What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-01-07 compared with 2021-07-01 · 216 added, 279 removed, 381 unchanged (57% of the section changed)

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(In millions, except share data)

May 31, 2021 August 31, 2020

November 30, 2021 August 31, 2021

Current assets:

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Accounts payable $ 409.3 $ 391.5

Current maturities of debt 4.0 24.3

Current operating lease liabilities 15.6 15.9

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Deferred income taxes 100.6 101.0

Self-insurance reserves 6.4 6.5

Other long-term liabilities 145.6 136.2

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Accumulated other comprehensive loss ( 108.9 ) ( 98.2 )

Treasury stock, at cost — 18,265,031 and 15,012,449 shares, respectively

Treasury stock, at cost, of 19,127,037 and 18,826,611 shares, respectively

( 1,716.5 ) ( 1,663.7 )

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(In millions, except per-share data)

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Net sales $ 926.1 $ 792.0

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Interest expense, net 5.9 4.9

Miscellaneous expense (income), net 2.7 ( 0.9 ) 6.5 1.5

Miscellaneous expense, net 0.3 1.6

Total other expense 6.2 6.5

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Defined benefit plans, net of tax 1.2 1.6

Other comprehensive income (loss) items, net of tax 20.7 ( 12.0 ) 35.3 ( 10.2 )

Other comprehensive (loss) income items, net of tax ( 10.7 ) 6.2

Comprehensive income $ 76.9 $ 65.8

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(In millions)

Nine Months Ended

May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Cash flows from operating activities:

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Asset impairment — 4.0

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable 40.2 56.3

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Proceeds from sale of property, plant, and equipment — 0.4

Acquisition of businesses, net of cash acquired ( 2.0 ) ( 303.0 )

Other investing activities 0.3 ( 3.1 )

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Dividends paid ( 4.7 ) ( 5.0 )

Net cash (used for) provided by financing activities ( 260.3 ) 26.8

Net cash used for financing activities ( 59.1 ) ( 164.1 )

Effect of exchange rate changes on cash and cash equivalents ( 2.9 ) 0.6

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Acuity Brands, Inc.

(referred to herein as “we,” “our,” “us,” the “Company,” or similar references) was incorporated in 2001 under the laws of the State of Delaware.

We are a market-leading industrial technology company that develops, manufactures, and brings to market products and services including building management systems, lighting, lighting controls, and location-aware applications.

These products and services provide commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets.

Beginning the third quarter of fiscal 2021, we have two reportable segments consisting of Acuity Brands Lighting and Lighting Controls (“ABL”) and Intelligent Spaces Group (“ISG”).

ABL offers devices such as luminaires, lighting controls, power supplies, prismatic skylights, and drivers as well as integrated systems designed to optimize energy efficiency and comfort for various indoor and outdoor applications.

(referred to herein as “we,” “our,” “us,” the “Company,” or similar references) is a market-leading industrial technology company.

We use technology to solve problems in spaces and light.

Through our two business segments, Acuity Brands Lighting and Lighting Controls (“ABL”) and the Intelligent Spaces Group (“ISG”), we design, manufacture, and bring to market products and services that make the world more brilliant, productive, and connected.

We achieve growth through the development of innovative new products and services, including lighting, lighting controls, building management systems, and location-aware applications.

ABL's portfolio of lighting solutions includes commercial, architectural, and specialty lighting in addition to lighting controls and components that can be combined to create integrated lighting controls systems.

We offer devices such as luminaires that predominantly utilize light emitting diode (“LED”) technology designed to optimize energy efficiency and comfort for various indoor and outdoor applications.

ABL's' portfolio of products includes but is not limited to the following brands:

Lithonia Lighting ® , Holophane ® , Peerless ® , Gotham ® , Mark Architectural Lighting TM , Winona ® Lighting, Juno ® , Indy TM , Aculux TM , Healthcare Lighting ® , Hydrel ® , American Electric Lighting ® , Sunoptics ® , eldoLED ® , nLight ® , Sensor Switch ® , IOTA ® , A-Light TM , Cyclone TM , Eureka ® , Lumniaire LED TM , Luminis ® , Dark to Light ® , and RELOC ® Wiring Solutions.

Principal customers of ABL include electrical distributors, retail home improvement centers, electric utilities, national accounts, digital retailers, lighting showrooms, and energy service companies located in North America and select international markets serving new construction, renovation and retrofit, and maintenance and repair applications.

Our lighting and lighting controls solutions are sold primarily through independent sales agencies that cover specific geographic areas and market channels, by internal sales representatives, through consumer retail channels, and directly to large corporate accounts.

ABL's lighting and lighting controls solutions are sold primarily through a network of independent sales agencies that cover specific geographic areas and market channels, by internal sales representatives, through consumer retail channels, and directly to large corporate accounts.

Products are delivered directly from our manufacturing facilities or through a network of distribution centers, regional warehouses, and commercial warehouses using both common carriers and a company-managed truck fleet.

To serve international customers, the sales forces utilize a variety of distribution methods to meet specific individual customer or country requirements.

