form 10-K. for further details regarding the potential impacts of COVID-19 to our results of operations, financial position, and cash flows.

Liquidity and Capital Resources

~~The Company’s~~Our principal sources of liquidity are operating cash flows generated primarily from ~~its~~our business operations, cash on hand, and various sources of borrowings. ~~The~~Our ability ~~of the Company~~ to generate sufficient cash flow from operations or to access certain capital markets, including banks, is necessary to fund ~~its~~our operations and capital expenditures, pay dividends, repurchase shares, meet ~~its~~ obligations as they become due, and maintain compliance with covenants contained in ~~its~~our financing agreements.

~~Based~~For the first three months of fiscal 2021, we paid $11.4 million for property, plant, and equipment, primarily for tooling, new and enhanced information technology capabilities, equipment, and facility enhancements. We currently expect to invest approximately 1.5% of net sales on ~~its~~capital expenditures during fiscal 2021.

During the first quarter of fiscal 2021, we repurchased 2.6 million shares. As of November 30, 2020, the maximum number of shares that may yet be repurchased under the share repurchase program authorized by the Board equaled 5.1 million shares. We expect to repurchase the remaining shares available for repurchase on an opportunistic basis subject to various factors including stock price, Company performance, market conditions, and other possible uses of cash.

Our short-term cash on hand, availability under existing financing arrangements, and current projections of cash flow from operations, the Company believes that it will be able to meet its liquidity needs over the next 12 months. The Company's short-term needs are expected to include funding operations as currently ~~planned,~~planned; making ~~anticipated~~ capital investments as currently anticipated; paying quarterly stockholder dividends as currently ~~anticipated,~~anticipated; paying principal and interest on ~~borrowings~~debt as currently ~~scheduled,~~scheduled; making required contributions and distributions related to ~~its~~our employee benefit ~~plans,~~plans; funding ~~potential acquisitions,~~possible acquisitions; and potentially repurchasing shares of ~~its~~our outstanding common ~~stock as authorized by~~stock. We believe that we will be able to meet our liquidity needs over the ~~Board~~next 12 months based on our cash on hand, current projections of ~~Directors (the “Board”).~~

In June 2017, the Board authorized the repurchase of two million shares of the Company's outstanding common stock in the future. The Company expects to repurchase shares on an opportunistic basis. No shares have been purchasedcash flow from operations, and borrowing availability under this plan as of November 30, 2017. During fiscal 2018, the Company currently expects to invest approximately two percent of net sales, of which $10.3 million had been invested as of November 30, 2017, in capital expenditures primarily for equipment, tooling, facility enhancements, and new and enhanced information technology capabilities.financing arrangements. Additionally, ~~management believes~~we believe that ~~the Company’s~~our cash flows from operations and sources of funding, including, but not limited to, future borrowings and borrowing capacity, will sufficiently support ~~the~~our long-term liquidity ~~needs~~needs. However, as the impact of the ~~Company.~~COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. A continued worldwide disruption could materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization, and capital investments. In the event of a sustained market deterioration, we may need additional liquidity, which would require us to evaluate available alternatives and take appropriate actions.

Cash Flow

~~The Company uses~~We use available cash and cash ~~flow~~flows from operations, ~~as well as~~borrowings, and proceeds from the exercise of stock options to fund operations, capital expenditures, and acquisitions if any; to repurchase Company ~~stock,~~stock; and to pay dividends.

~~The Company’s~~Our cash position at November 30, ~~2017~~2020 was ~~$428.6~~$507.0 million, ~~an increase~~a decrease of ~~$117.5~~$53.7 million from August 31, ~~2017.~~2020. During the three months ended November 30, ~~2017, the Company~~2020, we generated net cash flows from operations of ~~$139.8~~$123.9 million. Borrowings completed in the first quarter of fiscal 2021, as more fully described below under the Capitalization section, contributed $493.9 million to the cash position. Cash generated from operating activities, ~~as well as~~ cash on-hand, ~~was~~and funds from borrowings were used during the ~~current period~~three months ended November 30, 2020 primarily to repay

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borrowings on our Term Loan Facility (defined below) of $395.0 million, to pay for share repurchases of $255.2 million, to fund capital expenditures of ~~$10.3~~$11.4 million, to pay ~~employee~~dividends to stockholders of $5.0 million, and to pay withholding taxes on the net settlement of equity awards of ~~$6.0 million, and to pay dividends to stockholders of $5.5~~$3.0 million.

~~The Company~~We generated ~~$139.8~~$123.9 million of cash ~~flow~~flows from operating activities during the three months ended November 30, ~~2017~~2020 compared with ~~$55.8~~$129.6 million in the prior-year period, ~~an increase~~a decrease of ~~$84.0~~$5.7 million, due primarily to ~~lower operating working capital requirements,~~ the timing of payments for income taxes, and lower variable incentive compensation payments for prior year performance. Operating working capital (calculated by adding accounts receivable plus inventories, and subtracting accounts payable-net of acquisitions and the impact of foreign exchange rate changes) decreased approximately $14.0 million during the first three months of fiscal 2018 compared to a $0.1 million increase during the first three months of fiscal 2017.certain payments.

~~Management believes~~We believe that investing in assets and programs that will over time increase the overall return on ~~its~~our invested capital is a key factor in driving stockholder value. ~~The Company invested $10.3~~We paid $11.4 million and ~~$19.5~~$11.6 million induring the first three months of fiscal ~~2018~~2021 and ~~2017,~~2020, respectively, for property, plant, and equipment, primarily related to investments in tooling, new ~~equipment, tooling, facility enhancements,~~ and ~~information technology. As noted above, the Company expects to invest approximately two percent of net sales primarily for new equipment, tooling, facility enhancements, and~~enhanced information technology capabilities, ~~during fiscal 2018.~~equipment, and facility enhancements.

Capitalization

~~The current capital structure~~On November 10, 2020, Acuity Brands Lighting, Inc. (“ABL”), our wholly-owned operating subsidiary, issued $500.0 million aggregate principal amount of the Company is comprised principally of senior unsecured notes and equity of its stockholders. Total debt outstanding was $356.9 million at November 30, 2017 and August 31, 2017, and consisted primarily of fixed-rate obligations.

~~On December 8, 2009, ABL issued $350.0 million of~~2.150% senior unsecured notes due ~~in fiscal 2020~~December 2030 (the ~~“Unsecured Notes”~~"Unsecured Notes") ~~in a private placement transaction. The Unsecured Notes were subsequently exchanged for SEC-registered notes with substantially identical terms.~~. The Unsecured Notes bear interest at a rate of 6%2.150% per annum and were issued at a price equal to ~~99.797%~~99.737% of their face ~~value~~value. Interest on the Unsecured Notes will be paid semi-annually in arrears on June 15 and ~~for~~December 15 of each year, beginning on June 15, 2021. The Unsecured Notes will mature on December 15, 2030. The Unsecured Notes are fully and unconditionally guaranteed on a ~~term~~senior unsecured basis by Acuity Brands and ABL IP Holding LLC (“ABL IP Holding”, and, together with Acuity Brands, the “Guarantors”), a wholly-owned subsidiary of ~~10 years. See~~Acuity Brands. Additionally, we capitalized $4.8 million of deferred issuance costs related to the ~~Debt and Lines~~Unsecured Notes that are being amortized over the 10-year term. As of ~~Credit~~ ~~footnote~~November 30, 2020, the balance of the bond net of unamortized discount and deferred issuance costs was $493.9 million.

As of November 30, 2020, we also had $4.0 million of tax-exempt industrial revenue bonds that are scheduled to mature in June 2021. The carrying value of these bonds is reflected within Current maturities of debt on the Consolidated Balance Sheets as of November 30, 2020. Additionally, we had $2.0 million outstanding under fixed-rate bank loans outstanding at November 30, 2020 that mature in February 2028, subject to monthly or quarterly repayment schedules. There have been no other material changes outside of the ordinary course of business in our contractual obligations since August 31, 2020.

