Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2019.
2020.
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 001-16583.001-16583.

ACUITY BRANDS, INC.
(Exact name of registrant as specified in its charter)

Delaware58-2632672
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification Number)
Delaware58-2632672
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)

1170 Peachtree Street, N.E., Suite 2300,, Atlanta,, Georgia30309-7676 30309-7676
(Address of principal executive offices)
(404) (404) 853-1400
(Registrant’s telephone number, including area code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, $0.01 par value per shareAYINew York Stock Exchange
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 ☑     No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).  Yes ☑     No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐Non-accelerated filer☐
Smaller reporting company☐Emerging growth company☐
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐     No ☑
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 — 39,619,70636,026,752 shares as of January 6, 2020.4, 2021.



Table of Contents
ACUITY BRANDS, INC.
Table of Contents

Page No.
Item 1.
1
2
3
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
78
Note 7 — Property, Plant, and Equipment
78
Note 8 — Leases
9
Note 98 — Goodwill and Intangible Assets
98
Note 109 — Debt and Lines of Credit
109
Note 1110 — Commitments and Contingencies
1110
Note 1211 — Changes in Stockholders' Equity
1312
Note 12 — Revenue Recognition
13
Note 13 — Revenue RecognitionShare-based Payments
1413
Note 14 — Share-based PaymentsPension Plans
1415
Note 15 — Pension PlansSpecial Charges
1516
Note 16 — Special Charges
15
Note 17 — Earnings Per Share
16
Note 1817 — Comprehensive Income
17
Note 19 — Subsequent Event
17
Item 2.
1819
Item 3.
2527
Item 4.
2527
Item 1.
2628
Item 1a.
2729
Item 5.2.
2829
Item 6.5.
2829
Item 6.
31
2932

3034



Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Item 1.Financial Statements
ACUITY BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
November 30, 2019
August 31, 2019 November 30, 2020August 31, 2020
(unaudited)

 (unaudited)
ASSETS


ASSETS
Current assets: 



Current assets: 
Cash and cash equivalents$266.6

$461.0
Cash and cash equivalents$507.0 $560.7 
Accounts receivable, less reserve for doubtful accounts of $1.1 and $1.0, respectively507.7

561.0
Accounts receivable, less reserve for doubtful accounts of $2.4 and $2.6, respectivelyAccounts receivable, less reserve for doubtful accounts of $2.4 and $2.6, respectively445.3 500.3 
Inventories352.6

340.8
Inventories316.1 320.1 
Prepayments and other current assets79.5

79.0
Prepayments and other current assets79.3 58.6 
Total current assets1,206.4

1,441.8
Total current assets1,347.7 1,439.7 
Property, plant, and equipment, net278.4

277.3
Property, plant, and equipment, net268.8 270.5 
Operating lease right-of-use assets60.1
 —
Operating lease right-of-use assets65.8 63.4 
Goodwill1,115.5

967.3
Goodwill1,080.6 1,080.0 
Intangible assets, net621.5

466.0
Intangible assets, net596.0 605.9 
Deferred income taxes2.3

2.3
Deferred income taxes2.7 2.7 
Other long-term assets21.0

17.7
Other long-term assets27.0 29.5 
Total assets$3,305.2

$3,172.4
Total assets$3,388.6 $3,491.7 
LIABILITIES AND STOCKHOLDERS’ EQUITY


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: 



Current liabilities: 
Accounts payable$321.7

$338.8
Accounts payable$317.3 $326.5 
Current maturities of long-term debt9.2

9.1
Current maturities of debtCurrent maturities of debt4.3 24.3 
Current operating lease liabilities16.7
 —
Current operating lease liabilities18.1 17.2 
Accrued compensation50.5

73.2
Accrued compensation75.3 85.4 
Other accrued liabilities174.5

175.0
Other accrued liabilities168.4 164.2 
Total current liabilities572.6

596.1
Total current liabilities583.4 617.6 
Long-term debt347.1

347.5
Long-term debt495.6 376.8 
Long-term operating lease liabilities49.4
 —
Long-term operating lease liabilities58.1 56.8 
Accrued pension liabilities98.7

99.7
Accrued pension liabilities69.2 91.6 
Deferred income taxes122.7

92.7
Deferred income taxes95.3 94.9 
Self-insurance reserves7.2

6.8
Self-insurance reserves6.7 6.5 
Other long-term liabilities120.2

110.7
Other long-term liabilities143.3 120.0 
Total liabilities1,317.9

1,253.5
Total liabilities1,451.6 1,364.2 
Commitments and contingencies (see Commitments and Contingencies footnote)





Commitments and contingencies (see Commitments and Contingencies footnote)
00
Stockholders’ equity: 



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; 53,847,197 and 53,778,155 issued, respectively0.5

0.5
Preferred stock, $0.01 par value; 50,000,000 shares authorized; NaN issuedPreferred stock, $0.01 par value; 50,000,000 shares authorized; NaN issued0 0 
Common stock, $0.01 par value; 500,000,000 shares authorized; 53,960,200 and 53,885,165 issued, respectivelyCommon stock, $0.01 par value; 500,000,000 shares authorized; 53,960,200 and 53,885,165 issued, respectively0.5 0.5 
Paid-in capital942.8

930.0
Paid-in capital968.6 963.6 
Retained earnings2,347.6

2,295.8
Retained earnings2,577.7 2,523.3 
Accumulated other comprehensive loss(147.6)
(151.4)Accumulated other comprehensive loss(126.5)(132.7)
Treasury stock, at cost — 14,325,197 and 14,325,197 shares, respectively(1,156.0)
(1,156.0)
Treasury stock, at cost — 17,571,980 and 15,012,449 shares, respectivelyTreasury stock, at cost — 17,571,980 and 15,012,449 shares, respectively(1,483.3)(1,227.2)
Total stockholders’ equity1,987.3

1,918.9
Total stockholders’ equity1,937.0 2,127.5 
Total liabilities and stockholders’ equity$3,305.2

$3,172.4
Total liabilities and stockholders’ equity$3,388.6 $3,491.7 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions, except per-share data)
Three Months Ended Three Months Ended
November 30, 2019
November 30, 2018 November 30, 2020November 30, 2019
Net sales$834.7

$932.6
Net sales$792.0 $834.7 
Cost of products sold478.9

565.1
Cost of products sold459.6 478.9 
Gross profit355.8

367.5
Gross profit332.4 355.8 
Selling, distribution, and administrative expenses265.3

250.1
Selling, distribution, and administrative expenses246.0 265.3 
Special charges6.9

1.0
Special charges0.7 6.9 
Operating profit83.6

116.4
Operating profit85.7 83.6 
Other expense: 



Other expense: 
Interest expense, net8.3

8.7
Interest expense, net4.9 8.3 
Miscellaneous expense, net1.4

1.3
Miscellaneous expense, net1.6 1.4 
Total other expense9.7

10.0
Total other expense6.5 9.7 
Income before income taxes73.9

106.4
Income before income taxes79.2 73.9 
Income tax expense16.9

26.8
Income tax expense19.6 16.9 
Net income$57.0

$79.6
Net income$59.6 $57.0 






Earnings per share: 



Earnings per share: 
Basic earnings per share$1.44

$1.99
Basic earnings per share$1.58 $1.44 
Basic weighted average number of shares outstanding39.5

40.0
Basic weighted average number of shares outstanding37.6 39.5 
Diluted earnings per share$1.44

$1.98
Diluted earnings per share$1.57 $1.44 
Diluted weighted average number of shares outstanding39.6

40.1
Diluted weighted average number of shares outstanding37.8 39.6 
Dividends declared per share$0.13

$0.13
Dividends declared per share$0.13 $0.13 






Comprehensive income:




Comprehensive income:
Net income$57.0

$79.6
Net income$59.6 $57.0 
Other comprehensive income (loss) items:




Other comprehensive income (loss) items:
Foreign currency translation adjustments1.9

(8.8)Foreign currency translation adjustments4.6 1.9 
Defined benefit plans, net of tax1.9

2.6
Defined benefit plans, net of tax1.6 1.9 
Other comprehensive income (loss) items, net of tax3.8

(6.2)
Other comprehensive income items, net of taxOther comprehensive income items, net of tax6.2 3.8 
Comprehensive income$60.8

$73.4
Comprehensive income$65.8 $60.8 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.



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ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
Three Months Ended Three Months Ended
November 30, 2019 November 30, 2018 November 30, 2020November 30, 2019
Cash flows from operating activities:   Cash flows from operating activities:
Net income$57.0
 $79.6
Net income$59.6 $57.0 
Adjustments to reconcile net income to net cash flows from operating activities:   Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization24.2
 21.3
Depreciation and amortization25.0 24.2 
Share-based payment expense16.7
 7.8
Share-based payment expense7.7 16.7 
Loss on sale or disposal of property, plant, and equipment0.1
 0.4
Deferred income taxes0.4
 (0.1)
Change in assets and liabilities, net of effect of acquisitions, divestitures, and exchange rate changes:   
Asset impairmentAsset impairment4.0 0 
Accounts receivable66.3
 102.0
Accounts receivable56.3 66.3 
Inventories4.9
 (9.2)Inventories4.1 4.9 
Prepayments and other current assets(3.3) (14.8)Prepayments and other current assets(20.3)(3.3)
Accounts payable(22.7) (61.5)Accounts payable(9.2)(22.7)
Other current liabilities(28.3) (1.6)
Other14.3
 7.9
Other(3.3)(13.5)
Net cash provided by operating activities129.6
 131.8
Net cash provided by operating activities123.9 129.6 
Cash flows from investing activities: 
  
Cash flows from investing activities:  
Purchases of property, plant, and equipment(11.6) (14.0)Purchases of property, plant, and equipment(11.4)(11.6)
Proceeds from sale of property, plant, and equipmentProceeds from sale of property, plant, and equipment0.4 0 
Acquisition of businesses, net of cash acquired(302.0) —
Acquisition of businesses, net of cash acquired0 (302.0)
Other investing activities(1.5) 2.7
Other investing activities(3.1)(1.5)
Net cash used for investing activities(315.1) (11.3)Net cash used for investing activities(14.1)(315.1)
Cash flows from financing activities: 
  