ABL products and solutions are marketed under numerous brand names, including but not limited to Lithonia Lighting ® , Holophane ® , Peerless ® ,Gotham ® , Mark Architectural Lighting TM , Winona ® Lighitng, Juno ® , Indy TM , Aculux TM , Healthcare Lighting ® , Hydrel ® , American Electric Lighting ® , Sunoptics ® , eldoLED ® , nLight ® , Sensor Switch ® , IOTA ® , A-Light TM , Cyclone TM , Eureka ® , Lumniaire LED TM , Luminis ® , Dark to Light ® , and RELOC Wiring Solutions.

ISG offers building management systems and location-aware applications and sells predominantly through system integrators.

Our building management system includes Distech Controls ® products for controlling heating, ventilation, and air conditioning (“HVAC”), lighting, shades, and access control that deliver end-to-end optimization of those building systems.

We also offer Atrius TM , our intelligent building platform that enhances the occupant experience, improves building system management, and automates labor intensive tasks while delivering operational energy efficiency and cost reductions.

ABL comprised approximately 95 % of consolidated revenues during the three months ended November 30, 2021 and 2020.

ISG delivers products and services that make spaces smarter, safer, and greener.

ISG offers building management systems and location-aware applications and sells predominantly to system integrators.

Our building management system includes products for controlling heating, ventilation, and air conditioning (“HVAC”), lighting, shades, and building access that deliver end-to-end optimization of those building systems.

Atrius TM , our intelligent building platform, enhances the occupant experience, improves building system management, and automates labor intensive tasks while delivering operational energy efficiency and cost reductions.

Through a connected and converged building system architecture, our platform delivers different applications, allows clients to upgrade over time with natural refresh cycles, and deploys new capability through both software and hardware updates.

Principal customers of ISG include system integrators, electrical distributors, retail centers, airports, and enterprise campuses throughout North America and select international locations.

ISG products and solutions are marketed under numerous brand names, including but not limited to Distech Controls ® , DGLogik TM , Atruis TM BuildingOS ® , and LocusLabs TM .

ABL and ISG comprised approximately 95 % and 5 % of consolidated revenues, respectively, during the three and nine months ended May 31, 2021 and 2020.

We prepared the Consolidated Financial Statements in accordance with U.S.

Customers of ISG primarily include system integrators as well as retail stores, airports, and enterprise campuses throughout North America and select international locations.

ISG products and solutions are marketed under numerous brand names, including but not limited to Distech Controls®, Atrius TM , and Rockpile Ventures.

ISG comprised approximately 5 % of consolidated revenues during the three months ended November 30, 2021 and 2020.

We have prepared the Consolidated Financial Statements in accordance with U.S.

generally accepted accounting principles (“U.S.

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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 our consolidated financial position as of May 31, 2021, our consolidated comprehensive income for the three and nine months ended May 31, 2021 and 2020, and our consolidated cash flows for the nine months ended May 31, 2021 and 2020.

These unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly our consolidated financial position as of November 30, 2021, our consolidated comprehensive income for the three months ended November 30, 2021 and 2020, and our consolidated cash flows for the three months ended November 30, 2021 and 2020.

Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted.

GAAP have been

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condensed or omitted.

However, we believe that the disclosures included herein are adequate to make the information presented not misleading.

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001-16583) (“Form 10-K”).

The results of operations for the three and nine months ended May 31, 2021 and 2020 are not necessarily indicative of the results to be expected for the full fiscal year due primarily to continued uncertainty of general economic

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

conditions that may impact our key end markets for the remainder of fiscal 2021, seasonality, and the impact of any acquisitions, among other reasons.

The results of operations for the three months ended November 30, 2021 are not necessarily indicative of the results to be expected for the full fiscal 2022 year due primarily to continued uncertainty of general economic conditions that may impact our key end markets for the remainder of fiscal 2022, seasonality, and the impact of any acquisitions, among other reasons.

Additionally, we are uncertain of the future impact of the ongoing COVID-19 pandemic or recovery of prior deterioration in economic conditions to our sales channels, supply chain, manufacturing, and distribution as well as overall construction, renovation, and consumer spending.

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We have recast prior period segment and disaggregated revenue information to conform to the current year presentation.

See Note 18 — Segment Information for further details.

See Segment Information footnote of the Notes to Consolidated Financial Statements for further details.

No other material reclassifications occurred during the current period.

Note 3 — Acquisitions

The following discussion relates to fiscal 2021 acquisitions.

There were no acquisitions during fiscal 2022.

Fiscal 2021 Acquisition

ams OSRAM's North American Digital Systems Business

On July 1, 2021, using cash on hand, we acquired certain assets and liabilities of ams OSRAM’s North American Digital Systems business (“OSRAM DS”).

This acquisition is intended to enhance our LED driver and controls technology portfolio and accelerate our innovation, expand our access to market through a more fulsome original equipment manufacturer (“OEM”) product offering, and give us more control over our supply chain.

Rockpile Ventures

On May 18, 2021, using cash on hand, we acquired all of the equity interests of Rockpile Ventures, an accelerator of edge artificial intelligence (“AI”) startups.

Rockpile Ventures helps early-stage artificial intelligence companies drive co-engineering and co-selling partnerships with major cloud ecosystems, enabling faster adoption from proof-of-concept trials to market scale.

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 five niche lighting brands:

A-light™, Cyclone™, Eureka ® , Luminaire LED™, and Luminis ® .

LocusLabs, Inc.

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 Acquisitions

We accounted for the acquisition of Rockpile Ventures as well as the acquisitions of TLG and LocusLabs in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”).