The following tables present summarized financial information for Acuity Brands, ABL, and ABL IP Holding LLC on a combined basis after the elimination of all intercompany balances and transactions between the combined group as well as any investments in non-guarantors as of the dates and during the period presented (in millions):


Summarized Balance Sheet Information	November 30, 2020		August 31, 2020
Current assets	$	1,027.6	$	1,152.6
Current assets due from non-guarantor affiliates	219.4		183.3
Non-current assets	1,404.6		1,416.0
Current liabilities	498.0		530.2
Non-current liabilities	842.6		723.8


Summarized Income Statement Information	Three Months Ended November 30, 2020
Net sales	$	662.2
Gross profit	280.7

Net income	60.0

As of November 30, 2020, our capital structure was comprised principally of the Unsecured Notes ~~to Consolidated Financial Statements~~ ~~for more information.~~and equity of our stockholders. Total debt outstanding was $499.9 million at November 30, 2020 and consisted primarily of fixed-rate obligations. At August 31, 2020, total debt outstanding was $401.1 million and consisted primarily of variable-rate obligations.

On ~~August 27, 2014, the Company executed~~June 29, 2018, we entered into a credit agreement (“Credit Agreement”) with a syndicate of banks that provides us with a $400.0 million five-year unsecured revolving credit facility (“Revolving Credit Facility”) ~~with~~and a ~~borrowing capacity of $250.0 million. The Revolving Credit Facility will mature and all amounts outstanding thereunder will be due and payable on August 27, 2019. The Company~~$400.0 million unsecured delayed draw term loan facility (the “Term Loan Facility)”. We had no borrowings outstanding under the Revolving Credit Facility or the Term Loan Facility as of November 30, ~~2017.~~2020 or August 31, 2020. We had $395.0 million of borrowings under the Term Loan Facility as of August 31, 2020, which we fully repaid during the first quarter of fiscal 2021 using the proceeds from the Unsecured Notes. The ~~Company was~~Credit Agreement allows for no future borrowings under the Term Loan Facility.

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We were in compliance with all financial covenants under the ~~Revolving~~ Credit ~~Facility~~Agreement as of November 30, ~~2017.~~2020. At November 30, ~~2017, the Company~~2020, we had additional borrowing capacity under the ~~Revolving~~ Credit ~~Facility~~Agreement of ~~$244.7~~$395.9 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less the outstanding letters of credit of ~~$5.3~~$4.1 million issued under the Revolving Credit Facility. As of November 30, ~~2017, the Company~~2020, we had outstanding letters of credit totaling ~~$10.2~~$8.3 million, primarily for securing collateral requirements under ~~the Company's~~our casualty insurance programs and for providing credit support for ~~the Company’s~~our industrial revenue bond, ~~including $5.3~~which includes the $4.1 million issued under the Revolving Credit Facility. See the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements for more information.

During the first three months of fiscal ~~2018, the Company’s~~2021, our consolidated stockholders’ equity ~~increased $60.5~~decreased $190.5 million to ~~$1.73~~$1.9 billion at November 30, ~~2017,~~2020, from ~~$1.67~~$2.1 billion at August 31, ~~2017.~~2020. The ~~increase~~decrease was due primarily to ~~net income earned in the period,~~repurchases of our outstanding common stock, ~~issuances resulting primarily from the exercise of stock options, and amortization of pension plan prior service costs and actuarial losses,~~ partially offset by ~~the payment of dividends, and foreign currency translation adjustments. The Company’s~~net income earned. Our debt to total capitalization ratio (calculated by dividing total debt by the sum of total debt and total stockholders’ equity) was ~~17.1%~~20.5% and ~~17.6%~~15.9% at November 30, ~~2017~~2020 and August 31, ~~2017,~~2020, respectively. The ratio of debt, net of cash, to total capitalization, net of cash, was ~~(4.3)~~(0.4)% and (8.1)% at November 30, ~~2017~~2020 and ~~2.7% at~~ August 31, ~~2017.~~2020, respectively.

Dividends

~~Acuity Brands~~We paid dividends on ~~its~~our common stock of ~~$5.5~~$5.0 million ($0.13 per share) and ~~$5.8~~$5.2 million ($0.13 per share) during the three months ended November 30, ~~2017~~2020 and ~~2016,~~2019, respectively. All decisions regarding the declaration and payment of dividends ~~by Acuity Brands~~ are at the discretion of the Board and are evaluated regularly in light of ~~the Company’s~~our financial condition, earnings, growth prospects, funding requirements, applicable law, and any other factors the Board deems relevant.

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Results of Operations

First Quarter of Fiscal ~~2018~~2021 Compared with First Quarter of Fiscal ~~2017~~2020

The following table sets forth information comparing the components of net income for the three months ended November 30, ~~2017~~2020 and ~~2016~~2019 (in millions except per share data):


	Three Months Ended
	November 30, 2020			November 30, 2019			Increase (Decrease)			Percent Change
Net sales	$	792.0		$	834.7		$	(42.7)		(5.1)	%
Cost of products sold	459.6			478.9			(19.3)			(4.0)	%
Gross profit	332.4			355.8			(23.4)			(6.6)	%
Percent of net sales	42.0		%	42.6		%	(60)		bps
Selling, distribution, and administrative expenses	246.0			265.3			(19.3)			(7.3)	%
Special charges	0.7			6.9			(6.2)			NM
Operating profit	85.7			83.6			2.1			2.5	%
Percent of net sales	10.8		%	10.0		%	80		bps
Other expense:
Interest expense, net	4.9			8.3			(3.4)			(41.0)	%
Miscellaneous expense, net	1.6			1.4			0.2			NM
Total other expense	6.5			9.7			(3.2)			(33.0)	%
Income before income taxes	79.2			73.9			5.3			7.2	%
Percent of net sales	10.0		%	8.9		%	110		bps
Income tax expense	19.6			16.9			2.7			16.0	%
Effective tax rate	24.7		%	22.9		%
Net income	$	59.6		$	57.0		$	2.6		4.6	%
Diluted earnings per share	$	1.57		$	1.44		$	0.13		9.0	%
NM - not meaningful

Three Months Ended
November 30, 2017 November 30, 2016 Increase (Decrease) Percent Change
Net sales $ 842.8
$ 851.2
$ (8.4 ) (1.0 )%
Cost of products sold 492.6
491.6
1.0
0.2 %
Gross profit 350.2
359.6
(9.4 ) (2.6 )%
Percent of net sales 41.6 % 42.2 % (60 ) bps
Selling, distribution, and administrative expenses 231.4
231.8
(0.4 ) (0.2 )%
Special charge 0.2
1.2
(1.0 ) NM
Operating profit 118.6
126.6
(8.0 ) (6.3 )%
Percent of net sales 14.1 % 14.9 % (80 ) bps
Other (income) expense:

Interest expense, net 8.1
8.2
(0.1 ) (1.2 )%
Miscellaneous income, net (0.4 ) (7.9 ) 7.5
NM
Total other expense 7.7
0.3
7.4
NM
Income before provision for income taxes 110.9
126.3
(15.4 ) (12.2 )%
Percent of net sales 13.2 % 14.8 % (160 ) bps
Provision for income taxes 39.4
44.6
(5.2 ) (11.7 )%
Effective tax rate 35.5 % 35.3 %

Net income $ 71.5
$ 81.7
$ (10.2 ) (12.5 )%
Diluted earnings per share $ 1.70
$ 1.86
$ (0.16 ) (8.6 )%
NM - not meaningful

Net sales were ~~$842.8~~$792.0 million for the three months ended November 30, ~~2017~~2020 compared with ~~$851.2~~$834.7 million reported for the three months ended November 30, ~~2016,~~2019, a decrease of ~~$8.4~~$42.7 million, or ~~1.0%~~5.1%. For the three months ended November 30, ~~2017, the Company~~2020, we reported net income of ~~$71.5~~$59.6 million, ~~a decrease~~an increase of ~~$10.2~~$2.6 million, or ~~12.5%~~4.6%, compared with ~~$81.7~~$57.0 million for the three months ended November 30, ~~2016.~~2019. For the first quarter of fiscal ~~2018~~,2021, diluted earnings per share ~~decreased 8.6%~~increased 9.0% to ~~$1.70~~$1.57 compared with ~~$1.86~~$1.44 reported in the year-ago period.