Cash flows from financing activities:  
Borrowings on credit facility—
 55.4
Repayments of borrowings on credit facility—
 (55.4)
Issuance of long-term debtIssuance of long-term debt493.9 0 
Repayments of long-term debt(0.4) (0.1)Repayments of long-term debt(395.1)(0.4)
Repurchases of common stock—
 (25.0)Repurchases of common stock(255.2)0 
Proceeds from stock option exercises and other0.2
 0.1
Proceeds from stock option exercises and other0.3 0.2 
Payments of taxes withheld on net settlement of equity awards(4.1) (3.9)Payments of taxes withheld on net settlement of equity awards(3.0)(4.1)
Dividends paid(5.2) (5.2)Dividends paid(5.0)(5.2)
Net cash used for financing activities(9.5) (34.1)Net cash used for financing activities(164.1)(9.5)
Effect of exchange rate changes on cash and cash equivalents0.6
 (0.7)Effect of exchange rate changes on cash and cash equivalents0.6 0.6 
Net change in cash and cash equivalents(194.4) 85.7
Net change in cash and cash equivalents(53.7)(194.4)
Cash and cash equivalents at beginning of period461.0
 129.1
Cash and cash equivalents at beginning of period560.7 461.0 
Cash and cash equivalents at end of period$266.6
 $214.8
Cash and cash equivalents at end of period$507.0 $266.6 
Supplemental cash flow information: 
  
Supplemental cash flow information:  
Income taxes paid during the period$4.6
 $6.1
Income taxes paid during the period$9.3 $4.6 
Interest paid during the period$12.9
 $13.5
Interest paid during the period$15.1 $12.9 
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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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 “we,” “our,” “us,” “the Company,” or similar references) and was incorporated in 2001 under the laws of the State of Delaware. We are one of the world’s leading providers ofa market-leading industrial technology company that develops, manufactures, and provides lighting and building managementtechnology solutions and services for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. Our lighting and building managementtechnology solutions include devices such as luminaires, lighting controls, 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 expand our solutions portfolio, including software and services, to provideevolve Atrius as the intelligent building platform upon which a host of other economic benefits resulting from data analytics that enables the Internetproblem-solving applications can be deployed. Our solution, built on our local operating system, delivers increased efficiency and productivity by solving facility, operational, and line of Things (“IoT”), supports the advancement of smart buildings, smart cities, and the smart grid, and allows businesses to develop custom applications to scale their operations.business problems through location awareness. We have 1 reportable segment serving the North American lighting market and select international markets.
We prepared the Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) 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 our consolidated financial position as of November 30, 2019,2020, our consolidated comprehensive income for the three months ended November 30, 20192020 and 2018,2019, and our consolidated cash flows for the three months ended November 30, 20192020 and 2018.2019. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. However, 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 as of and for the three years ended August 31, 20192020 and notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October 29, 201923, 2020 (File No. 001-16583) (“Form 10-K”).
The results of operations for the three months ended November 30, 20192020 and 20182019 are not necessarily indicative of the results to be expected for the full fiscal year due primarily to seasonality, which results in our net sales and net income generally being higher in the second half of our fiscal year, the impact of any acquisitions, and, among other reasons, the continued uncertainty of general economic conditions that may impact our key end markets for the remainder of fiscal 2020.2021, 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
Use of Estimates
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.
Reclassifications
Certain prior-period amounts have been reclassified to conform to the current year presentation. No material reclassifications occurred during the current period.

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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’sTLG's indoor and outdoor lighting fixtures are marketed to architects, landscape architects, interior designers, and engineers through 5 niche lighting brands: A-light, Cyclone,A-light™, Cyclone™, Eureka®, Luminaire LED,LED™, and Luminis.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 Fiscal 2020 Acquisitions
Acquisition-relatedWe 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. Preliminary amounts related toAs of November 30, 2020, we have finalized the acquisition accounting for TLG and LocusLabs are reflected on the Consolidated Balance Sheets2020 Acquisitions. There were no material changes to our financial statements as a result of November 30, 2019. the finalization of the acquisition accounting for the 2020 Acquisitions.
The aggregate purchase price of these acquisitions reflects preliminary total goodwill and identified intangible assets of approximately $147.8$107.6 million and $165.0$180.6 million, respectively, as of November 30, 2019.2020. Identified intangible assets consist of indefinite-lived marketing relatedmarketing-related intangibles as well as definite-lived customer-based and technology-based assets, which have a preliminary weighted average useful life of approximately 1316 years. These amounts are deemedGoodwill 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 provisional until disclosed otherwise, as we continue to gather information related to the identification and valuation of intangible and other acquired assets and liabilities. These amounts are expected to change as we finalize the allocations. The operating results of the acquisitions have been included in our consolidated financial statements since the date of acquisition and are not material to our financial condition, results of operations, or cash flows.tax deductible.

Fiscal 2019 Acquisitions
WhiteOptics, LLC
On June 20, 2019, using cash on hand, we acquired all of the equity interests of WhiteOptics, LLC (“WhiteOptics”). WhiteOptics is headquartered in New Castle, Delaware and manufactures advanced optical components used to reflect, diffuse, and control light for light emitting diode (“LED”) lighting used in commercial and institutional applications. The operating results of WhiteOptics have been included in our consolidated financial statements since the date of acquisition and are not material to our financial condition, results of operations, or cash flows.

Note 4 — New Accounting Pronouncements
Accounting Standards Adopted in Fiscal 2020
Accounting Standards Codification (“ASC”) 842 — Leases (“ASC 842”)2021
In FebruaryJune 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02,2016-13, LeasesFinancial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-02”2016-13”), which requires lesseesan entity to include most leasesassess impairment of its financial instruments based on the balance sheet as lease liabilities with an associated right-of-use ("ROU") asset.entity's estimate of expected credit losses. Since the issuance of ASU 2016-02,2016-13, the FASB released several amendments to improve and clarify the implementation guidance, as well as to change the allowable adoption methods.guidance. These standards have been collectively codified within ASC 842,Topic 326, Leases Credit Losses(“ (“ASC 842”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 842 using the modified retrospective method and applied the standard to all leases existing326 as of September 1, 2019. Information for prior years presented has not been restated2020 and continuesapplied these changes through an immaterial cumulative-effect adjustment of $0.2 million to reflectretained earnings as of the authoritative accounting standards in effect for those periods. We electeddate of adoption. Our estimation of current expected credit losses reflects our considerations of the packageimpact of transition practical expedients that allows usgeneral economic conditions, including construction spending, unemployment rates, the effects of the COVID-19 pandemic, and macroeconomic growth, on our customers' ability to carryforward our historical assessments of whether existing contracts contain leases, determinations of lease classification, and treatments of initial direct costs.meet their obligations.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

AsIn 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 September 1, 2019, we recognized total operating lease liabilitiesthe 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 prospectively, and this standard did not have a material effect on our financial condition, results of $64.7 million in our Consolidated Balance Sheets, of which $49.3 million was recorded within Long-term operating lease liabilities and $15.4 million was recorded within Current operating lease liabilities. We additionally derecognized $5.1 million of previously recorded net deferred rent balances and recorded ROU assets of $59.6 million related to our operating leases, which were reflected within Operating lease right-of-use assets in our Consolidated Balance Sheets.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 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, 2021.2020. 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 the provisions of ASU 2019-12 on our financial condition, results of operations, and cash flows.
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 will require customers to apply internal-use software guidance to determine the implementation costs that are able to be capitalized. Capitalized implementation costs will be 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. The standard allows changes to be applied either retrospectively or prospectively. We will adopt the standard as required in fiscal 2021. The provisions of ASU 2018-15 are not expected to have a material effect on our financial condition, results of operations, or cash flows.
In June 2016, the FASB issued 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 its estimate of expected credit losses. Since the issuance of ASU 2016-13, the FASB released several amendments to improve and clarify the implementation guidance. The provisions of ASU 2016-13 and the related amendments are effective for fiscal years (and interim reporting periods within those years) beginning after December 15, 2019. Entities are required to apply these changes through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. We will adopt the amendments as required in fiscal 2021. The provisions of ASU 2016-13 are not expected to have a material effect on our financial condition, results of operations, or cash flows.
All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

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 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a three-level hierarchy making a distinction betweenthat 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).
Our cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $266.6 million and $461.0 million as of November 30, 2019 and August 31, 2019, respectively.
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. 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.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

We 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 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.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The carrying values and estimated fair values of certain of our financial instruments (Level 2) were as follows as of the dates presented (in millions):
 November 30, 2020August 31, 2020
 Carrying ValueFair ValueCarrying ValueFair 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 Facility0 0 395.0 395.0 
Industrial revenue bond4.0 4.0 4.0 4.0 
Bank loans2.0 2.2 2.1 2.3 
 November 30, 2019 August 31, 2019
 Carrying Value Fair Value Carrying Value Fair Value
Senior unsecured public notes, net of unamortized discount and deferred costs$350.0
 $350.1
 $349.9
 $352.7
Industrial revenue bond4.0
 4.0
 4.0
 4.0
Bank loans2.3
 2.4
 2.7
 2.9
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.