The TLG and LocusLabs acquisitions are referred to herein collectively as the “2020 Acquisitions.” Acquired assets and liabilities were recorded at their estimated acquisition-date fair values, and acquisition-related costs were expensed as incurred.

Amounts recognized for the acquisition of Rockpile Ventures are deemed to be provisional until disclosed otherwise, as we continue to gather information related to the identification and valuation of Rockpile Ventures' equity interests in AI startups as well as other acquired assets and liabilities.

We accounted for the acquisitions of Rockpile Ventures and OSRAM DS 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.

The aggregate purchase price of these acquisitions reflects preliminary goodwill of $ 10.0 million and definite-lived customer-based intangible assets of $ 6.1 million, which have a preliminary useful life of approximately 11 years.

Goodwill recognized from these acquisitions is comprised primarily of expected synergies from obtaining more control over our supply chain and technology, combining the operations of the acquired business with our operations, and acquiring the associated trained workforce.

As of November 30, 2021, goodwill from these

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We finalized the acquisition accounting for the 2020 Acquisitions during the first quarter of fiscal 2021.

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 the 2020 Acquisitions reflects total goodwill and identified intangible assets of approximately $ 107.6 million and $ 180.6 million, respectively.

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.

acquisitions totaling $ 6.9 million is expected to be tax deductible.

Amounts recognized for these acquisitions are deemed to be provisional until disclosed otherwise, as we continue to gather information related to the identification and valuation of acquired assets and liabilities, including but not limited to, acquired interests in technology startups, tax-related items, final net working capital purchase adjustments, if any, and the residual impacts on the valuation of intangible assets.

Note 4 — New Accounting Pronouncements

Accounting Standards Adopted in Fiscal 2022

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires an entity to assess impairment of its financial instruments based on the entity's estimate of expected credit losses.

Since the issuance of ASU 2016-13, the FASB released several amendments to improve and clarify the implementation guidance.

These standards have been collectively codified within ASC Topic 326, Credit Losses (“ASC 326”).

The provisions of ASC 326 are effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2019.

We adopted the provisions of ASC 326 as of September 1, 2020 and applied these changes through an immaterial cumulative-effect adjustment of $ 0.2 million to retained earnings as of the date of adoption.

Our estimation of current expected credit losses reflects our considerations of the impact of general economic conditions, including construction spending, unemployment rates, the effects of the COVID-19 pandemic, and macroeconomic growth, on our customers' ability to meet their obligations.

In August 2018, the FASB issued ASU No.

2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU 2018-15”), which requires customers to apply internal-use software guidance to determine the implementation costs that are able to be capitalized.

Capitalized implementation costs are required to be amortized over the term of the arrangement, beginning when the cloud computing arrangement is ready for its intended use.

ASU 2018-15 is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2019.

We adopted ASU 2018-15 as of September 1, 2020 on a prospective basis.

Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”)

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC Topic 740, Income Taxes , and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, or our fiscal 2022.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

We adopted ASU 2019-11 as of September 1, 2021 as required by the standard.

This standard did not have a material effect on our financial condition, results of operations, or cash flows.

Accounting Standards Yet to Be Adopted

In December 2019, the 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 Topic 740, Income Taxes , and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020.

Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

We are currently evaluating the impacts of the provisions of ASU 2019-12 on our financial condition, results of operations, and cash flows.

ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”)

In October 2021, the FASB issued ASU 2021-08, which requires companies to recognize and measure contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, or our fiscal 2024, with early adoption permitted.

We are currently assessing the impacts of ASU 2021-08 to determine whether we will adopt early or in fiscal 2024.

Amendments within the standard are required to be applied on a prospective basis from the date of adoption.

We will apply the provisions of ASU 2021-08 after adoption to future acquisitions, if any.

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

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Note 5 — Fair Value Measurements

We determine fair value measurements based on the assumptions a market participant would use in pricing an asset or liability.

ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three-level hierarchy 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).

ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three level hierarchy that distinguishes between 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).

We utilize valuation methodologies to determine the fair values of our financial assets and liabilities in conformity with the concepts of “exit price” and the fair value hierarchy as prescribed in ASC 820.

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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.

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Financial Instruments Recorded at Fair Value

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 $ 593.5 million and $ 560.7 million as of May 31, 2021 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, such as the discount rate and estimates of future cash flows.

The carrying values and estimated fair values of certain of our financial instruments were as follows as of the dates presented (in millions):

May 31, 2021 August 31, 2020

Carrying Value Fair Value Carrying Value Fair Value

Investments in unconsolidated affiliates $ 7.3 $ 7.3 $ 6.0 $ 6.0

Senior unsecured public notes, net of unamortized discount and deferred costs $ 494.2 $ 490.1 $ — $ —

Borrowings under Term Loan Facility — — 395.0 395.0

Industrial revenue bond 4.0 4.0 4.0 4.0

Bank loans — — 2.1 2.3

We hold equity investments in unconsolidated affiliates without readily determinable fair values.

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.

Our cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $ 504.0 million and $ 491.3 million as of November 30, 2021 and August 31, 2021, respectively.

We hold a small number of investments in equity and debt financial instruments totaling $ 8.8 million and $ 5.3 million as of November 30, 2021 and August 31, 2021, respectively.