The following table reconciles certain U.S. generally accepted accounting principles (“U.S. GAAP”) financial measures to the corresponding non-U.S. GAAP measures referred to in the discussion of ~~the Company’s~~our results of operations, which exclude the impact of ~~certain manufacturing inefficiencies,~~acquisition-related items, amortization of acquired intangible assets, share-based payment expense, special charges associated primarily with continued efforts to streamline the organization and ~~a gain on the sale~~integrate recent acquisitions, and impairments of ~~an investment in an unconsolidated affiliate.~~investments. Although the impacts of some of these items have been recognized in prior periods and could recur in future periods, ~~management~~we typically ~~excludes~~exclude these charges during internal reviews of performance and ~~uses~~use these non-U.S. GAAP measures for baseline comparative operational analysis, decision making, and other activities. Primarily due to the impact of the four acquisitions completed during fiscal 2016, the Company experienced noticeable increases in amortization of acquired intangibles, share-based payments used to improve retention and align the interest of key leaders of acquired businesses, and special charges due to activities to streamline and integrate those acquisitions. These non-U.S. GAAP financial measures, including adjusted gross profit and adjusted gross profit margin, adjusted selling, distribution, and administrative (“SD&A”) expenses and adjusted SD&A expenses as a percent of net sales, adjusted operating profit and margin, adjusted other expense, adjusted net income, and adjusted diluted earnings per share, are provided to enhance the user’s overall understanding of ~~the Company’s~~our current financial performance. Specifically, ~~the Company believes~~we believe these non-U.S. GAAP measures provide greater comparability and enhanced visibility into ~~the Company's~~our results of operations. ~~The~~There are limitations to the use of non-U.S. GAAP financial measures and such non-U.S. GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, results prepared in accordance with U.S. GAAP.

The non-U.S. GAAP measures as defined by us may not be comparable to similar non-U.S. GAAP measures presented by other companies. Our presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that our future results will be unaffected by other unusual or non-recurring items.

Table of Contents


(In millions, except per share data)	Three Months Ended											(In millions, except per share data)	Three Months Ended
	November 30, 2017			November 30, 2016			Increase (Decrease)			Percent Change			November 30, 2020				November 30, 2019				Increase (Decrease)		Percent Change
Gross profit	$	350.2		$	359.6							Gross profit	$	332.4			$	355.8			$	(23.4)	(6.6)	%
Add-back: Manufacturing inefficiencies⁽¹⁾	—			1.6
Percent of net sales												Percent of net sales			42.0	%			42.6	%	(60)		bps

Add-back: Acquisition-related items (1)												Add-back: Acquisition-related items (1)	—				1.1

Adjusted gross profit	$	350.2		$	361.2		$	(11.0	)	(3.0	)%	Adjusted gross profit	$	332.4			$	356.9			$	(24.5)	(6.9)	%
Percent of net sales	41.6		%	42.4		%	(80		)	bps		Percent of net sales			42.0	%			42.8	%	(80)		bps


Selling, distribution, and administrative expenses	$	231.4		$	231.8							Selling, distribution, and administrative expenses	$	246.0			$	265.3			$	(19.3)	(7.3)	%
Percent of net sales												Percent of net sales			31.1	%			31.8	%	(70)		bps
Less: Amortization of acquired intangible assets	(6.6		)	(5.9		)						Less: Amortization of acquired intangible assets	(10.1)				(9.6)
Less: Share-based payment expense	(8.5		)	(7.9		)						Less: Share-based payment expense	(7.7)				(16.7)
Less: Acquisition-related items (1)												Less: Acquisition-related items (1)	—				(1.1)
Adjusted selling, distribution, and administrative expenses	$	216.3		$	218.0		$	(1.7	)	(0.8	)%	Adjusted selling, distribution, and administrative expenses	$	228.2			$	237.9			$	(9.7)	(4.1)	%
Percent of net sales	25.7		%	25.6		%	10			bps		Percent of net sales			28.8	%			28.5	%	30		bps

Operating profit	$	118.6		$	126.6							Operating profit	$	85.7			$	83.6			$	2.1	2.5	%
Percent of net sales												Percent of net sales			10.8	%			10.0	%	80		bps
Add-back: Amortization of acquired intangible assets	6.6			5.9								Add-back: Amortization of acquired intangible assets	10.1				9.6
Add-back: Share-based payment expense	8.5			7.9								Add-back: Share-based payment expense	7.7				16.7
Add-back: Manufacturing inefficiencies ⁽¹⁾	—			1.6

Add-back: Acquisition-related items (1)												Add-back: Acquisition-related items (1)	—				2.2

Add-back: Special charges	0.2			1.2								Add-back: Special charges	0.7				6.9
Adjusted operating profit	$	133.9		$	143.2		$	(9.3	)	(6.5	)%	Adjusted operating profit	$	104.2			$	119.0			$	(14.8)	(12.4)	%
Percent of net sales	15.9		%	16.8		%	(90		)	bps		Percent of net sales			13.2	%			14.3	%	(110)		bps


Other expense	$	7.7		$	0.3							Other expense	$	6.5			$	9.7			$	(3.2)	(33.0)	%
Add-back: Gain on sale of investment in unconsolidated affiliate	—			7.2
Less: Impairment of investment												Less: Impairment of investment	(4.0)				—
Adjusted other expense	$	7.7		$	7.5		$	0.2		2.7	%	Adjusted other expense	$	2.5			$	9.7			$	(7.2)	(74.2)	%

Net income	$	71.5		$	81.7							Net income	$	59.6			$	57.0			$	2.6	4.6	%
Add-back: Amortization of acquired intangible assets	6.6			5.9								Add-back: Amortization of acquired intangible assets	10.1				9.6
Add-back: Share-based payment expense	8.5			7.9								Add-back: Share-based payment expense	7.7				16.7
Add-back: Manufacturing inefficiencies⁽¹⁾	—			1.6

Add-back: Acquisition-related items (1)												Add-back: Acquisition-related items (1)	—				2.2

Add-back: Special charges	0.2			1.2								Add-back: Special charges	0.7				6.9
Less: Gain on sale of investment in unconsolidated affiliate	—			(7.2		)
Add-back: Impairment of investment												Add-back: Impairment of investment	4.0				—
Total pre-tax adjustments to net income	15.3			9.4								Total pre-tax adjustments to net income	22.5				35.4
Income tax effects	(5.3		)	(3.3		)						Income tax effects	(5.2)				(8.2)

Adjusted net income	$	81.5		$	87.8		$	(6.3	)	(7.2	)%	Adjusted net income	$	76.9			$	84.2			$	(7.3)	(8.7)	%

Diluted earnings per share	$	1.70		$	1.86							Diluted earnings per share	$	1.57			$	1.44			$	0.13	9.0	%
Adjusted diluted earnings per share	$	1.94		$	2.00		$	(0.06	)	(3.0	)%	Adjusted diluted earnings per share	$	2.03			$	2.13			$	(0.10)	(4.7)	%

____________________________

^{______________________________}

⁽¹⁾~~Incremental costs incurred due to manufacturing inefficiencies directly related to the closure of a facility.~~

Acquisition-related items include profit in inventory and professional fees.

Net sales for the three months ended November 30, ~~2017~~2020 decreased ~~1.0%~~5.1% compared with the prior-year ~~period~~period. From a sales channel perspective, sales in the retail channel increased 3%, reflecting strength in home center opportunities. Sales through the independent sales network decreased 3% compared with the prior year due ~~primarily~~ to ~~an approximately 1% decrease in sales~~lower volume, decreasing prices on certain products, and ~~the unfavorable impact of changes in product prices and the~~a changing mix of products sold (“price/mix”) of approximately 1%, partially offset by the favorable impact from foreign exchange rate changes of approximately 1%. Sales of LED-based products during the first quarter of fiscal 2018 and 2017 accounted for approximately two-thirds of total net sales. Overall sales decreased compared to the prior year due primarily to the ~~expected tepid conditions within~~impact of the ~~North American non-residential lighting market, as well as declines~~COVID-19 pandemic. Sales in the ~~home center/showroom~~direct sales network decreased 10%, reflecting weakness in large industrial projects, while sales in the corporate accounts channel ~~and certain international channels. The change in price/mix was~~declined 28% due primarily to lower ~~pricing~~retrofit activity in large big-box retailers. Changes in foreign currency rates did not have a meaningful impact on ~~luminaires, reflecting the decline in certain LED component costs as well as increased competition in more basic, lesser-featured products. Due to the changing dynamics~~first quarter net sales.