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 is a variable-rate instrument that resets on a frequent short-term basis; therefore, we estimate that the face amount of this bond approximates its fair value as of November 30, 2020 based on 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 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 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)
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, 2019 August 31, 2019
Raw materials, supplies, and work in process (1)
$190.6
 $179.4
Finished goods186.8
 183.7
Inventories excluding reserves377.4
 363.1
Less: Reserves(24.8) (22.3)
Total inventories$352.6
 $340.8

 November 30, 2020August 31, 2020
Raw materials, supplies, and work in process (1)
$161.4 $170.3 
Finished goods196.4 199.1 
Inventories excluding reserves357.8 369.4 
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.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 7 — Property, Plant, and Equipment
Property, plant, and equipment consisted of the following as of the dates presented (in millions):
 November 30, 2020August 31, 2020
Land$22.4 $22.2 
Buildings and leasehold improvements194.4 192.2 
Machinery and equipment601.6 588.4 
Total property, plant, and equipment, at cost818.4 802.8 
Less: Accumulated depreciation and amortization(549.6)(532.3)
Property, plant, and equipment, net$268.8 $270.5 
 November 30, 2019 August 31, 2019
Land$22.7
 $22.6
Buildings and leasehold improvements193.6
 190.7
Machinery and equipment557.7
 544.4
Total property, plant, and equipment, at cost774.0
 757.7
Less: Accumulated depreciation and amortization(495.6) (480.4)
Property, plant, and equipment, net$278.4
 $277.3


Note 8 — Leases
We lease property and equipment under operating lease arrangements, most of which relate to distribution centers and manufacturing facilities in the U.S. and Mexico. We include both the contractual term as well as any renewal option that we are reasonably certain to exercise in the determination of our lease terms. For leases with a term of greater than 12 months, we value lease liabilities and the related assets as the present value of the lease payments over the related term. We apply the short-term lease exception to leases with a term of 12 months or less and exclude such leases from our Consolidated Balance Sheets. Payments related to these short-term leases are expensed on a straight-line basis over the lease term and reflected as a component of lease cost within our Consolidated Statements of Comprehensive Income. Lease payments generally consist of fixed amounts, and variable amounts based on a market rate or an index are not material to our consolidated lease cost. We have elected to use the practical expedient present in ASC 842 to not separate lease and non-lease components for all significant underlying asset classes and instead account for them together as a single lease component in the measurement of our lease liabilities. Our leases do not contain significant terms and conditions for variable lease payments.
Generally, the rate implicit in our leases is not readily determinable. Therefore, we discount future lease payments using our estimated incremental borrowing rate at lease commencement. We determine this rate based on a credit-adjusted risk-free rate, which approximates a secured rate over the lease term. The weighted average discount rate for operating leases as of November 30, 2019 was 2.2%.
The following table presents the future undiscounted payments due on our operating lease liabilities as well as a reconciliation of those payments to our operating lease liabilities recorded as of the period presented (in millions):
Fiscal year November 30, 2019
2020 $13.8
2021 15.6
2022 10.9
2023 7.8
2024 5.4
Thereafter 16.5
Total undiscounted lease payments 70.0
Less: Discount due to interest (3.9)
Present value of lease liabilities $66.1

The weighted average remaining lease term for our operating leases was six years as of November 30, 2019.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The components of total lease cost were as follows for the period presented (in millions):
  Three Months Ended
  November 30, 2019
Operating lease cost $4.9
Variable lease cost 0.8
Short-term lease cost 0.3
Total lease cost $6.0

Total rent expense recognized during the three months ended November 30, 2018, prior to the adoption of ASC 842, was $5.5 million.
Cash paid for operating lease liabilities during the three months ended November 30, 2019 was $4.5 million. ROU assets obtained in exchange for lease liabilities, including those obtained from recent acquisitions, during the three months ended November 30, 2019 were $5.1 million.
We do not have material leases that have not yet commenced as of November 30, 2019 that create significant rights and obligations.
We have subleased certain properties. Lease income from these subleases is recognized in income as it is earned and is not material to our consolidated results of operations. We do not have any other significant transactions in which we are the lessor.

Note 9 — 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. Indefinite-lived intangible assets consist of trade names that are expected to generate cash flows indefinitely.
We recorded amortization expense of $9.6$10.1 million and $7.7$9.6 million during the three months ended November 30, 20192020 and 2018,2019, respectively. Amortization expense is generally recorded on a straight-line basis and is expected to be approximately $41.3 million in fiscal 2020, $39.0$40.7 million in fiscal 2021, $38.1$40.6 million in fiscal 2022, $36.9$40.3 million in fiscal 2023, and $36.0$40.1 million in fiscal 2024.2024, and $33.3 million in fiscal 2025.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The following table summarizes the changes in the carrying amount of goodwill during the periods presented (in millions):
 Three Months Ended
 November 30, 2019 November 30, 2018
Beginning balance$967.3
 $970.6
Additions from acquired businesses147.8
 —
Foreign currency translation adjustments0.4
 (3.7)
Ending balance$1,115.5
 $966.9

Three Months Ended
November 30, 2020November 30, 2019
Beginning balance$1,080.0 $967.3 
Provisional additions from acquired businesses0 147.8 
Foreign currency translation adjustments0.6 0.4 
Ending balance$1,080.6 $1,115.5 
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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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 109 — Debt and Lines of Credit
Long-term Debt
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 Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements within our Form 10-K.
Lines of Credit
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 (“Term(the “Term Loan Facility”). We had 0 borrowings outstanding under the current 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 November 30, 2019 or August 31, 2019.2020, 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 InterbankInter-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%. The Term Loan Facility allows for borrowings to be drawn over a period ending December 31, 2019, utilizing up to 4 separate installments, which are U.S. dollar denominated. Borrowings under the Term Loan Facility will amortize in equal quarterly installments
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Table of 2.5% per year in year one, 2.5% per year in year two, 5.0% per year in year three, 5.0% per year in year four, and 7.5% per year in year five. Any remaining borrowings under the Term Loan Facility are due and payable in full on June 29, 2023. The Term Loan Facility allows for borrowings to bear interest at either a Eurocurrency Rate or the base rate, at our option, in each case 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 LIBOR or screen rate for the applicable currency plus an applicable margin. The Eurocurrency applicable margin is based on our leverage ratio, as defined in the Credit Agreement, with such margin ranging from 0.875% to 1.250%. 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 0.0% to 0.25%.Contents
ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
We are required to pay certain fees in connection with the Credit Agreement, including administrative service fees and 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 0.25%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 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, 2019.2020. At November 30, 2019,2020, we had additional borrowing capacity under the Credit Agreement of $796.2$395.9 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility and the Term Loan Facility less the outstanding letters of credit of $3.8$4.1 million issued under the Revolving Credit Facility. As of November 30, 2019,2020, we had outstanding letters of credit totaling $8.1$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 $3.8$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.
Long-term Debt
At November 30, 2019, we had $350.0 million of publicly-traded, senior unsecured notes outstanding at a 6% interest rate that matured in December 2019 (the “Unsecured Notes”). On December 16, 2019, we repaid the Unsecured Notes and accrued interest in full with borrowings under our Term Loan Facility. Because approximately $341.2 million of the borrowings under the Term Loan Facility are due greater than one year from the refinancing date, $341.2 million of the carrying value of the Unsecured Notes is reflected within Long-term debt on the Consolidated Balance Sheets as ofNovember 30, 2019.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

We also had $4.0 million of tax-exempt industrial revenue bonds that are scheduled to mature in 2021 and $2.3 million outstanding under fixed-rate bank loans outstanding at November 30, 2019. 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.
Interest Expense, net
Interest expense, net, is comprised primarily of interest expense on long-term debt, and 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, 2020November 30, 2019
Interest expense$5.1 $9.0 
Interest income(0.2)(0.7)
Interest expense, net$4.9 $8.3 
 Three Months Ended
 November 30, 2019
November 30, 2018
Interest expense$9.0
 $9.2
Interest income(0.7) (0.5)
Interest expense, net$8.3
 $8.7


Note 1110 — 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 reservesestimated liabilities and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. We establish reservesestimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended November 30, 2019,2020, no material changes have occurred in our reservesestimated 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 a reservean 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 reservesincreases in the accrual may be required, which could have a material adverse impact on our results of operations and cash flows.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

ReservesEstimated 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 reservesestimated liabilities for product warranty and recall costs for the periods presented (in millions):
 Three Months Ended
 November 30, 2019 November 30, 2018
Beginning balance$11.5
 $27.3
Warranty and recall costs7.9
 5.4
Payments and other deductions(7.8) (5.6)
Acquired warranty and recall liabilities0.1
 —
ASC 606 adjustments (1)
—
 (14.8)
Ending balance$11.7
 $12.3

______________________________
(1) Certain service-type warranties accounted for as contingent liabilities prior to the adoption of ASC 606, Revenue from Contracts with Customers (“ASC 606”), are now reflected as contract liabilities effective September 1, 2018.
Three Months Ended
November 30, 2020November 30, 2019
Beginning balance$16.1 $11.5 
Warranty and recall costs6.6 7.9 
Payments and other deductions(5.9)(7.8)
Acquired warranty and recall liabilities0 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 inwith 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 73 patents, LSG’s infringement allegations relate to certain of our LED luminairesluminaires. On April 7, 2020 and related systems. LSG seeks orders fromOctober 1, 2020, the International Trade Commission made final determinations that LSG was not entitled to precludeany relief. In the importation and saleDistrict of the accused products.Delaware action, LSG seeksseparately sought unspecified monetary damages, costs, and attorneys’ fees infees. 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, action. We dispute and have numerous defensesthe Patent Trial and Appeal Board. According to the allegations, and we intend to vigorously defend against LSG’s 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 a request for an exclusion order and are in the stagesterms of the proceedings where key factualsettlement, the various pending actions will be dismissed with prejudice, each party will bear its own fees and legal issues have not been resolved. For these reasons, we currently are unable to predictcosts, and the ultimate timing or outcome of or reasonably estimateCompany will pay no compensation for the possible losses or a range of possible losses resulting from these matters.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 officers and 1 former executiveofficers/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 class certification, 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.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Trade Compliance Matters
In the course of routine reviews of import and export activity, we previously determined that we misclassified and/or inaccurately valued certain international shipments of products. We are conducting a detailed review of this activity to determine the extent of any liabilities and implementing the appropriate remedial measures. At this time, we are unable to determine the likelihood or amount of loss, if any, associated with these shipments.
Litigation
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 reservesestimated 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 reservedaccrued 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 amounts reservedaccrued amounts.
.

