Company Quick10K Filing
Acuity Brands
Price134.54 EPS9
Shares40 P/E16
MCap5,368 P/FCF15
Net Debt23 EBIT514
TEV5,391 TEV/EBIT10
TTM 2019-05-31, in MM, except price, ratios
10-Q 2020-02-29 Filed 2020-04-02
10-Q 2019-11-30 Filed 2020-01-09
10-K 2019-08-31 Filed 2019-10-29
10-Q 2019-05-31 Filed 2019-07-02
10-Q 2019-02-28 Filed 2019-04-03
10-Q 2018-11-30 Filed 2019-01-09
10-K 2018-08-31 Filed 2018-10-25
10-Q 2018-05-31 Filed 2018-07-03
10-Q 2018-02-28 Filed 2018-04-04
10-Q 2017-11-30 Filed 2018-01-09
10-K 2017-08-31 Filed 2017-10-26
10-Q 2017-05-31 Filed 2017-06-29
10-Q 2017-02-28 Filed 2017-04-04
10-Q 2016-11-30 Filed 2017-01-09
10-K 2016-08-31 Filed 2016-10-27
10-Q 2016-05-31 Filed 2016-06-29
10-Q 2016-02-29 Filed 2016-04-06
10-Q 2015-11-30 Filed 2016-01-08
10-K 2015-08-31 Filed 2015-10-27
10-Q 2015-05-31 Filed 2015-07-01
10-Q 2015-02-28 Filed 2015-04-01
10-Q 2014-11-30 Filed 2015-01-09
10-K 2014-08-31 Filed 2014-10-29
10-Q 2014-05-31 Filed 2014-07-01
10-Q 2014-02-28 Filed 2014-04-02
10-Q 2013-11-30 Filed 2014-01-09
10-K 2013-08-31 Filed 2013-10-29
10-Q 2013-05-31 Filed 2013-07-02
10-Q 2013-02-28 Filed 2013-04-03
10-Q 2012-11-30 Filed 2013-01-08
10-K 2012-08-31 Filed 2012-10-26
10-Q 2012-05-31 Filed 2012-07-02
10-Q 2012-02-29 Filed 2012-04-04
10-Q 2011-11-30 Filed 2012-01-09
10-K 2011-08-31 Filed 2011-10-28
10-Q 2011-05-31 Filed 2011-06-29
10-Q 2011-02-28 Filed 2011-03-30
10-Q 2010-11-30 Filed 2011-01-10
10-K 2010-08-31 Filed 2010-10-29
10-Q 2010-05-31 Filed 2010-06-30
10-Q 2010-02-28 Filed 2010-03-31
10-Q 2009-11-30 Filed 2010-01-06
8-K 2020-03-27
8-K 2020-02-03
8-K 2020-01-09
8-K 2020-01-09
8-K 2019-10-02
8-K 2019-09-04
8-K 2019-07-02
8-K 2019-04-23
8-K 2019-04-03
8-K 2019-01-09
8-K 2018-10-03
8-K 2018-07-03
8-K 2018-04-04
8-K 2018-01-09

AYI 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Description of Business and Basis of Presentation
Note 2 - Significant Accounting Policies
Note 3 - Acquisitions
Note 4 - New Accounting Pronouncements
Note 5 - Fair Value Measurements
Note 6 - Inventories
Note 7 - Property, Plant, and Equipment
Note 8 - Leases
Note 9 - Goodwill and Intangible Assets
Note 10 - Debt and Lines of Credit
Note 11 - Commitments and Contingencies
Note 12 - Changes in Stockholders' Equity
Note 13 - Revenue Recognition
Note 14 - Share - Based Payments
Note 15 - Pension Plans
Note 16 - Special Charges
Note 17 - Earnings per Share
Note 18 - Comprehensive Income
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 5. Other Information
Item 6. Exhibits
EX-31.A ayi-20200229xex31a.htm
EX-31.B ayi-20200229xex31b.htm
EX-32.A ayi-20200229xex32a.htm
EX-32.B ayi-20200229xex32b.htm