We generally account for these investments at fair value on a recurring basis.

Changes in the fair values of these financial instruments during the three months ended November 30, 2021 and November 30, 2020 were de minimis.

Our strategic equity investments represent less than a 20% ownership interest in each of the privately-held entities, and we do not exercise significant influence or control any of the entities.

Certain of these investments do not have readily determinable fair value.

We have elected the practical expedient in ASC Topic 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 May 31, 2021.

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 for the nine months ended May 31, 2021 within our Consolidated Statements of Comprehensive Income.

During the first quarter of fiscal 2021, we recorded an impairment charge of $ 4.0 million for one of these investments as a recapitalization of the underlying company diluted our holding value.

This impairment is reflected in Miscellaneous expense, net for the three months ended November 30, 2020 within our Consolidated Statements of Comprehensive Income.

Disclosures of Fair Value of Financial Instruments

Disclosures of fair value information about financial instruments, 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.

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).

Our industrial revenue bond (“IRB”) is carried at the outstanding balance as of the end of the reporting period.

The IRB was a variable-rate instrument that

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reset on a frequent short-term basis and matured within one month from balance sheet date;

therefore, we estimate that the face amount of this bond approximates its fair value as of May 31, 2021 based on instruments of similar terms and maturity (Level 2).

See Note 9 — Debt and Lines of Credit for further details on our borrowings.

The estimated fair value of our senior unsecured public notes was $ 488.9 million and $ 496.5 million as of November 30, 2021 and August 31, 2021, respectively.

See Debt and Lines of Credit footnote for further details on our long-term borrowings.

ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.

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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):

May 31, 2021 August 31, 2020

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, 2021 August 31, 2021

Raw materials, supplies, and work in process (1)

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(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.

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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.

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

May 31, 2021 August 31, 2020

November 30, 2021 August 31, 2021

Land $ 22.1 $ 22.4

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Property, plant, and equipment, net $ 261.0 $ 269.1

Subsequent to May 31, 2021, one of our facilities, included within property, plant, and equipment, with a carrying value of $ 6.6 million met the criteria to be classified as held for sale and is expected to be sold within one year.

We concluded the fair value less cost to sell of this asset exceeded its carrying value.

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As of November 30, 2021 and August 31, 2021, we classified as held for sale one building with a total carrying value of $ 6.6 million within Prepayments and other current assets on the Consolidated Balance Sheets .

At each balance sheet date, we concluded the fair value less costs to sell exceeded the carrying value of each of these assets.

Note 8 — Goodwill and Intangible Assets

Through multiple acquisitions, we have acquired definite-lived intangible assets consisting primarily of trademarks and trade names associated with specific products, distribution networks, patented technology, non-compete agreements, and customer relationships, which are amortized over their estimated useful lives.

Through multiple acquisitions, we acquired definite-lived intangible assets consisting primarily of customer relationships, patented technology, distribution networks, and trademarks and trade names associated with specific products, which are amortized over their estimated useful lives.

Indefinite-lived intangible assets consist of trade names that are expected to generate cash flows indefinitely.

We recorded amortization expense of $ 10.2 million and $ 10.8 million during the three months ended May 31, 2021 and 2020, respectively, and $ 30.4 million and $ 30.8 million during the nine months ended May 31, 2021 and 2020, respectively.

We recorded amortization expense for definite-lived intangible assets of $ 10.3 million and $ 10.1 million during the three months ended November 30, 2021 and 2020, respectively.

Amortization expense is generally recorded on a straight-line basis and is expected to be approximately $ 41.2 million in fiscal 2022, $ 40.5 million in fiscal 2023, $ 40.0 million in fiscal 2024, $ 31.9 million in fiscal 2025, and $ 29.1 million in fiscal 2026.

The following table summarizes the changes in the carrying amount of goodwill during the periods presented (in millions):

Nine Months Ended

May 31, 2021 May 31, 2020

Beginning balance $ 1,080.0 $ 967.3

Provisional additions from acquired businesses 3.1 147.8

Adjustments to provisional amounts from acquired businesses — ( 21.6 )

The following table summarizes the changes in the carrying amount of goodwill by segment during the periods presented (in millions):

ABL ISG Total

Balance as of August 31, 2021 $ 1,022.2 $ 72.5 $ 1,094.7

Foreign currency translation adjustments ( 3.0 ) ( 0.7 ) ( 3.7 )

Ending balance $ 1,096.2 $ 1,086.4

Balance as of November 30, 2021 $ 1,019.2 $ 71.8 $ 1,091.0

ABL ISG Total

Balance as of August 31, 2020 $ 1,012.6 $ 67.4 $ 1,080.0

Foreign currency translation adjustments 0.4 0.2 0.6

Balance as of November 30, 2020 $ 1,013.0 $ 67.6 $ 1,080.6

Further discussion of 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.

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Note 9 — Other Current Liabilities

Other current liabilities consist of the following as of the dates presented (in millions):

November 30, 2021 August 31, 2021

Customer incentive programs (1)

$ 40.4 $ 33.9

Refunds to customers (1)

Current deferred revenues (1)

Sales commissions 25.6 28.9

Freight costs 16.7 17.5

Warranty and recall costs (2)

Tax-related items (3)

Interest on long-term debt (4)

Total other current liabilities $ 202.6 $ 189.4

____________________________________

(1) Refer to the Revenue Recognition footnote of the Notes to Consolidated Financial Statements within our Form 10-K for additional information.