Note 1211 — Changes in Stockholders' Equity
The following tables summarize changes in the components of stockholders' equity for the periods presented (in millions):
Common Stock Outstanding
SharesAmountPaid-in
Capital		Retained
Earnings		Accumulated Other
Comprehensive
Loss		Treasury
Stock, at cost		Total
Balance, August 31, 202038.9 $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 cancellations0.1 — 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, 202036.4 $0.5 $968.6 $2,577.7 $(126.5)$(1,483.3)$1,937.0 
____________________________________
 Common Stock Outstanding          
 Shares Amount 
Paid-in
Capital
 
Retained
Earnings
 Accumulated Other
Comprehensive
Loss		 
Treasury
Stock, at cost
 Total
Balance, August 31, 201939.5
 $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—
 —
 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, 201939.5
 $0.5
 $942.8
 $2,347.6
 $(147.6) $(1,156.0) $1,987.3
(1) See Note 4 - New Accounting Pronouncements for further details on our adoption of ASC 326.
Common Stock Outstanding
SharesAmountPaid-in
Capital		Retained
Earnings		Accumulated Other
Comprehensive
Loss		Treasury
Stock, at cost		Total
Balance, August 31, 201939.5 $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 cancellations0 — 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, 201939.5 $0.5 $942.8 $2,347.6 $(147.6)$(1,156.0)$1,987.3 

 Common Stock Outstanding          
 Shares Amount 
Paid-in
Capital
 
Retained
Earnings
 Accumulated Other
Comprehensive
Loss		 
Treasury
Stock, at cost
 Total
Balance, August 31, 201840.0
 $0.5
 $906.3
 $1,999.2
 $(114.8) $(1,074.4) $1,716.8
Net income—
 —
 —
 79.6
 —
 —
 79.6
Other comprehensive loss—
 —
 —
 —
 (6.2) —
 (6.2)
ASC 606 adjustments—
 —
 —
 (13.0) —
 —
 (13.0)
Share-based payment amortization, issuances, and cancellations0.1
 —
 3.8
 —
 —
 —
 3.8
Employee stock purchase plan issuances—
 —
 0.1
 —
 —
 —
 0.1
Cash dividends of $0.13 per share paid on common stock—
 —
 —
 (5.2) —
 —
 (5.2)
Repurchases of common stock(0.2) —
 —
 —
 —
 (25.0) (25.0)
Balance, November 30, 201839.9
 $0.5
 $910.2
 $2,060.6
 $(121.0) $(1,099.4) $1,750.9
12



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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1312 — 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.
Contract Balances
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 an unconditional right to collect cash prior to the transfer of control of goods or 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, 2019 August 31, 2019
Current deferred revenues$7.4
 $4.7
Non-current deferred revenues47.7
 46.4

November 30, 2020August 31, 2020
Current deferred revenues$5.2 $5.4 
Non-current deferred revenues54.2 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.Sheets. Revenue recognized from beginning balances of contract liabilities during the three months ended November 30, 20192020 totaled $1.6$2.8 million.
Unsatisfied performance obligations as of November 30, 20192020 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, 2020November 30, 2019
Independent sales network$599.5 $618.0 
Direct sales network76.3 84.3 
Retail sales55.0 53.4 
Corporate accounts24.0 33.5 
Other37.2 45.5 
Total$792.0 $834.7 
 Three Months Ended
 November 30, 2019 November 30, 2018
Independent sales network$618.0
 $651.0
Direct sales network84.3
 99.0
Retail sales53.4
 85.2
Corporate accounts33.5
 51.2
Other45.5
 46.2
Total$834.7
 $932.6


Note 1413 — 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.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

savings plan.
We recognizedThe following table presents share-based payment expense of $16.7 million and $7.8 million duringfor the three months ended November 30, 2019 and 2018, respectively. periods presented (in millions):
Three Months Ended
November 30, 2020November 30, 2019
Share-based payment expense$7.7 $16.7 
Further details regarding our stock options, restricted shares, and director compensation award programs andas 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
During the current period, the Board of Directors (the “Board”) approved grants of performance share units to certain executives and key employees. These shares vest over a three-year period and are valued at the closing stock price on the date of grant. The actual number of performance shares earned will be determined at the end of the three-year period based on the level of achievement of established performance thresholds. We recognize compensation expense for these awards proportionately over the requisite service period for each employee when it becomes probable that the performance metric will be satisfied. As of November 30, 2019, we had approximately 37,000 performance share units outstanding.
Additionally, effectiveEffective for restricted stock and performance share grants awarded in October 20192020 and thereafter, the Board reinstatedof Directors (the “Board”) discontinued a policy that providesprovided for the continued vesting of stock awards following retirement for all eligible participants who have attained age 60 and have at least 10ten years of service with the Company. This policy required acceleration of share-based payment expense in certain circumstances.
Stock Options
As such, for awardsof 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 October 2019the first quarter of fiscal 2021:
Market Options
Valuation MethodologyMonte Carlo Simulation
Dividend yield0.5%
Expected volatility36.5%
Risk-free interest rate0.7%
Expected life of options8 years
Weighted-average fair value of options$40.45
The dividend yield was calculated based on annual dividends paid and later, we deem the requisite servicetrailing 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 participantterm 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:
 OutstandingExercisable
Number of
Shares
(in millions)		Weighted Average
Exercise Price		Number of
Shares
(in millions)		Weighted Average
Exercise Price
Outstanding at August 31, 20200.9$133.190.4$151.07
Granted0.3$108.96  
Canceled0*0  
Outstanding at November 30, 20201.2$127.560.4$148.90
Range of option exercise prices:    
$40.01 - $100.00 (average life - 1.9 years)0.1$62.250.1$62.25
$100.01 - $160.00 (average life - 8.6 years)1.0$119.110.2$126.85
$160.01 - $210.00 (average life - 4.9 years)0.1$207.800.1$207.80
$210.01 - $239.76 (average life - 5.9 years)0*$239.760*$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 the shorterrecognized over a weighted-average period of either the award's stated vesting period or the time from grant until the participant satisfies the age and service criteria.approximately 2.5 years.

Note 1514 — 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, 2019
November 30, 2018
Service cost$1.2
 $0.8
Interest cost1.8
 2.2
Expected return on plan assets(3.1) (3.1)
Amortization of prior service cost1.0
 0.8
Settlement loss—
 0.4
Recognized actuarial loss1.4
 1.1
Net periodic pension cost$2.3
 $2.2

 Three Months Ended
 November 30, 2020November 30, 2019
Service cost$1.2 $1.2 
Interest cost1.6 1.8 
Expected return on plan assets(3.3)(3.1)
Amortization of prior service cost0.7 1.0 
Recognized actuarial loss1.4 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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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1615 — Special Charges
During the first three months of fiscal 2020,2021, we recognized pre-tax special charges of $6.9 million. The fiscal 2020 special charge$0.7 million, which consisted primarily of severance costs and ROU asset lease impairments related to planned facility closures. Additionally, we recognized charges for relocation costs and ROU lease asset impairment charges associated with the previously announced transfer of activities from planned facility closures. We expect these actions to streamline our business activities, and to 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

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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, 2019 November 30, 2018
Severance and employee-related costs$5.1
 $(0.5)
Other restructuring costs1.8
 1.5
Total special charges$6.9
 $1.0

Three Months Ended
November 30, 2020November 30, 2019
Severance and employee-related costs$0.3 $5.1 
Relocation and other restructuring costs0.4 1.8 
Total special charges$0.7 $6.9 
As of November 30, 2019,2020, remaining restructuring reserves were $4.8$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 costs0.3 
Payments made during the period(1.3)
Balance at November 30, 2020$2.0 
 Fiscal 2020 Actions Fiscal 2019 Actions Fiscal 2018 Actions Total
Balance at August 31, 2019$—
 $1.3
 $0.6
 1.9
Severance costs5.1
 —
 —
 5.1
Payments made during the period(1.0) (0.8) (0.4) (2.2)
Balance at November 30, 2019$4.1
 $0.5
 $0.2
 $4.8


Note 1716 — Earnings Per Share
Basic earnings per share 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 periods presented (in millions, except per share data):
Three Months Ended
November 30, 2020November 30, 2019
Net income$59.6 $57.0 
Basic weighted average shares outstanding37.6 39.5 
Common stock equivalents0.2 0.1 
Diluted weighted average shares outstanding37.8 39.6 
Basic earnings per share$1.58 $1.44 
Diluted earnings per share$1.57 $1.44 
 Three Months Ended
 November 30, 2019 November 30, 2018
Net income$57.0
 $79.6
Basic weighted average shares outstanding39.5
 40.0
Common stock equivalents0.1
 0.1
Diluted weighted average shares outstanding39.6

40.1
Basic earnings per share$1.44
 $1.99
Diluted earnings per share$1.44

$1.98
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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:
Three Months Ended
November 30, 2020November 30, 2019
Stock options1,127,837 278,972 
Restricted stock awards185,419 118,036 
 Three Months Ended
 November 30, 2019 November 30, 2018
Stock options278,972
 212,048
Restricted stock awards118,036
 197,014

NaN performance share units were antidilutive for the three months ended November 30, 2020 and 2019.
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.

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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1817 — 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) items includes 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):
  Foreign Currency Items  Defined Benefit Pension Plans  Accumulated Other Comprehensive Loss Items
Balance at August 31, 2019$(65.4) $(86.0) $(151.4)
Other comprehensive income before reclassifications1.9
 —
 1.9
Amounts reclassified from accumulated other comprehensive loss (1)
—
 1.9
 1.9
Net current period other comprehensive income1.9
 1.9
 3.8
Balance at November 30, 2019$(63.5) $(84.1) $(147.6)

 Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items
Balance at August 31, 2020$(53.5)$(79.2)$(132.7)
Other comprehensive income before reclassifications4.6 0 4.6 
Amounts reclassified from accumulated other comprehensive loss (1)
0 1.6 1.6 
Net current period other comprehensive income4.6 1.6 6.2 
Balance at November 30, 2020$(48.9)$(77.6)$(126.5)
  Foreign Currency Items  Defined Benefit Pension Plans  Accumulated Other Comprehensive Loss Items
Balance at August 31, 2018$(53.9) $(60.9) $(114.8)
Other comprehensive (loss) income before reclassifications(8.8) 0.9
 (7.9)
Amounts reclassified from accumulated other comprehensive loss (1)
—
 1.7
 1.7
Net current period other comprehensive (loss) income(8.8) 2.6
 (6.2)
Balance at November 30, 2018$(62.7)
$(58.3)
$(121.0)
 Foreign Currency Items Defined Benefit Pension Plans Accumulated Other Comprehensive Loss Items
Balance at August 31, 2019$(65.4)$(86.0)$(151.4)
Other comprehensive income before reclassifications1.9 0 1.9 
Amounts reclassified from accumulated other comprehensive loss (1)
0 1.9 1.9 
Net current period other comprehensive income1.9 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.
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ACUITY BRANDS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The following table summarizes the tax expense or benefit allocated to each component of other comprehensive lossincome (loss) for the periods presented (in millions):
Three Months Ended
November 30, 2020November 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 losses1.4 (0.3)1.1 1.4 (0.3)1.1 
Total defined benefit pension plans, net2.1 (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, 2019 November 30, 2018
  Before Tax Amount  Tax (Expense) Benefit  Net of Tax Amount  Before Tax Amount  Tax (Expense) Benefit  Net of Tax Amount
Foreign currency translation adjustments$1.9
 $—
 $1.9
 $(8.8) $—
 $(8.8)
Defined benefit pension plans:           
Actuarial loss—
 —
 —
 1.3
 (0.4) 0.9
Amortization of defined benefit pension items:           
Prior service cost 
1.0
 (0.2) 0.8
 0.8
 (0.2) 0.6
Actuarial losses1.4
 (0.3) 1.1
 1.1
 (0.3) 0.8
Settlement losses—
 —
 —
 0.4
 (0.1) 0.3
Total defined benefit pension plans, net2.4
 (0.5) 1.9
 3.6
 (1.0) 2.6
Other comprehensive income (loss)$4.3
 $(0.5) $3.8
 $(5.2) $(1.0) $(6.2)