Acuity Brands Earnings 2020-02-29

Balance SheetIncome StatementCash Flow
3.22.61.91.30.60.02012201420172020
Assets, Equity
1.10.90.70.40.20.02012201420172020
Rev, G Profit, Net Income
0.20.1-0.0-0.2-0.3-0.42012201420172020
Ops, Inv, Fin

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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 February 29, 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.
_____________________________________________
ACUITY BRANDS, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________
Delaware
 
58-2632672
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification Number)

1170 Peachtree Street, N.E., Suite 2300, Atlanta, Georgia 30309-7676
(Address of principal executive offices)
(404853-1400
(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 class
 
Trading symbol
 
Name of each exchange on which registered
Common stock, $0.01 par value per share
 
AYI
 
New 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 39,641,456 shares as of March 30, 2020.
 



ACUITY BRANDS, INC.
Table of Contents

 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 



PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
ACUITY BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
 
February 29, 2020

August 31, 2019
 
(unaudited)


ASSETS



Current assets:
 




Cash and cash equivalents
$
380.6


$
461.0

Accounts receivable, less reserve for doubtful accounts of $1.4 and $1.0, respectively
506.7


561.0

Inventories
348.6


340.8

Prepayments and other current assets
71.9


79.0

Total current assets
1,307.8


1,441.8

Property, plant, and equipment, net
279.3


277.3

Operating lease right-of-use assets
59.4

 

Goodwill
1,089.6


967.3

Intangible assets, net
628.8


466.0

Deferred income taxes
2.1


2.3

Other long-term assets
29.7


17.7

Total assets
$
3,396.7


$
3,172.4

LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities:
 




Accounts payable
$
333.5


$
338.8

Current maturities of debt
15.4


9.1

Current operating lease liabilities
16.6

 

Accrued compensation
55.6


73.2

Other accrued liabilities
151.1


175.0

Total current liabilities
572.2


596.1

Long-term debt
390.8


347.5

Long-term operating lease liabilities
48.1

 

Accrued pension liabilities
96.9


99.7

Deferred income taxes
117.8


92.7

Self-insurance reserves
7.0


6.8

Other long-term liabilities
118.8


110.7

Total liabilities
1,351.6


1,253.5

Commitments and contingencies (see Commitments and Contingencies footnote)





Stockholders’ equity:
 




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



Common stock, $0.01 par value; 500,000,000 shares authorized; 53,859,675 and 53,778,155 issued, respectively
0.5


0.5

Paid-in capital
950.6


930.0

Retained earnings
2,399.6


2,295.8

Accumulated other comprehensive loss
(149.6
)

(151.4
)
Treasury stock, at cost — 14,325,197 and 14,325,197 shares, respectively
(1,156.0
)

(1,156.0
)
Total stockholders’ equity
2,045.1


1,918.9

Total liabilities and stockholders’ equity
$
3,396.7


$
3,172.4

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

1


ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In millions, except per-share data)
 
Three Months Ended
 
Six Months Ended
 
February 29, 2020

February 28, 2019
 
February 29, 2020
 
February 28, 2019
Net sales
$
824.2


$
854.4

 
$
1,658.9

 
$
1,787.0

Cost of products sold
480.3


520.5

 
959.2

 
1,085.6

Gross profit
343.9


333.9

 
699.7

 
701.4

Selling, distribution, and administrative expenses
260.9


237.6

 
526.2

 
487.7

Special charges
1.6


0.4

 
8.5

 
1.4

Operating profit
81.4


95.9

 
165.0

 
212.3

Other expense:
 




 


 


Interest expense, net
5.7


8.6

 
14.0

 
17.3

Miscellaneous expense, net
1.0


1.1

 
2.4

 
2.4

Total other expense
6.7


9.7

 
16.4

 
19.7

Income before income taxes
74.7


86.2

 
148.6

 
192.6

Income tax expense
17.5


19.9

 
34.4

 
46.7

Net income
$
57.2


$
66.3

 
$
114.2

 
$
145.9







 