(2) Refer to the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements for additional information.

(3) Includes accruals for income, property, sales and use, and value added taxes.

(4) Refer to the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements for additional information.

(5) Includes an accrual of $ 15.8 million as of November 30, 2021, related to the securities class action matter.

Refer to the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements for additional information.

Note 10 — Debt and Lines of Credit

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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.

Interest on the Unsecured Notes is paid semi-annually in arrears on June 15 and December 15 of each year.

The Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by Acuity Brands, Inc.

and ABL IP Holding LLC, a wholly-owned subsidiary of Acuity Brands, Inc.

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.

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 May 31, 2021, the balance of the Unsecured Notes net of unamortized discount and deferred issuance costs was $ 494.2 million.

As of May 31, 2021, we also had $ 4.0 million of tax-exempt industrial revenue bonds that were paid at maturity on June 1, 2021.

The carrying value of these bonds is reflected within Current maturities of debt on the Consolidated Balance Sheets as of May 31, 2021.

Additionally, we had $ 2.1 million outstanding under fixed-rate bank loans at August 31, 2020 that we repaid during the second quarter of fiscal 2021, prior to their maturity date.

Further discussion of our long-term debt is included within the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

As of November 30, 2021, the balance of the Unsecured Notes net of unamortized discount and deferred issuance costs was $ 494.5 million.

Lines of Credit

On June 29, 2018, we entered into a credit agreement (the “Credit Agreement”) with a syndicate of banks that provides us with a $ 400.0 million five-year unsecured revolving credit facility (the “Revolving Credit Facility”) and provided us with a $ 400.0 million unsecured delayed draw term loan facility (the “Term Loan Facility”).

We had no borrowings outstanding under the Revolving Credit Facility as of May 31, 2021 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

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

quarter of fiscal 2021 using the proceeds from the Unsecured Notes.

The Credit Agreement allows for no future borrowings under the Term Loan Facility.

We had no borrowings outstanding under the Revolving Credit Facility as of November 30, 2021 or August 31, 2021.

The Credit Agreement expires in June 2023, and we plan to enter into a new agreement prior to this expiration.

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.

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The base rate applicable margin is based on our leverage ratio with such margin ranging from 0.000 % to 0.375 %.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

On July 27, 2017, the U.K.

Financial Conduct Authority, which regulates LIBOR, announced that it will phase out rates for the calculation of LIBOR.

As a result of this change, certain LIBOR tenors and currencies were eliminated on December 31, 2021 with all other tenors and currencies of LIBOR anticipated to be eliminated on June 30, 2023.

We are required to pay certain fees in connection with the Credit Agreement, including administrative service fees and an annual facility fee.

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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.

We were in compliance with all financial covenants under the Credit Agreement as of May 31, 2021.

At May 31, 2021, 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 May 31, 2021, 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.

We were in compliance with all financial covenants under the Credit Agreement as of November 30, 2021.

As of November 30, 2021, we had outstanding letters of credit totaling $ 4.1 million, primarily for securing collateral requirements under our casualty insurance programs.

At November 30, 2021, 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.

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.

Interest expense, net , is comprised primarily of interest expense on long-term debt, line of credit borrowings, and loans that are secured by and presented net of company-owned life insurance policies on our Consolidated Balance Sheets .

Interest expense is 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 Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Interest expense $ 6.2 $ 5.1

4 unchanged sentences

We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated.

For the period ended May 31, 2021, 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.

For the period ended November 30, 2021, 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 other than the items discussed below.

ACUITY BRANDS, INC.

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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):

Nine Months Ended

May 31, 2021 May 31, 2020

Estimated liabilities for product warranty and recall costs are included in Other accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets based upon when we expect to settle the incurred warranty.

The following table summarizes changes in the estimated liabilities for product warranty and recall costs during the periods presented (in millions):

Three Months Ended

November 30, 2021 November 30, 2020

Beginning balance $ 20.3 $ 16.1

1 unchanged sentence

Payments and other deductions ( 4.5 ) ( 5.9 )

Acquired warranty and recall liabilities — 0.1

Ending balance $ 20.2 $ 16.8

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 October 5, 2021, the parties to the shareholder class action litigation previously disclosed (and further described below) executed a term sheet for settlement of the litigation, subject to documentation of the settlement and approval of the District Court after notice to class members.

On December 2, 2021, the lead plaintiff in the case filed an unopposed motion seeking preliminary approval of the settlement which attaches the settlement stipulation and exhibits thereto.

If the settlement is approved, we expect that the agreed-upon settlement payment of $ 15.8 million will be funded entirely by applicable Directors and Officers liability insurance.

As such, we do not anticipate a significant net loss or cash outflow as a result of the settlement of this matter.

As of November 30, 2021, we reflected a liability for the settlement amount within Other current liabilities and a corresponding receivable for the offsetting insurance proceeds within Prepayments and other current assets on the Consolidated Balance Sheets .

The case was originally filed on January 3, 2018, in the United States District Court for the District of Delaware against the Company 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.

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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 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 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 dispute the allegations in the complaints.

We filed a motion to dismiss the Consolidated Complaint.