18
Note 19 — Subsequent Event
In December 2019, we borrowed the full $400.0 million available under our Term Loan Facility. The proceeds were primarily used to repay the Unsecured Notes, which matured on December 15, 2019, and the related accrued interest in full. See Debt and LinesTable of Credit footnote for interest rates and repayment terms related the Term Loan Facility. As of the date of this filing, we had additional borrowing capacity under the Credit Agreement of $396.2 million under the most restrictive covenant in effect at that time.Contents

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, 20192020 and for the three months ended November 30, 20192020 and 2018.2019. 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 Acuity Brands' Annual Report on Form 10-K for the fiscal year ended August 31, 2019,2020, filed with the Securities and Exchange Commission (the “SEC”) on October 29, 201923, 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 “we,” “our,” “us,” “the Company,” or similar references). Our principal office is located in Atlanta, Georgia.
We are one of the world’s leading providers of lightinga market-leading industrial technology company that designs, manufactures, and building management solutionsbrings to market products and services for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. Our lighting andproducts include building management solutions include devices such as luminaires,systems, lighting, lighting controls, controls for various building systems, power supplies, prismatic skylights, and drivers, as well as integrated systems designedlocation 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 efficiencyincrease market share and comfort for various indoordeliver superior returns. We look to aggressively deploy capital to grow the business and outdoor applications. Additionally, we continue to expand our solutions portfolio, including software and services, to provide a host of other economic benefits resulting from data analytics that enables the Internet of Things (“IoT”), supports the advancement of smart buildings, smart cities, and the smart grid, and allows businesses to develop custom applications to scale their operations.enter attractive new verticals. As of November 30, 2019,2020, we operate 2318 manufacturing facilities and eight distribution facilities along with fourtwo warehouses to serve our extensive customer base.
We do not consider acquisitions a critical element of our strategy but seek opportunities to expand and enhance our portfolio of solutions, including the following transactions:transactions during the 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 complementscomplement 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,A-light™, Cyclone™, Eureka®, Luminaire LED,LED™, and Luminis.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.
The results of operations for the three months ended November 30, 20192020 and 20182019 are not necessarily indicative of the results to be expected for the full fiscal year due primarily to seasonality, which results in our net sales and net income generally being higher in the second half of our fiscal year, the impact of any acquisitions, and, among other reasons, the continued uncertainty of general economic conditions that may impact our key end markets for fiscal 2021, seasonality, and the remainderimpact 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 2020.2021 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 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
Our principal sources of liquidity are operating cash flows generated primarily from our business operations, cash on hand, and various sources of borrowings. Our ability to generate sufficient cash flow from operations or to access certain capital markets, including banks, is necessary to fund our operations and capital expenditures, pay dividends, repurchase shares, meet obligations as they become due, and maintain compliance with covenants contained in our financing agreements.
For the first three months of fiscal 2020,2021, we paid $11.6$11.4 million for property, plant, and equipment, primarily for equipment, tooling, new and enhanced information technology capabilities, equipment, and facility enhancements. We currently expect to invest approximately 1.7%1.5% of net sales inon capital expenditures during fiscal 2020.2021.
In March 2018,During the Boardfirst quarter of Directors (the “Board”) authorized the repurchase of up to sixfiscal 2021, we repurchased 2.6 million shares of the Company's common stock.shares. As of November 30, 2019, 1.45 million2020, the maximum number of shares had beenthat may yet be repurchased under this

authorization. No shares were repurchased in fiscal 2020.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 needs are expected to include funding operations as currently planned; making capital investments as currently anticipated; paying quarterly stockholder dividends as currently anticipated; paying principal and interest on debt as currently scheduled, including our senior unsecured notes that matured in December 2019, which we repaid on December 16, 2019 with borrowings available under existing credit arrangements;scheduled; making required contributions and distributions related to our employee benefit plans; funding possible acquisitions; and potentially repurchasing shares of our outstanding common stock. We believe that we will be able to meet our liquidity needs over the next 12 months based on our cash on hand, current projections of cash flow from operations, and borrowing availability under financing arrangements. Additionally, we believe that our cash flows from operations and sources of funding, including, but not limited to, future borrowings and borrowing capacity, will sufficiently support our long-term liquidity needs. However, as the impact of the 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
We use available cash and cash flowflows from operations, borrowings, on credit arrangements, and proceeds from the exercise of stock options to fund operations, capital expenditures, and acquisitions if any; to repurchase Company stock; and to pay dividends.
Our cash position at November 30, 20192020 was $266.6$507.0 million, a decrease of $194.4$53.7 million from August 31, 2019.2020. During the three months ended November 30, 2019,2020, we generated net cash flows from operations of $129.6$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, wasand funds from borrowings were used during the three months ended November 30, 20192020 primarily to fund acquisitionsrepay
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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 $11.6$11.4 million, to pay dividends to stockholders of $5.2$5.0 million, and to pay withholding taxes on the net settlement of equity awards of $4.1$3.0 million.
We generated $129.6$123.9 million of cash flowflows from operating activities during the three months ended November 30, 20192020 compared with $131.8$129.6 million in the prior-year period, a decrease of $2.2$5.7 million, due primarily to lower net income, partially offset by lower working capital requirements.the timing of certain payments.
We believe that investing in assets and programs that will over time increase the overall return on our invested capital is a key factor in driving stockholder value. We paid $11.4 million and $11.6 million and $14.0 million induring the first three months of fiscal 2021 and 2020, respectively, for property, plant, and 2019, respectively,equipment, primarily related to investments in equipment, tooling, new and enhanced information technology capabilities, equipment, and facility enhancements. We expect to invest approximately 1.7% of net sales primarily for new equipment, tooling, facility enhancements, and information technology capabilities during fiscal 2020.
Capitalization
AsOn November 10, 2020, Acuity Brands Lighting, Inc. (“ABL”), our wholly-owned operating subsidiary, issued $500.0 million aggregate principal amount of November 30, 2019, our capital structure was comprised principally of senior unsecured notes and equity of our stockholders. Total debt outstanding was $356.3 million and $356.6 million at November 30, 2019 and August 31, 2019, respectively, and consisted primarily of fixed-rate obligations.
On December 8, 2009, ABL issued $350.0 million of2.150% senior unsecured notes due in December 20192030 (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 borebear 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 for a term of ten years. On December 16, 2019, we repaidvalue. Interest on the Unsecured Notes will be paid semi-annually in arrears on June 15 and accrued interest in fullDecember 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 (“ABL IP Holding”, and, together with borrowings under our unsecured delayed draw term loan facility described below (the “Term Loan Facility”Acuity Brands, the “Guarantors”). Because approximately $341.2, a wholly-owned subsidiary of Acuity Brands. Additionally, we capitalized $4.8 million of deferred issuance costs related to the borrowings underUnsecured Notes that are being amortized over the Term Loan Facility are due greater than one year from10-year term. As of November 30, 2020, the refinancing date, $341.2balance 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 thetax-exempt industrial revenue bonds that are scheduled to mature in June 2021. The carrying value of the Unsecured Notesthese bonds is reflected within Long-termCurrent maturities of debt on theConsolidated Balance Sheets as ofNovember 30, 2019. See the Debt and Lines of Credit footnote2020. 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 InformationNovember 30, 2020August 31, 2020
Current assets$1,027.6 $1,152.6 
Current assets due from non-guarantor affiliates219.4 183.3 
Non-current assets1,404.6 1,416.0 
Current liabilities498.0 530.2 
Non-current liabilities842.6 723.8 
Summarized Income Statement InformationThree Months Ended November 30, 2020
Net sales$662.2 
Gross profit280.7 
Net income60.0 
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 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 a $400.0 million Termunsecured delayed draw term loan facility (the “Term Loan Facility. On November 30, 2019, weFacility)”. We had no borrowings outstanding under the Revolving Credit Facility and noor the Term Loan 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.
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We were in compliance with all financial covenants under the Credit Agreement as of November 30, 2019.2020. At November 30, 2019,2020, we had additional borrowing capacity under the Credit Agreement of $796.2$395.9 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility and the Term Loan Facility less the outstanding letters of credit of $3.8$4.1 million issued onunder the Revolving Credit Facility. As of November 30, 2019,2020, we had outstanding letters of credit totaling $8.1$8.3 million, primarily for securing collateral requirements under our casualty insurance programs and for providing credit support

for our industrial revenue bond, including $3.8which 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 2020,2021, our consolidated stockholders’ equity increased $68.4decreased $190.5 million to $1.99$1.9 billion at November 30, 2019,2020, from $1.92$2.1 billion at August 31, 2019.2020. The increasedecrease was due primarily to comprehensive income earned in the period,repurchases of our outstanding common stock, partially offset by the payment of dividends.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 15.2%20.5% and 15.7%15.9% at November 30, 20192020 and August 31, 2019,2020, respectively. The ratio of debt, net of cash, to total capitalization, net of cash, was 4.3%(0.4)% and (5.8)(8.1)% at November 30, 20192020 and August 31, 2019,2020, respectively.
Dividends
We paid dividends on our common stock of $5.0 million ($0.13 per share) and $5.2 million ($0.13 per share) during the three months ended November 30, 2020 and 2019, and 2018.respectively. All decisions regarding the declaration and payment of dividends are at the discretion of the Board and are evaluated regularly in light of our financial condition, earnings, growth prospects, funding requirements, applicable law, and any other factors the Board deems relevant.
Contractual Obligations
In December 2019, we borrowed the full $400.0 million available under our Term Loan Facility. The proceeds were primarily used to repay the Unsecured Notes, which matured on December 15, 2019, and the related accrued interest in full. See Debt and Lines of Credit footnote for interest rates and repayment terms related the Term Loan Facility. As of the date of this filing, we had additional borrowing capacity under the Credit Agreement of $396.2 million under the most restrictive covenant in effect at that time. Borrowings under the Term Loan Facility amortize in equal quarterly installments as described in the Debt and Lines of Credit footnote of the Notes to Consolidated Financial Statements. Any remaining borrowings under the Term Loan Facility are due and payable in full on June 29, 2023. There have been no other material changes outside of the ordinary course of business in our contractual obligations since August 31, 2019.