 


Earnings per share:
 




 


 


Basic earnings per share
$
1.45


$
1.68

 
$
2.89

 
$
3.67

Basic weighted average number of shares outstanding
39.5


39.5

 
39.5

 
39.7

Diluted earnings per share
$
1.44


$
1.67

 
$
2.88

 
$
3.66

Diluted weighted average number of shares outstanding
39.7


39.6

 
39.7

 
39.8

Dividends declared per share
$
0.13


$
0.13

 
$
0.26

 
$
0.26







 


 


Comprehensive income:





 


 


Net income
$
57.2


$
66.3

 
$
114.2

 
$
145.9

Other comprehensive income (loss) items:





 


 


Foreign currency translation adjustments
(3.7
)

4.9

 
(1.8
)
 
(3.9
)
Defined benefit plans, net of tax
1.7


1.4

 
3.6

 
4.0

Other comprehensive (loss) income items, net of tax
(2.0
)

6.3

 
1.8

 
0.1

Comprehensive income
$
55.2


$
72.6

 
$
116.0

 
$
146.0

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



2


ACUITY BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In millions)
 
Six Months Ended
 
February 29, 2020
 
February 28, 2019
Cash flows from operating activities:
 
 
 
Net income
$
114.2

 
$
145.9

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
49.8

 
43.3

Share-based payment expense
24.7

 
15.3

Loss on sale or disposal of property, plant, and equipment
0.1

 
0.4

Deferred income taxes
(0.1
)
 
0.4

Change in assets and liabilities, net of effect of acquisitions, divestitures, and exchange rate changes:
 
 
 
Accounts receivable
66.9

 
139.6

Inventories
8.3

 
(1.3
)
Prepayments and other current assets
(4.0
)
 
(21.8
)
Accounts payable
(12.3
)
 
(102.6
)
Other current liabilities
(46.1
)
 
(38.9
)
Other
13.2

 
8.0

Net cash provided by operating activities
214.7

 
188.3

Cash flows from investing activities:
 

 
 

Purchases of property, plant, and equipment
(24.9
)
 
(24.9
)
Proceeds from sale of property, plant, and equipment
0.2

 

Acquisition of businesses, net of cash acquired
(302.9
)
 

Other investing activities
(1.9
)
 
2.9

Net cash used for investing activities
(329.5
)
 
(22.0
)
Cash flows from financing activities:
 

 
 

Borrowings on credit facility
400.0

 
86.5

Repayments of borrowings on credit facility

 
(86.5
)
Repayments of long-term debt
(350.5
)
 
(0.2
)
Repurchases of common stock

 
(48.7
)
Proceeds from stock option exercises and other
0.5

 
0.3

Payments of taxes withheld on net settlement of equity awards
(4.7
)
 
(4.3
)
Dividends paid
(10.4
)
 
(10.5
)
Net cash provided by (used for) financing activities
34.9

 
(63.4
)
Effect of exchange rate changes on cash and cash equivalents
(0.5
)
 

Net change in cash and cash equivalents
(80.4
)
 
102.9

Cash and cash equivalents at beginning of period
461.0

 
129.1

Cash and cash equivalents at end of period
$
380.6

 
$
232.0

Supplemental cash flow information:
 

 
 

Income taxes paid during the period
$
29.9

 
$
63.2

Interest paid during the period
$
23.8

 
$
24.5

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

3

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 a market-leading industrial technology company that develops, manufactures, and provides lighting and building management solutions and services for commercial, institutional, industrial, infrastructure, and residential applications throughout North America and select international markets. Our lighting and building management 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 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. We have one 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 February 29, 2020, our consolidated comprehensive income for the three and six months ended February 29, 2020 and February 28, 2019, and our consolidated cash flows for the six months ended February 29, 2020 and February 28, 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, 2019 and notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on October 29, 2019 (File No. 001-16583) (“Form 10-K”).
The results of operations for the three and six months ended February 29, 2020 and February 28, 2019 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. Additionally, we are uncertain of the impact of the COVID-19 pandemic 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.