Gross profit for the first quarter of fiscal ~~2018~~2021 decreased ~~$9.4~~$23.4 million, or ~~2.6%~~6.6%, to ~~$350.2~~$332.4 million compared with ~~$359.6~~$355.8 million in the prior-year ~~period. Gross~~period, and gross profit margin decreased 60 basis points to ~~41.6% for the three months ended November 30, 2017 compared with 42.2%~~42.0% from 42.6%. The declines in ~~the prior-year period. Gross~~gross profit and margin ~~was lower than the prior-year period~~were due primarily to lower ~~net sales,~~volume and price as well as an unfavorable ~~price/~~change in product mix, ~~and higher input costs for certain commodity-related items, such as steel. These declines were~~ partially offset by lower product input costs ~~for certain LED components and productivity improvements.~~from cost reduction efforts. Adjusted gross profit for ~~the three months ended November 30, 2017 was $350.2~~fiscal 2021 decreased $24.5 million, ~~(41.6% of net sales)~~or 6.9%, to $332.4 compared with ~~$361.2 million (42.4% of net sales)~~$356.9 for the prior year. Adjusted gross profit margin decreased 80 basis points to 42.0% compared to 42.8% in the ~~prior-year period.~~prior year.

SD&A expenses for the three months ended November 30, ~~2017~~2020 were ~~$231.4~~$246.0 million compared with ~~$231.8~~$265.3 million in the prior-year period, a decrease of ~~$0.4~~$19.3 million, or ~~0.2%~~7.3%. The decrease in SD&A expenses was due primarily to ~~lower sales commissions, largely offset by higher salaried~~decreased employee costs, ~~including~~lower freight and commissions associated with decreased sales volumes, and lower travel as well as sales and marketing expenses due in part to the COVID-19 pandemic. In particular, share-based payment expense ~~and higher amortization~~decreased due to the discontinuation of ~~intangible assets.~~certain retirement provisions in the equity incentive program that resulted in the acceleration of share-based payment expense for fiscal 2020 grants. SD&A expenses for the first quarter of fiscal ~~2018~~2021 were ~~27.5%~~31.1% of net sales compared with ~~27.2%~~31.8% for the prior-year period. Adjusted SD&A expenses for the three months ended November 30, ~~2017~~2020 were ~~$216.3~~$228.2 million ~~(25.7%~~(28.8% of net sales) compared with ~~$218.0~~$237.9 million ~~(25.6%~~(28.5% of net sales) in the prior-year period.

~~The Company~~We recognized pre-tax special charges ~~related to prior fiscal year actions~~ of ~~$0.2~~$0.7 million during the first quarter of fiscal ~~2018,~~2021 compared with ~~pre-tax special charges of $1.2~~$6.9 million recorded during the first quarter of fiscal ~~2017.~~2020. Further details regarding ~~the Company's~~our special charges are included in the Special ~~Charge~~ Charges footnote of the Notes to Consolidated Financial Statements.

Operating profit for the first quarter of fiscal ~~2018~~2021 was ~~$118.6~~$85.7 million ~~(14.1%~~(10.8% of net sales) compared with ~~$126.6~~$83.6 million ~~(14.9%~~(10.0% of net sales) for the prior-year period, ~~a decrease~~an increase of ~~$8.0~~$2.1 million, or ~~6.3%~~2.5%. The ~~decrease~~increase in operating profit was due ~~primarily~~ to ~~a decrease in gross profit, partially offset by~~ lower SD&A expenses and special ~~charges.~~

charges, partially offset by lower gross profit. Adjusted operating profit decreased ~~by $9.3~~$14.8 million, or ~~6.5%~~12.4%, to ~~$133.9~~$104.2 million for the first quarter of fiscal ~~2018~~2021 compared with ~~$143.2~~$119.0 million for the first quarter of fiscal ~~2017.~~2020. Adjusted operating profit margin decreased ~~90 basis points~~ to ~~15.9%~~13.2% for the first quarter of fiscal ~~2018~~2021 compared with ~~16.8%~~14.3% for the year-ago period.

Other Expense ~~(Income)~~

Other expense ~~(income)~~ consists ~~principally~~ of net interest expense and net miscellaneous ~~income/~~expense, which includes non-service related components of net periodic pension cost, gains and losses associated with foreign currency-related transactions, and non-operating gains and losses.

Interest expense, net, was ~~$8.1~~$4.9 million and ~~$8.2~~$8.3 million for the three months ended November 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The ~~Company~~decrease in interest expense was due primarily to the interest savings associated with refinancing the previously outstanding 6% senior unsecured notes with funds under the Term Loan Facility, which were subject to lower short-term borrowing rates.

We reported net miscellaneous ~~income~~expense of ~~$0.4~~$1.6 million and ~~$7.9~~$1.4 million for the three months ended November 30, ~~2017~~2020 and ~~2016,~~2019, respectively. During the first quarter of fiscal 2021, we recorded an impairment charge of $4.0 million for an unconsolidated equity investment, which was partially offset by net foreign currency transaction gains.

Income Taxes and Net ~~miscellaneous~~Income

Our effective income tax rate was 24.7% and 22.9% for the three months ended November 30, ~~2016 included a gain~~2020 and 2019, respectively. The increase in the current fiscal tax rate was due primarily to the recognition in fiscal 2021 of ~~$7.2 million associated with~~unfavorable discrete items related to the ~~sale~~deductibility of ~~an investment in an unconsolidated affiliate.~~

~~Provision for Income Taxes and Net Income~~

~~The Company’s~~certain compensation. We currently estimate that our blended consolidated effective income tax rate, ~~was 35.5% and 35.3%~~before any discrete items, will be approximately 23% for fiscal 2021, assuming the ~~three months ended November 30, 2017 and 2016, respectively.~~rates in our taxing jurisdictions remain generally consistent throughout the year.

Net income for the first quarter of fiscal ~~2018 decreased $10.2~~2021 increased $2.6 million, or 4.6%, to ~~$71.5~~$59.6 million from ~~$81.7~~$57.0 million reported for the prior-year period. The ~~decrease~~increase in net income resulted primarily from ~~lower~~an increased operating profit and lower ~~miscellaneous income,~~interest expense, partially offset by a ~~smaller provision for~~higher income ~~taxes.~~tax expense compared to the prior-year period. Diluted earnings per share for the three months ended November 30, ~~2017 decreased $0.16~~2020 increased $0.13, or 9.0%, to ~~$1.70~~$1.57 compared with diluted earnings per share of ~~$1.86~~$1.44 for the prior-year period.

This increase reflects higher net income as well as lower outstanding diluted shares. Adjusted net income for the first quarter of fiscal ~~2018~~2021 was ~~$81.5~~$76.9 million, compared with ~~$87.8~~$84.2 million in the prior-year period, ~~which represented an~~a decrease of ~~$6.3~~$7.3 million, or ~~7.2%~~8.7%. Adjusted diluted

earnings per share for the three months ended November 30, ~~2017~~2020 decreased ~~$0.06,~~$0.10, or ~~3.0%~~4.7%, to ~~$1.94~~$2.03 compared with ~~$2.00~~$2.13 for the prior-year period.

~~Management believes that~~We believe the execution of ~~the Company's~~our strategy will provide attractive opportunities for ~~continued~~ profitable ~~growth. The Company's strategy is~~growth over the long term. Although we are aggressively managing our response to ~~capitalize~~the current COVID-19 pandemic, its impact on market growth opportunities by continuing to expand and leverage its industry-leading lighting and building management solutions portfolio combined with its extensive market presence and financial strength.