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Results of Operations
First Quarter of Fiscal 20202021 Compared with First Quarter of Fiscal 20192020
The following table sets forth information comparing the components of net income for the three months ended November 30, 20192020 and 20182019 (in millions except per share data):
Three Months Ended
 November 30, 2020November 30, 2019Increase (Decrease) Percent Change
Net sales$792.0 $834.7 $(42.7)(5.1)%
Cost of products sold459.6 478.9 (19.3)(4.0)%
Gross profit332.4 355.8 (23.4)(6.6)%
Percent of net sales42.0 %42.6 %(60)bps 
Selling, distribution, and administrative expenses246.0 265.3 (19.3) (7.3)%
Special charges0.7 6.9 (6.2)NM
Operating profit85.7 83.6 2.1  2.5 %
Percent of net sales10.8 %10.0 %80 bps 
Other expense:     
Interest expense, net4.9 8.3 (3.4) (41.0)%
Miscellaneous expense, net1.6 1.4 0.2  NM
Total other expense6.5 9.7 (3.2) (33.0)%
Income before income taxes79.2 73.9 5.3 7.2 %
Percent of net sales10.0 %8.9 %110 bps
Income tax expense19.6 16.9 2.7 16.0 %
Effective tax rate24.7 %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, 2019 November 30, 2018 Increase (Decrease) Percent Change
Net sales$834.7
 $932.6
 $(97.9) (10.5)%
Cost of products sold478.9
 565.1
 (86.2) (15.3)%
Gross profit355.8
 367.5
 (11.7) (3.2)%
Percent of net sales42.6% 39.4% 320
bps 
Selling, distribution, and administrative expenses265.3
 250.1
 15.2
 6.1 %
Special charges6.9
 1.0
 5.9
 NM
Operating profit83.6
 116.4
 (32.8) (28.2)%
Percent of net sales10.0% 12.5% (250)bps 
Other expense: 
  
  
  
Interest expense, net8.3
 8.7
 (0.4) (4.6)%
Miscellaneous expense, net1.4
 1.3
 0.1
 NM
Total other expense9.7
 10.0
 (0.3) NM
Income before income taxes73.9
 106.4
 (32.5) (30.5)%
Percent of net sales8.9% 11.4% (250)bps 
Income tax expense16.9
 26.8
 (9.9) NM
Effective tax rate22.9% 25.2%  
  
Net income$57.0
 $79.6
 $(22.6) (28.4)%
Diluted earnings per share$1.44
 $1.98
 $(0.54) (27.3)%
NM - not meaningful       
Net sales were $834.7$792.0 million for the three months ended November 30, 20192020 compared with $932.6$834.7 million reported for the three months ended November 30, 2018,2019, a decrease of $97.9$42.7 million, or 10.5%5.1%. For the three months ended November 30, 2019,2020, we reported net income of $57.0$59.6 million, a decreasean increase of $22.6$2.6 million, or 28.4%4.6%, compared with $79.6$57.0 million for the three months ended November 30, 2018.2019. For the first quarter of fiscal 2020,2021, diluted earnings per share decreased 27.3%increased 9.0% to $1.44$1.57 compared with $1.98$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 our results of operations, which exclude the impact of acquisition relatedacquisition-related items, amortization of acquired intangible assets, share-based payment expense, and special charges associated primarily with continued efforts to streamline the organization and integrate recent acquisitions.acquisitions, and impairments of investments. Although the impacts of some of these items have been recognized in prior periods and could recur in future periods, we typically exclude these charges during internal reviews of performance and use these non-U.S. GAAP measures for baseline comparative operational analysis, decision making, and other activities. 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 our current financial performance. Specifically, we believe these non-U.S. GAAP measures provide greater comparability and enhanced visibility into our results of operations. TheThere 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.
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(In millions, except per share data)Three Months Ended   (In millions, except per share data)Three Months Ended
November 30, 2019 November 30, 2018 Increase (Decrease)Percent Change November 30, 2020November 30, 2019Increase (Decrease)Percent Change
Gross profit$355.8
 $367.5
   Gross profit$332.4 $355.8 $(23.4)(6.6)%
Percent of net salesPercent of net sales42.0 %42.6 %(60)bps
Add-back: Acquisition-related items (1)
1.1
 1.2
   
Add-back: Acquisition-related items (1)
— 1.1 
Adjusted gross profit$356.9

$368.7
 $(11.8)(3.2)%Adjusted gross profit$332.4 $356.9 $(24.5)(6.9)%
Percent of net sales42.8% 39.5% 330
bpsPercent of net sales42.0 %42.8 %(80)bps
      
Selling, distribution, and administrative expenses$265.3
 $250.1
   Selling, distribution, and administrative expenses$246.0 $265.3 $(19.3)(7.3)%
Percent of net salesPercent of net sales31.1 %31.8 %(70)bps
Less: Amortization of acquired intangible assets(9.6) (7.7)   Less: Amortization of acquired intangible assets(10.1)(9.6)
Less: Share-based payment expense(16.7) (7.8)   Less: Share-based payment expense(7.7)(16.7)
Less: Acquisition-related items (1)
(1.1) —
   
Less: Acquisition-related items (1)
— (1.1)
Adjusted selling, distribution, and administrative expenses$237.9
 $234.6
 $3.3
1.4 %Adjusted selling, distribution, and administrative expenses$228.2 $237.9 $(9.7)(4.1)%
Percent of net sales28.5% 25.2% 330
bpsPercent of net sales28.8 %28.5 %30 bps
      
Operating profit$83.6
 $116.4
   Operating profit$85.7 $83.6 $2.1 2.5 %
Percent of net salesPercent of net sales10.8 %10.0 %80 bps
Add-back: Amortization of acquired intangible assets9.6
 7.7
   Add-back: Amortization of acquired intangible assets10.1 9.6 
Add-back: Share-based payment expense16.7
 7.8
   Add-back: Share-based payment expense7.7 16.7 
Add-back: Acquisition-related items (1)
2.2
 1.2
   
Add-back: Acquisition-related items (1)
— 2.2 
Add-back: Special charges6.9
 1.0
   Add-back: Special charges0.7 6.9 
Adjusted operating profit$119.0
 $134.1
 $(15.1)(11.3)%Adjusted operating profit$104.2 $119.0 $(14.8)(12.4)%
Percent of net sales14.3% 14.4% (10)bpsPercent of net sales13.2 %14.3 %(110)bps
      
Other expenseOther expense$6.5 $9.7 $(3.2)(33.0)%
Less: Impairment of investmentLess: Impairment of investment(4.0)— 
Adjusted other expenseAdjusted other expense$2.5 $9.7 $(7.2)(74.2)%
Net income$57.0
 $79.6
   Net income$59.6 $57.0 $2.6 4.6 %
Add-back: Amortization of acquired intangible assets9.6
 7.7
   Add-back: Amortization of acquired intangible assets10.1 9.6 
Add-back: Share-based payment expense16.7
 7.8
   Add-back: Share-based payment expense7.7 16.7 
Add-back: Acquisition-related items (1)
2.2
 1.2
   
Add-back: Acquisition-related items (1)
— 2.2 
Add-back: Special charges6.9
 1.0
   Add-back: Special charges0.7 6.9 
Add-back: Impairment of investmentAdd-back: Impairment of investment4.0 — 
Total pre-tax adjustments to net income35.4
 17.7
   Total pre-tax adjustments to net income22.5 35.4 
Income tax effects(8.2) (4.5)   Income tax effects(5.2)(8.2)
Adjusted net income$84.2
 $92.8
 $(8.6)(9.3)%Adjusted net income$76.9 $84.2 $(7.3)(8.7)%
      
Diluted earnings per share$1.44
 $1.98
   Diluted earnings per share$1.57 $1.44 $0.13 9.0 %
Adjusted diluted earnings per share$2.13
 $2.32
 $(0.19)(8.2)%Adjusted diluted earnings per share$2.03 $2.13 $(0.10)(4.7)%
__________________________________________________________
(1) (1)Acquisition-related items include profit in inventory and professional fees.
Net Sales
Net sales for the three months ended November 30, 20192020 decreased 10.5%5.1% compared with the prior-year periodperiod. 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 lower volume, decreasing prices on certain products, and a 16% decrease in sales volumes, partially offset by a 3% net favorable change in product prices andchanging mix of products sold (“price/mix”) and a contribution from acquired businessesdue primarily to the impact of approximately 2.5%.the COVID-19 pandemic. Sales in the direct sales network decreased 10%, reflecting weakness in large industrial projects, while sales in the corporate accounts channel declined 28% due primarily to lower retrofit activity in large big-box retailers. Changes in foreign currency rates did not have a meaningful impact on first quarter net sales. The volume decline from the prior year was a result
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Table of several factors including an estimated market decline in the low-to-mid single digits; the negative impact of a prior year volume increase from a pull forward of orders in advance of announced price increases; the elimination of certain products in our portfolio negatively impacted by the increases in tariffs sold primarily through the retail sales channel that did not meet our return objectives; and lower activity of large projects. Price/mix was impacted by a favorable shift in sales channel mix and, to a lesser extent, realization from price increases implemented in fiscal 2019 partially offset by an unfavorable mix of products sold. Fiscal 2020 first quarter net sales reflected a decline across all key sales channels compared with the prior year.Contents