4

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


Note 3 — Acquisitions
Fiscal 2020 Acquisitions
The Luminaires Group
On September 17, 2019, using cash on hand and borrowings under available existing credit arrangements, we acquired all of the equity interests of The Luminaires Group (“TLG”), a leading provider of specification-grade luminaires for commercial, institutional, hospitality, and municipal markets, all of which complement our current and dynamic lighting portfolio. TLG’s indoor and outdoor lighting fixtures are marketed to architects, landscape architects, interior designers, and engineers through five niche lighting brands: A-light, Cyclone, Eureka, Luminaire LED, and Luminis.
LocusLabs, Inc.
On November 25, 2019, using cash on hand, we acquired all of the equity interests of LocusLabs, Inc (“LocusLabs”). The LocusLabs software platform supports navigation applications used on mobile devices, web browsers, and digital displays in airports, event centers, multi-floor office buildings, and campuses.
Accounting for Fiscal 2020 Acquisitions
Acquisition-related costs were expensed as incurred. Preliminary amounts related to the acquisition accounting for TLG and LocusLabs are reflected on the Consolidated Balance Sheets as of February 29, 2020. The aggregate purchase price of these acquisitions reflects preliminary total goodwill and identified intangible assets of approximately $125.3 million and $183.1 million, respectively, as of February 29, 2020. Identified intangible assets consist of indefinite-lived marketing related intangibles as well as definite-lived customer-based and technology-based assets, which have a preliminary weighted average useful life of approximately 16 years. These amounts are deemed 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.
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”)
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”), which requires lessees to include most leases on the balance sheet as lease liabilities with an associated right-of-use (“ROU”) asset. Since the issuance of ASU 2016-02, the FASB released several amendments to improve and clarify the implementation guidance, as well as to change the allowable adoption methods. These standards have been collectively codified within ASC 842, Leases (“ASC 842”).
We adopted ASC 842 using the modified retrospective method and applied the standard to all leases existing as of September 1, 2019. Information for prior years presented has not been restated and continues to reflect the authoritative accounting standards in effect for those periods. We elected the package of transition practical expedients that allows us to carryforward our historical assessments of whether existing contracts contain leases, determinations of lease classification, and treatments of initial direct costs.

5

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


As of September 1, 2019, we recognized total operating lease liabilities 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.
Accounting Standards Yet to Be Adopted
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the the provisions of ASU 2020-04 on our financial condition, results of operations, and cash flows.
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, 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 have an implementation team tasked with reviewing our financial assets and determining the impact of the new standard to our financial statements. The team is also tasked with identifying appropriate changes to our business processes, systems, and controls to support recognition and disclosure under the new standard. The implementation team has begun reviewing our portfolio of financial assets and assessing potential impacts of the new standard. The implementation team reports its findings and progress of the project to management on a frequent basis and to the Audit Committee of the Board of Directors on a quarterly basis. Our current financial asset portfolio consists primarily of trade receivables, and we preliminarily expect ASU 2016-13 to immaterially impact our computation of expected credit losses on trade receivables. We will adopt the amendments as required in fiscal 2021.
All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.