~~Management continues to expect the North American lighting market, the Company’s primary market, to experience low-single digit growth for the fiscal 2018~~our full year ~~reflecting an expected rebound in~~fiscal 2021 results and beyond is uncertain. We believe that the ~~second half~~most significant elements of uncertainty are the intensity and duration of the year. Management does not foresee a meaningful rebound in demand in the near term in certain international markets that the Company serves. In addition, management expects certain headwinds in the home center/showroom channel to continue in the near term, giving way to growth in the second half of calendar 2018impact on construction, renovation, and consumer spending as well as the ~~Company brings new solutions to key customers~~ability of our sales channels, supply chain, manufacturing, and expands its access to market in this important sales channel. Third-party forecasts suggest that softness in demand in the North American lighting market that began in the third calendar quarter of 2016 will continue through the early part of calendar year 2018, followed by improvement in growth rates later in the year. While current quoting activity remains tepid, both short and long-term fundamental drivers of the markets that the Company serves remain positive. Management expects the pricing environmentdistribution to continue to ~~be challenging in certain portions~~operate with minimal disruption for the remainder of the market, particularly for more basic, lesser-featured products sold through certain sales channels. Management continues to accelerate programs to reduce product costs to maintain the Company’s competitivenessfiscal 2021 and ~~drive improved profitability. Management expects to continue to outperform the growth rates~~beyond, all of the markets that the Company serves by executing its strategies focused on growth opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from the continued introductionwhich could negatively impact our financial position, results of ~~new lighting and building management solutions as part of the Company’s integrated, tiered solutions strategy.~~

~~Management expects the Tax Cuts and Jobs Act (the “Act”) that was passed on December 22, 2017, to favorably impact the Company’s net income, diluted earnings per share, and~~operations, cash flows, ~~in future periods, due primarily to the reduction in the federal corporate tax rate from 35% to 21% effective for periods beginning January 1, 2018. Additionally, positive business sentiment~~ and other favorable aspects of the new tax law could incentivize additional investments in facilities and infrastructure in the U.S. that may increase future demand in the end-markets that the Company serves. Management currently estimates that the Company’s blended consolidated effective income tax rate (“tax rate”) for full-year fiscal 2018 will approximate 26 to 28% before discrete items, compared with nearly 35% for the prior year. Management also anticipates that the tax rate for the second quarter of fiscal 2018 will be significantly lower than the estimated full-year blended tax rate to cumulatively adjust for the 35.5% tax rate recorded for the first quarter of fiscal 2018. Additionally, management currently estimates the second quarter tax expense to be reduced by approximately $30 million for discrete items, primarily due to a non-cash income tax benefit from the remeasurement of the Company’s net U.S. deferred tax liabilities, partially offset by an unfavorable impact related to the taxation of the Company's accumulated unremitted foreign earnings. Management currently estimates that the fiscal 2019 tax rate will approximate 23 to 25% before discrete items. The aforementioned tax-related estimates may differ from actual results, possibly materially, due to changes in interpretations of the Act and assumptions made by the Company, as well as guidance that may be issued and actions the Company may take as a result of the Act.outlook.

Notwithstanding the U.S. Tax Cuts and Jobs Act, a great amount of rhetoric and debate remains regarding a wide range of policy options with respect to monetary, regulatory, and trade, amongst others, that may be pursued by the current U.S. Administration. Any additional policy changes that may be implemented could have a positive or negative consequence on the Company’s financial performance depending on how the changes would influence many factors, including business and consumer sentiment. While management is proactively identifying and evaluating potential

~~contingency options under various policy scenarios, it is too early to comment or speculate at this time on the potential ramification of these endless scenarios.~~

From a longer term perspective, management expects that the Company’s addressable markets have the potential to experience solid growth over the next decade, particularly as energy and environmental concerns come to the forefront along with emerging opportunities for digital lighting to play a key role in the IoT through the use of intelligent networked lighting and building automation systems that can collect and exchange data to increase efficiency as well as provide a host of other economic benefits resulting from data analytics. Management remains positive about the future prospects of the Company and its ability to outperform the markets it serves.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations addresses the financial condition and results of operations as reflected in ~~the Company’s~~ our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. As discussed in the Description of Business and Basis of Presentation footnote of the Notes to Consolidated Financial Statements, the preparation of financial statements in conformity with U.S. GAAP requires ~~management~~us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expense during the reporting period. On an ongoing basis, ~~management evaluates its~~we evaluate our estimates and judgments, including those related to revenue recognition; inventory valuation; amortization and the recoverability of long-lived assets, including goodwill and intangible assets; share-based payment expense; medical, product warranty and recall, and other ~~reserves;~~estimated liabilities; retirement benefits; and litigation. ~~Management bases its~~We base our estimates and judgments on ~~its~~our substantial historical experience and other relevant factors, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. ~~Management discusses~~We discuss the development of accounting estimates with the ~~Company’s~~ Audit Committee of the Board.

There have been no material changes in ~~the Company’s~~our critical accounting estimates during the current period. For a detailed discussion of other significant accounting policies that may involve a higher degree of judgment, ~~please~~ refer to ~~the Company’s~~our Form 10-K.

Cautionary Statement Regarding Forward-Looking Statements and Information

This filing contains forward-looking statements within the meaning of the federal securities laws. Statements made herein that may be considered forward-looking include statements incorporating terms such as “expects,” “believes,” “intends,” “anticipates,” and similar terms that relate to future events, performance, or results of the Company. In addition, the Company, or the executive officers on the Company’s behalf, may from time to time make forward-looking statements in reports and other documents ~~the Company files~~we file with the ~~SEC~~U.S. Securities and Exchange Commission or in connection with oral statements made to the press, current and potential investors, or others. Forward-looking statements include, without limitation: (a) ~~the Company’s~~our projections regarding financial performance, liquidity, capital structure, capital expenditures, investments, share repurchases, and dividends; (b) expectations about the impact of ~~softness~~any changes in demand as well as volatility and uncertainty in general economic ~~conditions and the pricing environment;~~conditions; (c) ~~external forecasts projecting the North American lighting and building management solutions market growth rate and growth in the Company's addressable markets; (d) the Company's~~our ability to execute and realize benefits from initiatives related to streamlining ~~its~~our operations and integrating recent acquisitions, realize synergies from acquisitions, capitalize on growth opportunities, ~~expand in key markets as well as underpenetrated geographies and channels,~~ and introduce new lighting and building management solutions; (d) our planned reductions in our real estate footprint; (e) ~~the Company’s~~our estimate of ~~its~~our fiscal ~~2018 and 2019~~2021 effective income tax ~~rates, as well as the impact of the U.S. Tax Cuts and Jobs Act on the Company's financial position,~~rate, results of operations, and cash flows; (f) ~~the Company’s~~our estimate of future amortization expense; (g) ~~the Company’s~~our ability to achieve ~~its~~our long-term financial goals and measures and outperform the markets ~~its serves;~~we serve; (h) ~~the impact to the Company of changes in the political landscape and related policy changes; (i) the Company's projected future capital expenditures and investments; and (j) the Company's~~our expectations about the resolution of ~~trade compliance matters.~~patent litigation, securities class action, and/or other legal matters; and (i) our expectations of the impact of the current COVID-19 pandemic. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this ~~annual~~quarterly report. Except as required by law, ~~the Company undertakes~~we undertake no obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this ~~annual~~quarterly report or to reflect the occurrence of unanticipated events. ~~The Company’s~~Our forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from ~~the~~our historical experience ~~of the Company~~ and management’s present expectations or projections. These risks and uncertainties include, but are not limited to, customer and supplier relationships and prices; competition; ability to realize anticipated benefits from initiatives taken and timing of benefits; market demand; litigation and other contingent liabilities; and economic, political, governmental, and technological factors affecting the Company. Also, additional risks that could cause ~~the Company’s~~our actual results to differ materially from those expressed in ~~the Company’s~~our forward-looking statements are discussed in Part I, Item 1a. Risk Factorsof ~~this Annual Report on~~our Form ~~10-K, and are specifically incorporated herein by reference.~~10-K.