Gross Profit
Gross profit for the first quarter of fiscal 20202021 decreased $11.7$23.4 million, or 3.2%6.6%, to $355.8$332.4 million compared with $367.5$355.8 million in the prior-year period, and gross profit margin decreased 60 basis points to 42.0% from 42.6%. The declines in gross profit and margin were due primarily to lower sales volume and increased tariffs, partially offset by favorable price/mix, lower costs for certain inputs, and the contribution from acquisitions. Gross profit margin increased 320 basis points to 42.6% for the three months ended November 30, 2019 compared with 39.4%price as well as an unfavorable change in the prior-year period. The improvement in gross profit margin was primarily due to favorable sales channelproduct mix, partially offset by lower product input costs from cost reduction efforts. Adjusted gross profit for fiscal 2021 decreased $24.5 million, or 6.9%, to $332.4 compared with $356.9 for the mix of products sold and lower net sales volume.prior year. Adjusted gross profit margin for the three months ended November 30, 2019 increased 330decreased 80 basis points to 42.8%42.0% compared with 39.5%to 42.8% in the prior year period.year.
Operating Profit
SD&A expenses for the three months ended November 30, 20192020 were $265.3$246.0 million compared with $250.1$265.3 million in the prior-year period, an increasea decrease of $15.2$19.3 million, or 6.1%7.3%. The increasedecrease in SD&A expenses was due primarily to higherdecreased employee costs, 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 the addition of acquisitions, and higher professional fees associated with recent acquisitions. Share-based payment expense increaseddecreased due to changes made tothe discontinuation of certain retirement provisions in the equity incentive program as part of the Company’s comprehensive review of its compensation programs that occurred during the past year, which resulted in the acceleration of share-based payment expense in the first quarter offor fiscal 2020.2020 grants. SD&A expenses for the first quarter of fiscal 20202021 were 31.8%31.1% of net sales compared with 26.8%31.8% for the prior-year period. Adjusted SD&A expenses for the three months ended November 30, 20192020 were $237.9$228.2 million (28.5%(28.8% of net sales) compared with $234.6$237.9 million (25.2%(28.5% of net sales) in the prior-year period.
We recognized pre-tax special charges of $6.9$0.7 million during the first quarter of fiscal 20202021 compared with pre-tax special charges of $1.0$6.9 million recorded during the first quarter of fiscal 2019.2020. Further details regarding our special charges are included in the Special Charges footnote of the Notes to Consolidated Financial Statements.
Operating profit for the first quarter of fiscal 20202021 was $83.6$85.7 million (10.0%(10.8% of net sales) compared with $116.4$83.6 million (12.5%(10.0% of net sales) for the prior-year period, a decreasean increase of $32.8$2.1 million, or 28.2%2.5%. The decreaseincrease in operating profit was primarily due to lower gross profit, higher SD&A expenses and increased special charges.
charges, partially offset by lower gross profit. Adjusted operating profit decreased $15.1$14.8 million, or 11.3%12.4%, to $104.2 million for the first quarter of fiscal 2021 compared with $119.0 million for the first quarter of fiscal 2020 compared with $134.1 million2020. Adjusted operating profit margin decreased to 13.2% for the first quarter of fiscal 2019. Adjusted operating profit margin decreased to 14.3% for the first quarter of fiscal 20202021 compared with 14.4%14.3% for the year-ago period.
Other Expense
Other expense consists of net interest expense and net miscellaneous 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 $8.3$4.9 million and $8.7$8.3 million for the three months ended November 30, 2020 and 2019, and 2018, respectively. The 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 expense of $1.4$1.6 million and $1.3$1.4 million for the three months ended November 30, 2020 and 2019, and 2018, 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 Income
Our effective income tax rate was 22.9%24.7% and 25.2%22.9% for the three months ended November 30, 2020 and 2019, and 2018, respectively. The increase in the current fiscal tax rate was due primarily to the recognition in fiscal 2021 of unfavorable discrete items related to the deductibility of certain compensation. We currently estimate that our blended consolidated effective income tax rate, before any discrete items, will be approximately 23% for fiscal 2020,2021, assuming the rates in our taxing jurisdictions remain generally consistent throughout the year.
Net income for the first quarter of fiscal 2020 decreased $22.62021 increased $2.6 million, or 4.6%, to $57.0$59.6 million from $79.6$57.0 million reported for the prior-year period. The decreaseincrease in net income resulted primarily from a decreasedan increased operating profit and lower interest expense, partially offset by a higher income tax expense compared to the prior-year period partially offset by lower income tax expense.period. Diluted earnings per share for the three months ended November 30, 2019 decreased $0.542020 increased $0.13, or 9.0%, to $1.44$1.57 compared with diluted earnings per share of $1.98$1.44 for the prior-year period. This decreaseincrease reflects lowerhigher net income partially offset by a reduced share count.
as well as lower outstanding diluted shares. Adjusted net income for the first quarter of fiscal 20202021 was $84.2$76.9 million, compared with $92.8$84.2 million in the prior-year period, a decrease of $8.6$7.3 million, or 9.3%8.7%. Adjusted diluted
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earnings per share for the three months ended November 30, 20192020 decreased $0.19,$0.10, or 8.2%4.7%, to $2.13$2.03 compared with $2.32$2.13 for the prior-year period.

Outlook
We continue to believe the execution of our strategy will provide attractive opportunities for profitable growth over the long-term. Our strategylong term. Although we are aggressively managing our response to the current COVID-19 pandemic, its impact on our full year fiscal 2021 results and beyond is to capitalizeuncertain. We believe that the most significant elements of uncertainty are the intensity and duration of the impact on market growthconstruction, renovation, and share gain opportunities by continuing to expand and leverage our industry-leading lighting and building management solutions portfolio, coupled with our extensive market presence and financial strength, to produce attractive financial performance over the long-term.
We remain cautious about overall market conditions within the lighting industry for fiscal 2020 primarily due to continued year-to-year declines in private non-residential constructionconsumer spending continued economic uncertainties caused by global trade issues, including tariffs, as well as potential uncertainties associated with the U.S. elections in November 2020. We expect market demand for lighting products to remain sluggish until there is evidenceability of growth in private construction spend as well as there is more clarity regarding these uncertainties related to global tradeour sales channels, supply chain, manufacturing, and the political environment in the U.S. Additionally, we expect that labor shortages for qualified trades in certain markets will continue to dampen growth rates for both the construction and lighting markets. Nonetheless, our focus for fiscal 2020 will be to drive market share gains and enhance margins, while implementing appropriate cost containment measures as necessitated by market demand.
We expectdistribution to continue to outperform the growth rates of the markets that we serve in future periods, subject to quarterly volatility and excluding our actions to prune less profitable portions of our product portfolio, by continuing to execute our various strategies. These strategies focus on growth opportunities for new construction and renovation projects, expansion into underpenetrated geographies and channels, and growth from the continued introduction of new lighting and building management solutions as part of our integrated, tiered solutions strategy, including leveraging our unique, technology driven solutions portfolio to capture market share in the nascent, but rapidly growing, market for data capture, analytics, and other services, assisting in transforming buildings and campuses from cost centers to strategic assets.
We expect the pricing environment to continue to be challenging in portions of the market and could negatively impact net sales and margins, particularly for more basic, lesser-featured products sold through certain sales channels as well as shifts in product mix, including product substitution trends to lower priced alternatives. The impact of the challenging pricing environment. We expect to continue to introduce products and solutions to more effectively compete in these portions of the market and to accelerate programs to reduce product costs in order to maintain our competitiveness and drive improved profitability.
Starting in calendar 2018, the U.S. federal government began imposing tariffs on certain Chinese imports and threatened to impose tariffs on all products imported from Mexico. We produce a meaningful percentage of our products in Mexico. Additionally, we import components as well as certain finished products from China that are impacted by the recently imposed Chinese tariffs. Our efforts to mitigate the impact of these added costs include a variety of activities, such as finding alternative suppliers, in-sourcing the production of certain products, and raising prices. We believe that our mitigation activities will assist to offset the added costs. Future U.S. policy changes that may be implemented, including additional tariffs, could have a positive or negative consequence on our financial performance depending on how the changes influence many factors, including business and consumer sentiment.
In December 2019, we borrowed the full $400 million available under our existing Term Loan Facility. The majority of the proceeds were used to refinance the Unsecured Notes that matured on December 15, 2019. Borrowings under the Term Loan Facility are based on short-term interest rates that are currently approximately half the rate of the refinanced Unsecured Notes. The interest savings associatedoperate with refinancing the Unsecured Notes is estimated between $7 million and $8 millionminimal disruption for the remainder of fiscal 2020, assuming no meaningful changes in short-term interest rates.2021 and beyond, all of which could negatively impact our financial position, results of operations, cash flows, and outlook.
From a longer term perspective, we expect that our addressable markets have the potential to experience solid growth over the next decade, particularly as energy and environmental concerns continue to 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. We remain positive about our future prospects and ability to outperform the markets we serve.


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 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 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, 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. We base our estimates and judgments on 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. We discuss the development of accounting estimates with the Audit Committee of the Board.
There have been no material changes in 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, refer to 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 we file with the 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) our projections regarding financial performance, liquidity, capital structure, capital expenditures, investments, share repurchases, and dividends; (b) expectations about the impact of 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 our addressable markets; (d) our ability to execute and realize benefits from initiatives related to streamlining 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) our estimate of our fiscal 20202021 effective income tax rate, results of operations, and cash flows; (f) our estimate of future amortization expense; (g) our ability to achieve our long-term financial goals and measures and outperform the markets we serve; (h) the impact of changes in the political landscape and related policy changes, including monetary, regulatory, and trade policies; (i) our expectations related to mitigating efforts around recently imposed tariffs; and (j) our expectations about the resolution of patent litigation, securities class action, trade compliance, and/or other legal matters.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 quarterly report. Except as required by law, 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 quarterly report or to reflect the occurrence of unanticipated events. Our forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience 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 us. Also, additional risks that could cause our actual results to differ materially from those expressed in our forward-looking statements are discussed in Part I, Item 1a. Risk Factors of our Form 10-K.

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Item 3.Quantitative and Qualitative Disclosures about Market Risk
Item 3.Quantitative and Qualitative Disclosures about Market Risk
General.We are exposed to market risks that may impact 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. ThereOur 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 our exposure from market risks from those disclosed in Part II, Item 7a. Quantitative and Qualitative Disclosures About Market Risk of our Form 10-K.