6

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


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 that categorizes market participant assumptions based on (i) unadjusted quoted prices for identical assets or liabilities in an active market (Level 1), (ii) quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (Level 2), and (iii) prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (Level 3).
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.
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.
Our cash and cash equivalents (Level 1), which are required to be carried at fair value and measured on a recurring basis, were $380.6 million and $461.0 million as of February 29, 2020 and August 31, 2019, 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.
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):
 
February 29, 2020
 
August 31, 2019
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Senior unsecured public notes, net of unamortized discount and deferred costs
$

 
$

 
$
349.9

 
$
352.7

Borrowings under Term Loan Facility
400.0

 
400.0

 

 

Industrial revenue bond
4.0

 
4.0

 
4.0

 
4.0

Bank loans
2.2

 
2.4

 
2.7

 
2.9


Borrowings under our unsecured delayed draw term loan facility (the “Term Loan Facility”) and the industrial revenue bond (“IRB”) are carried at the outstanding balance as of the end of the reporting period. The borrowings under the Term Loan Facility and the IRB are variable-rate instruments that reset on a weekly basis; therefore, we estimate that the face amounts of these instruments approximate their fair value as of February 29, 2020 based on instruments of similar terms and maturity (Level 2). See Note 10Debt and Lines of Credit for further details on our long-term borrowings.
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).
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.


7

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):
 
February 29, 2020
 
August 31, 2019
Raw materials, supplies, and work in process (1)
$
188.8

 
$
179.4

Finished goods
185.3

 
183.7

Inventories excluding reserves
374.1

 
363.1

Less: Reserves
(25.5
)
 
(22.3
)
Total inventories
$
348.6

 
$
340.8


_______________________________________
(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.

Note 7 — Property, Plant, and Equipment
Property, plant, and equipment consisted of the following as of the dates presented (in millions):
 
February 29, 2020
 
August 31, 2019
Land
$
22.7

 
$
22.6

Buildings and leasehold improvements
193.6

 
190.7

Machinery and equipment
571.9

 
544.4

Total property, plant, and equipment, at cost
788.2

 
757.7

Less: Accumulated depreciation and amortization
(508.9
)
 
(480.4
)
Property, plant, and equipment, net
$
279.3

 
$
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 February 29, 2020 was 2.2%.

8

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


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 date presented (in millions):
Fiscal year
 
February 29, 2020
2020
 
$
9.3

2021
 
16.1

2022
 
11.5

2023
 
8.5

2024
 
6.0

Thereafter
 
17.7

Total undiscounted lease payments
 
69.1

Less: Discount due to interest
 
(4.4
)
Present value of lease liabilities
 
$
64.7


The weighted average remaining lease term for our operating leases was six years as of February 29, 2020.
Lease cost is recorded within Cost of products sold or Selling, distribution, and administrative expenses in the Consolidated Statements of Comprehensive Income based on the primary use of the related ROU asset. The components of total lease cost were as follows for the period presented (in millions):
 
Three Months Ended
 
Six Months Ended
 
February 29, 2020
 
February 29, 2020
Operating lease cost
$
4.4

 
$
9.3

Variable lease cost
0.4

 
1.2

Short-term lease cost
0.9

 
1.2

Total lease cost
$
5.7

 
$
11.7


Prior to the adoption of ASC 842, we recognized rent expense of $5.4 million and $10.9 million during the three and six months ended February 28, 2019, respectively.
Cash paid for operating lease liabilities during the six months ended February 29, 2020 was $9.3 million. ROU assets obtained in exchange for lease liabilities, including those obtained from recent acquisitions, during the six months ended February 29, 2020 were $8.8 million.
We do not have material leases that have not yet commenced as of February 29, 2020 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 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 $10.4 million and $7.7 million during the three months ended February 29, 2020 and February 28, 2019, respectively, and $20.0 million and $15.4 million during the six months ended February 29, 2020 and February 28, 2019, respectively. Amortization expense is generally recorded on a straight-line basis and is expected to be approximately $40.9 million in fiscal 2020, $38.9 million in fiscal 2021, $38.0 million in fiscal 2022, $36.8 million in fiscal 2023, and $36.0 million in fiscal 2024.

9

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):
 
Six Months Ended
 
February 29, 2020
 
February 28, 2019
Beginning balance
$
967.3

 
$
970.6

Provisional additions from acquired businesses
147.8

 

Adjustments to provisional amounts from acquired businesses
(23.9
)
 

Foreign currency translation adjustments
(1.6
)
 
(2.1
)
Ending balance
$
1,089.6

 
$
968.5


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.