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The Eleventh Circuit Court of Appeals granted the Company permission to file an interlocutory appeal of the District Court’s class certification order, and the briefing of that appeal has been completed.

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 evidential 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.

On October 7, 2021, the Eleventh Circuit Court of Appeals entered an order holding the appeal from the class certification order in abeyance pending a

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

decision from the District Court concerning approval of the proposed settlement.

Shareholder Derivative Complaint

On October 1, 2021, certain alleged shareholders of the Company filed a putative derivative complaint in the United States District Court for the Northern District of Georgia asserting claims against three of the individuals named as defendants in the above securities action for breach of fiduciary duty and certain other claims arising out of the alleged facts and circumstances upon which the claims in the above securities class action are based (the “Derivative Complaint”).

The Company is named as a nominal defendant, and the plaintiffs seek on behalf of the Company unspecified damages from the individual defendants and other relief.

Prior to filing the Derivative Complaint, the derivative plaintiffs sent letters to the Company’s Board of Directors (the “Board”) demanding that the Company investigate and pursue substantially the same claims against the individual defendants that are asserted in the Derivative Complaint.

The Company’s Board formed a demand evaluation committee consisting of independent directors to investigate these matters and make a recommendation to the Board regarding the best interests of the Company in connection therewith.

The committee’s work is ongoing.

On December 14, 2021, the Company filed a motion to stay the derivative action pending the conclusion of the related securities class action or, in the alternative, to dismiss the derivative action without prejudice as premature, given the demand evaluation committee’s ongoing work.

Also on December 14, 2021, the individual defendants filed a motion to dismiss the Derivative Complaint for failure to adequately plead any claim for relief against them.

Estimating an amount or range of possible losses or gains 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 evidential 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 gains or a range of possible losses or gains resulting from the matters described above.

We are subject to various other legal claims arising in the normal course of business, including patent infringement, employment matters, and product liability claims.

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However, we cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the accrued amounts.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 12 — Changes in Stockholders' Equity

9 unchanged sentences

Net income — — — 87.6 — — 87.6

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

Net income — — — 62.9 — — 62.9

Other comprehensive income — — — — 8.4 — 8.4

Share-based payment amortization, issuances, and cancellations — — 8.6 — — — 8.6

Employee stock purchase plan issuances — — 0.2 — — — 0.2

Cash dividends of $ 0.13 per share paid on common stock

— — — ( 4.7 ) — — ( 4.7 )

Stock options exercised — — 0.4 — — — 0.4

Repurchases of common stock ( 0.7 ) — — — — ( 80.3 ) ( 80.3 )

Balance, February 28, 2021 35.7 0.5 977.8 2,635.9 ( 118.1 ) ( 1,563.6 ) 1,932.5

Net income — — — 85.7 — — 85.7

Other comprehensive income — — — — 20.7 — 20.7

Other comprehensive loss — — — — ( 10.7 ) — ( 10.7 )

Share-based payment amortization, issuances, and cancellations 0.1 — 0.4 — — — 0.4

4 unchanged sentences

Repurchases of common stock ( 0.3 ) — — — — ( 52.8 ) ( 52.8 )

— — — — — ( 2.5 ) ( 2.5 )

Balance, May 31, 2021 35.7 $ 0.5 $ 985.1 $ 2,717.0 $ ( 97.4 ) $ ( 1,566.1 ) $ 2,039.1

____________________________________

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

(2) Represents repurchases of fewer than 0.1 million shares of common stock.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Balance, November 30, 2021 35.1 $ 0.5 $ 1,004.6 $ 2,893.2 $ ( 108.9 ) $ ( 1,716.5 ) $ 2,072.9

Common Stock Outstanding

8 unchanged sentences

Other comprehensive income — — — — 6.2 — 6.2

Cumulative effect of adoption of ASC 326 — — — ( 0.2 ) — — ( 0.2 )

Share-based payment amortization, issuances, and cancellations 0.1 — 4.7 — — — 4.7

2 unchanged sentences

— — — ( 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

Net income — — — 57.2 — — 57.2

Other comprehensive loss — — — — ( 2.0 ) — ( 2.0 )

Share-based payment amortization, issuances, and cancellations — — 7.5 — — — 7.5

Employee stock purchase plan issuances — — 0.2 — — — 0.2

Cash dividends of $ 0.13 per share paid on common stock

— — — ( 5.2 ) — — ( 5.2 )

Stock options exercised — — 0.1 — — — 0.1

Balance, February 29, 2020 39.5 0.5 950.6 2,399.6 ( 149.6 ) ( 1,156.0 ) 2,045.1

Net income — — — 60.4 — — 60.4

Other comprehensive loss — — — — ( 12.0 ) — ( 12.0 )

Share-based payment amortization, issuances, and cancellations — — 7.2 — — — 7.2

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, May 31, 2020 39.5 $ 0.5 $ 958.0 $ 2,454.8 $ ( 161.6 ) $ ( 1,156.0 ) $ 2,095.7

Note 13 — Revenue Recognition

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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):

May 31, 2021 August 31, 2020

November 30, 2021 August 31, 2021

Current deferred revenues $ 8.9 $ 7.7

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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 nine months ended May 31, 2021 totaled $ 4.8 million.

Unsatisfied performance obligations as of May 31, 2021 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.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

from the dates presented.