Item 4.Controls and Procedures
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 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 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 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, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2019.2020. 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 our disclosure controls and procedures are effective at a reasonable assurance level as of November 30, 2019.2020. 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 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.
During the three months ended November 30, 2019, we completed our acquisitions
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Table of The Luminaires Group (“TLG”) and LocusLabs, Inc (“LocusLabs”). SEC guidance permits management to omit an assessment of an acquired business' internal control over financial reporting from management's assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition. Accordingly, management has not assessed TLG's or LocusLab's internal control over financial reporting as of November 30, 2019. Excluding the acquisitions, there have been no changes in our internal control over financial reporting that occurred during our most recent completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We began integrating TLG and LocusLabs into our existing control procedures from their respective dates of acquisition. We do not anticipate the integration of the acquired companies to result in changes that would materially affect our internal control over financial reporting.Contents


PART II. OTHER INFORMATION

Item 1.Legal Proceedings
Item 1.Legal Proceedings
Lighting Science Group Patent Litigation
On April 30, 2019 and May 1, 2019, Lighting Science Group Corp. (“LSG”) filed complaints inwith 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 seventhree patents, LSG’s infringement allegations relate to certain of our LED luminairesluminaires. On April 7, 2020 and related systems. LSG seeks orders fromOctober 1, 2020, the International Trade Commission made final determinations that LSG was not entitled to precludeany relief. In the importation and saleDistrict of the accused products.Delaware action, LSG seeksseparately sought unspecified monetary damages, costs, and attorneys’ fees infees. 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, action. We dispute and have numerous defensesthe Patent Trial and Appeal Board. According to the allegations, and we intend to vigorously defend against LSG’s 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 a request for an exclusion order and are in the stagesterms of the proceedings where key factualsettlement, the various pending actions will be dismissed with prejudice, each party will bear its own fees and legal issues have not been resolved. For these reasons, we currently are unable to predictcosts, and the ultimate timing or outcome of or reasonably estimateCompany will pay no compensation for the possible losses or a range of possible losses resulting from these matters.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 officers and one former executiveofficers/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 class certification, 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 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, 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.
Trade Compliance Matters
In the course of routine reviews of import and export activity, we previously determined that we misclassified and/or inaccurately valued certain international shipments of products. We are conducting a detailed review of this activity to determine the extent of any liabilities and implementing the appropriate remedial measures. At this time, we are unable to determine the likelihood or amount of loss, if any, associated with these shipments.
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. We are self-insured up to specified limits for certain types of claims, including product liability, and are 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 theour 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 our financial condition, results of operations, or cash flows in future periods. We establish reservesestimated liabilities for legal claims when theassociated 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 reservedaccrued 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 amounts reserved.accrued amounts.
Information regarding reportable legal proceedings is contained in Part I, Item 3. Legal Proceedings in our Form 10-K. Information set forth in this report’s Commitments and Contingencies footnote of the Notes to Consolidated
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Financial Statements describes any legal proceedings that became reportable during the quarter ended November 30, 2019,2020, 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
Item 1a. Risk Factors
There have been no material changes in 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 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
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced PlansMaximum Number of Shares that May Yet Be Purchased Under the Plans
9/1/2020 through 9/30/2020705,141 $102.76 705,141 3,157,607 
10/1/2020 through 10/31/20201,092,245 $96.81 1,092,245 5,855,000 
11/1/2020 through 11/30/2020762,145 $102.22 762,145 5,092,855 
Total2,559,531 $100.06 2,559,531 5,092,855 

Item 5.Other Information
Item 5.    Other Information
Declaration of Dividend
On January 8, 2020, the6, 2021, the Board of Directors (the “Board”) declared a quarterly dividend of $0.13 per share. The dividend is payable on February 3, 20201, 2021 to stockholders of record on January 20, 2020.2021.
Results of Annual Stockholders Meeting
At our annual meeting of stockholders held on January 8, 20206, 2021 in Atlanta, Georgia, the stockholders considered and voted on the following proposals:
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PROPOSAL 1 - Votes regarding the persons elected to serve as Directors of the Company were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
Neil M. AsheNeil M. Ashe30,983,864 449,447 26,168 2,058,369 
W. Patrick Battle30,483,4392,766,69482,5481,862,877W. Patrick Battle28,244,578 3,193,220 21,681 2,058,369 
Peter C. Browning28,472,8204,482,628377,2331,862,877Peter C. Browning25,183,940 6,253,802 21,737 2,058,369 
G. Douglas Dillard, Jr.30,494,5182,755,41982,7441,862,877G. Douglas Dillard, Jr.28,612,344 2,825,429 21,706 2,058,369 
James H. Hance, Jr.32,712,264598,73921,6781,862,877James H. Hance, Jr.30,529,766 903,398 26,315 2,058,369 
Robert F. McCullough31,608,3571,407,760316,5641,862,877
Vernon J. Nagel30,904,1552,118,266310,2601,862,877
Maya LeibmanMaya Leibman30,854,234 584,268 20,977 2,058,369 
Laura G. O'ShaughnessyLaura G. O'Shaughnessy31,006,072 431,962 21,445 2,058,369 
Dominic J. Pileggi32,720,176590,90721,5981,862,877Dominic J. Pileggi30,009,311 1,428,489 21,679 2,058,369 
Ray M. Robinson24,686,0798,561,03785,5651,862,877Ray M. Robinson26,864,795 1,989,800 2,604,884 2,058,369 
Mary A. Winston32,506,540798,54627,5951,862,877Mary A. Winston25,223,285 6,216,500 19,694 2,058,369 
PROPOSAL 2 - Votes cast regarding the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal 2021 were as follows:
Votes ForVotes AgainstVotes AbstainedVotes ForVotes AgainstVotes AbstainedBroker Non-Votes
34,269,962861,16064,436
32,987,960 32,987,960 517,311 12,577 None
PROPOSAL 33a - The results of the vote regarding the approval of an amendment to the Restated Certificate of Incorporation to eliminate supermajority voting provisions to amend the Restated Certificate of Incorporation and the Amended and Restated Bylaws were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
31,335,580 107,384 16,515 2,058,369 
PROPOSAL 3b - The results of the vote regarding the approval of an amendment to the Restated Certificate of Incorporation to eliminate supermajority voting provisions to remove directors were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
31,334,617 107,639 17,223 2,058,369 
PROPOSAL 4 - The results of the vote regarding the approval of an amendment to the Restated Certificate of Incorporation to grant stockholders the ability to call special meetings of stockholders were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-Votes
31,380,941 56,270 22,268 2,058,369 
PROPOSAL 5 - The results of the advisory vote on the compensation of the named executive officers of the Company were as follows:
Votes ForVotes AgainstVotes AbstainedBroker Non-VotesVotes ForVotes AgainstVotes AbstainedBroker Non-Votes
10,992,13922,221,810118,7321,862,877
10,313,396 10,313,396 21,120,179 25,904 2,058,369 
Pursuant to the foregoing votes, the Company's stockholders: (i) elected nineten directors nominated by the Board of Directors and listed above for a one-year term; (ii) approved the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm;firm for fiscal 2021; (iii) approved the amendment to the
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Restated Certificate of Incorporation to eliminate supermajority voting provisions to amend the Restated Certificate of Incorporation and (iii)the Amended and Restated Bylaws; (iv) approved the amendment to the Restated Certificate of Incorporation to eliminate supermajority voting provisions to remove directors; (v) approved the amendments to the Amended and Restated Certificate of Incorporation; and (vi) did not approve, on an advisory basis, the Company's named executive officer compensation.

Item 6.Exhibits
Item 6.Exhibits
Exhibits are listed on the Index to Exhibits.

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INDEX TO EXHIBITS
EXHIBIT 3(a)Reference is made to Exhibit 3.1 of registrant's Form 8-K as filed with the Commission on September 26, 2007, which is incorporated herein by reference.
(b)Reference is made to Exhibit 3.2 of registrant's Form 8-K as filed with the Commission on September 26, 2007, which is incorporated herein by reference.
(c)Reference is made to Exhibit 3.C of registrant's Form 10-Q as filed with the Commission on January 9, 2017, which is incorporated herein by reference.
(d)Filed with the Commission as part of this Form 10-Q.
(e)Filed with the Commission as part of this Form 10-Q.
EXHIBIT 4(a)Reference is made to Exhibit 3.D4.1 of registrant's Form 10-Q8-K as filed with the Commission on January 9, 2017,November 10, 2020, which is incorporated herein by reference.
(b)Reference is made to Exhibit 4.2 of registrant's Form 8-K as filed with the Commission on November 10, 2020, which is incorporated herein by reference.
(c)Reference is made to Exhibit 4.3 of registrant's Form 8-K as filed with the Commission on November 10, 2020, which is incorporated herein by reference.
(d)Reference is made to Exhibit 4.4 of registrant's Form 8-K as filed with the Commission on November 10, 2020, which is incorporated herein by reference.
EXHIBIT 10(a)Filed with the Commission as part of this Form 10-Q.
(b)Filed with the Commission as part of this Form 10-Q.
(c)
Acuity Brands, Inc.Amended and Restated 2012 Omnibus Stock Incentive Compensation PlanGlobal Performance Unit Notification and Award Agreement.
Filed with the Commission as part of this Form 10-Q.
(d)
Acuity Brands, Inc. Amended and Restated 2012 Omnibus Stock Incentive Compensation PlanGlobal Restricted Stock Unit Notification and Award Agreement.
Filed with the Commission as part of this Form 10-Q.
EXHIBIT 22Reference is made to Exhibit 22 of registrant's Form 10-K as filed with the Commission on October 23, 2020, which is incorporated herein by reference.
EXHIBIT 31(a)Filed with the Commission as part of this Form 10-Q.
(b)Filed with the Commission as part of this Form 10-Q.
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EXHIBIT 32(a)Filed with the Commission as part of this Form 10-Q.
(b)Filed with the Commission as part of this Form 10-Q.
EXHIBIT 101.INSXBRL Instance DocumentThe instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
.SCHXBRL Taxonomy Extension Schema Document.Filed with the Commission as part of this Form 10-Q.
.CALXBRL Taxonomy Extension Calculation Linkbase Document.Filed with the Commission as part of this Form 10-Q.
.DEFXBRL Taxonomy Extension Definition Linkbase Document.Filed with the Commission as part of this Form 10-Q.
.LABXBRL Taxonomy Extension Label Linkbase Document.Filed with the Commission as part of this Form 10-Q.
.PREXBRL Taxonomy Extension Presentation Linkbase Document.Filed with the Commission as part of this Form 10-Q.
EXHIBIT 104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)Filed with the Commission as part of this Form 10-Q



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ACUITY BRANDS, INC.
Date:January 9, 20207, 2021By:/S/  VERNON J. NAGELNEIL M. ASHE
VERNON J. NAGEL
NEIL M. ASHE
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

Date:January 9, 20207, 2021By:/S/  KAREN J. HOLCOM
KAREN J. HOLCOM

SENIOR VICE PRESIDENT AND

CHIEF FINANCIAL OFFICER (Principal Financial and

Accounting Officer)


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