Note 10 — Debt and Lines of Credit
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 a $400.0 million unsecured delayed draw term loan facility (“Term Loan Facility”). We had no borrowings outstanding under the current Revolving Credit Facility as of February 29, 2020 or August 31, 2019. We had $400.0 million in borrowings outstanding under the Term Loan Facility as of February 29, 2020 and no borrowings under the Term Loan Facility as of August 31, 2019. Based on the repayment schedule detailed below, $385.0 million of the borrowings under the Term Loan Facility are reflected within Long-term debt on the Consolidated Balance Sheets as of February 29, 2020.
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 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 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 four separate installments, which are U.S. dollar denominated. Borrowings under the Term Loan Facility will amortize in equal quarterly installments 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 allowed 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%.
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% 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.

10

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


We were in compliance with all financial covenants under the Credit Agreement as of February 29, 2020. At February 29, 2020, we had additional borrowing capacity under the Credit Agreement of $396.2 million under the most restrictive covenant in effect at the time, which represents the full amount of the Revolving Credit Facility less the outstanding letters of credit of $3.8 million issued under the Revolving Credit Facility. As of February 29, 2020, we had outstanding letters of credit totaling $8.1 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 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
On December 16, 2019, we repaid $350.0 million of senior unsecured notes in full plus accrued interest with borrowings under our Term Loan Facility.
In addition to the long-term portion of borrowings under the Term Loan Facility, we had $4.0 million of tax-exempt industrial revenue bonds that are scheduled to mature in 2021 and $2.2 million outstanding under fixed-rate bank loans outstanding at February 29, 2020. 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, 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
 
Six Months Ended
 
February 29, 2020

February 28, 2019
 
February 29, 2020

February 28, 2019
Interest expense
$
6.8

 
$
9.1

 
$
15.8

 
$
18.3

Interest income
(1.1
)
 
(0.5
)
 
(1.8
)
 
(1.0
)
Interest expense, net
$
5.7

 
$
8.6

 
$
14.0

 
$
17.3



Note 11 — Commitments and Contingencies
In the normal course of business, we are subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance estimated liabilities and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated. For the period ended February 29, 2020, no material changes have occurred in our estimated liabilities for self-insurance, litigation, environmental matters, guarantees and indemnities, or relevant events and circumstances, from those disclosed in the Commitments and Contingencies footnote of the Notes to Consolidated Financial Statements within our Form 10-K.
Product Warranty and Recall Costs
Our products generally have a standard warranty term of five years that assure our products comply with agreed upon specifications. We record an accrual for the estimated amount of future warranty costs when the related revenue is recognized. Estimated costs related to product recalls based on a formal campaign soliciting repair or return of that product are accrued when they are deemed to be probable and can be reasonably estimated. Estimated future warranty and recall costs are primarily based on historical experience of identified warranty and recall claims. However, there can be no assurance that future warranty or recall costs will not exceed historical amounts or that new technology products may not generate unexpected costs. If actual future warranty or recall costs exceed historical amounts, additional increases in the accrual may be required, which could have a material adverse impact on our results of operations and cash flows.

11

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


Estimated liabilities for product warranty and recall costs are included in Other accrued liabilities and Other long-term liabilities on the Consolidated Balance Sheets. The following table summarizes changes in the estimated liabilities for product warranty and recall costs for the periods presented (in millions):
 
Six Months Ended
 
February 29, 2020
 
February 28, 2019
Beginning balance
$
11.5

 
$
27.3

Warranty and recall costs
12.5

 
9.6

Payments and other deductions
(12.5
)
 
(9.2
)
Acquired warranty and recall liabilities
0.1

 

ASC 606 adjustments (1)

 
(14.8
)
Ending balance
$
11.6

 
$
12.9


______________________________ 
(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.
Lighting Science Group Patent Litigation
On April 30, 2019 and May 1, 2019, Lighting Science Group Corp. (“LSG”) filed complaints in 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. For the remaining seven patents, LSG’s infringement allegations relate to certain of our LED luminaires and related systems. LSG seeks orders from the International Trade Commission to preclude the importation and sale of the accused products. LSG seeks unspecified monetary damages, costs, and attorneys’ fees in the District of Delaware action. We dispute and have numerous defenses 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 stages of the proceedings where key factual and legal issues have not been resolved. For these reasons, we currently are unable to predict the ultimate timing or outcome of or reasonably estimate the possible losses or a range of possible losses resulting from these matters.
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 executive 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. 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.

12

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 estimated liabilities for legal claims when associated costs become probable and can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher than the amounts accrued for such claims. However, we cannot make a meaningful estimate of actual costs to be incurred that could possibly be higher or lower than the accrued amounts.


13

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


Note 12 — Changes in Stockholders' Equity
The following tables summarize changes in the components of stockholders' equity for the periods presented (in millions):
 
Common Stock Outstanding
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Paid-in
Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive
Loss
 
Treasury
Stock, at cost
 
Total
Balance, August 31, 2019
39.5

 
$
0.5

 
$
930.0

 
$
2,295.8

 
$
(151.4
)
 
$
(1,156.0
)
 
$
1,918.9

Net income

 

 

 
57.0

 

 

 
57.0

Other comprehensive income

 

 

 

 
3.8

 

 
3.8

Share-based payment amortization, issuances, and cancellations

 

 
12.6

 

 

 

 
12.6

Employee stock purchase plan issuances

 

 
0.2

 

 

 

 
0.2

Cash dividends of $0.13 per share paid on common stock

 

 

 
(5.2
)
 

 

 
(5.2
)
Balance, November 30, 2019
39.5

 
0.5

 
942.8

 
2,347.6

 
(147.6
)
 
(1,156.0
)
 
1,987.3

Net income

 

 

 
57.2

 

 

 
57.2

Other comprehensive loss

 

 

 

 
(2.0
)
 

 
(2.0
)
Share-based payment amortization, issuances, and cancellations

 

 
7.5

 

 

 

 
7.5

Employee stock purchase plan issuances

 

 
0.2

 

 

 

 
0.2

Cash dividends of $0.13 per share paid on common stock

 

 

 
(5.2
)
 

 

 
(5.2
)
Stock options exercised

 

 
0.1

 

 

 

 
0.1

Balance, February 29, 2020
39.5

 
$
0.5

 
$
950.6

 
$
2,399.6

 
$
(149.6
)
 
$
(1,156.0
)
 
$
2,045.1


 
Common Stock Outstanding
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Paid-in
Capital
 
Retained
Earnings
 
Accumulated Other
Comprehensive
Loss
 
Treasury
Stock, at cost
 
Total
Balance, August 31, 2018
40.0

 
$
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 cancellations
0.1

 

 
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, 2018
39.9

 
0.5

 
910.2

 
2,060.6

 
(121.0
)
 
(1,099.4
)
 
1,750.9

Net income

 

 

 
66.3

 

 

 
66.3

Other comprehensive income

 

 

 

 
6.3

 

 
6.3

Share-based payment amortization, issuances, and cancellations

 

 
7.1

 

 

 

 
7.1

Employee stock purchase plan issuances

 

 
0.2

 

 

 

 
0.2

Cash dividends of $0.13 per share paid on common stock

 

 

 
(5.3
)
 

 

 
(5.3
)
Repurchases of common stock
(0.2
)
 

 

 

 

 
(23.7
)
 
(23.7
)
Balance, February 28, 2019
39.7

 
$
0.5

 
$
917.5

 
$
2,121.6

 
$
(114.7
)
 
$
(1,123.1
)
 
$
1,801.8



Note 13 — 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.

14

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


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):
 
February 29, 2020
 
August 31, 2019