Revenue recognized from beginning balances of contract liabilities during the three months ended November 30, 2021 totaled $ 3.1 million.

Unsatisfied performance obligations that do not represent contract liabilities are expected to be satisfied within one year from November 30, 2021 and consist primarily of orders for physical goods that have not yet been shipped.

Disaggregated Revenues

Our ABL segment's lighting and lighting controls 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.

ISG sells predominantly through system integrators.

ISG sells predominantly to system integrators.

The following table shows revenue from contracts with customers by sales channel and reconciles to our segment information for the periods presented (in millions):

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Independent sales network $ 636.8 $ 559.5

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Note 14 — Share-based Payments

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 savings plan.

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 stock units, and restricted stock (all part of our equity incentive plan), as well as stock units representing certain deferrals into our director deferred compensation plan or our supplemental deferred savings plan.

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

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Share-based payment expense $ 7.6 $ 7.7

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.

We recognized excess tax benefits of $ 4.2 million related to share-based payment awards during the three months ended November 30, 2021.

Further details regarding our share-based payments are included within the Share-based Payments footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 15 — Pension Plans

2 unchanged sentences

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.

Plan assets are invested primarily in fixed income and equity 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.

1 unchanged sentence

Net periodic pension cost included the following components before tax for the periods presented (in millions):

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Service cost $ 1.2 $ 1.2

5 unchanged sentences

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.

Note 15 — Special Charges

During the first nine months of fiscal 2021, we recognized pre-tax special charges of $ 1.5 million, which consisted primarily of charges for relocation costs and adjustments related to severance costs associated with the previously announced transfer of activities from planned facility closures.

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 Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Severance and employee-related costs $ 0.5 $ 2.4 $ 0.4 $ 8.1

Relocation and other restructuring costs — 0.9 1.1 3.7

Total special charges $ 0.5 $ 3.3 $ 1.5 $ 11.8

As of May 31, 2021, remaining restructuring liabilities were $ 1.3 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):

Nine Months Ended

Balance, August 31, 2020 $ 3.0

Severance and employee-related costs 0.4

Payments made during the period ( 2.1 )

Balance, May 31, 2021 $ 1.3

Note 16 — Earnings Per Share

1 unchanged sentence

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.

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Common stock equivalents are calculated using the treasury stock method.

The dilutive effects of share-based payment awards subject to market and/or performance conditions that were not met during the period are excluded from the computation of diluted earnings per share.

The following table calculates basic earnings per common share and diluted earnings per common share for the periods presented (in millions, except per share data):

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Net income $ 87.6 $ 59.6

4 unchanged sentences

Diluted earnings per share $ 2.46 $ 1.57

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 periods presented as the effect of inclusion would have been antidilutive (in millions):

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Stock options 0.1 1.1

Performance stock awards — * —

Restricted stock awards — * 0.2

Further discussion of 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 our Form 10-K.

_______________________________________

* Represents shares of less than 0.1 million.

Further discussion of our share-based payment awards is included within the Common Stock and Related Matters and Share-based Payments footnotes of the Notes to Consolidated Financial Statements within our Form 10-K.

Note 17 — 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.

Comprehensive income includes our net income as well as other comprehensive income (loss) items.

Other comprehensive income (loss) items include foreign currency translation and pension adjustments.

The following tables summarize the changes in each component of accumulated other comprehensive loss during the periods presented (in millions):

The following table presents the changes in each component of accumulated other comprehensive loss net of tax during the periods presented (in millions):

Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items

Balance at August 31, 2021 $ ( 40.2 ) $ ( 58.0 ) $ ( 98.2 )

Other comprehensive income (loss) before reclassifications 33.6 ( 3.2 ) 30.4

Other comprehensive loss before reclassifications ( 11.9 ) — ( 11.9 )

Amounts reclassified from accumulated other comprehensive loss (1)

Net current period other comprehensive income 33.6 1.7 35.3

Balance at May 31, 2021 $ ( 19.9 ) $ ( 77.5 ) $ ( 97.4 )

Net current period other comprehensive (loss) income ( 11.9 ) 1.2 ( 10.7 )

Balance at November 30, 2021 $ ( 52.1 ) $ ( 56.8 ) $ ( 108.9 )

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 loss before reclassifications ( 15.6 ) — ( 15.6 )

Other comprehensive income before reclassifications 4.6 — 4.6

Amounts reclassified from accumulated other comprehensive loss (1)

Net current period other comprehensive (loss) income ( 15.6 ) 5.4 ( 10.2 )

Balance at May 31, 2020 $ ( 81.0 ) $ ( 80.6 ) $ ( 161.6 )

Net current period other comprehensive income 4.6 1.6 6.2

Balance at November 30, 2020 $ ( 48.9 ) $ ( 77.6 ) $ ( 126.5 )

_______________________________________

5 unchanged sentences

Three Months Ended

May 31, 2021 May 31, 2020

November 30, 2021 November 30, 2020

Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount

1 unchanged sentence

Defined benefit pension plans:

Tax adjustments — ( 3.2 ) ( 3.2 ) — — —

Amortization of defined benefit pension items:

3 unchanged sentences

Total defined benefit pension plans, net 1.6 ( 0.4 ) 1.2 2.1 ( 0.5 ) 1.6

Other comprehensive income (loss) $ 24.5 $ ( 3.8 ) $ 20.7 $ ( 11.4 ) $ ( 0.6 ) $ ( 12.0 )