Item 3.Quantitative and Qualitative Disclosures about Market Risk

General. ~~The Company is~~We are exposed to market risks that may impact ~~its~~ our Consolidated Balance Sheets, Consolidated Statements of Comprehensive Income, and Consolidated Statements of Cash Flows due primarily to fluctuations in interest rates, foreign exchange rates, and commodity prices. ~~There~~Our long-term debt as of August 31, 2020 consisted primarily of variable-rate obligations, whereas at November 30, 2020, our variable-rate debt was solely comprised of the $4.0 million industrial revenue bond. We had no borrowings outstanding under the Revolving Credit Facility or the Term Loan Facility as of November 30, 2020. A 10% increase in market interest rates during November 30, 2020, would have resulted in a de minimis amount of additional annual after-tax interest expense. A fluctuation in interest rates would not affect interest expense or cash flows related to the Company’s fixed-rate debt, which includes $500.0 million of senior unsecured notes. A 10% increase in market interest rates at November 30, 2020 would have decreased the estimated fair value of the senior unsecured notes by approximately $9.5 million. Except for the change in our long-term debt from primarily variable to fixed-rate obligations and the broad effects of the COVID-19 pandemic as a result of its negative impact on the global economy and major financial markets, there have been no other material changes to ~~the Company’s~~our exposure from market risks from those disclosed in Part II, Item 7a. Quantitative and Qualitative Disclosures About Market Risk of ~~the Company’s~~our Form 10-K.

Item 4.Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to reasonably ensure that information required to be disclosed in the reports filed or submitted by ~~the Company~~us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the ~~SEC~~Securities and Exchange Commission (the “SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to reasonably ensure that information required to be disclosed by ~~the Company~~us in the reports filed under the Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As required by SEC rules, ~~the Company has~~we have evaluated the effectiveness of the design and operation of ~~its~~our disclosure controls and procedures as of November 30, ~~2017.~~2020. This evaluation was carried out under the supervision and with the participation of management, including the principal executive officer and principal financial officer. Based on this evaluation, these officers have concluded that the design and operation of ~~the Company’s~~our disclosure controls and procedures are effective at a reasonable assurance level as of November 30, ~~2017.~~2020. However, because all disclosure procedures must rely to a significant degree on actions or decisions made by employees throughout the organization, such as reporting of material events, the Company and its reporting officers believe that they cannot provide absolute assurance that all control issues and instances of fraud or errors and omissions, if any, within the Company will be detected. Limitations within any control system, including ~~the Company’s~~our control system, include faulty judgments in decision-making or simple errors or mistakes. In addition, controls can be circumvented by an individual, by collusion between two or more people, or by management override of the control. Because of these limitations, misstatements due to error or fraud may occur and may not be detected.

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

Lighting Science Group Patent Litigation

On April 30, 2019 and May 1, 2019, Lighting Science Group Corp. (“LSG”) filed complaints with the International Trade Commission and United States District Court for the District of Delaware, respectively, alleging infringement of eight patents by the Company and others. On May 17, 2019, LSG amended both of its complaints and dropped its claims regarding one of the patents. On October 9, 2019 and November 6, 2019, LSG dropped from the International Trade Commission action its claims regarding four additional patents. For the remaining three patents, LSG’s infringement allegations relate to certain of our LED luminaires. On April 7, 2020 and October 1, 2020, the International Trade Commission made final determinations that LSG was not entitled to any relief. In the District of Delaware action, LSG separately sought unspecified monetary damages, costs, and attorneys’ fees. During fiscal 2021, LSG and the Company have reached an agreement to resolve their patent disputes pending before the International Trade Commission, United States District Court for the District of Delaware, and the Patent Trial and Appeal Board. According to the terms of the settlement, the various pending actions will be dismissed with prejudice, each party will bear its own fees and costs, and the Company will pay no compensation for the rights granted under the settlement agreement.

Securities Class Action

On January 3, 2018, a shareholder filed a class action complaint in the United States District Court for the District of Delaware against ~~the Company~~us and certain of ~~its~~our officers on behalf of all persons who purchased or otherwise acquired ~~the Company’s~~our stock between June 29, 2016 and April 3, 2017. On February 20, 2018, a different shareholder filed a second class action complaint in the same venue against the same parties on behalf of all persons who purchased or otherwise acquired our stock between October 15, 2015 and April 3, 2017. The cases were transferred on April 30, 2018, to the United States District Court for the Northern District of Georgia and subsequently were consolidated as In re Acuity Brands, Inc. Securities Litigation, Civil Action No. 1:18-cv-02140-MHC (N.D. Ga.). On October 5, 2018, the court-appointed lead plaintiff filed a consolidated amended class action complaint (the “Consolidated Complaint”), which supersedes the initial complaints. The Consolidated Complaint is brought on behalf of all persons who purchased our common stock between October 7, 2015 and April 3, 2017 and alleges that ~~the defendants~~we and certain of our current and former officers/executives violated the federal securities laws by making false or misleading statements and/or omitting to disclose material adverse facts that (i) concealed known trends negatively impacting sales of ~~the Company’s~~our products and (ii) overstated ~~the Company’s~~our ability to achieve profitable sales growth. The ~~plaintiff seeks class certification,~~plaintiffs seek unspecified monetary damages, costs, and attorneys’ fees. ~~The Company disputes~~We dispute the allegations in the ~~complaint~~complaints and ~~intends~~intend to vigorously defend against the claims. We filed a motion to dismiss the Consolidated Complaint. On August 12, 2019, the court entered an order granting our motion to dismiss in part and dismissing all claims based on 42 of the 47 statements challenged in the Consolidated Complaint but also denying the motion in part and allowing claims based on five challenged statements to proceed to discovery. The Eleventh Circuit Court of Appeals has granted the Company permission to file an interlocutory appeal of the District Court’s class certification order. Estimating an amount or range of possible losses resulting from litigation proceedings is inherently difficult, particularly where the matters involve indeterminate claims for monetary damages and are in the stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, ~~the Company is~~we are currently unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from the ~~matter~~matters described above. We are insured, in excess of a self-retention, for Directors and Officers liability.

~~The Company is~~Litigation

We are subject to various other legal claims arising in the normal course of business, including ~~but not limited to,~~ patent infringement, employment matters, and product liability claims, and employment matters. The Company is self-insured up to specified limits for certain types of claims, including product liability, and is fully self-insured for certain other types of claims, including environmental, product recall, and patent infringement.claims. Based on information currently available, it is the opinion of management that the ultimate resolution of ~~any such~~ pending and threatened legal proceedings will not have a material adverse effect on ~~the~~our financial condition, results of operations, or cash ~~flows of the Company.~~flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of any such matters, if unfavorable, could have a material adverse effect on ~~the~~our financial condition, results of operations, or cash flows ~~of the Company~~ in future periods. ~~The Company establishes reserves~~We establish estimated liabilities for legal claims when ~~the~~associated costs ~~associated with the claims~~ become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher than the amounts ~~reserved~~accrued for such claims. However, ~~the Company~~we cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the ~~amounts reserved.~~accrued amounts.

Information regarding reportable legal proceedings is contained in Part I, Item 3. Legal Proceedings in ~~the Company’s~~our Form 10-K. Information set forth in this report’s Commitments and Contingencies footnote of the Notes to Consolidated

Financial Statements describes any legal proceedings that became reportable during the quarter ended November 30, ~~2017,~~2020, and updates any descriptions of previously reported legal proceedings in which there have been material developments during such quarter. The discussion of legal proceedings included within the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements is incorporated into this Item 1 by reference.

Item 1a. Risk Factors

There have been no material changes in ~~the Company’s~~our risk factors from those disclosed in Part I, Item 1a. Risk Factors of our Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In March 2018, the Board of Directors (the “Board”) authorized the repurchase of up to six million shares of our common stock. As of October 22, 2020, 2.2 million shares were available for repurchase under this authorization. On October 23, 2020, the Board authorized the repurchase of an additional 3.8 million shares of our common stock, bringing our total authorization back to six million shares at that time. Under the new increased share repurchase authorization, we may repurchase shares of our common stock from time to time at prevailing market prices, depending on market conditions, through open market or privately negotiated transactions. No date has been established for the completion of the ~~Company’s Form 10-K.~~share repurchase program, and we are not obligated to repurchase any shares. Subject to applicable corporate securities laws, repurchases may be made at such times and in such amounts as management deems appropriate. Repurchases under the program can be discontinued at any time management feels additional repurchases are not warranted.

During the first quarter of fiscal 2021, we repurchased 2.6 million shares under these authorizations. As of November 30, 2020, the maximum number of shares that may yet be repurchased under the share repurchase program authorized by the Board equaled 5.1 million shares. The following table reflects activity related to equity securities we repurchased during the quarter ended November 30, 2020:


Purchases of Equity Securities
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet Be Purchased Under the Plans
9/1/2020 through 9/30/2020	705,141	$	102.76	705,141	3,157,607
10/1/2020 through 10/31/2020	1,092,245	$	96.81	1,092,245	5,855,000
11/1/2020 through 11/30/2020	762,145	$	102.22	762,145	5,092,855
Total	2,559,531	$	100.06	2,559,531	5,092,855

Item 5. Other Information

Declaration of Dividend

On January 6, 2021, the Board of Directors (the “Board”) declared a quarterly dividend of $0.13 per share. The dividend is payable on February 1, 2021 to stockholders of record on January 20, 2021.

Results of Annual Stockholders Meeting

At ~~the Company's~~our annual meeting of stockholders held on January ~~5, 2018,~~6, 2021 in Atlanta, Georgia, the stockholders considered and voted on the following ~~proposals.~~proposals:


		~~For the quarterly period ended November 30, 2017.~~OR
OR
o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to .


Delaware		58-2632672
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

~~Delaware~~	~~58-2632672~~
~~(State or other jurisdiction of~~


				Page No.
Part I. FINANCIAL INFORMATION
Item 1.			Financial Statements
			Consolidated Balance Sheets -- November 30, 2020 (Unaudited) and August 31, 2020	1
			Consolidated Statements of Comprehensive Income (Unaudited) -- Three months ended November 30, 2020 and 2019	2
			Consolidated Statements of Cash Flows (Unaudited) -- Three months ended November 30, 2020 and 2019	3
			Notes to Consolidated Financial Statements (Unaudited)	4
			Note 1 — Description of Business and Basis of Presentation	4
			Note 2 — Significant Accounting Policies	4
			Note 3 — Acquisitions	5
			Note 4 — New Accounting Pronouncements	5
			Note 5 — Fair Value Measurements	6
			Note 6 — Inventories	8
			Note 7 — Property, Plant, and Equipment	8

			Note 8 — Goodwill and Intangible Assets	~~Page No.~~ 8
			~~Part I. FINANCIAL INFORMATION~~Note 9 — Debt and Lines of Credit	9
			Note 10 — Commitments and Contingencies	10
			Note 11 — Changes in Stockholders' Equity	12
			Note 12 — Revenue Recognition	13
			Note 13 — Share-based Payments	13
			Note 14 — Pension Plans	15
			Note 15 — Special Charges	16
			Note 16 — Earnings Per Share	16
			Note 17 — Comprehensive Income	17
~~ITEM 1.~~Item 2.			~~FINANCIAL STATEMENTS~~Management's Discussion and Analysis of Financial Condition and Results of Operations
	~~CONSOLIDATED BALANCE SHEETS -- NOVEMBER 30, 2017 (Unaudited) AND AUGUST 31, 2017~~	119
	~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) -- THREE MONTHS ENDED NOVEMBER 30, 2017 AND 2016~~	2
	~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) -- THREE MONTHS ENDED NOVEMBER 30, 2017 AND 2016~~	3
	~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)~~	4
~~ITEM 2.~~Item 3.			~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Quantitative and Qualitative Disclosures about Market Risk	2127
~~ITEM 3.~~Item 4.			~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~Controls and Procedures	2827
~~ITEM 4.~~					~~CONTROLS AND PROCEDURES~~	28

Part II. OTHER INFORMATION
~~ITEM~~Item 1.			~~LEGAL PROCEEDINGS~~Legal Proceedings	2928
~~ITEM~~Item 1a.			~~RISK FACTORS~~Risk Factors	29
~~ITEM 5.~~Item 2.			~~OTHER INFORMATION~~Unregistered Sales of Equity Securities and Use of Proceeds	3029
~~ITEM 6.~~Item 5.			~~EXHIBITS~~Other Information	3129
Item 6.			Exhibits	31

INDEX TO EXHIBITS ~~INDEX~~				32

SIGNATURES				3334


	November 30, 2020		August 31, 2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	507.0	$	560.7
Accounts receivable, less reserve for doubtful accounts of $2.4 and $2.6, respectively	445.3		500.3
Inventories	316.1		320.1
Prepayments and other current assets	79.3		58.6
Total current assets	1,347.7		1,439.7
Property, plant, and equipment, net	268.8		270.5
Operating lease right-of-use assets	65.8		63.4
Goodwill	1,080.6		1,080.0
Intangible assets, net	596.0		605.9
Deferred income taxes	2.7		2.7
Other long-term assets	27.0		29.5
Total assets	$	3,388.6	$	3,491.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	317.3	$	326.5
Current maturities of debt	4.3		24.3
Current operating lease liabilities	18.1		17.2
Accrued compensation	75.3		85.4
Other accrued liabilities	168.4		164.2
Total current liabilities	583.4		617.6
Long-term debt	495.6		376.8
Long-term operating lease liabilities	58.1		56.8
Accrued pension liabilities	69.2		91.6
Deferred income taxes	95.3		94.9
Self-insurance reserves	6.7		6.5
Other long-term liabilities	143.3		120.0
Total liabilities	1,451.6		1,364.2
Commitments and contingencies (see Commitments and Contingencies footnote)	0		0
Stockholders’ equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized; NaN issued	0		0
Common stock, $0.01 par value; 500,000,000 shares authorized; 53,960,200 and 53,885,165 issued, respectively	0.5		0.5
Paid-in capital	968.6		963.6
Retained earnings	2,577.7		2,523.3
Accumulated other comprehensive loss	(126.5)		(132.7)
Treasury stock, at cost — 17,571,980 and 15,012,449 shares, respectively	(1,483.3)		(1,227.2)
Total stockholders’ equity	1,937.0		2,127.5
Total liabilities and stockholders’ equity	$	3,388.6	$	3,491.7



	November 30, 2017			August 31, 2017
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	428.6		$	311.1
Accounts receivable, less reserve for doubtful accounts of $2.0 and $1.9, respectively	514.3			573.3
Inventories	339.6			328.6
Prepayments and other current assets	41.3			32.6
Total current assets	1,323.8			1,245.6
Property, plant, and equipment, at cost:
Land	22.3			22.5
Buildings and leasehold improvements	181.4			180.7
Machinery and equipment	492.9			484.6
Total property, plant, and equipment	696.6			687.8
Less — Accumulated depreciation and amortization	(410.5		)	(400.1		)
Property, plant, and equipment, net	286.1			287.7
Goodwill	896.5			900.9
Intangible assets, net	439.9			448.8
Deferred income taxes	3.3			3.4
Other long-term assets	11.8			13.2
Total assets	$	2,961.4		$	2,899.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	364.6		$	395.1
Current maturities of long-term debt	0.4			0.4
Accrued compensation	31.2			41.8
Other accrued liabilities	198.7			163.6
Total current liabilities	594.9			600.9
Long-term debt	356.5			356.5
Accrued pension liabilities	95.9			96.9
Deferred income taxes	108.3			108.2
Self-insurance reserves	8.6			7.9
Other long-term liabilities	71.1			63.6
Total liabilities	1,235.3			1,234.0
Commitments and contingencies (see Commitments and Contingencies footnote)
Stockholders’ equity:
Preferred stock, $0.01 par value; 50,000,000 shares authorized; none issued	—			—
Common stock, $0.01 par value; 500,000,000 shares authorized; 53,621,355 and 53,549,840 issued, respectively	0.5			0.5
Paid-in capital	884.3			881.0
Retained earnings	1,725.9			1,659.9
Accumulated other comprehensive loss	(108.6		)	(99.7		)
Treasury stock, at cost — 11,676,689 and 11,678,002 shares, respectively	(776.0		)	(776.1		)
Total stockholders’ equity	1,726.1			1,665.6
Total liabilities and stockholders’ equity	$	2,961.4		$	2,899.6



Balance at August 31, 2017	$	900.9
Foreign currency translation adjustments	(4.4		)
Balance at November 30, 2017	$	896.5



	Fiscal 2017 Actions			Fiscal 2016 Actions			Total
Balance at August 31, 2017	$	11.2		$	1.4		$	12.6
Severance costs	0.2			—			0.2
Payments made during the period	(2.1		)	(0.5		)	(2.6		)
Balance at November 30, 2017	$	9.3		$	0.9		$	10.2



	November 30, 2017
	Parent		Subsidiary Issuer		Subsidiary Guarantor		Non- Guarantors		Consolidating Adjustments			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	364.8	$	—	$	—	$	63.8	$	—		$	428.6
Accounts receivable, net	—		443.5		—		70.8		—			514.3
Inventories	—		314.5		—		25.1		—			339.6
Other current assets	11.0		14.8		—		15.5		—			41.3
Total current assets	375.8		772.8		—		175.2		—			1,323.8
Property, plant, and equipment, net	0.3		227.0		—		58.8		—			286.1
Goodwill	—		677.5		2.7		216.3		—			896.5
Intangible assets, net	—		232.5		108.9		98.5		—			439.9
Deferred income taxes	51.5		—		—		7.9		(56.1		)	3.3
Other long-term assets	0.2		9.3		—		2.3		—			11.8
Investments in and amounts due from affiliates	1,469.7		459.4		244.0		—		(2,173.1		)	—
Total assets	$	1,897.5	$	2,378.5	$	355.6	$	559.0	$	(2,229.2	)	$	2,961.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	0.3	$	340.5	$	—	$	23.8	$	—		$	364.6
Current maturities of long-term debt	—		—		—		0.4		—			0.4
Other accrued liabilities	65.5		126.1		—		38.3		—			229.9
Total current liabilities	65.8		466.6		—		62.5		—			594.9
Long-term debt	—		353.2		—		3.3		—			356.5
Deferred income taxes	—		134.6		—		29.8		(56.1		)	108.3
Other long-term liabilities	105.6		49.7		—		20.3		—			175.6
Amounts due to affiliates	—		—		—		117.4		(117.4		)	—
Total stockholders’ equity	1,726.1		1,374.4		355.6		325.7		(2,055.7		)	1,726.1
Total liabilities and stockholders’ equity	$	1,897.5	$	2,378.5	$	355.6	$	559.0	$	(2,229.2	)	$	2,961.4



	Three Months Ended November 30, 2017
	Parent			Subsidiary Issuer			Subsidiary Guarantor		Non- Guarantors			Consolidating Adjustments			Consolidated
Net sales:
External sales	$	—		$	744.2		$	—	$	98.6		$	—		$	842.8
Intercompany sales	—			—			12.0		43.5			(55.5		)	—
Total sales	—			744.2			12.0		142.1			(55.5		)	842.8
Cost of products sold	—			429.8			—		104.9			(42.1		)	492.6
Gross profit	—			314.4			12.0		37.2			(13.4		)	350.2
Selling, distribution, and administrative expenses	12.7			194.7			0.8		36.6			(13.4		)	231.4
Intercompany charges	(1.0		)	(0.5		)	—		1.5			—			—
Special charge	—			0.2			—		—			—			0.2
Operating (loss) profit	(11.7		)	120.0			11.2		(0.9		)	—			118.6
Interest expense, net	2.7			4.0			—		1.4			—			8.1
Equity earnings in subsidiaries	(80.9		)	(1.1		)	—		—			82.0			—
Miscellaneous expense (income), net	—			0.8			—		(1.2		)	—			(0.4		)
Income (loss) before provision for income taxes	66.5			116.3			11.2		(1.1		)	(82.0		)	110.9
(Benefit) provision for income taxes	(5.0		)	42.2			2.2		—			—			39.4
Net income (loss)	71.5			74.1			9.0		(1.1		)	(82.0		)	71.5

Other comprehensive income (loss) items:
Foreign currency translation adjustments	(10.5		)	(10.5		)	—		—			10.5			(10.5		)
Defined benefit pension plans, net	1.6			1.2			—		0.4			(1.6		)	1.6
Other comprehensive (loss) income items, net of tax	(8.9		)	(9.3		)	—		0.4			8.9			(8.9		)
Comprehensive income (loss)	$	62.6		$	64.8		$	9.0	$	(0.7	)	$	(73.1	)	$	62.6



	Three Months Ended November 30, 2016
	Parent			Subsidiary Issuer			Subsidiary Guarantor		Non- Guarantors			Consolidating Adjustments			Consolidated
Net sales:
External sales	$	—		$	746.3		$	—	$	104.9		$	—		$	851.2
Intercompany sales	—			—			11.5		51.6			(63.1		)	—
Total sales	—			746.3			11.5		156.5			(63.1		)	851.2
Cost of products sold	—			426.9			—		114.9			(50.2		)	491.6
Gross profit	—			319.4			11.5		41.6			(12.9		)	359.6
Selling, distribution, and administrative expenses	11.8			199.9			0.9		32.1			(12.9		)	231.8
Intercompany charges	(1.2		)	0.2			—		1.0			—			—
Special charge	—			1.2			—		—			—			1.2
Operating (loss) profit	(10.6		)	118.1			10.6		8.5			—			126.6
Interest expense, net	2.8			4.0			—		1.4			—			8.2
Equity earnings in subsidiaries	(90.4		)	(9.1		)	—		0.2			99.3			—
Miscellaneous income, net	—			(7.3		)	—		(0.6		)	—			(7.9		)
Income before provision for income taxes	77.0			130.5			10.6		7.5			(99.3		)	126.3
(Benefit) provision for income taxes	(4.7		)	47.8			0.9		0.6			—			44.6
Net income	81.7			82.7			9.7		6.9			(99.3		)	81.7

Other comprehensive income (loss) items:
Foreign currency translation adjustments	(11.9		)	(11.9		)	—		—			11.9			(11.9		)
Defined benefit pension plans, net	2.0			0.7			—		0.7			(1.4		)	2.0
Other comprehensive (loss) income items, net of tax	(9.9		)	(11.2		)	—		0.7			10.5			(9.9		)
Comprehensive income	$	71.8		$	71.5		$	9.7	$	7.6		$	(88.8	)	$	71.8


~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~


	Votes For	Votes Against	Votes Abstained	Broker Non-Votes
Neil M. Ashe	30,983,864	449,447	26,168	2,058,369
W. Patrick Battle	28,244,578	3,193,220	21,681	2,058,369
Peter C. Browning	25,183,940	6,253,802	21,737	2,058,369
G. Douglas Dillard, Jr.	28,612,344	2,825,429	21,706	2,058,369
James H. Hance, Jr.	30,529,766	903,398	26,315	2,058,369
Maya Leibman	30,854,234	584,268	20,977	2,058,369
Laura G. O'Shaughnessy	31,006,072	431,962	21,445	2,058,369
Dominic J. Pileggi	30,009,311	1,428,489	21,679	2,058,369
Ray M. Robinson	26,864,795	1,989,800	2,604,884	2,058,369
Mary A. Winston	25,223,285	6,216,500	19,694	2,058,369


~~Item 1.~~	~~Financial Statements~~


2.	~~Significant Accounting Policies~~


4.	~~Fair Value Measurements~~



1 Year	2 Years	3 Years	Votes Abstained	Broker Non-Votes
34,179,035	113,187	2,230,943	91,068	2,193,025

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934