Nine Months Ended

May 31, 2021 May 31, 2020

Before Tax Amount Tax (Expense) Benefit Net of Tax Amount Before Tax Amount Tax (Expense) Benefit Net of Tax Amount

Foreign currency translation adjustments $ 33.6 $ — $ 33.6 $ ( 15.6 ) $ — $ ( 15.6 )

Defined benefit pension plans:

Tax adjustments — ( 3.2 ) ( 3.2 ) — — —

Amortization of defined benefit pension items:

Prior service cost 2.2 ( 0.5 ) 1.7 3.0 ( 0.7 ) 2.3

Actuarial losses 4.1 ( 0.9 ) 3.2 4.2 ( 1.1 ) 3.1

Total defined benefit pension plans, net 6.3 ( 4.6 ) 1.7 7.2 ( 1.8 ) 5.4

Other comprehensive income (loss) $ 39.9 $ ( 4.6 ) $ 35.3 $ ( 8.4 ) $ ( 1.8 ) $ ( 10.2 )

Other comprehensive (loss) income $ ( 10.3 ) $ ( 0.4 ) $ ( 10.7 ) $ 6.7 $ ( 0.5 ) $ 6.2

Note 18 — Segment Information

2 unchanged sentences

We have recast historical information to conform to the current segment structure.

Principal customers of ABL include electrical distributors, retail home improvement centers, electric utilities, national accounts, digital retailers, lighting showrooms and energy service companies located in North America and select international markets serving new construction, renovation and retrofit, and maintenance and repair applications.

Our lighting and lighting controls solutions are sold primarily through independent sales agencies who cover specific geographic areas and market channels, by internal sales representatives, through consumer retail channels and directly to large corporate accounts.

To serve international customers, the sales forces utilize a variety of distribution methods to meet specific individual customer or country requirements.

Our ISG segment offers building management systems and location-aware applications, which include products for controlling HVAC, lighting, shades, and access control that deliver end-to-end optimization of those building

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Additionally, ISG includes our intelligent building platform that enhances the occupant experience, improves building system management, and automates labor intensive tasks while delivering operational energy efficiency and cost reductions.

Principal customers of ISG include system integrators, electrical distributors, retail centers, airports, and enterprise campuses throughout North America and select international locations.

Corporate and Unallocated Amounts

Corporate expenses that are primarily administrative in nature and benefit the company on an entity-wide basis are not allocated to our segments.

The accounting policies of our reportable segments are the same as those described in the Significant Accounting Policies footnote of the Notes to Consolidated Financial Statements within our Form 10-K.

Corporate expenses that are primarily administrative in function and benefit the Company on an entity-wide basis are not allocated to our segments.

These include expenses related to governance, policy setting, compliance, and certain other shared services functions.

Additionally, we do not allocate non-operating amounts, including net interest expense and miscellaneous expense, special charges, or assets to our segments.

Additionally, we do not allocate net interest expense, net miscellaneous expense, special charges, or assets to our segments.

Accordingly, this information is not used by the chief operating decision maker to make operating decisions and assess performance and is therefore excluded from our disclosures.

The following table presents financial information by operating segment for the periods presented (in millions):

ABL ISG Corporate Eliminations (1)

Three Months Ended May 31, 2021:

Net sales $ 850.0 $ 55.4 $ — $ ( 5.7 ) $ 899.7

Operating profit (loss) 126.5 7.2 ( 15.6 ) — 118.1

Depreciation and amortization 21.0 3.7 0.3 — 25.0

Three Months Ended May 31, 2020:

Net sales 741.6 37.7 — ( 3.1 ) 776.2

Operating profit (loss) 98.6 ( 0.2 ) ( 15.4 ) — 83.0

Depreciation and amortization 20.8 4.4 0.3 — 25.5

Nine Months Ended May 31, 2021:

Three Months Ended November 30, 2021:

Net sales $ 883.6 $ 46.4 $ — $ ( 3.9 ) $ 926.1

1 unchanged sentence

Depreciation and amortization 20.4 3.6 0.3 — 24.3

Nine Months Ended May 31, 2020:

Three Months Ended November 30, 2020:

Net sales $ 753.6 $ 40.8 $ — $ ( 2.4 ) $ 792.0

5 unchanged sentences

The following table reconciles operating profit by segment to income before income taxes (in millions):

Three Months Ended Nine Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

Three Months Ended

November 30, 2021 November 30, 2020

Operating profit - ABL $ 128.1 $ 98.4

3 unchanged sentences

Interest expense, net 5.9 4.9

Miscellaneous expense (income), net 2.7 ( 0.9 ) 6.5 1.5

Miscellaneous expense, net 0.3 1.6

Income before income taxes $ 108.9 $ 79.2

ACUITY BRANDS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 19 — Subsequent Event

One June 4, 2021, the Company announced that it has signed a definitive agreement to purchase ams OSRAM’s North American Digital Systems (“DS”) business.

This acquisition is intended to enable the Company to enhance our LED driver and controls technology portfolio and accelerate our innovation, expand our access to market through a more fulsome OEM product offering, and give us more control over our supply chain.

The transaction is expected to close by end of day on July 1, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements